<PAGE>
FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION Statement NO. 33-52961
[FORTUNE LETTERHEAD]
April 5, 1994
Dear Common and Preferred Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Fortune Bancorp, Inc. ("Fortune") to be held on Thursday, May 12, 1994, at
11:00 a.m., local time, at Fortune's corporate headquarters, 16120 U.S. Highway
19 North, Clearwater, Florida 34624-6895.
At the meeting, you will be asked to consider and vote upon a proposal to
approve an Agreement and Plan of Merger ("Merger Agreement") pursuant to which
Fortune will merge (the "Merger") with and into AmSouth Bancorporation
("AmSouth"). Your Board of Directors has determined that the Merger is in the
best interests of Fortune and its shareholders and unanimously recommends that
you vote "FOR" approval of the Merger. In addition, common shareholders will be
asked to consider and vote upon the election of directors and the ratification
of the appointment of the firm of KPMG Peat Marwick as independent auditors.
Under the Merger Agreement, which was unanimously approved by your Board of
Directors on September 12, 1993, each common and preferred shareholder of
Fortune may elect to receive either all cash or all shares of AmSouth common
stock in exchange for all his or her shares of Fortune stock. Whether you
receive all cash or all AmSouth common stock for your Fortune shares will
depend upon both your election and certain allocation procedures that are
described in the attached Proxy Statement/Prospectus. Because the number of
shares of AmSouth common stock and the total amount of cash to be issued in the
Merger will be fixed, no guarantee can be given that an election by any given
shareholder will be honored. Rather, the election by each holder will be
subject to the election and allocation procedures described herein. Thus,
holders may not receive their chosen form of consideration.
The amount of cash and the number of shares of AmSouth common stock that will
be exchanged for each share of Fortune common and preferred stock will be
determined by applying a formula, set forth in the Merger Agreement, that is
based upon the average closing price of AmSouth's common stock over a ten-day
pricing period ending shortly before the Merger is consummated.
The formula has been designed to provide that those Fortune shareholders who
receive cash and those who receive AmSouth common stock will receive equal
value for their shares, based on such average closing price. If, for example,
over the pricing period, the average closing price of AmSouth common stock is
$31.80 per share, which was a recent average closing price of AmSouth common
stock at the time of the signing of the Merger Agreement, the value to be
received in exchange for Fortune common and preferred shares will be $34.25 per
share, and $45.67 per share, respectively. During the ten trading days ended
March 31, 1994, the average closing price of AmSouth common stock was $30.79
per share. Page 37 of the attached Proxy Statement/Prospectus contains a table
that illustrates the values to be received, based on a range of average closing
prices of AmSouth common stock. Based on the number of shares of Fortune common
and preferred stock outstanding on March 31, 1994 and assuming the exercise of
all stock options currently outstanding under Fortune's stock option plans, it
is anticipated that AmSouth will issue approximately 4,507,000 shares of
AmSouth common stock and approximately $143.3 million cash in the Merger.
Consummation of the Merger is subject to certain conditions, including the
approval and adoption of the Merger Agreement by Fortune's shareholders and
approval by various regulatory agencies. The terms of the Merger are described
in detail in the Proxy Statement/Prospectus that follows, and I urge you to
read this document as you consider your vote.
<PAGE>
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF FORTUNE COMMON
STOCK AND TWO-THIRDS OF THE OUTSTANDING SHARES OF FORTUNE PREFERRED STOCK ARE
REQUIRED TO APPROVE THE MERGER AGREEMENT. CONSEQUENTLY, THE FAILURE TO VOTE
WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER. THE HOLDERS OF FORTUNE
COMMON STOCK ARE ALSO BEING ASKED TO VOTE ON THE ELECTION OF THREE DIRECTORS
AND THE RATIFICATION OF AUDITORS. THUS, IT IS ESSENTIAL THAT YOU TAKE THE TIME
TO CONSIDER AND TO VOTE UPON THIS SIGNIFICANT MATTER--AND THAT YOUR SHARES BE
REPRESENTED AT THE ANNUAL MEETING.
On behalf of the Board of Directors, I urge you to vote, sign, date and
return the enclosed proxy card as soon as possible, even if you plan to attend
the Annual Meeting. DO NOT send in your Fortune stock certificates at this
time. Signing the proxy will not prevent you from voting in person should you
be able to attend the Annual Meeting. Signing the proxy will assure that your
vote is counted if, for any reason, you are unable to attend.
On behalf of the Board of Directors, I thank you for your investment in
Fortune, and for your serious consideration of the important matter at hand. We
recommend unanimously that you vote "FOR" approval of the Merger Agreement,
"FOR" the proposed slate of directors and "FOR" the ratification of the
appointment of KPMG Peat Marwick.
Sincerely yours,
/s/ John R. Torell III
John R. Torell III
Chairman of the Board
and Chief Executive Officer
<PAGE>
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 1994
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Fortune Bancorp, Inc. ("Fortune") will be held at its corporate
headquarters, 16120 U.S. Highway 19 North, Clearwater, Florida 34624-6895, on
Thursday, May 12, 1994, at 11:00 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to approve an Agreement and Plan of
Merger dated September 12, 1993 (the "Merger Agreement"), which provides
for the merger (the "Merger") of Fortune with and into AmSouth
Bancorporation, a Delaware corporation, which Merger Agreement is
attached to and described in the enclosed Proxy Statement/Prospectus;
2. To elect three directors each for terms of three years or, if the Merger
is approved by Fortune shareholders, for terms ending on the date of
consummation of the Merger;
3. To ratify the appointment by the Board of Directors of the firm of KPMG
Peat Marwick as independent public accountants of Fortune for the fiscal
year ending September 30, 1994; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof. As of the date
hereof, management is not aware of any other such business.
If the Merger is effectuated, shareholders dissenting therefrom shall be
entitled to be paid the fair value of their shares (exclusive of any
appreciation in value arising from the expectation of the Merger) if they file
a written objection to the Merger before the shareholder vote at the Annual
Meeting and comply with the further requirements of Sections 607.1301, 607.1302
and 607.1320 of the Florida Business Corporation Act, the full text of which is
included as Annex E to the enclosed Proxy Statement/Prospectus. For a summary
of the dissenters' rights of Fortune shareholders, see "Dissenters' Rights" in
the Proxy Statement/Prospectus.
Pursuant to Fortune's Bylaws, the Board of Directors has fixed March 14,
1994, as the record date for the determination of shareholders who will receive
notice of and be entitled to vote at the Annual Meeting or any adjournments or
postponements thereof. If there are not sufficient votes to approve any of the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may
be adjourned or postponed in order to permit further solicitation of proxies by
Fortune.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ John R. Torell III
John R. Torell III
Chairman of the Board
and Chief Executive Officer
Clearwater, Florida
April 5, 1994
THE FORTUNE BOARD UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF FORTUNE COMMON AND
PREFERRED STOCK VOTE TO APPROVE THE PROPOSALS THAT THEY ARE ENTITLED TO VOTE
ON.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
PROXIES BE RETURNED PROMPTLY, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF FORTUNE COMMON
STOCK AND TWO THIRDS OF THE OUTSTANDING SHARES OF FORTUNE PREFERRED STOCK IS
REQUIRED TO APPROVE THE MERGER AGREEMENT. THEREFORE, WHETHER OR NOT YOU PLAN TO
BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT PROSPECTUS
FORTUNE BANCORP, INC. AMSOUTH BANCORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE COMMON STOCK (PAR VALUE $1.00 PER
HELD ON MAY 12, 1994 SHARE)
This Proxy Statement/Prospectus is furnished in connection with the
solicitation by the Board of Directors of Fortune Bancorp, Inc. ("Fortune") of
proxies for use at the Annual Meeting of Shareholders to be held on Thursday,
May 12, 1994, at 11:00 a.m., local time, at Fortune's corporate headquarters,
16120 U.S. Highway 19 North, Clearwater, Florida 34624-6895, and at any
adjournments or postponements thereof ("Annual Meeting").
At the Annual Meeting, the holders of Fortune common stock, par value $.01
per share ("Fortune Common Stock"), will consider and vote upon the election of
directors and the ratification of the appointment of KPMG Peat Marwick as
independent auditors. In addition, holders of Fortune Common Stock and Fortune
Series A 8% Cumulative Convertible Preferred Stock, par value $.01 per share
("Fortune Preferred Stock"), will consider and vote upon a proposal to approve
an Agreement and Plan of Merger, dated as of September 12, 1993, by and between
AmSouth Bancorporation, a Delaware corporation ("AmSouth"), and Fortune (the
"Merger Agreement"), a copy of which is attached to this Proxy
Statement/Prospectus as Annex A, and the transactions contemplated thereby.
Only holders of record of Fortune Common Stock and Fortune Preferred Stock at
the close of business on March 14, 1994, will be entitled to vote at the Annual
Meeting. As more fully described herein, pursuant to the Merger Agreement,
Fortune will merge (the "Merger") with and into AmSouth, and subject to the
election and allocation procedures provided for in the Merger Agreement, all
the outstanding shares of Fortune Common Stock and Fortune Preferred Stock held
by each holder thereof immediately before the effective date of the Merger will
be converted into the right to receive either (x) a number of shares of common
stock, par value $1.00 per share of AmSouth ("AmSouth Common Stock"),
determined as described in the Merger Agreement, or (y) an amount in cash,
without interest, determined as described in the Merger Agreement. The actual
per share consideration to be received by Fortune shareholders will be
determined based on a formula set forth in the Merger Agreement that takes into
consideration the average of the closing prices per share of AmSouth Common
Stock as reported by the New York Stock Exchange, Inc. ("NYSE") on the NYSE
composite transactions tape for the ten consecutive trading days ending on the
tenth business day before the effective date of the Merger, all as more fully
described herein. A table setting forth the amount of consideration per share
based on various assumed average closing prices per share of AmSouth Common
Stock is provided on page 37 of this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus also constitutes a prospectus of AmSouth with
respect to shares of AmSouth Common Stock to be issued in the Merger. The
outstanding shares of AmSouth Common Stock are listed on the NYSE. The reported
last sale price of AmSouth Common Stock on the NYSE composite transactions tape
on March 31, 1994, was $29.75 per share.
All information contained in this Proxy Statement/Prospectus relating to
Fortune has been supplied by Fortune and all information relating to AmSouth
has been supplied by AmSouth.
----------------
THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF AMSOUTH COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS
ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
----------------
This Proxy Statement/Prospectus and the accompanying form of proxy are first
being mailed to shareholders of Fortune on or about April 7, 1994.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS APRIL 5, 1994.
<PAGE>
AVAILABLE INFORMATION
Fortune and AmSouth are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by Fortune and AmSouth with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at Seven World Trade
Center (13th Floor), New York, New York 10048, and Northwestern Atrium Center,
500 West Madison, Suite 1400, Chicago, Illinois 60661. Copies of such material
also can be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549, at prescribed rates. In addition, material filed by
AmSouth can be inspected at the offices of the NYSE, 20 Broad Street, New York,
New York 10005, on which the AmSouth Common Stock is listed.
AmSouth has filed with the Commission a Registration Statement on Form S-4
(together with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities to be issued pursuant to the Merger Agreement. This Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement. Such additional information may be obtained from the
Commission's principal office in Washington, D.C. Statements contained in this
Proxy Statement/Prospectus or in any document incorporated by reference in this
Proxy Statement/Prospectus as to the contents of any contract or other document
referred to herein or therein are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS
TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER TO WHOM
THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, ON WRITTEN OR ORAL REQUEST,
WITHOUT CHARGE, IN THE CASE OF DOCUMENTS RELATING TO FORTUNE, DIRECTED TO
FORTUNE, 16120 U.S. HIGHWAY 19 NORTH, CLEARWATER, FLORIDA 34624-6895 (TELEPHONE
NUMBER 813/538-1114), ATTENTION: CORPORATE SECRETARY, OR, IN THE CASE OF
DOCUMENTS RELATING TO AMSOUTH, DIRECTED TO AMSOUTH, POST OFFICE BOX 11007,
BIRMINGHAM, ALABAMA 35288 (TELEPHONE NUMBER 205/583-4439), ATTENTION: INVESTOR
RELATIONS DEPARTMENT. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUESTS SHOULD BE MADE BY MAY 5, 1994.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IN
CONNECTION WITH THE SOLICITATION OF PROXIES OR THE OFFERING OF SECURITIES MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY FORTUNE, AMSOUTH OR ANY OTHER PERSON.
THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO
MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY
OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF FORTUNE OR AMSOUTH SINCE THE DATE HEREOF OR
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
A copy of Fortune's Annual Report on Form 10-K and Annual Report to
Shareholders for the fiscal year ended September 30, 1993, has previously been
provided to shareholders. SHAREHOLDERS MAY OBTAIN, FREE OF CHARGE, AN
ADDITIONAL COPY OF FORTUNE'S ANNUAL REPORT BY WRITING TO THE CORPORATE
SECRETARY OF FORTUNE AT THE ABOVE ADDRESS.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Fortune (File No. 0-
11608) and AmSouth (File No. 1-7476) pursuant to the Exchange Act are
incorporated by reference in this Proxy Statement/Prospectus:
1. Fortune's Annual Report on Form 10-K for the year ended September 30,
1993 ("Fortune's Annual Report") filed on December 29, 1993;
2. Fortune's Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 1993 filed on February 14, 1994;
3. Fortune's Current Reports on Form 8-K filed on (i) September 17, 1993,
(ii) December 16, 1993, as amended by a Form 8-K/A filed on December 24, 1993,
and (iii) April 1, 1994;
4. AmSouth's Annual Report on Form 10-K for the fiscal year ended December
31, 1993 filed on March 22, 1994 (provided that the information referred to in
Item 402(a)(8) of Regulation S-K shall not be deemed to be specifically
incorporated herein);
5. AmSouth's Current Reports on Form 8-K filed on (i) December 21, 1993, as
amended by a Form 8-K/A filed on February 16, 1994; (ii) January 26, 1994; and
(iii) March 22, 1994, as amended by a Form 8-K/A filed on April 4, 1994;
6. AmSouth's Registration Statement on Form 10, filed on March 12, 1973,
with respect to the description of AmSouth Common Stock contained therein (and
any amendment or report filed for the purpose of updating such description);
and
7. AmSouth's Registration Statement on Form 8-A, filed on July 10, 1989,
with respect to the AmSouth's Stockholder Protection Rights Agreement (and any
amendment or report filed for the purpose of updating such description).
All documents and reports subsequently filed by Fortune and AmSouth pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Proxy Statement/Prospectus and before the date of the Annual Meeting
shall be deemed to be incorporated by reference in this Proxy
Statement/Prospectus and to be part hereof from the date of filing of such
documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Proxy Statement/Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
that also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Proxy Statement/Prospectus.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
PROXY STATEMENT............................................................ 1
AVAILABLE INFORMATION...................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 3
SUMMARY.................................................................... 7
Parties to the Merger.................................................... 7
The Annual Meeting....................................................... 9
The Merger............................................................... 10
COMPARATIVE MARKET AND STOCK PRICE DATA.................................... 21
COMPARATIVE PER SHARE INFORMATION.......................................... 23
SUMMARY CONDENSED CONSOLIDATED FINANCIAL INFORMATION....................... 24
INTRODUCTION............................................................... 29
General.................................................................. 29
Parties to the Merger.................................................... 29
THE ANNUAL MEETING......................................................... 32
General.................................................................. 32
Matters to be Considered at the Annual Meeting........................... 32
Record Date and Voting................................................... 33
Votes Required........................................................... 33
Recommendation of the Fortune Board...................................... 34
Revocation of Proxy...................................................... 34
Security Ownership of Management; Voting Agreements...................... 34
PROPOSAL TO APPROVE THE MERGER............................................. 35
General.................................................................. 35
The Merger and the Bank Merger........................................... 35
Effect of the Merger..................................................... 35
Merger Consideration..................................................... 35
Price-Based Termination.................................................. 38
Background of the Merger................................................. 38
Reasons for the Merger................................................... 39
Opinion of Financial Advisor............................................. 40
Effective Date........................................................... 45
Election and Allocation Procedures....................................... 45
Issuance of Stock and Payment of Cash.................................... 47
Representations and Warranties........................................... 48
Certain Covenants........................................................ 48
Conditions to Each Party's Obligations................................... 50
Regulatory Approvals..................................................... 51
Conduct of Business Pending Merger....................................... 52
Termination.............................................................. 53
Management After the Merger.............................................. 53
Interests of Certain Persons in the Merger............................... 54
Certain Federal Income Tax Consequences.................................. 56
Backup Withholding....................................................... 58
Accounting Treatment..................................................... 58
NYSE Listing............................................................. 59
Expenses................................................................. 59
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
CERTAIN RELATED TRANSACTIONS............................................... 59
The Stock Option Agreement............................................... 59
Resales of AmSouth Common Stock.......................................... 61
CERTAIN REGULATORY CONSIDERATIONS.......................................... 61
General.................................................................. 61
Payment of Dividends..................................................... 62
Conversion of AmSouth Alabama............................................ 62
Transactions with Affiliates............................................. 63
Capital Adequacy......................................................... 63
Support of Subsidiary Banks.............................................. 65
FDICIA................................................................... 64
Brokered Deposits........................................................ 65
FDIC Insurance Assessments............................................... 65
Depositor Preference..................................................... 66
DESCRIPTION OF AMSOUTH CAPITAL STOCK....................................... 66
General.................................................................. 66
Common Stock............................................................. 66
Preferred Stock.......................................................... 67
AmSouth Rights Agreement................................................. 67
Changes in Control....................................................... 68
COMPARISON OF RIGHTS OF SHAREHOLDERS....................................... 69
Removal of Directors..................................................... 70
Vacancies on the Board of Directors...................................... 70
Amendments to the Certificate or Articles of Incorporation and Bylaws.... 70
Authorized Capital Stock................................................. 71
Changes in Control....................................................... 72
Shareholder Rights Plan.................................................. 74
Prevention of Greenmail.................................................. 74
Special Meetings of Shareholders; Action Without a Meeting............... 74
Preemptive Rights........................................................ 74
Proxy Requirements....................................................... 75
Derivative Actions....................................................... 75
Affliated Transactions................................................... 75
Directors' Liability..................................................... 75
Indemnification.......................................................... 76
Rights of Dissenting Shareholders........................................ 77
Dividends................................................................ 78
DISSENTERS' RIGHTS......................................................... 78
ELECTION OF DIRECTORS...................................................... 80
Corporate Governance, Committees and Meetings............................ 81
Compensation of Directors................................................ 82
Stock Owned by Management and Principal Shareholders..................... 82
EXECUTIVE COMPENSATION..................................................... 85
Report of the Compensation Committee..................................... 85
Comparative Stock Performance............................................ 87
Pension Plan............................................................. 90
Severance Compensation Plan.............................................. 91
Certain Transactions..................................................... 91
Compliance with Section 16(a) of the Exchange Act........................ 92
</TABLE>
5
<PAGE>
<TABLE>
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<S> <C>
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS........... 92
VALIDITY OF AMSOUTH COMMON STOCK........................................ 92
EXPERTS................................................................. 92
SHAREHOLDER PROPOSAL INFORMATION........................................ 92
GENERAL................................................................. 93
ANNEX A: Agreement and Plan of Merger................................... A-1
*Schedules Omitted:
Schedule 1 (Disclosure Schedule)
Schedule 2 (Book Value of Loan)
Schedule 3 (Book Value of Loan)
Annex 3 (Affiliates Agreement)
Appendix A (Table re consideration to be issued)
ANNEX B: Stock Option Agreement......................................... B-1
ANNEX C: Form of Voting Agreement....................................... C-1
ANNEX D: Opinion of Dillon, Read & Co. Inc.............................. D-1
ANNEX E: Florida Business Corporation Act (S)(S) 607.1301, 607.1302 and
607.1320............................................................... E-1
</TABLE>
* Annex A (Stock Option Agreement) and Annex B (Form of Voting Agreement) to
the Agreement and Plan of Merger are Annex B and Annex C, respectively, to the
Proxy Statement/Prospectus.
6
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in this
Proxy Statement/Prospectus. Reference is made to and this summary is qualified
in its entirety by, the more detailed information contained, or incorporated by
reference, in this Proxy Statement/Prospectus and the Annexes hereto. Unless
otherwise defined herein, capitalized terms used in this summary have the
respective meanings ascribed to them elsewhere in this Proxy
Statement/Prospectus. Shareholders are urged to read this Proxy
Statement/Prospectus and the Annexes hereto in their entirety.
All historical financial and share-price information of AmSouth contained
herein has been adjusted to give effect to the three-for-two split of AmSouth
Common Stock paid on January 15, 1992 to AmSouth shareholders of record on
December 13, 1991 (the "AmSouth Stock Split"). As used in this Proxy
Statement/Prospectus, the terms "AmSouth" and "Fortune" refer to those entities
respectively and, where the context requires, to such entities and their
subsidiaries.
PARTIES TO THE MERGER
AmSouth............................. AmSouth is a bank holding company or-
ganized in November, 1970, under Del-
aware law. AmSouth provides bank and
bank-related services primarily
through subsidiaries operating in Al-
abama, Florida and Tennessee. The
principal executive offices of
AmSouth are located at 1400 AmSouth-
Sonat Tower, Birmingham, Alabama
35203, and its telephone number is
(205) 320-7151.
Based on total consolidated assets of ap-
proximately $12.5 billion at December 31,
1993, AmSouth was the second largest bank
holding company headquartered in Alabama.
At December 31, 1993, AmSouth's total
consolidated deposits were approximately
$9.6 billion and total consolidated
shareholders' equity was approximately
$1.1 billion. AmSouth Bank N.A. ("AmSouth
Alabama") is the largest subsidiary of
AmSouth. As of December 31, 1993, AmSouth
Alabama had total consolidated assets of
approximately $8.8 billion, total consol-
idated deposits of approximately $6.5
billion, and total consolidated share-
holders' equity of approximately $738.7
million. AmSouth Alabama is a full-serv-
ice commercial bank with approximately
147 banking offices located throughout
Alabama at December 31, 1993. AmSouth's
other major subsidiaries are AmSouth Bank
of Florida ("AmSouth Florida") and
AmSouth Bank of Tennessee ("AmSouth Ten-
nessee").
At December 31, 1993, AmSouth Florida had
total consolidated assets of approxi-
mately $2.6 billion, total consolidated
deposits of approximately $2.1 billion
and total consolidated shareholders' eq-
uity of approximately $231.2 million.
AmSouth Florida operated 65 offices in
Florida at December 31, 1993.
7
<PAGE>
Effective February 1, 1993, First Chatta-
nooga Financial Corporation, headquar-
tered in Chattanooga, Tennessee ("FCFC"),
merged with AmSouth, and First Federal
Bank, FSB, a subsidiary of FCFC, merged
with AmSouth Tennessee. The mergers were
accounted for under the purchase method
of accounting under generally accepted
accounting principles ("GAAP"). At
December 31, 1993, AmSouth Tennessee had
total consolidated assets of approxi-
mately $1.0 billion, total consolidated
deposits of approximately $779.3 million
and total consolidated shareholders' eq-
uity of approximately $110.2 million.
AmSouth Tennessee operated 20 offices in
Tennessee as of December 31, 1993.
AmSouth is a party to other pending and
recently completed business combinations
described in "Introduction--Parties to
the Merger," some of which remain subject
to fulfillment of a number of conditions,
including shareholder and regulatory ap-
provals. As used in this Proxy
Statement/Prospectus, the term "Other
Business Combinations" includes all such
transactions pending at December 31,
1993, which does not include AmSouth's
pending acquisitions of The Tampa Banking
Company and Community Federal Savings
Bank, the effect of which are not ex-
pected to be material to the unaudited
pro forma financial statements of AmSouth
contained herein. No assurances can be
given that such conditions will be ful-
filled or that all of the "Other Business
Combinations" will be consummated.
Fortune............................. Fortune is a savings and loan holding
company organized in November 1983 under
Florida law. Fortune provides commercial
and retail banking services through its
principal subsidiary, Fortune Bank a Sav-
ings Bank ("Fortune Bank"). The principal
executive offices of Fortune are located
at 16120 U.S. Highway 19 North, Clearwa-
ter, Florida 34624-6895, and its tele-
phone number is (813) 538-1000.
At December 31, 1993, Fortune had total
consolidated assets of approximately $2.7
billion, total consolidated deposits of
approximately $1.8 billion and total con-
solidated shareholders' equity of approx-
imately $167.9 million. Fortune Bank is a
Florida-chartered stock savings associa-
tion headquartered in Clearwater, Flori-
da, and operates 46 branches located from
approximately 50 miles north to approxi-
mately 200 miles south of Clearwater.
Based on total consolidated assets at De-
cember 31, 1993, it is currently the
largest independent banking organization
headquartered on the west coast of Flori-
da. Its deposit accounts are insured
8
<PAGE>
by the Federal Deposit Insurance Corpora-
tion through the Savings Association In-
surance Fund.
THE ANNUAL MEETING
Time, Date and Place................ The Annual Meeting will be held on May
12, 1994, at Fortune's executive offices
located at 16120 U.S. Highway 19 North,
Clearwater, Florida 34624-6895, commenc-
ing at 11:00 a.m., local time.
Purpose of the Meeting.............. The purpose of the Annual Meeting is to
consider and vote upon (i) a proposal to
approve the Merger Agreement, a copy of
which is attached to this Proxy
Statement/Prospectus as Annex A, (ii)
election to the Board of Directors of
three nominees, (iii) ratification of
KPMG Peat Marwick as independent public
accountants of Fortune for the fiscal
year ending September 30, 1994 and (iv)
such other matters as may properly be
brought before the Annual Meeting.
Record Date; Shares Entitled to
Vote............................... Holders of record of shares of Fortune
Common Stock at the close of business on
March 14, 1994, are entitled to notice of
and to vote at the Annual Meeting. On
such date, 6,358,514 shares of Fortune
Common Stock were outstanding and eligi-
ble to vote at the Annual Meeting. Each
share of Fortune Common Stock will be en-
titled to one vote on each matter to be
acted upon or which may properly come be-
fore the Annual Meeting.
Holders of record of shares of Fortune
Preferred Stock at the close of business
on March 14, 1994, are entitled to notice
of and to vote on the proposed Merger,
but are not entitled to notice of or to
vote on any other matters to be acted
upon or which may properly come before
the Annual Meeting. On such date,
1,380,000 shares of Fortune Preferred
Stock were outstanding and eligible to
vote on the proposed Merger at the Annual
Meeting. Each share of Fortune Preferred
Stock will be entitled to one vote on the
proposed Merger.
Votes Required...................... The approval of the Merger Agreement will
require the affirmative vote of the hold-
ers of a majority of the outstanding
shares of Fortune Common Stock entitled
to vote thereon, and an affirmative vote
of the holders of at least 66 2/3% of the
outstanding shares of Fortune Preferred
Stock entitled to vote thereon. The af-
firmative vote of a plurality of the
votes cast at the Annual Meeting is re-
quired to elect directors, and the affir-
mative vote of a majority of the out-
standing shares of Fortune Common Stock
represented and entitled to
9
<PAGE>
vote at the Annual Meeting is required to
ratify the appointment of KPMG Peat
Marwick as independent public accoun-
tants. As of March 30, 1994, directors
and executive officers of Fortune and
their affiliates may have been deemed to
be beneficial owners of approximately
22.62% of the outstanding shares of For-
tune Common Stock and no shares of For-
tune Preferred Stock.
BECAUSE THE REQUIRED VOTE OF THE HOLDERS
OF FORTUNE COMMON STOCK AND FORTUNE PRE-
FERRED STOCK ON THE MERGER AGREEMENT IS
BASED UPON THE NUMBER OF ISSUED AND OUT-
STANDING SHARES OF STOCK, THE FAILURES TO
SUBMIT A PROXY CARD (OR TO VOTE IN PERSON
AT THE ANNUAL MEETING), BROKER NON-VOTES
AND ABSTENTIONS FROM VOTING BY FORTUNE
SHAREHOLDERS WILL HAVE THE SAME EFFECT AS
A "NO" VOTE WITH RESPECT TO THE MERGER
AGREEMENT.
THE MERGER
Effect of the Merger................ Pursuant to the Merger Agreement, at the
Effective Date (as defined below), For-
tune will merge with and into AmSouth,
which will be the surviving corporation.
See "Proposal To Approve The Merger--Ef-
fect of the Merger."
Merger Consideration................ The Merger Agreement provides that (sub-
ject to the election and allocation pro-
cedures provided for therein) each issued
and outstanding share of Fortune Common
Stock will be converted into the right to
receive, at the election of each holder
thereof, either (a) a number of AmSouth
Common Stock shares equal to the sum of
.538522 and the ratio of $17.125 to the
Average AmSouth Closing Price (as defined
below) (the "Conversion Ratio"), or (b)
cash equal to the sum of $17.125 and the
product of .538522 and the Average
AmSouth Closing Price (the "Cash Consid-
eration"). The Merger Agreement also pro-
vides that (subject to the election and
allocation procedures provided for there-
in) each issued and outstanding share of
Fortune Preferred Stock will be converted
into the right to receive, at the elec-
tion of each holder thereof, either (x) a
number of AmSouth Common Stock shares
equal to the product of the Conversion
Ratio and 1.333333 (the number of shares
of Fortune Common Stock issuable upon
conversion of one share of Fortune Pre-
ferred Stock, as provided in Fortune's
Restated Articles of Incorporation, as
amended), or (y) cash equal to the prod-
uct of the Cash Consideration and
1.333333. The "Average AmSouth Closing
Price" means the average
10
<PAGE>
of the closing prices of shares of
AmSouth Common Stock as reported by the
NYSE on the NYSE composite transactions
tape for the ten consecutive trading days
ending on the tenth business day before
the Effective Date.
As further described below, the value of
the per share stock consideration and the
Cash Consideration to be received by For-
tune shareholders will be based on the
Average AmSouth Closing Price and will be
equal. Also, the Merger Agreement pro-
vides that the aggregate number of
AmSouth Common Stock shares to be issued
in the Merger shall be fixed. Assuming
that the Average AmSouth Closing Price is
not less than $27.00, based on the number
of shares of Fortune Common Stock and
Fortune Preferred Stock outstanding on
March 31, 1994, and assuming further the
exercise of all stock options currently
outstanding under Fortune's stock option
plans, AmSouth will issue approximately
4,507,000 shares of AmSouth Common Stock
and approximately $143.3 million cash in
the Merger.
The following is an example of how the
consideration to be received by Fortune
shareholders will be determined. Under
the Merger Agreement, if the Average
AmSouth Closing Price is $31.80, which
was a recent average market price of
AmSouth Common Stock at the time the
Merger Agreement was signed, the Conver-
sion Ratio will be 1.077044 shares of
AmSouth Common Stock for each share of
Fortune Common Stock, and the Cash Con-
sideration will be $34.25, and each share
of Fortune Preferred Stock will have the
right to convert into either 1.436058
shares of AmSouth Common Stock or $45.67
in cash. Based on an Average AmSouth
Closing Price of $31.80, 1.077044 shares
of AmSouth Common Stock would have a
value of $34.25 and 1.436058 shares of
AmSouth Common Stock would have a value
of $45.67. In such event, 50% of the to-
tal number of shares of Fortune Common
Stock and Fortune Preferred Stock out-
standing on the Effective Date will be
converted into AmSouth Common Stock and
50% will be converted into cash. For the
purposes of computing these percentages,
each share of Fortune Common Stock is
counted as one share, and each share of
Fortune Preferred Stock is counted as
1.333333 shares, the number of shares of
Fortune Common Stock into which it is
convertible.
11
<PAGE>
If the Average AmSouth Closing Price ex-
ceeds $31.80, the Conversion Ratio will
be reduced below 1.077044 and the Cash
Consideration will be increased pursuant
to a formula, set forth in the Merger
Agreement, designed so that, basing the
value of the stock consideration on the
Average AmSouth Closing Price, the Cash
Consideration and the stock consideration
will be equal in value. Thus, if the Av-
erage AmSouth Closing Price is above
$31.80, the Cash Consideration and the
value of the stock consideration avail-
able to holders of Fortune Common Stock
will be above $34.25 (with a correspond-
ing value above $45.67 for holders of
Fortune Preferred Stock). In such event,
because the aggregate number of shares of
AmSouth Common Stock and the total amount
of cash payable in the Merger will be
fixed, the percentage of shares of For-
tune stock to be converted into AmSouth
Common Stock will be increased and the
percentage of shares of Fortune stock to
be converted into cash will be reduced.
If the Average AmSouth Closing Price is
less than $31.80, the Conversion Ratio
will be increased and the Cash Considera-
tion decreased pursuant to a formula, set
forth in the Merger Agreement, designed
so that, basing the value of the stock
consideration on the Average AmSouth
Closing Price, the Cash Consideration and
the stock consideration will be equal in
value. Thus, if the Average AmSouth Clos-
ing Price is below $31.80, the Cash Con-
sideration and the value of the stock
consideration available to holders of
Fortune Common Stock will be below $34.25
(with a corresponding value below $45.67
for holders of Fortune Preferred Stock).
In such event, because the aggregate num-
ber of shares of AmSouth Common Stock and
the total amount of cash payable in the
Merger will be fixed, the percentage of
shares of Fortune stock to be converted
into AmSouth Common Stock will be reduced
and the percentage of shares of Fortune
stock to be converted into cash will be
increased.
Fractional shares of AmSouth Common Stock
will not be issued in the Merger. Fortune
shareholders otherwise entitled to a
fractional share will be paid the value
of such fraction in cash determined as
described herein under "Proposal To Ap-
prove The Merger--Effect of the Merger."
12
<PAGE>
The following table sets forth various assumed Average AmSouth Closing Prices
and the resulting Conversion Ratio, the value of AmSouth Common Stock and the
Cash Consideration to be received per share of Fortune Common Stock and Fortune
Preferred Stock based on such assumed Average AmSouth Closing Price and the
percentage of shares of Fortune stock to be converted into AmSouth Common Stock
and cash.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF
FORTUNE
VALUE OF AMSOUTH COMMON CASH CONSIDERATION TO BE STOCK TO BE
STOCK TO BE RECEIVED RECEIVED CONVERTED INTO*
------------------------- ------------------------- ------------------
ASSUMED PER SHARE OF PER SHARE OF PER SHARE OF PER SHARE OF
AVERAGE FORTUNE FORTUNE FORTUNE FORTUNE AMSOUTH
AMSOUTH CONVERSION COMMON PREFERRED COMMON PREFERRED COMMON
CLOSING PRICE RATIO STOCK STOCK STOCK STOCK STOCK CASH
------------- ---------- ------------ ------------ ------------ ------------ ------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
$36.00.................. 1.014216 $36.51 $48.68 $36.51 $48.68 53.1% 46.9%
35.00.................. 1.027808 35.97 47.96 35.97 47.96 52.4 47.6
34.00.................. 1.042198 35.43 47.25 35.43 47.25 51.7 48.3
33.00.................. 1.057461 34.90 46.53 34.90 46.53 50.9 49.1
32.00.................. 1.073678 34.36 45.81 34.36 45.81 50.2 49.8
31.80.................. 1.077044 34.25 45.67 34.25 45.67 50.0 50.0
31.00.................. 1.090941 33.82 45.09 33.82 45.09 49.4 50.6
30.00.................. 1.109355 33.28 44.37 33.28 44.37 48.5 51.5
29.00.................. 1.129039 32.74 43.66 32.74 43.66 47.7 52.3
28.00.................. 1.150129 32.20 42.94 32.20 42.94 46.8 53.2
27.00.................. 1.172781 31.67 42.22 31.67 42.22 45.9 54.1
</TABLE>
* For the purpose of computing these percentages, each share of Fortune Common
Stock is counted as one share, and each share of Fortune Preferred Stock is
counted as 1.333333 shares, the number of shares of Fortune Common Stock into
which it is convertible.
Because the number of shares of AmSouth Common Stock and the total amount of
cash to be issued in the Merger will be fixed, no guarantee can be given that
an election by any given shareholder will be honored. Rather, the election by
each holder will be subject to the election and allocation procedures described
herein. Thus, holders may not receive their chosen form of consideration. See
"Proposal To Approve The Merger--Election and Allocation Procedures."
Election by Fortune Shareholders.... Each shareholder of Fortune will have the
opportunity to submit an election form
("Election Form") specifying the kind of
consideration sought to be received in
exchange for his Fortune shares. The
Merger Agreement provides that the Elec-
tion Form will be mailed 27 days before
the expected effective date of the Merger
(or on such other date as is mutually
agreed) (the "Mailing Date") to each
holder of record of Fortune Common Stock
and Fortune Preferred Stock as of five
business days before the Mailing Date
The Election Form will permit Fortune
shareholders (1) to indicate that they
elect to receive in exchange for their
Fortune shares (a) only AmSouth Common
Stock ("Stock Election Shares") or (b)
only cash ("Cash Election Shares") or (2)
to make no election ("No Election
Shares"). The Election Form, together
with stock certificates representing all
shares of For-
13
<PAGE>
tune stock covered thereby, must be re-
turned to AmSouth Alabama, as exchange
agent (the "Exchange Agent"), no later
than 5:00 p.m., Central Time, on the date
that is 20 days after the Mailing Date
(the "Election Deadline"). Fortune shares
for which a properly completed Election
Form has not been received by the Ex-
change Agent by the Election Deadline
will be deemed No Election Shares. See
"Proposal To Approve The Merger--Election
and Allocation Procedures."
Because the number of shares of AmSouth
Common Stock to be issued and the total
amount of cash to be paid in the Merger
will be fixed pursuant to the Merger
Agreement, the extent to which particular
elections will be accommodated will de-
pend upon the respective numbers of For-
tune shareholders who elect cash and
stock and who fail to make an election.
Accordingly, a Fortune shareholder who
elects to receive cash may instead re-
ceive shares of AmSouth Common Stock
(plus cash in lieu of fractional shares),
or a Fortune shareholder who elects to
receive shares of AmSouth Common Stock
(plus cash in lieu of fractional shares)
may instead receive cash.
If the cash election is oversubscribed,
the Fortune shareholders making no elec-
tion shall have their Fortune shares ran-
domly selected and converted into AmSouth
Common Stock to the extent necessary so
that the cash election is not oversub-
scribed. If the cash election is still
oversubscribed, the Fortune shareholders
making a cash election shall have their
Fortune shares randomly selected and con-
verted into AmSouth Common Stock to the
extent necessary.
However, in circumstances where the cash
election is oversubscribed, the Merger
Agreement provides that no particular
holder who has elected to receive cash
will be selected randomly to receive
AmSouth Common Stock if such selection
would threaten satisfaction of the condi-
tions to the consummation of the Merger.
One such condition is the receipt of
opinions from counsel and an accounting
firm that the Merger qualifies as a tax-
free reorganization.
In order to permit such qualification and
to receive such opinions, the cash elec-
tions of the two largest holders of For-
tune Common Stock, The Dyson-Kissner Mo-
ran Corporation group (the "Moran Group")
and John T. Oxley (who have indicated
their intent to make cash elections if
the Merger is ap-
14
<PAGE>
proved), would be satisfied on a priority
basis. John A. Moran, a member of the Mo-
ran Group, is a director of Fortune.
Other than as a holder of Fortune Common
Stock and Mr. Moran's status as both a
member of the Moran Group and as a direc-
tor of Fortune, the Moran Group is not
affiliated with Fortune. Other than as a
holder of Fortune Common Stock, Mr. Oxley
is not affiliated with Fortune. Neither
Mr. Moran, the Moran Group, nor Mr. Oxley
is an affiliate of AmSouth within the
meaning of the Securities Act of 1933.
In addition, cash elections of other
large Fortune shareholders also may be
satisfied on a priority basis if such
satisfaction would be necessary in order
to meet the conditions required for con-
summation of the Merger. One such condi-
tion is the receipt of opinions from
counsel and an accounting firm that the
Merger qualifies as a tax-free reorgani-
zation. As a result, under such circum-
stances, cash elections of smaller For-
tune shareholders would be less likely to
be satisfied. Except as indicated above
with respect to Mr. Moran as a member of
the Moran Group and possibly director
Ezra K. Zilkha (as a result of his hold-
ing 4.92% of Fortune Common Stock as of
March 30, 1994), cash elections of direc-
tors and officers of Fortune will likely
not be satisfied on a priority basis. See
"Proposal To Approve The Merger--Election
and Allocation Procedures."
Because the tax consequences of receiving
cash or AmSouth Common Stock will differ,
shareholders of Fortune are urged to read
carefully the information under the cap-
tion "Proposal to Approve the Merger--
Certain Federal Income Tax Consequences."
Recommendation of Fortune's Board
of Directors....................... All members of the Board of Directors of
Fortune participated in the meeting at
which the Merger Agreement was consid-
ered. The directors unanimously approved
the Merger Agreement and recommend a vote
in favor of its approval by the share-
holders of Fortune. For a discussion of
the factors considered by Fortune's Board
of Directors in reaching its decision,
see "Proposal to Approve the Merger--Rea-
sons for the Merger;--Recommendations of
Fortune's Board of Directors;--Voting at
the Annual Meeting."
The Board of Directors of Fortune be-
lieves that the terms of the Merger are
fair to, and in the best interests of,
Fortune's shareholders. The Board of Di-
rectors believes that the Merger will
provide significant value to
15
<PAGE>
all Fortune shareholders. See "Proposal
To Approve The Merger--Reasons for the
Merger;--Recommendations of Fortune's
Board of Directors;--Voting at the Annual
Meeting." See also, "Proposal To Approve
The Merger--Opinion of Financial Advi-
sor."
Voting Agreements; Security
Ownership of Management............ As of March 30, 1994, directors and exec-
utive officers of Fortune and their af-
filiates may have been deemed to be bene-
ficial owners of approximately 22.62% of
the outstanding shares of Fortune Common
Stock. As an inducement to AmSouth to en-
ter into the Merger Agreement, the direc-
tors of Fortune have entered into voting
agreements (the "Voting Agreements") to
vote the shares of Fortune stock owned by
them in favor of the Merger. The direc-
tors who signed Voting Agreements owned
or controlled, as of March 30, 1994,
1,353,916 shares, or 21.27%, of the out-
standing shares of Fortune Common Stock.
No Fortune directors own any Fortune Pre-
ferred Stock. The Voting Agreements are
intended to increase the likelihood that
the Merger will be consummated according
to the terms set forth in the Merger
Agreement and may tend to discourage com-
peting offers to the Merger. Executive
officers of Fortune who are not directors
owned or controlled, as of March 30,
1994, 85,749 shares, or 1.35%, of the
outstanding shares of Fortune Common
Stock. No Fortune executive officers own
any Fortune Preferred Stock. See "Pro-
posal To Approve The Merger--Reasons for
the Merger"; "Annual Meeting--Recommenda-
tion of the Fortune Board;--Security Own-
ership of Management; Voting Agreements."
In general, elections to receive cash or
stock by Fortune directors and executive
officers will not be satisfied on a pri-
ority basis. In the event cash elections
are oversubscribed, however, cash elec-
tions by director John A. Moran (in his
capacity as a member of the Moran Group)
and possibly director Ezra K. Zilkha will
be given priority over other Fortune
shareholders in order to preserve the
Merger as a tax-free reorganization. Pri-
ority treatment, if applicable, is a
function of the relative size of such
persons' share ownership, the Average
AmSouth Closing Price and the effect of
certain tax laws. Such treatment is not a
result of their status as directors or
executive officers. See "Proposal to Ap-
prove the Merger--Election and Allocation
Procedures."
Opinion of Financial Advisor........ Dillon, Read & Co. Inc. ("Dillon Read")
has delivered to Fortune's Board of Di-
rectors its written opinion,
16
<PAGE>
dated April 4, 1994, to the effect
that, as of the date of its opinion, the
consideration to be received in the
Merger by the holders of shares of For-
tune Common Stock and Fortune Preferred
Stock, as determined by applying the for-
mula set forth in the Merger Agreement,
is fair to such holders from a financial
point of view. A copy of the opinion of
Dillon Read, which sets forth the assump-
tions made, matters considered and limits
of its review, is attached to this Proxy
Statement/Prospectus as Annex D, and
should be read in its entirety. See "Pro-
posal To Approve The Merger--Opinion of
Financial Advisor."
Effective Date of the Merger........ The Merger will become effective on the
date articles of merger are filed with
the Secretary of State of the State of
Florida in accordance with the Florida
Business Corporation Act, and with the
Secretary of State of the State of Dela-
ware in accordance with the Delaware Gen-
eral Corporation Law or on such later
date as the articles of merger may spec-
ify (the "Effective Date"). The articles
of merger will be filed with both states
within thirty days after (a) the later of
(i) the expiration of all applicable
waiting periods, if any, in connection
with approvals of governmental authori-
ties, and (ii) the receipt of all other
required approvals, or (b) on such later
date as may be agreed by the parties. Af-
ter regulatory approvals that would per-
mit consummation of the Merger have been
obtained, the parties expect that the
Merger will occur on a date that will fa-
cilitate an orderly business combination
of Fortune and AmSouth, which date may be
after the first possible date on which
the Merger could occur under the terms of
the Merger Agreement. The parties are un-
able at this time to predict when or if
the Effective Date will occur.
Conditions to the Merger;
Regulatory Approval................. The obligations of AmSouth and Fortune to
consummate the Merger are subject to the
satisfaction of certain conditions, in-
cluding (i) obtaining requisite share-
holder and regulatory approvals, (ii) the
receipt of opinions of independent ac-
countants and counsel with respect to
certain tax aspects of the Merger, (iii)
the absence of a material adverse condi-
tion (as defined in the Merger Agreement)
with respect to Fortune, Fortune Bank and
AmSouth, (iv) the conversion or redemp-
tion of Fortune's 10% Convertible Subor-
dinated Debentures, due 2010 (the "Deben-
tures") (which has occurred) and the sat-
isfaction of other customary closing con-
ditions. See "Proposal To Approve The
Merger--Certain Federal Income Tax Conse-
quences" and "--Conditions to Each
Party's Obligations."
17
<PAGE>
AmSouth plans that Fortune Bank will
merge with and into AmSouth Florida at
the Effective Date (the "Bank Merger").
Receipt of regulatory approvals for the
Bank Merger is a condition to consumma-
tion of the Merger. See "Proposal to Ap-
prove the Merger--Regulatory Approvals."
The Merger will require the approval of
the Board of Governors of the Federal Re-
serve System (the "Federal Reserve
Board"), and the Bank Merger will require
the approval of the Federal Reserve
Board, the Office of Thrift Supervision,
the Federal Deposit Insurance Corporation
and the Florida Department of Banking and
Finance. Approvals of the Federal Reserve
Board and the Federal Deposit Insurance
Corporation have been obtained. There can
be no assurance that the other regulatory
approvals will be obtained, and, if ob-
tained, there can be no assurance as to
the date of any such approvals. There can
also be no assurance that any such ap-
provals will not contain a condition or
requirement which causes such approvals
to fail to satisfy the conditions set
forth in the Merger Agreement and de-
scribed under "Proposal to Approve the
Merger--Conditions to Each Party's Obli-
gations." Also, there can be no assurance
that the United States Department of Jus-
tice or a state attorney general will not
challenge the Merger or the Bank Merger
or, if such a challenge is made, as to
the result thereof. See "Proposal to Ap-
prove the Merger--Regulatory Approvals."
AmSouth and Fortune will solicit Fortune
shareholders with revised Proxy
Statement/Prospectus disclosure materials
if the transaction is modified in a man-
ner such that it differs from the terms
described in this Proxy
Statement/Prospectus in any manner that
would require resolicitation under the
Securities Exchange Act of 1934 and the
rules and regulations thereunder. Under
the circumstances described in "Proposal
to Approve the Merger--Conditions to Each
Party's Obligation," holders of Fortune
Preferred Stock may not be solicited with
revised disclosure materials.
Termination of the Merger
Agreement........................... The Merger Agreement may be terminated,
and the Merger abandoned, before the Ef-
fective Date, either before or after its
approval by the shareholders of Fortune,
(a) by the mutual consent of AmSouth and
Fortune, or (b) by either of them indi-
vidually under certain specified circum-
stances, including (i) if the Merger has
not become effective by June 30, 1994
(subject to extension to September 30,
1994, in the case of a protest to the
Merger under the Community Reinvestment
Act), or (ii) in the event of a material
breach by the
18
<PAGE>
other party of any representation, war-
ranty, covenant or agreement contained in
the Merger Agreement. See "Proposal to
Approve the Merger--Termination."
In addition, the Merger Agreement con-
tains a price-based termination provi-
sion. Under this provision, the Merger
Agreement may be terminated by Fortune at
any time during the ten-day period com-
mencing with the date of receipt of the
last federal regulatory approval required
for consummation of the Merger if (a) the
average closing price of AmSouth Common
Stock over a designated time period is
less than $27.00 per share, and (b)
AmSouth elects not to increase the con-
sideration to shareholders of Fortune as
specified in the Merger Agreement. Before
making any decision to terminate the
transaction, the Board of Directors of
Fortune would consult with its financial
and other advisors and would consider all
financial and other information it deemed
relevant to its decision. The matter
would not, however, be resubmitted to
shareholders. See "Proposal to Approve
the Merger--Price-Based Termination."
Interests of Certain Persons in the
Merger.............................. Certain members of Fortune's management
and the Board of Directors of Fortune may
be deemed to have interests in the Merger
in addition to their interests, if any,
as shareholders of Fortune generally.
These include, among other things, provi-
sions in the Merger Agreement relating to
indemnification, continuation of sever-
ance agreements, cash payments under out-
standing stock options or the conversion
of such outstanding options into options
for AmSouth Common Stock, continued em-
ployment with AmSouth, service as a di-
rector of AmSouth and certain other bene-
fits. See "Proposal to Approve the Merg-
er--Interests of Certain Persons in the
Merger."
Certain Federal Income Tax
Consequences........................ The Merger is intended to be a reorgani-
zation within the meaning of Section 368
of the Internal Revenue Code of 1986, as
amended (the "Code"); accordingly no gain
or loss will be recognized by Fortune
shareholders who receive solely AmSouth
Common Stock in exchange for their For-
tune Common Stock and Fortune Preferred
Stock. Receipt of cash in the Merger will
be a taxable event. The Merger Agreement
provides that consummation of the Merger
is conditioned upon receipt by AmSouth
and Fortune of an opinion of independent
accountants and counsel to the effect
that the Merger will constitute a reorga-
nization within the meaning of Section
368 of the Code. For a further discussion
of the federal income tax consequences of
the Merger, see "Proposal to Approve the
Merger--
19
<PAGE>
Certain Federal Income Tax Consequences."
See also "Proposal to Approve the Merg-
er--Conditions to Each Party's Obliga-
tions."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE
MERGER MAY VARY DEPENDING UPON THE PAR-
TICULAR CIRCUMSTANCES OF EACH SHAREHOLDER
AND OTHER FACTORS, EACH HOLDER OF FORTUNE
COMMON STOCK AND/OR FORTUNE PREFERRED
STOCK IS URGED TO CONSULT SUCH HOLDER'S
OWN TAX ADVISOR TO DETERMINE THE PARTICU-
LAR TAX CONSEQUENCES TO SUCH HOLDER OF
THE MERGER (INCLUDING THE APPLICATION AND
EFFECT OF STATE AND LOCAL INCOME AND
OTHER TAX LAWS).
Accounting Treatment................ It is intended that the Merger will be
accounted for as a purchase under GAAP.
The Stock Option Agreement.......... As an inducement and a condition to
AmSouth's entering into the Merger Agree-
ment, AmSouth and Fortune also entered
into a Stock Option Agreement dated as of
September 13, 1993 (the "Stock Option
Agreement"), pursuant to which AmSouth
has an option (the "Option"), upon the
occurrence of certain events (none of
which has yet occurred to the best of
AmSouth's and Fortune's knowledge), to
purchase up to 551,034 shares of Fortune
Common Stock (representing approximately
9.9% of the outstanding shares of Fortune
Common Stock on September 13, 1993), at a
price of $34.25 per share, subject to ad-
justment in certain circumstances and
subject to termination within certain pe-
riods. The Stock Option Agreement may
discourage competing offers to the Merger
and is intended to increase the likeli-
hood that the Merger will be consummated
in accordance with the terms of the
Merger Agreement. A copy of the Stock Op-
tion Agreement is attached to this Proxy
Statement/Prospectus as Annex B. See
"Certain Related Transactions--The Stock
Option Agreement."
Comparison of Rights of
Shareholders....................... See "Comparison of Rights of Sharehold-
ers" for a summary of the material dif-
ferences between the rights of holders of
AmSouth Common Stock and holders of For-
tune Common Stock and Fortune Preferred
Stock.
Dissenters' Rights.................. Under Section 607.1320 of the Florida
Business Corporation Act, holders of For-
tune Common Stock and Fortune Preferred
Stock may dissent from the Merger and re-
ceive payment of the "fair value" of such
holder's shares in cash if the Merger is
consummated, by following certain proce-
dures set forth in the statute, the text
of which is attached hereto as Annex E.
See "Dissenters' Rights."
20
<PAGE>
COMPARATIVE MARKET AND STOCK PRICE DATA
AmSouth Common Stock is listed on the NYSE. Fortune Common Stock and Fortune
Preferred Stock are traded on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") National Market System ("NMS"). The table below
sets forth, for the calendar quarters indicated, the reported high and low
sales prices of AmSouth Common Stock as reported on the NYSE and Fortune Common
Stock and Fortune Preferred Stock as reported on the NMS, in each case based on
published financial sources, and the dividends declared on such stock. The
Fortune Preferred Stock was not issued until December 1, 1992.
<TABLE>
<CAPTION>
AMSOUTH COMMON STOCK FORTUNE COMMON STOCK FORTUNE PREFERRED STOCK
----------------------- ----------------------- -----------------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
------ ------ --------- ------ ------ --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991
First Quarter......... $17.25 $12.38 .24 $10.50 $ 7.13 .075 n/a n/a n/a
Second Quarter........ 19.13 16.63 .24 10.25 9.00 .075 n/a n/a n/a
Third Quarter......... 22.13 18.75 .24 9.25 7.25 .075 n/a n/a n/a
Fourth Quarter........ 22.13 19.13 .26 9.50 7.00 .075 n/a n/a n/a
1992
First Quarter......... 27.38 21.38 .26 12.00 8.38 .075 n/a n/a n/a
Second Quarter........ 31.13 26.13 .26 17.00 9.25 .075 n/a n/a n/a
Third Quarter......... 29.00 26.00 .26 20.75 15.25 .075 n/a n/a n/a
Fourth Quarter........ 32.63 26.88 .29 18.50 15.50 .075 29.88 26.00 n/a
1993
First Quarter......... 34.13 29.63 .29 20.25 16.75 .075 31.50 28.13 .50
Second Quarter........ 35.88 30.38 .29 22.75 17.75 .075 35.25 29.50 .50
Third Quarter......... 33.63 29.25 .29 30.00 26.75 .075 43.00 33.00 .50
Fourth Quarter........ 31.50 27.38 .35 31.75 27.25 .075 42.50 38.50 .50
1994
First Quarter......... 32.00 29.25 .35 31.75 30.38 .075 43.25 41.25 .50
</TABLE>
On September 10, 1993, the last full trading day before the execution and
delivery of the Merger Agreement and the public announcement thereof, the
closing price of AmSouth Common Stock was $31.63 per share on the NYSE. On such
date the high, low and closing prices of Fortune Common Stock were $27.25,
$26.50 and $27.13 per share, respectively, and the high, low and closing prices
of Fortune Preferred Stock were $39.75, $39.50 and $39.75 per share,
respectively, on the NMS.
On March 31, 1994, the closing price of AmSouth Common Stock was $29.75 per
share on the NYSE, the closing price of Fortune Common Stock was $30.75 per
share, and the closing price of Fortune Preferred Stock was $42.25 per share,
on the NMS.
The Cash Consideration and the value of the stock consideration in the Merger
will be determined using a formula, set forth in the Merger Agreement, which is
based on the Average AmSouth Closing Price (i.e., the average of the closing
prices per share of AmSouth Common Stock as reported by the NYSE on the NYSE
composite transactions tape for the ten consecutive trading days ending on the
tenth business day before the Effective Date (the "Valuation Period")).
The following table sets forth (i) the closing price per share of AmSouth
Common Stock and the closing price per share of Fortune Common Stock and
Fortune Preferred Stock on each of (x) September 10, 1993, the last full
trading day before the public announcement of the Merger Agreement, and (y)
March 31, 1994, (ii) a hypothetical Average AmSouth Closing Price determined as
if the Effective Date were such date and
21
<PAGE>
COMPARATIVE MARKET AND STOCK PRICE DATA (CONTINUED)
(iii) the pro forma equivalent price per share of Fortune Common Stock and
Fortune Preferred Stock determined as if the Effective Date were such date. The
pro forma equivalent price per share of Fortune Common Stock and Fortune
Preferred Stock at each specified date represents a hypothetical Average
AmSouth Closing Price (as if such date had been the Effective Date) multiplied,
in the case of Fortune Common Stock, by a fraction equal to the Conversion
Ratio that would have existed if such date had been the Effective Date and, in
the case of Fortune Preferred Stock, by such Conversion Ratio multiplied by
1.333333.
<TABLE>
<CAPTION>
AMSOUTH FORTUNE FORTUNE HYPOTHETICAL PRO FORMA EQUIVALENT PRO FORMA EQUIVALENT
COMMON COMMON PREFERRED AVERAGE AMSOUTH PRICE PER SHARE OF PRICE PER SHARE OF
STOCK STOCK STOCK CLOSING PRICE FORTUNE COMMON STOCK FORTUNE PREFERRED STOCK
------- ------- --------- --------------- -------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
September 10, 1993...... $31.63 $27.13 $39.75 $31.28 $33.97(a) $45.29 (a)
March 31, 1994.......... 29.75 30.75 42.25 29.90 33.23(b) 44.30(b)
</TABLE>
- --------
(a) Represents a Conversion Ratio of 1.086084. At this Conversion Ratio
(assuming a quarterly dividend of $0.35 per share of AmSouth Common Stock),
the pro forma equivalent per share dividend for the Fortune Common Stock
would be $0.38 per share or $1.52 per share on an annualized basis and the
pro forma equivalent per share dividend for the Fortune Preferred Stock
(determined by multiplying the pro forma equivalent per share dividend for
Fortune Common Stock by 1.333333) would be $0.51 per share or $2.03 per
share on an annualized basis.
(b) Represents a Conversion Ratio of 1.111264. At this Conversion Ratio
(assuming a quarterly dividend of $0.35 per share of AmSouth Common Stock),
the pro forma equivalent per share dividend for the Fortune Common Stock
would be $.39 per share or $1.56 per share on an annualized basis and pro
forma equivalent per share dividend for the Fortune Preferred Stock
(determined by multiplying the pro forma equivalent per share dividend for
Fortune Common Stock by 1.333333) would be $.52 per share or $2.07 per
share on an annualized basis.
No assurance can be given as to what the Average AmSouth Closing Price will
be during the actual Valuation Period or as to what the market price of AmSouth
Common Stock will be at the time the Merger is consummated. Because the market
price of AmSouth Common Stock is subject to fluctuation, the Conversion Ratio
and the Cash Consideration may change before the Merger. See "Proposal to
Approve the Merger--Merger Consideration" and "--Price-Based Termination."
Fortune shareholders are encouraged to obtain current market quotations for
AmSouth Common Stock, Fortune Common Stock and Fortune Preferred Stock. In
addition, there are statutory and regulatory limitations on the ability of
AmSouth to pay dividends to its shareholders and there can be no assurance that
AmSouth will continue to pay dividends at its current quarterly rate. See
"Regulatory Considerations--Payment of Dividends."
22
<PAGE>
COMPARATIVE PER SHARE INFORMATION
The following table sets forth for the AmSouth Common Stock, the Fortune
Common Stock and the Fortune Preferred Stock certain historical, pro forma
combined and pro forma equivalent per share financial information. The pro
forma data do not purport to be indicative of the results of future operations
or the results that would have occurred had the Merger been consummated on
January 1, 1993. As discussed under "Proposal to Approve the Merger--Merger
Consideration," the Conversion Ratio and the Cash Consideration are subject to
adjustment as a result of a change in the price of AmSouth Common Stock. The
pro forma information presented would be different if the Conversion Ratio and
the Cash Consideration were so adjusted.
The information shown below should be read in conjunction with the historical
and pro forma financial statements of AmSouth, including the respective notes
thereto, incorporated by reference herein, and with the historical financial
statements of Fortune appearing in Fortune's Annual Report on Form 10-K for the
year ended September 30, 1993, a copy of which has been provided to
shareholders, including the notes thereto. See "Available Information,"
"Incorporation of Certain Documents by Reference" and "Summary Condensed
Consolidated Financial Information."
<TABLE>
<CAPTION>
AMSOUTH,
FORTUNE
AND OTHER
AMSOUTH BUSINESS FORTUNE
HISTORICAL AND FORTUNE FORTUNE COMBINATIONS PRO FORMA
----------------------------------- FORTUNE PRO FORMA PRO FORMA PRO FORMA EQUIVALENT
FORTUNE FORTUNE PRO FORMA EQUIVALENT EQUIVALENT COMBINED, COMMON,
PER SHARE AMSOUTH COMMON PREFERRED COMBINED COMMON(A) PREFERRED(A) AS ADJUSTED AS ADJUSTED(A)
--------- ------- ------- --------- --------- ---------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET INCOME
(LOSS)(b)
For the year
ended
December 31,
1993............ $ 3.10 $ .52 (c)(d) $ .76(c) $ 2.83(e) $ 3.05(e) $ 4.06(e) $ 2.57(f) $ 2.77(f)
1992............ 2.51(g) 1.60 (c)(h) -- -- -- -- -- --
1991............ 2.07(g) (2.34)(c)(h) -- -- -- -- -- --
CASH DIVIDENDS
For the year
ended
December 31,
1993............ $ 1.22 $ .30 (c) $ 2.00(c) $ 1.22(i) $ 1.31 $ 1.75 $ 1.22(i) $ 1.31
1992............ 1.07 .30 (c) -- -- -- -- -- --
1991............ .98 .30 (c) -- -- -- -- -- --
BOOK VALUE(j)
As of
December 31,
1993............ $22.01 $23.56 $22.41(k) $22.52 $24.26 $32.34 $22.04(l) $23.74(l)
<CAPTION>
FORTUNE
PRO FORMA
EQUIVALENT
PREFERRED,
PER SHARE AS ADJUSTED(A)
--------- --------------
<S> <C>
NET INCOME
(LOSS)(b)
For the year
ended
December 31,
1993............ $ 3.69(f)
1992............ --
1991............ --
CASH DIVIDENDS
For the year
ended
December 31,
1993............ $ 1.75
1992............ --
1991............ --
BOOK VALUE(j)
As of
December 31,
1993............ $31.65(l)
</TABLE>
- --------
(a) Fortune pro forma equivalent amounts are computed by multiplying the pro
forma combined amounts by an assumed Conversion Ratio of 1.077044 for
Fortune Common Stock and such Conversion Ratio multiplied by 1.333333, or
1.436058, for Fortune Preferred Stock.
(b) Net income (loss) per common share is based on weighted average common
shares outstanding, except for (i) Fortune Common historical amounts which
are based on weighted average common shares and common stock equivalent
shares outstanding and (ii) Fortune Preferred historical amounts which are
based on the weighted average common shares and common equivalent shares
outstanding plus the effect of the Fortune Preferred Stock assuming that
all such shares of Fortune Preferred Stock were converted into shares of
Fortune Common Stock on January 1, 1993.
(c) Amounts have been restated to conform to a calendar year.
(d) Amount is before the cumulative effect of a change in accounting principle
for Fortune's adoption of Statement of Financial Standards No. 109,
"Accounting for Income Taxes" ("FAS 109").
(e) Amounts are adjusted to include the pro forma effect of the December 9,
1993 acquisition of Mid-State Federal Savings Bank ("Mid-State Federal"),
as if such acquisition had taken place on January 1, 1993.
(f) Amounts are adjusted to include the pro forma effect of the December 9,
1993 acquisition of Mid-State Federal and the Other Business Combinations
(as defined in "Introduction--Parties to the Merger--AmSouth") as if such
acquisitions had taken place on January 1, 1993.
(g) Amounts have been restated for the pooling of interests of Mickler
Corporation ("Mickler") and The First National Bank of Clearwater
("Clearwater") but have not been restated for the pooling of interests of
First Sunbelt Bankshares, Inc. ("First Sunbelt"), the effect of which is
not material to AmSouth's financial statements.
(h) Amounts are before extraordinary items.
(i) Pro forma cash dividends represent historical cash dividends of AmSouth.
(j) Book value per common share is based on total period-end shareholders'
equity, except for Fortune Common Stock historical amounts which are
adjusted to exclude the liquidation preference on the Fortune Preferred
Stock.
(k) Amount is computed assuming all Fortune Preferred Stock is converted into
Fortune Common Stock.
(l) Amounts are adjusted to reflect the Other Business Combinations.
23
<PAGE>
SUMMARY CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following tables present summary consolidated financial data for (i)
AmSouth on an historical basis, (ii) Fortune on an historical basis, (iii)
AmSouth and Fortune on a pro forma combined basis giving effect to the Merger
and (iv) AmSouth and Fortune on a pro forma combined basis giving effect to the
Merger, as adjusted to give effect to the Other Business Combinations by
AmSouth. For information on the accounting treatment of these other
acquisitions see "Introduction--Parties to the Merger." The pro forma data in
the tables assume (i) that each of the outstanding shares of Fortune Common
Stock and Fortune Preferred Stock are converted in the Merger into either cash
or shares of AmSouth Common Stock, (ii) that each of the outstanding options to
purchase Fortune Common Stock outstanding on December 31, 1993 (other than
AmSouth's option pursuant to the Stock Option Agreement), are exercised prior
to the Effective Date and converted in the Merger into either cash or shares of
AmSouth Common Stock, (iii) that each of the Debentures are converted into
shares of Fortune Common Stock prior to the Effective Date and converted in the
Merger into either cash or shares of AmSouth Common Stock, (iv) that the total
cash paid is approximately $142.5 million and the number of shares of AmSouth
Common Stock issued in the Merger is approximately 4,481,000 and (v) that the
Merger is accounted for as a purchase. See "Proposal to Approve the Merger--
Accounting Treatment." These tables should be read in conjunction with the
historical and pro forma financial statements of AmSouth, including the
respective notes thereto, incorporated by reference herein and with the
historical financial statements of Fortune, including the notes thereto,
appearing in Fortune's Annual Report on Form 10-K for the year ended September
30, 1993, a copy of which has been provided to shareholders. See "Available
Information," and "Incorporation of Certain Documents by Reference." Interim
historical data reflect, in the respective opinions of management, all
adjustments (consisting only of normal recurring adjustments) necessary to a
fair presentation of such data. The pro forma combined condensed financial
information is presented for informational purposes only and is not necessarily
indicative of the combined financial position or results of operations which
would have actually occurred if the transactions had been consummated in the
past or which may be obtained in the future.
The following selected consolidated financial data for AmSouth for the year
ended December 31, 1993 give effect to the acquisition of Mickler, Clearwater
and First Sunbelt on a pooling of interests accounting basis, and the
acquisitions of FCFC, Charter Banking Corp. ("Charter") and Mid-State Federal
on a purchase accounting basis. The selected consolidated financial data for
the years ended December 31, 1989-1992 have been restated for the pooling of
interests of Mickler and Clearwater but have not been restated for the pooling
of interests of First Sunbelt, the effect of which is not material to AmSouth's
financial statements.
24
<PAGE>
AMSOUTH--HISTORICAL
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
(In Thousands)
Gross Interest Margin...... $462,077 $393,437 $334,712 $297,525 $277,743
Provision for Loan Losses.. 18,980 36,555 46,029 41,583 44,766
Noninterest Revenues....... 194,361 164,249 162,502 130,243 124,857
Noninterest Expenses....... 420,087 370,056 340,748 288,488 275,446
Applicable Income Taxes.... 71,144 43,026 27,636 22,297 15,185
Net Income................. 146,227 108,049 82,801 75,400 67,203
PER COMMON SHARE DATA
Net Income................. $ 3.10 $ 2.51 $ 2.07 $ 1.97 $ 1.71
Cash Dividends Declared.... 1.22 1.07 0.98 0.94 0.89
Book Value................. 22.01 19.10 17.65 16.40 15.32
AVERAGE STATEMENT OF
CONDITION
(In Millions)
Investment Securities...... $ 2,399 $ 2,536 $ 2,476 $ 2,196 $ 2,088
Loans, Net of Unearned In-
come...................... 7,043 5,757 5,631 5,734 5,597
Allowance for Loan Losses.. 108 90 91 87 76
Total Earning Assets....... 10,543 8,756 8,417 8,095 7,841
Total Assets............... 11,464 9,591 9,266 8,939 8,688
Deposits................... 8,745 7,608 7,441 7,093 6,811
Long-Term Debt............. 159 138 135 131 131
Shareholders' Equity....... 979 791 682 607 588
END-OF-PERIOD STATEMENT OF
CONDITION
(In Millions)
Investment Securities...... $ 1,618 $ 2,415 $ 2,664 $ 2,150 $ 2,105
Loans, Net of Unearned In-
come...................... 7,930 6,139 5,723 5,840 5,831
Allowance for Loan Losses.. 118 93 89 88 93
Total Earning Assets....... 11,402 9,297 9,009 8,145 8,135
Total Assets............... 12,548 10,209 9,925 9,148 8,993
Deposits................... 9,568 7,800 7,779 7,449 7,047
Long-Term Debt............. 163 136 139 129 131
Shareholders' Equity....... 1,090 825 754 625 600
SELECTED FINANCIAL RATIOS
Return on Average Total As-
sets...................... 1.28% 1.13% 0.89% 0.84% 0.77%
Return on Average Common
Equity.................... 14.93 13.66 12.14 12.43 11.43
Taxable Equivalent Gross
Interest Margin to Average
Earning Assets............ 4.55 4.72 4.24 3.97 3.86
Overhead Ratio(a).......... 62.34 64.07 65.56 63.88 64.41
Dividend Payout............ 39.35 42.63 47.34 47.72 52.05
Average Equity to Average
Assets.................... 8.54 8.25 7.36 6.79 6.77
Allowance at End of Period
to Loans, Net of Unearned
Income.................... 1.49 1.51 1.56 1.50 1.60
Allowance at End of Period
to Nonperforming Loans
(b)....................... 245.82 164.28 134.54 103.35 118.33
Nonperforming Assets to
Loans, Net of Unearned
Income, Foreclosed
Properties and
Repossessions(c).......... 0.92 1.59 2.74 2.85 2.18
</TABLE>
- --------
(a) The Overhead Ratio is defined as noninterest expenses divided by the sum of
the taxable equivalent gross interest margin and noninterest revenues.
(b) Nonperforming loans include nonaccrual loans and restructured loans.
(c) Nonperforming assets include nonaccrual loans, restructured loans,
foreclosed properties and repossessions.
25
<PAGE>
SUMMARY CONDENSED CONSOLIDATED FINANCIAL INFORMATION--CONTINUED
FORTUNE BANCORP, INC.--HISTORICAL(A)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
DECEMBER 31 YEAR ENDED SEPTEMBER 30
------------------ -------------------------------------------------------
1993 1992 1993 1992 1991 1990 1989 1988
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS
(In Thousands)
Gross Interest Margin.. $16,776 $18,217 $70,986 $64,198 $61,319 $52,304 $44,020 $42,908
Provision for Loan
Losses................ 9,168 5,296 13,819 17,163 32,370 15,803 11,537 20,721
Noninterest Revenues... 1,919 7,920 9,147 18,574 10,225 3,633 4,853 19,486
Noninterest Expenses... 15,372 13,793 55,430 52,101 50,578 47,158 46,587 43,393
Applicable Income Tax-
es.................... (2,332) 2,991 3,969 7,677 270 (1,483) (2,505) (1,929)
Extraordinary items,
net................... -- -- 2,319 519 -- -- -- --
Cumulative Effect of
Accounting Change..... 4,013(b) -- -- -- -- -- -- --
Net Income (Loss)...... 500 4,057 9,234 6,350 (11,674) (5,541) (6,746) 209
PER COMMON SHARE DATA
Net Income (Loss)...... $ (0.03) $ 0.69 $ 1.23 $ 1.15 $ (2.40) $ (1.27) $ (1.48) $ 0.05
Cash Dividends De-
clared................ 0.08 0.08 0.30 0.30 0.30 0.30 0.30 0.25
Book Value at End of
Period................ 23.56 23.28 23.92 22.95 22.36 28.70 28.92 30.10
AVERAGE STATEMENT OF
CONDITION
(In Millions)
Investment Securities.. $ 970 $ 805 $ 952 $ 753 $ 865 $ 879 $ 948 $ 1,036
Loans, Net of Unearned
Income................ 1,273 1,464 1,531 1,740 1,987 2,126 2,182 1,770
Allowance for Loan
Losses................ 25 25 25 24 12 11 12 9
Total Earning Assets... 2,449 2,444 2,484 2,493 2,852 3,005 3,129 2,806
Total Assets........... 2,592 2,583 2,620 2,609 2,982 3,181 3,321 2,993
Deposits............... 1,810 2,015 1,930 2,204 2,319 2,199 2,242 1,898
Shareholders' Equity... 168 141 160 124 127 129 136 143
END-OF-PERIOD STATEMENT
OF CONDITION
(In Millions)
Investment Securities.. $ 1,072 $ 806 $ 947 $ 737 $ 778 $ 813 $ 852 $ 1,016
Loans, Net of Unearned
Income................ 1,520 1,572 1,443 1,667 1,851 2,087 2,198 1,992
Allowance for Loan
Losses................ 29 27 23 26 20 9 10 24
Total Earning Assets... 2,592 2,378 2,390 2,404 2,629 2,890 3,050 3,008
Total Assets........... 2,747 2,552 2,551 2,550 2,788 3,064 3,247 3,175
Deposits............... 1,792 2,001 1,826 2,041 2,318 2,243 2,220 2,089
Shareholders' Equity... 168 163 168 127 122 125 131 136
SELECTED FINANCIAL RA-
TIOS
Return on Average Total
Assets................ 0.08% 0.63% 0.35% 0.24% (0.39)% (0.17)% (0.20)% 0.01%
Return on Average Com-
mon Equity............ 1.19 11.48 5.77 5.11 (9.19) (4.29) (4.97) 1.47
Taxable Equivalent
Gross Interest Margin
to Average Earning As-
sets.................. 2.74 2.97 2.85 2.57 2.15 1.74 1.40 1.52
Overhead Ratio(c)...... 82.22 52.77 69.17 62.95 70.69 84.31 95.32 69.55
Dividend Payout Ratio.. n/a 10.87 24.39 26.09 n/a n/a n/a 500.00
Average Equity to Aver-
age Assets............ 6.48 5.47 6.11 4.76 4.36 4.07 4.09 4.65
Allowance at End of Pe-
riod to Loans, Net of
Unearned Income....... 2.07 1.90 1.69 1.73 1.08 0.43 0.47 1.20
Allowance at End of Pe-
riod to Nonperforming
Loans(d).............. 56.96 31.83 42.17 29.11 20.93 15.19 18.35 107.07
Net Charge-Offs to
Average Loans Net of
Unearned Income....... 1.04 0.99 1.07 0.61 1.08 0.83 1.15 0.07
Nonperforming Assets to
Loans, Net of Unearned
Income, Foreclosed
Properties and
Repossessions(e)...... 4.14 7.02 4.86 6.76 6.08 4.34 3.63 1.77
</TABLE>
- --------
(a) Certain terminology used in the presentation of Fortune's historical data
has been changed to conform with terminology used in AmSouth's
presentation.
(b) This amount reflects the effect of the adoption of FAS 109.
(c) The Overhead Ratio is defined as noninterest expenses divided by the sum of
the taxable equivalent gross interest margin and noninterest revenues.
(d) Nonperforming loans include nonaccrual loans and restructured loans.
(e) Nonperforming assets include nonaccrual loans, accruing loans contractually
past due 90 days or more, restructured loans and real estate and other
assets owned.
26
<PAGE>
SUMMARY CONDENSED CONSOLIDATED FINANCIAL INFORMATION--CONTINUED
AMSOUTH AND FORTUNE PRO FORMA COMBINED
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1993
-----------------
<S> <C>
STATEMENT OF CONDITION
(In Thousands, Except Per Share Amounts)
Cash and Due from Banks.................................... $ 620,380
Federal Funds Sold and Securities Purchased Under Agree-
ments to Resell........................................... 204,614
Trading Account Securities................................. 94,844
Securities Held for Sale................................... 1,660,042
Investment Securities...................................... 2,253,912
Mortgage Loans Held for Sale............................... 464,730
Loans, Net of Unearned Income.............................. 9,318,156
Less Allowance for Loan Losses............................. 146,882
-----------
Net Loans................................................. 9,171,274
Premises and Equipment, Net................................ 242,299
Other Real Estate Owned.................................... 30,769
Intangible Assets.......................................... 258,043
Mortgage Servicing Rights.................................. 58,372
Other Assets............................................... 341,508
-----------
Total Assets.............................................. $15,400,787
===========
Deposits and Interest-Bearing Liabilities:
Deposits................................................... $11,376,088
Federal Funds Purchased and Securities Sold Under Agree-
ments to Repurchase....................................... 1,160,255
Other Borrowed Funds....................................... 647,648
Long-Term Debt............................................. 526,562
-----------
Total Deposits and Interest-Bearing Liabilities........... 13,710,553
Other Liabilities.......................................... 474,197
-----------
Total Liabilities......................................... 14,184,750
Shareholders' Equity:
Common Stock............................................... 55,497
Capital Surplus............................................ 567,891
Retained Earnings.......................................... 619,766
-----------
1,243,154
Less: Cost of Common Stock in Treasury..................... 24,173
Deferred Compensation on Restricted Stock.................. 2,944
-----------
Total Shareholders' Equity................................ 1,216,037
-----------
Total Liabilities and Shareholders' Equity.............. $15,400,787
===========
Book Value per Common Share................................ $ 22.52
===========
</TABLE>
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED
DECEMBER 31, 1993(A)
--------------------
<S> <C>
STATEMENT OF EARNINGS
(In Thousands, Except Per Share Amounts)
Gross Interest Margin.................................... $555,477
Provision for Loan Losses................................ 39,608
Noninterest Revenues..................................... 205,186
Noninterest Expenses..................................... 502,657
Applicable Income Taxes.................................. 72,336
Net Income(b)............................................ $146,062
Net Income per Share(b).................................. $ 2.83
Average Common Shares Outstanding........................ 51,634
</TABLE>
- --------
(a) Adjusted to include the pro forma effect of the December 9, 1993
acquisition of Mid-State Federal as if such acquisition had taken place on
January 1, 1993.
(b) Amounts are before the cumulative effect of a change in accounting
principle.
For more detailed pro forma financial information, see "Incorporation of
Certain Documents by Reference."
27
<PAGE>
SUMMARY CONDENSED CONSOLIDATED FINANCIAL INFORMATION--CONTINUED
AMSOUTH, FORTUNE AND OTHER BUSINESS COMBINATIONS
PRO FORMA COMBINED (A)
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1993
--------------------
<S> <C>
STATEMENT OF CONDITION
(In Thousands, Except Per Share Amounts)
Cash and Due from Banks.................................. $ 663,776
Federal Funds Sold and Securities Purchased Under Agree-
ments to Resell......................................... 254,138
Trading Account Securities............................... 94,844
Securities Held for Sale................................. 1,682,862
Investment Securities.................................... 2,483,988
Mortgage Loans Held for Sale............................. 474,972
Loans, Net of Unearned Income............................ 10,048,908
Less Allowance for Loan Losses........................... 161,656
-----------
Net Loans.............................................. 9,887,252
Premises and Equipment, Net.............................. 264,342
Other Real Estate Owned.................................. 38,889
Intangible Assets........................................ 259,375
Mortgage Servicing Rights................................ 58,372
Other Assets............................................. 358,976
-----------
Total Assets........................................... $16,521,786
===========
Deposits and Interest-Bearing Liabilities:
Deposits................................................. $12,346,252
Federal Funds Purchased and Securities Sold Under
Agreements to Repurchase................................ 1,162,248
Other Borrowed Funds..................................... 696,398
Long-Term Debt........................................... 543,062
-----------
Total Deposits and Interest-Bearing Liabilities........ 14,747,960
Other Liabilities........................................ 483,158
-----------
Total Liabilities...................................... 15,231,118
Shareholders' Equity:
Common Stock............................................. 60,052
Capital Surplus.......................................... 600,596
Retained Earnings........................................ 657,137
-----------
1,317,785
Less: Cost of Common Stock in Treasury................... 24,173
Deferred Compensation on Restricted Stock................ 2,944
-----------
Total Shareholders' Equity............................... 1,290,668
-----------
Total Liabilities and Shareholders' Equity............... $16,521,786
===========
Book Value per Common Share.............................. $ 22.04
===========
<CAPTION>
TWELVE MONTHS
ENDED
DECEMBER 31, 1993(B)
--------------------
<S> <C>
STATEMENT OF EARNINGS
(In Thousands, Except Per Share Amounts)
Gross Interest Margin.................................... $602,624
Provision for Loan Losses................................ 48,622
Noninterest Revenues..................................... 216,995
Noninterest Expenses..................................... 546,943
Applicable Income Taxes.................................. 74,680
Net Income(c)............................................ $149,374
Net Income per Share(c).................................. $ 2.57
Average Common Shares Outstanding........................ 58,150
</TABLE>
- --------
(a) Adjusted to reflect the Other Business Combinations.
(b) Adjusted to include the pro forma effect of the December 9, 1993
acquisition of Mid-State Federal as if such acquisition had taken place on
January 1, 1993.
(c) Amounts are before the cumulative effect of a change in accounting
principle.
For more detailed pro forma financial information, see "Incorporation of
Certain Documents by Reference." For information on regulatory capital ratios
of AmSouth on both an historical and a pro forma combined basis after giving
effect to the Merger and to AmSouth's Other Business Combinations, see "Certain
Regulatory Considerations--Capital Adequacy."
28
<PAGE>
INTRODUCTION
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of common
stock, par value $.01 per share, of Fortune ("Fortune Common Stock") and
holders of Series A 8% Cumulative Convertible Preferred Stock, par value $.01
per share, of Fortune ("Fortune Preferred Stock") in connection with the
solicitation of proxies by the Board of Directors of Fortune for use at the
Annual Meeting of Fortune shareholders to be held at 11:00 a.m. local time on
Thursday, May 12, 1994, at the corporate headquarters of Fortune located at
16120 U.S. Highway 19 North, Clearwater, Florida 34624-6895, and at any
adjournments or postponements thereof (the "Annual Meeting").
At the Annual Meeting, the shareholders of record of Fortune Common Stock and
Fortune Preferred Stock as of the close of business on March 14, 1994 (the
"Record Date"), will, among other things, consider and vote upon a proposal to
approve the Agreement and Plan of Merger, dated as of the 12th day of
September, 1993 (the "Merger Agreement"), between Fortune and AmSouth
Bancorporation, a Delaware corporation ("AmSouth"), pursuant to which Fortune
will merge with and into AmSouth (the "Merger").
This Proxy Statement/Prospectus is also being furnished by AmSouth to Fortune
shareholders as a prospectus in connection with the issuance of shares of
AmSouth Common Stock as consideration in the Merger (the "Merger Shares").
All historical financial and share price-related information of AmSouth
contained herein has been adjusted to give effect to the three-for-two split on
AmSouth Common Stock paid on January 15, 1992 to AmSouth shareholders of record
on December 13, 1991.
PARTIES TO THE MERGER
AmSouth. AmSouth is a regional bank holding company headquartered in
Birmingham, Alabama, with 234 banking offices located in Alabama, Florida,
Tennessee and Georgia at December 31, 1993. At December 31, 1993, AmSouth had
total consolidated assets of approximately $12.5 billion, total consolidated
deposits of approximately $9.6 billion and total consolidated shareholders'
equity of approximately $1.1 billion. AmSouth was the largest bank holding
company headquartered in Alabama in terms of equity capital and the second
largest in terms of assets, based on December 31, 1993 information. Through its
subsidiaries, AmSouth offers a broad range of banking and bank-related
services.
AmSouth's largest subsidiary is AmSouth Bank N.A. ("AmSouth Alabama"). At
December 31, 1993, AmSouth Alabama had total consolidated assets of
approximately $8.8 billion, total consolidated deposits of approximately $6.5
billion and total consolidated shareholders' equity of approximately $738.7
million. AmSouth Alabama is a full-service bank with 147 banking offices
located throughout Alabama at December 31, 1993. AmSouth Alabama is the largest
bank in Alabama, based upon total assets at December 31, 1993. AmSouth's other
major banking subsidiaries are AmSouth Bank of Florida ("AmSouth Florida") and
AmSouth Bank of Tennessee ("AmSouth Tennessee").
At December 31, 1993, AmSouth Florida had total consolidated assets of
approximately $2.6 billion, total consolidated deposits of approximately $2.1
billion and total consolidated shareholders' equity of approximately $231.2
million. AmSouth Florida operated 65 offices in Florida at December 31, 1993.
Effective February 1, 1993, First Chattanooga Financial Corporation,
headquartered in Chattanooga, Tennessee ("FCFC"), merged with AmSouth, and
First Federal Bank, FSB, a subsidiary of FCFC, merged with AmSouth Tennessee.
The mergers were accounted for under the purchase method of accounting under
generally accepted accounting principles ("GAAP"). At December 31, 1993,
AmSouth Tennessee had total
29
<PAGE>
consolidated assets of approximately $1.0 billion, total consolidated deposits
of approximately $779.3 million and total consolidated shareholders' equity of
approximately $110.2 million. AmSouth Tennessee operated 20 offices in
Tennessee as of December 31, 1993.
Other recently completed transactions of AmSouth are described below.
Effective October 14, 1993, Mickler Corporation, headquartered in
Clearwater, Florida ("Mickler"), merged with AmSouth, and The First
National Bank of Clearwater ("Clearwater"), a subsidiary of Mickler, merged
with AmSouth Florida. AmSouth issued approximately 2,987,000 shares of
AmSouth Common Stock in exchange for the outstanding shares of Mickler and
Clearwater. These acquisitions were accounted for as a pooling of interests
under GAAP. At September 30, 1993, Mickler had total consolidated assets of
approximately $436 million and total consolidated deposits of approximately
$335 million.
Also effective October 14, 1993, Charter Banking Corp., headquartered in
St. Petersburg, Florida ("Charter"), merged with AmSouth, and First Gulf
Bank, a subsidiary of Charter, merged with AmSouth Florida. AmSouth paid
approximately $12.8 million in cash for all of the outstanding shares of
both institutions. These acquisitions were accounted for as a purchase
under GAAP. At September 30, 1993, Charter had total consolidated assets of
approximately $106 million and total consolidated deposits of approximately
$96 million.
Effective December 9, 1993, Mid-State Federal Savings Bank, located in
Ocala, Florida ("Mid-State Federal"), merged with AmSouth Florida. AmSouth
issued approximately 2,041,000 shares of AmSouth Common Stock and paid
approximately $31.7 million for all of the outstanding shares of Mid-State
Federal common stock; AmSouth also paid $542,000 upon cancellation of the
outstanding options to purchase Mid-State Federal common stock. This
acquisition was accounted for as a purchase under GAAP. At September 30,
1993, Mid-State Federal had total consolidated assets of approximately $734
million and total consolidated deposits of approximately $645 million.
Effective December 17, 1993, First Sunbelt Bankshares, Inc.,
headquartered in Rome, Georgia ("First Sunbelt"), the parent company of The
Georgia State Bank of Rome, merged with AmSouth. AmSouth issued
approximately 537,000 shares of AmSouth Common Stock in exchange for all of
the outstanding shares of First Sunbelt common stock. This acquisition was
accounted for as a pooling of interests under GAAP. At September 30, 1993,
First Sunbelt had total consolidated assets of approximately $102 million
and total consolidated deposits of approximately $92 million.
Effective January 3, 1994, Orange Banking Corporation ("OBC"),
headquartered in Orlando, Florida, the parent company of Orange Bank,
merged with AmSouth. AmSouth issued approximately 1,332,000 shares of
AmSouth Common Stock in exchange for all of the outstanding shares of OBC
common stock. This acquisition was accounted for as a pooling of interests
under GAAP. At December 31, 1993, OBC had total consolidated assets of
approximately $354 million and total consolidated deposits of approximately
$323 million.
Effective February 10, 1994, FloridaBank, a Federal Savings Bank, located
in Jacksonville, Florida ("FloridaBank"), merged with AmSouth Florida.
AmSouth issued approximately 759,000 shares of AmSouth Common Stock in
exchange for all of the outstanding shares of FloridaBank common stock.
This acquisition was accounted for as a pooling of interests under GAAP. At
December 31, 1993, FloridaBank had total consolidated assets of
approximately $271 million and total consolidated deposits of approximately
$203 million.
Effective April 4, 1994, Parkway Bancorp, Inc. ("Parkway"), which is
headquartered in Fort Meyers, Florida, the parent company of Parkway Bank,
merged with AmSouth. AmSouth issued approximately 622,000 shares of AmSouth
Common Stock for all of the outstanding shares of Parkway common stock.
These acquisitions were accounted for as a pooling of interests under GAAP.
30
<PAGE>
At December 31, 1993, Parkway had total consolidated assets of
approximately $127 million and total consolidated deposits of approximately
$116 million.
Effective April 4, 1994, Citizens National Corporation ("Citizens"),
which is headquartered in Naples, Florida, the parent company of Citizens
National Bank of Naples, merged with AmSouth. AmSouth issued approximately
1,604,000 shares of AmSouth Common Stock in exchange for the outstanding
shares of Citizens. These acquisitions were accounted for as a pooling of
interests under GAAP. At December 31, 1993, Citizens had total consolidated
assets of approximately $300 million and total consolidated deposits of
approximately $270 million.
In addition, AmSouth is a party to the pending business combinations
described below. Except as noted, consummation of each of these transactions
remains subject to fulfillment of a number of conditions, including shareholder
and regulatory approvals. No assurances can be given that such conditions will
be fulfilled or that such transactions will be consummated.
On August 3, 1993, AmSouth signed an agreement to acquire First Federal
Savings Bank, Calhoun, Georgia ("Calhoun"), headquartered in Calhoun,
Georgia. At December 31, 1993, Calhoun had total assets of approximately
$72 million and total deposits of approximately $59 million. Under the
terms of the agreement, AmSouth will issue 0.9991 of a share of AmSouth
Common Stock for each of the outstanding shares of Calhoun common stock. At
December 31, 1993, Calhoun had 414,330 shares of common stock outstanding.
Shareholder and regulatory approvals have been received. This acquisition
will be accounted for as a pooling of interests under GAAP.
On March 9, 1994, AmSouth signed an agreement to acquire The Tampa
Banking Company ("Tampa"), which is located in Tampa, Florida, and its
subsidiary, The Bank of Tampa. At December 31, 1993, Tampa had total
consolidated assets of approximately $211 million and total consolidated
deposits of approximately $196 million. Under the terms of the agreement,
AmSouth will issue 1.5592 shares of AmSouth Common Stock for each of
the outstanding shares of Tampa common stock, subject to adjustment. At
December 31, 1993, Tampa had approximately 626,000 shares of common stock
outstanding. The transaction will be accounted for as a pooling of
interests under GAAP.
On March 31, 1994, AmSouth signed an agreement to acquire Community
Federal Savings Bank ("Community"), headquartered in Fort Oglethorpe,
Georgia. At December 31, 1993, Community had total assets of approximately
$102 million and total deposits of approximately $87 million. Under the
terms of the agreement, AmSouth will pay $65.50 for each of the outstanding
shares of Community common stock for a total purchase price of
approximately $17.2 million.
Excluding Tampa and Community, which are not expected to have a material
effect on the pro forma financial statements of AmSouth, the pending
transaction and the completed transactions which were pending at December 31,
1993 are sometimes referred to collectively herein as the "Other Business
Combinations."
AmSouth continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with possible
business combinations. As a result, business combination discussions and, in
some cases, negotiations frequently take place, and future business
combinations involving cash, debt or equity securities can be expected. Any
future business combination or series of business combinations that AmSouth
might undertake may be material, in terms of assets acquired or liabilities
assumed, to AmSouth's financial condition. Recent business combinations in the
banking industry have typically involved the payment of a premium over book and
market values. This practice may result in dilution of book value and net
income per share for the acquirors.
On December 21, 1993, AmSouth's Registration Statement on Form S-3, pursuant
to which AmSouth may offer from time to time not more than $300 million of
unsecured senior debt securities, unsecured subordinated debt securities,
and/or warrants to purchase such debt securities, was declared effective by the
Commission. AmSouth intends to utilize approximately $143.3 million of proceeds
from the issuance of such securities to fund the cash portion of the Fortune
purchase price. Additionally, AmSouth has lines of credit arrangements with two
financial institutions enabling AmSouth to borrow up to $21 million upon such
terms as AmSouth and the banks mutually agree. Such available credit and
proceeds from the issuance of the debt securities may be utilized to fund
future business combinations.
AmSouth's other subsidiaries include AmSouth Mortgage Company, Inc., which
offers first mortgage loans through 41 originating offices in nine states,
AmSouth Leasing Corporation, a specialized lender providing equipment leasing,
and AmSouth Investment Services, Inc., a registered broker-dealer that provides
securities brokerage services.
31
<PAGE>
AmSouth was incorporated under the laws of the State of Delaware in 1970. Its
principal executive office is located at 1400 AmSouth-Sonat Tower, 1900 Fifth
Avenue North, Birmingham, Alabama 35203. Its telephone number is (205) 320-
7151.
Additional information about AmSouth and its subsidiaries is included in
documents incorporated by reference in this Proxy Statement/Prospectus. See
"Available Information" and "Incorporation of Certain Documents by Reference."
Fortune. Fortune is a savings and loan holding company organized in November
1983, under Florida law. Fortune provides commercial and retail banking
services through its principal subsidiary, Fortune Bank a Savings Bank
("Fortune Bank"). The principal executive offices of Fortune are located at
16120 U.S. Highway 19 North, Clearwater, Florida 34624-6895, and its telephone
number is (813) 538-1000.
At December 31, 1993, Fortune had total consolidated assets of approximately
$2.7 billion, total consolidated deposits of approximately $1.8 billion and
total consolidated shareholders' equity of approximately $167.9 million.
Fortune Bank is a Florida-chartered stock savings association headquartered in
Clearwater, Florida, and operates 46 branches located from approximately 50
miles north to approximately 200 miles south of Clearwater. Based on
consolidated assets at December 31, 1993, it is currently the largest
independent banking organization headquartered on the west coast of Florida.
Its deposit accounts are insured by the Federal Deposit Insurance Corporation
through the Savings Association Insurance Fund. Additional information about
Fortune and Fortune Bank is included in Fortune's Annual Report on Form 10-K
for the year ended September 30, 1993, a copy of which has been provided to
shareholders. See "Available Information" and "Incorporation of Certain
Documents by Reference."
THE ANNUAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to Fortune shareholders in
connection with the solicitation of proxies by the Fortune Board of Directors
for use at the Annual Meeting. The Annual Meeting is scheduled to be held on
Thursday, May 12, 1994, at 11:00 a.m. local time, at Fortune's corporate
headquarters. Only holders of record of Fortune Common Stock and Fortune
Preferred Stock at the close of business on the Record Date are entitled to
receive notice of and to vote at the Meeting.
HOLDERS OF FORTUNE COMMON STOCK AND FORTUNE PREFERRED STOCK ARE REQUESTED
PROMPTLY TO SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD TO FORTUNE IN THE
ENCLOSED POSTAGE-PAID, ADDRESSED ENVELOPE. FAILURE TO RETURN YOUR PROPERLY
EXECUTED PROXY CARD OR TO VOTE AT THE ANNUAL MEETING WILL HAVE THE SAME EFFECT
AS A VOTE AGAINST THE MERGER AGREEMENT.
The cost of soliciting proxies will be borne by Fortune. In addition to use
of the mails, proxies may be solicited personally or by telephone or telegraph
by officers, directors and employees of Fortune who will not be specifically
compensated for such solicitation activities. Arrangements will also be made
with brokerage houses and other custodians, nominees and fiduciaries for
forwarding solicitation materials to the beneficial owners of shares held of
record by such persons, and Fortune will reimburse such persons for their
reasonable expenses incurred in that connection. Fortune has also retained
Morrow & Co., Inc., a proxy soliciting firm, to assist in solicitation of
proxies at a fee of $7,500, plus reimbursement of out-of-pocket costs.
FORTUNE SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
The Annual Meeting has been called for the following purposes: (1) to approve
the Merger Agreement between Fortune and AmSouth, a copy of which is attached
to this Proxy Statement/Prospectus as Annex
32
<PAGE>
A; (2) to elect three directors each for terms of three years or, if the Merger
is approved by Fortune shareholders, for terms ending on the date of
consummation of the Merger; (3) to ratify the appointment by the Board of
Directors of the firm of KPMG Peat Marwick as independent accountants of
Fortune for the fiscal year ending September 30, 1994; and (4) to transact such
other business as may properly come before the Annual Meeting. Each copy of
this Proxy Statement/Prospectus mailed to Fortune shareholders is accompanied
by a form of proxy for use at the Annual Meeting.
RECORD DATE AND VOTING
The Record Date for the determination of shareholders who will receive notice
of and be entitled to vote at the Annual Meeting is March 14, 1994.
Accordingly, only holders of record of shares of Fortune Common Stock and
Fortune Preferred Stock on the Record Date will be entitled to notice of and to
vote at the Annual Meeting as provided herein. On the Record Date, 6,358,514
shares of Fortune Common Stock and 1,380,000 shares of Fortune Preferred Stock
were outstanding and eligible to be voted at the Annual Meeting. Holders of
Fortune Common Stock will be entitled to one vote for each share held by them
of record at the close of business on the Record Date on each proposal
described herein and on any other matter that may be presented for
consideration and action by the shareholders at the Annual Meeting.
Holders of Fortune Preferred Stock will be entitled to one vote for each
share held by them of record at the close of business on the Record Date solely
with respect to the Merger proposal. Holders of Fortune Preferred Stock will
not be entitled to vote on any other matter. The affirmative vote of the
holders of at least 66 2/3% of the outstanding shares of Fortune Preferred
Stock, voting separately as a class, is required for any amendment, alteration
or repeal, whether by merger or otherwise, of Fortune's Restated Articles of
Incorporation, as amended, that would adversely affect the powers, preferences,
privileges or rights of shares of Fortune Preferred Stock. Under the Merger
Agreement, Fortune will be merged into AmSouth, the separate existence of
Fortune will cease and the Fortune Preferred Stock will become and be converted
into the right to receive either cash or AmSouth Common Stock upon the terms
described in the Merger Agreement. The Merger Agreement does not provide for
the issuance of any AmSouth preferred stock to holders of Fortune Preferred
Stock. As a result, the Merger could be deemed to adversely affect certain
powers, preferences, privileges or rights of shares of Fortune Preferred Stock,
and, therefore, the Merger is being submitted to a vote of the holders of
Fortune Preferred Stock. See "Comparison of Rights of Shareholders--Authorized
Capital Stock--Fortune."
VOTES REQUIRED
The presence, in person or by proxy, of at least a majority of the total
number of shares of Fortune Common Stock outstanding on the record date and a
majority of the total number of shares of Fortune Preferred Stock outstanding
on the record date is necessary to constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be considered as shares present for
purposes of determining the presence of a quorum.
The approval of the Merger Agreement will require the affirmative vote of the
holders of a majority of the outstanding shares of Fortune Common Stock
entitled to vote thereon, and an affirmative vote of the holders of at least 66
2/3% of the outstanding shares of Fortune Preferred Stock entitled to vote
thereon. With respect to the vote on the proposal to approve the Merger,
abstentions and failures to vote (including broker non-votes) will have the
same effect as negative votes. The affirmative vote of a plurality of the votes
cast at the Annual Meeting is required to elect directors, and the affirmative
vote of a majority of the outstanding shares of Fortune Common Stock
represented and entitled to vote at the Annual Meeting is required to ratify
the appointment of KPMG Peat Marwick as independent public accountants. With
respect to election of directors, abstentions and failures to vote (including
broker non-votes) will be deemed not to have been cast and will have no legal
effect on the election of directors. With respect to the ratification of the
appointment of public accountants, abstentions and failures to vote (including
broker non-votes) will have the same effect as negative votes.
33
<PAGE>
If the enclosed form of proxy is properly executed and returned to Fortune in
time to be voted at the Annual Meeting, the shares represented thereby will be
voted in accordance with the instructions marked thereon. Executed but unmarked
proxies relating to shares of Fortune Common Stock will be voted (1) FOR
approval of the Merger of Fortune with and into AmSouth; (2) FOR the election
of the Board of Directors' three nominees as directors; and (3) FOR
ratification of the appointment of KPMG Peat Marwick as independent public
accountants of Fortune for the fiscal year ending September 30, 1994. Executed
but unmarked proxies relating to shares of Fortune Preferred Stock will be
voted FOR approval of the Merger of Fortune with and into AmSouth. If any other
matters properly come before the Annual Meeting, the persons named as proxies
will, unless the shareholder otherwise specifies in the proxy, vote upon such
matters as determined by a majority of the Board of Directors.
RECOMMENDATION OF THE FORTUNE BOARD
The Fortune Board of Directors has unanimously approved the Merger Agreement
and has determined that the Merger is fair to, and in the best interests of,
Fortune and its shareholders. The Fortune Board of Directors therefore
unanimously recommends that holders of Fortune Common Stock and Fortune
Preferred Stock vote FOR approval of the Merger Agreement. For the reasons
described below, the Fortune Board of Directors believes that the Merger will
provide significant value to all Fortune shareholders. See "Proposal to Approve
the Merger--Background of the Merger" and "--Reasons for the Merger." The
Fortune Board of Directors also unanimously recommends that holders of Fortune
Common Stock vote FOR the election of the three nominees to the Board of
Directors and FOR ratification of the appointment of KPMG Peat Marwick as
independent public accountants.
REVOCATION OF PROXY
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. A shareholder may, however, revoke a proxy at
any time before its exercise by filing a written notice of revocation, or by
delivering a duly executed proxy bearing a later date, to the Secretary of
Fortune at 16120 U.S. Highway 19 North, Clearwater, Florida 34624-6895, or by
attending the Annual Meeting and voting in person.
SECURITY OWNERSHIP OF MANAGEMENT; VOTING AGREEMENTS
As of March 30, 1994, directors and executive officers of Fortune and their
affiliates may have been deemed to be beneficial owners of approximately 22.62%
of the outstanding shares of Fortune Common Stock. As consideration and an
inducement to AmSouth's entering into the Merger Agreement, each of the
directors of Fortune have entered into voting agreements with AmSouth (the
"Voting Agreements") pursuant to which each of them has agreed to vote the
shares of Fortune Common Stock that he owns (or has the power to vote) in favor
of the Merger, and against any business combination or other reorganization
involving Fortune with any entity other than AmSouth. A form of the Voting
Agreement is attached as Annex C to this Proxy Statement/Prospectus. The
directors who signed Voting Agreements owned or controlled, as of March 30,
1994, 1,353,916 shares, or 21.27%, of the outstanding shares of Fortune Common
Stock. No Fortune directors own any Fortune Preferred Stock. The Voting
Agreements are intended to increase the likelihood that the Merger will be
consummated according to the terms set forth in the Merger Agreement and may
tend to discourage competing offers to the Merger. Executive officers of
Fortune who are not directors owned or controlled, as of March 30, 1994, 85,749
shares, or 1.35%, of the outstanding shares of Fortune Common Stock. No Fortune
executive officer owns any Fortune Preferred Stock.
34
<PAGE>
PROPOSAL TO APPROVE THE MERGER
(Proposal No. 1)
GENERAL
The following information, insofar as it relates to matters contained in the
Merger Agreement or the Stock Option Agreement between AmSouth and Fortune, is
qualified in its entirety by reference to the Merger Agreement and the Stock
Option Agreement, which are incorporated herein by reference and attached
hereto as Annex A and Annex B, respectively. Fortune shareholders are urged to
read the Merger Agreement and the Stock Option Agreement in their entirety.
THE MERGER AND THE BANK MERGER
The Merger Agreement provides that AmSouth will acquire Fortune through a
merger of Fortune into AmSouth, with AmSouth being the surviving entity. Upon
consummation of the Merger, all shares of Fortune Common Stock and Fortune
Preferred Stock will no longer be outstanding and will automatically be
cancelled and retired and will cease to exist, and each holder of a certificate
representing any shares of Fortune Common Stock or Fortune Preferred Stock will
cease to have any rights with respect thereto, except the right to receive cash
or shares of AmSouth Common Stock to be paid or issued upon the surrender of
such certificate, without interest, as described below. AmSouth also plans to
merge Fortune Bank into AmSouth Florida at the Effective Date (the "Bank
Merger").
EFFECT OF THE MERGER
At the Effective Date, as defined below, Fortune will merge with and into
AmSouth. The Fortune Common Stock and Fortune Preferred Stock will be exchanged
for shares of AmSouth Common Stock or cash as described under "Merger
Consideration." Each share of AmSouth Common Stock outstanding immediately
prior to the Effective Date will remain outstanding and unchanged as a result
of the Merger.
No fractional shares of AmSouth Common Stock will be issued in connection
with the Merger. In lieu of issuing fractional shares, AmSouth will make a cash
payment equal to the fractional interest which a Fortune shareholder would
otherwise receive multiplied by the closing price of AmSouth Common Stock on
the NYSE on the Effective Date.
The amount and form of the consideration to be received by holders of Fortune
Common Stock and Fortune Preferred Stock were arrived at through arm's length
negotiations between AmSouth and Fortune. See "Proposal to Approve the Merger--
Background of the Merger." For certain information concerning the historical
range of sales prices of Fortune Common Stock and Fortune Preferred Stock, see
"Comparative Market and Stock Price Data." For information regarding certain
rights attached to each share of AmSouth Common Stock, including, when issued,
to each of the shares of AmSouth Common Stock to be issued in the Merger, see
"Description of AmSouth Capital Stock--AmSouth Rights Agreement."
MERGER CONSIDERATION
Upon consummation of the Merger, each issued and outstanding share of Fortune
Common Stock and each issued and outstanding share of Fortune Preferred Stock
will be converted as follows: each such share of Fortune Common Stock will be
converted into the right to receive, at the election of each holder thereof
(subject to the election and allocation procedures provided for in the Merger
Agreement), either (a) a number of AmSouth Common Stock shares equal to the sum
of .538522 and the ratio of $17.125 to the Average AmSouth Closing Price (as
defined below) (the "Conversion Ratio"), or (b) cash equal to the sum of
$17.125 and the product of .538522 and the Average AmSouth Closing Price (the
"Cash Consideration"); and each such share of Fortune Preferred Stock will be
converted into the right to receive, at the election of each holder thereof
(subject to the election and allocation procedures provided for in the Merger
Agreement), either (x) a
35
<PAGE>
number of AmSouth Common Stock shares equal to the product of the Conversion
Ratio and 1.333333 (the number of shares of Fortune Common Stock issuable upon
conversion of one share of Fortune Preferred Stock, as provided in Fortune's
Restated Articles of Incorporation, as amended, the document which governs the
terms of the Fortune Preferred Stock), or (y) cash equal to the product of the
Cash Consideration and 1.333333. The "Average AmSouth Closing Price" means the
average of the closing prices of shares of AmSouth Common Stock as reported on
the NYSE composite transactions tape for the ten consecutive trading days
ending on the tenth business day before the Effective Date (the "Valuation
Period").
As further described below, the value of the per share stock consideration
and the Cash Consideration to be received by Fortune shareholders will be based
on the Average AmSouth Closing Price and will be equal. Also, the Merger
Agreement provides that the aggregate number of AmSouth Common Stock shares to
be issued in the Merger shall (subject to certain exceptions) be fixed at a
number (the "Stock Limit") equal to the product of .538522 and the total number
of shares of Fortune Common Stock and Fortune Preferred Stock outstanding on
the Effective Date (for this purpose each share of Fortune Common Stock is
counted as one share, and each share of Fortune Preferred Stock is counted as
1.333333 shares, the number of shares of Fortune Common Stock into which it is
convertible) including dissenting shares, but excluding any shares of Fortune
Common Stock and Fortune Preferred Stock held by Fortune or any subsidiary
other than in a fiduciary capacity or in satisfaction of a debt previously
contracted, which shares will not be converted and will be cancelled. Assuming
that the Average AmSouth Closing Price is not less than $27.00, based on the
number of shares of Fortune Common Stock and Fortune Preferred Stock
outstanding on March 31, 1994, and assuming further the exercise of all stock
options currently outstanding under Fortune's stock option plans, AmSouth will
issue approximately 4,507,000 shares of AmSouth Common Stock and approximately
$143.3 million cash in the Merger.
The total number of shares of AmSouth Common Stock issuable in the Merger and
the total amount of cash payable in the Merger will be fixed through the
operation of the terms of the Merger Agreement. As a result, the percentage of
Fortune shares to be converted into AmSouth Common Stock and the percentage to
be converted into cash will vary with upward and downward fluctuations in the
Average AmSouth Closing Price. Assuming an Average AmSouth Closing Price
between $27 and $36 per share, the percentage of Fortune shares to be converted
into AmSouth Common Stock will range between approximately 46% and 53%,
respectively, as set forth in the table below.
For example, under the Merger Agreement, if the Average AmSouth Closing Price
is $31.80, which was a recent average market price of AmSouth Common Stock at
the time the Merger Agreement was signed, the Conversion Ratio will be 1.077044
shares of AmSouth Common Stock for each share of Fortune Common Stock, and the
Cash Consideration will be $34.25, and each share of Fortune Preferred Stock
will have the right to convert into either 1.436058 shares of AmSouth Common
Stock or $45.67 in cash. Based on an Average AmSouth Closing Price of $31.80,
1.077044 shares of AmSouth Common Stock will have a value of $34.25 and
1.436058 shares of AmSouth Common Stock will have a value of $45.67. In such
event, 50% of the total number of shares of Fortune Common Stock and Fortune
Preferred Stock outstanding on the Effective Date will be converted into
AmSouth Common Stock and 50% will be converted into cash. For the purposes of
computing these percentages, each share of Fortune Common Stock is counted as
one share, and each share of Fortune Preferred Stock is counted as 1.333333
shares, the number of shares of Fortune Common Stock into which it is
convertible.
If the Average AmSouth Closing Price exceeds $31.80, the Conversion Ratio
will be reduced below 1.077044 and the Cash Consideration will be increased
pursuant to a formula, set forth in the Merger Agreement, designed so that,
basing the value of the stock consideration on the Average AmSouth Closing
Price, the Cash Consideration and the stock consideration will remain equal in
value. Thus, if the Average AmSouth Closing Price is above $31.80, the Cash
Consideration and the value of the stock consideration available to holders of
Fortune Common Stock will be above $34.25 (with a corresponding value above
$45.67 for holders of Fortune Preferred Stock). In such event, because the
aggregate number of shares of AmSouth
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<PAGE>
Common Stock and the total amount of cash payable in the Merger will be fixed,
the percentage of shares of Fortune stock to be converted into AmSouth Common
Stock will be increased and the percentage of shares of Fortune stock to be
converted into cash will be reduced.
If the Average AmSouth Closing Price is less than $31.80, the Conversion
Ratio will be increased and the Cash Consideration decreased pursuant to a
formula, set forth in the Merger Agreement, designed so that, basing the value
of the stock consideration on the Average AmSouth Closing Price, the Cash
Consideration and the stock consideration will still be equal in value. Thus,
if the Average AmSouth Closing Price is below $31.80, the Cash Consideration
and the value of the stock consideration available to holders of Fortune Common
Stock will be below $34.25 (with a corresponding value below $45.67 for holders
of Fortune Preferred Stock). In such event, because the aggregate number of
shares of AmSouth Common Stock and the total amount of cash payable in the
Merger will be fixed, the percentage of shares of Fortune stock to be converted
into AmSouth Common Stock will be reduced and the percentage of shares of
Fortune stock to be converted into cash will be increased.
The following table sets forth various assumed Average AmSouth Closing Prices
and the resulting Conversion Ratio, the value of AmSouth Common Stock and the
Cash Consideration to be received per share of Fortune Common Stock and Fortune
Preferred Stock based on such assumed Average AmSouth Closing Price, and the
percentage of shares of Fortune stock to be converted into AmSouth Common Stock
and cash.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OF
FORTUNE STOCK
VALUE OF AMSOUTH COMMON CASH CONSIDERATION TO BE TO BE
STOCK TO BE RECEIVED RECEIVED CONVERTED INTO*
------------------------- ------------------------- ------------------
ASSUMED PER SHARE OF PER SHARE OF PER SHARE OF PER SHARE OF
AVERAGE FORTUNE FORTUNE FORTUNE FORTUNE AMSOUTH
AMSOUTH CONVERSION COMMON PREFERRED COMMON PREFERRED COMMON
CLOSING PRICE RATIO STOCK STOCK STOCK STOCK STOCK CASH
------------- ---------- ------------ ------------ ------------ ------------ --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$36.00.................. 1.014216 $36.51 $48.68 $36.51 $48.68 53.1% 46.9%
35.00.................. 1.027808 35.97 47.96 35.97 47.96 52.4 47.6
34.00.................. 1.042198 35.43 47.25 35.43 47.25 51.7 48.3
33.00.................. 1.057461 34.90 46.53 34.90 46.53 50.9 49.1
32.00.................. 1.073678 34.36 45.81 34.36 45.81 50.2 49.8
31.80.................. 1.077044 34.25 45.67 34.25 45.67 50.0 50.0
31.00.................. 1.090941 33.82 45.09 33.82 45.09 49.4 50.6
30.00.................. 1.109355 33.28 44.37 33.28 44.37 48.5 51.5
29.00.................. 1.129039 32.74 43.66 32.74 43.66 47.7 52.3
28.00.................. 1.150129 32.20 42.94 32.20 42.94 46.8 53.2
27.00.................. 1.172781 31.67 42.22 31.67 42.22 45.9 54.1
</TABLE>
- --------
* For the purposes of computing these percentages, each share of Fortune Common
Stock is counted as one share, and each share of Fortune Preferred Stock is
counted as 1.333333 shares, the number of shares of Fortune Common Stock into
which it is convertible.
Because the number of shares of AmSouth Common Stock and the total amount of
cash to be issued in the Merger will be fixed, no guarantee can be given that
an election by any given shareholder to receive a particular form of
consideration will be honored. Rather, the election by each holder will be
subject to the election and allocation procedures described below. Thus,
holders may not receive their chosen form of consideration. See "Proposal to
Approve the Merger--Election and Allocation Procedures."
If AmSouth effects a reclassification, recapitalization, stock split,
consolidation or similar change in AmSouth Common Stock before the Effective
Date, the Conversion Ratio and Cash Consideration will be appropriately
adjusted.
Although the Average AmSouth Closing Price, which will determine the value of
the cash or stock consideration to be received by Fortune shareholders, will be
based on the average market price of AmSouth
37
<PAGE>
Common Stock during the Valuation Period, the market price of AmSouth Common
Stock may fluctuate thereafter and, on the Effective Date, may be more or less
than the Average AmSouth Closing Price.
At the Effective Date, all rights with respect to Fortune Common Stock
pursuant to stock options granted by Fortune under Fortune's stock option
plans that are outstanding at such time, whether or not then exercisable, will
be converted into the right to receive, in AmSouth's sole discretion, either
an option to purchase shares of AmSouth Common Stock or cash, as discussed
below in "Proposal to Approve the Merger--Interests of Certain Persons in the
Merger--Stock Options."
It is possible that certain shares of Fortune Common Stock and Fortune
Preferred Stock will not be converted in the Merger. Shares of Fortune Common
Stock or Fortune Preferred Stock with respect to which dissenters' rights have
been properly perfected will not be converted into the right to receive shares
of AmSouth Common Stock or Cash Consideration. See "Dissenters' Rights." In
addition, as of the Effective Date, each share of Fortune Common Stock and
Fortune Preferred Stock held directly or indirectly by Fortune or Fortune
Bank, other than shares held in a fiduciary capacity or in satisfaction of a
debt previously contracted, will be canceled and retired, and no exchange or
payment will be made with respect to such shares.
PRICE-BASED TERMINATION
The Merger Agreement provides that Fortune may terminate the Merger
Agreement at any time within ten days after the date of receipt of the last
federal regulatory approval required for consummation of the Merger if the
average closing price of AmSouth Common Stock as reported on the NYSE
composite transactions tape for the ten consecutive trading days ending on
such regulatory approval date is less than $27.00. However, AmSouth will have
the option to avoid such termination under the circumstances described below.
Approvals of the Federal Reserve Board and the Federal Deposit Insurance
Corporation (the "FDIC") have been received. See "Proposal to Approve the
Merger--Regulatory Approvals."
If Fortune elects to trigger the price-based termination provision, it must
give prompt written notice to AmSouth (provided that such notice of election
may be withdrawn at any time within the aforementioned ten-day period). During
the seven-day period commencing with its receipt of such notice, AmSouth will
have the option to increase the value of the cash or the AmSouth Common Stock
(based on such average closing price), or a combination thereof, being offered
to Fortune shareholders so that the per share value of the cash or the AmSouth
Common Stock (based on such average closing price), or a combination thereof,
is at least equal to the per share consideration that would have been received
if the average closing price had been $27.00 per share, so long as the
transaction, as adjusted, qualifies as a reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"). If
AmSouth so elects within such seven-day period, it will give prompt written
notice to Fortune of its election and of the increase in the average per share
value of the cash and/or stock consideration, in which case no termination
will have occurred, and the Merger Agreement will remain in effect in
accordance with its terms (except to the extent the value of the cash and/or
stock consideration is so modified).
Before making any decision to trigger this provision, the Fortune Board of
Directors would consult with its financial and other advisors and would
consider all financial and other information it deems relevant to its
decision. The matter would not, however, be resubmitted to Fortune's
shareholders but is a decision within the sole discretion of the Fortune Board
of Directors.
BACKGROUND OF THE MERGER
Fortune recently has pursued a strategy of developing a presence on the west
coast of Florida as an independent financial institution. In November 1992,
Fortune completed a $34.5 million offering of the Fortune Preferred Stock to
enable it to continue to grow either internally or through strategic
acquisitions in its marketplace.
38
<PAGE>
Management and the Fortune Board of Directors also have been cognizant of the
significant consolidation that has been occurring among the providers of
banking services in Fortune's banking market. Fortune is and has been aware
that larger entities that emerge from consolidations may acquire substantial
competitive advantages, including greater diversity in their loan portfolios,
cost savings through the integration of overlapping operations and support
functions, improved access to capital and funding and the ability to spread
costs of new products, services and research and development over a wider
customer base.
In March 1993, Mr. John R. Torell III, Chairman and Chief Executive Officer
of Fortune, was contacted by Mr. John W. Woods, Chairman, President and Chief
Executive Officer of AmSouth, to explore the possibility of a business
combination. Thereafter, at various times during the spring and summer of 1993,
representatives of Fortune met with representatives of AmSouth to discuss the
benefits and synergies that could result from a merger of the two companies.
In early July 1993, Fortune was contacted by another banking institution (the
"Other Institution") that expressed an interest in a business combination with
Fortune. As a result, Fortune entered into preliminary merger discussions with
the Other Institution at the same time as it was holding discussions with
AmSouth. Pursuant to confidentiality agreements, Fortune provided both AmSouth
and the Other Institution confidential information about Fortune's business,
operations and affairs. In mid-July 1993, Fortune invited both parties to
submit acquisition proposals to it by the last week in August 1993. On August
23, 1993, AmSouth submitted a nonbinding letter to Fortune outlining the
preliminary terms of a proposed merger between Fortune and AmSouth. On August
25, 1993, the Other Institution advised Fortune that it was not prepared at the
time to make a competitive proposal.
Members of senior management and counsel for and financial advisors to
Fortune and AmSouth held detailed discussions during the last week of August
1993, and the first two weeks of September 1993, regarding the terms of a
definitive agreement and plan of merger of the two companies. The Fortune Board
of Directors met on September 10, 1993, and again on September 12, 1993, with
members of its senior management and its financial and legal advisors. At these
meetings, senior management and the financial and legal advisors made detailed
presentations concerning all material aspects of the proposed merger and
related transactions. The Fortune Board of Directors concluded that the Merger
Agreement and the transactions contemplated thereby were fair to and in the
best interests of the shareholders of Fortune. At the September 12, 1993,
meeting, all members of the Fortune Board of Directors participated and
unanimously approved the Merger Agreement and the Stock Option Agreement.
The Board of Directors of AmSouth (the "AmSouth Board") met on July 15, 1993,
with members of senior management of AmSouth. Such members of management made
detailed presentations concerning all material aspects of the proposed merger
and related transactions. Presentations were also made to the AmSouth Board by
AmSouth's financial advisors and counsel. At the conclusion of the
presentations, the AmSouth Board authorized management to enter into a
definitive merger agreement and related agreements with Fortune on terms
substantially conforming to those discussed at the meeting. The AmSouth Board
further authorized the issuance of shares of AmSouth Common Stock in connection
with the Merger.
Following such approvals, Fortune and AmSouth executed the definitive Merger
Agreement and the definitive Stock Option Agreement. AmSouth thereafter also
obtained the Voting Agreements from each of the directors of Fortune.
REASONS FOR THE MERGER
AmSouth. The AmSouth Board has approved the Merger Agreement and the Stock
Option Agreement, dated September 13, 1993, and determined that the Merger and
the issuance of the Merger Shares pursuant thereto are in the best interests of
AmSouth and its shareholders. In approving the Merger Agreement, the
39
<PAGE>
AmSouth Board considered a number of factors. The material factors considered
by the AmSouth Board were the following:
(a) The AmSouth Board's review, based in part on the presentations made
and written material submitted by AmSouth management, of (i) the business,
operations, earnings and financial condition, including the capital levels
and asset quality, of Fortune on a historical, prospective and pro forma
basis, and (ii) the demographic, economic and financial characteristics of
Fortune's market area, including existing competition, on a historical
basis;
(b) The financial advice rendered by AmSouth's financial advisor
regarding the amount of the proposed consideration to be paid in the Merger
and the potential reaction of the financial community; and
(c) A variety of factors affecting and relating to the overall strategic
focus of AmSouth, including AmSouth's desire to expand in areas near
Alabama and to improve its presence in the Florida market.
Fortune. THE BOARD OF DIRECTORS OF FORTUNE BELIEVES THAT THE MERGER IS FAIR
TO, AND IN THE BEST INTERESTS OF, FORTUNE'S SHAREHOLDERS, AND RECOMMENDS THAT
THE SHAREHOLDERS OF FORTUNE VOTE IN PERSON OR BY PROXY AT THE ANNUAL MEETING
FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT. The Board of Directors
believes that the Merger will provide significant value to all Fortune
shareholders.
In reaching its determination to approve the Merger Agreement, Fortune's
Board of Directors considered a number of factors, both from a short term and
longer term perspective, including, among others:
(a) information concerning the financial performance, condition, business
operations and prospects of each of Fortune and AmSouth, as well as the
earnings potential, prospects and future value of the two companies
separately and as a combined enterprise;
(b) the compatibility of the respective businesses and the management
philosophies of Fortune and AmSouth;
(c) the possible alternatives to the Merger available to Fortune;
(d) the consideration to be received by Fortune shareholders in the
Merger in relation to the current market value and book value of Fortune,
and the increased dividend rate that Fortune shareholders who become
AmSouth shareholders are expected to enjoy;
(e) the proposed tax-free nature of the transaction to Fortune and to its
shareholders who receive AmSouth Common Stock as a result of the Merger;
(f) the fact that the Merger would afford Fortune shareholders (subject
to limitations in the Merger Agreement) the opportunity to exchange their
shares for an ownership interest in a combined enterprise which is larger
and has greater financial resources than Fortune on a stand-alone basis;
(g) the advice of Dillon Read rendered at the Board of Directors meetings
on September 10 and 12, 1993, to the effect that, as of those dates, the
consideration to be received in the Merger, as determined by applying the
formula set forth in the Merger Agreement, was fair from a financial point
of view to the holders of Fortune Common Stock and the holders of Fortune
Preferred Stock;
(h) the historic market prices and book values of Fortune Common Stock,
Fortune Preferred Stock and the AmSouth Common Stock into which Fortune
Common Stock and Fortune Preferred Stock may (subject to the limitations of
the Merger Agreement) be converted; and
(i) the current and prospective economic environment and the competition
from larger institutions that Fortune likely would encounter were it to
remain an independent company.
OPINION OF FINANCIAL ADVISOR
The Board of Directors of Fortune retained Dillon Read to evaluate the
fairness, from a financial point of view, of the consideration to be received
by Fortune shareholders in the Merger. Dillon Read rendered its
40
<PAGE>
oral opinion at Fortune's Board of Directors meetings on September 10, 1993,
and September 12, 1993, to the effect that, as of those dates, the
consideration provided for in the Merger Agreement was fair to the shareholders
of Fortune from a financial point of view. On April 4, 1994, Dillon Read
rendered its written opinion to Fortune's Board of Directors that, as of that
date, the consideration provided for in the Merger Agreement was fair to the
holders of shares of Fortune Common Stock and Fortune Preferred Stock from a
financial point of view. A copy of Dillon Read's written opinion is attached as
Annex D to this Proxy Statement/Prospectus. The summary of Dillon Read's
opinion set forth herein is qualified in its entirety by reference to the full
text of the opinion. FORTUNE SHAREHOLDERS ARE URGED TO READ THE OPINION IN ITS
ENTIRETY FOR A DESCRIPTION OF ASSUMPTIONS MADE, MATTERS CONSIDERED, PROCEDURES
FOLLOWED AND LIMITS ON THE REVIEW UNDERTAKEN BY DILLON READ.
Dillon Read's opinion is directed only to the consideration to be received by
Fortune shareholders in the Merger and does not constitute a recommendation to
any Fortune shareholder as to how such shareholder should vote at the Annual
Meeting. Dillon Read did not determine or recommend the kind or amount of
consideration to be paid in the Merger.
In connection with its opinion, Dillon Read reviewed, analyzed and relied
upon material relating to the financial and operating condition of Fortune and
AmSouth, including, among other things, the following: (i) the Merger
Agreement; (ii) this Proxy Statement/Prospectus; (iii) Annual Reports to
Shareholders and Annual Reports on Form 10-K for the five years ended September
30, 1993, of Fortune and the five years ended December 31, 1993, of AmSouth;
(iv) certain interim reports to shareholders and Quarterly Reports of Fortune
and AmSouth and certain other communications from Fortune and AmSouth to their
respective shareholders; (v) certain internal financial analyses and forecasts
for Fortune and AmSouth prepared by their respective managements or consultants
retained by their managements; (vi) certain publicly available information
concerning the trading of, and the trading market for, the Fortune Common
Stock, the Fortune Preferred Stock, and the AmSouth Common Stock; and (vii)
certain publicly available information with respect to banking companies and
the nature and terms of certain other transactions that Dillon Read considered
relevant to its inquiry. In addition, Dillon Read held discussions with the
senior managements of Fortune and AmSouth concerning the past and current
operations, financial condition and prospects, as well as the results of
regulatory examinations of their respective companies.
In conducting its review and arriving at its opinion, Dillon Read relied upon
and assumed the accuracy and completeness of all of the financial and other
information provided to it or publicly available, and Dillon Read did not
attempt to verify such information independently. Dillon Read relied upon the
managements of Fortune and AmSouth as to the reasonableness and achievability
of the financial and operating forecasts and projections (and the assumptions
and bases therefor) provided to it and assumed that such forecasts and
projections reflect the best currently available estimates and judgments of
management and that such forecasts and projections will be realized in the
amounts and in the time periods currently estimated by management. Dillon Read
also assumed, without independent verification, that the aggregate allowances
for loan losses for Fortune and AmSouth are adequate to cover such losses.
Dillon Read did not make or obtain any evaluations or appraisals of the
property of Fortune or AmSouth, nor did Dillon Read examine any individual loan
credit files. Dillon Read was informed by Fortune, and assumed for purpose of
its opinion, that the Merger will be recorded as a purchase under GAAP.
Set forth below is a brief summary of selected analyses undertaken by Dillon
Read in connection with rendering its oral opinions to the Fortune Board of
Directors.
Analysis of the AmSouth Offer. Dillon Read reviewed the terms of the proposed
transaction as reflected in the Merger Agreement. Dillon Read also calculated
the imputed value of the AmSouth offer to holders of Fortune Common Stock and
Fortune Preferred Stock at various Average AmSouth Closing Prices. Assuming an
Average AmSouth Closing Price of $31.80 (which was a recent average market
price of AmSouth common stock at the time the Merger Agreement was signed),
each share of Fortune Common Stock would be converted into AmSouth Common Stock
or cash with a value of $34.25 and each share of Fortune Preferred
41
<PAGE>
Stock would be converted into AmSouth Common Stock or cash with a value of
$45.67. This consideration would represent a price/fully diluted book value
multiple of 1.51 and a price/fully diluted tangible book value multiple of
1.64. Dillon Read also calculated that, based on an assumed range of Average
AmSouth Closing Prices of between $27.00 and $40.00 per share, the
consideration to be paid to Fortune shareholders under the Merger Agreement
represented a price/fully diluted book value multiple of between 1.40 and
1.71, and a price/fully diluted tangible book value multiple of between 1.51
and 1.85.
Dividend Analysis. Dillon Read analyzed the effect of the AmSouth offer on
the dividends received by Fortune shareholders. Assuming an Average AmSouth
Closing Price of $31.80 (which was a recent average market price of AmSouth
Common Stock at the time the Merger Agreement was signed), and given the
current indicated annual dividend for AmSouth Common Stock of $1.40 per share,
the holder of each share of Fortune Common Stock who receives AmSouth Common
Stock in exchange will realize annual dividend income of approximately $1.51,
which compares with the current annual dividend of $0.30 per share on Fortune
Common Stock. Likewise, the holder of each share of Fortune Preferred Stock
would receive annual dividends of approximately $2.01, which compares with the
current annual dividend of $2.00 per share on Fortune Preferred Stock.
Analysis of Selected Merger Transactions. Dillon Read reviewed certain
financial data related to selected bank holding company acquisitions of
thrifts announced since July 1992. The selected acquisitions included the
following transactions:
ACQUIROR ACQUIREE
Southern National Corporation The First Savings Bank, FSB
First Fidelity Bancorporation Peoples Westchester Savings Bank
First Alabama Bancshares, Inc. Secor Bank, FSB
Bank of Boston Corporation Society for Savings Bancorp
First Union Corporation South Carolina Federal
First Union Corporation DFSoutheastern Inc.
BB&T Financial Corporation First Fincorp, Inc.
ONBANCorp., Inc. First Franklin Financial Corp.
SunTrust Banks, Inc. Coast Bank, FSB
First Union Corporation Meritor Savings, FA
Society Corporation First Federal Savings and Loan of Ft.
Myers
For each of the selected transactions, Dillon Read calculated the purchase
price as a percentage of the target's book value, tangible book value and
total assets; as a multiple of the target's latest twelve months earnings per
share; and as a premium over the target's market price per share one week
prior to the announcement. The calculations yielded the following statistics:
(i) the price offered as a percentage of book value ranged from 75% to 160%
with an average of 128% as compared to 151% for the Merger; (ii) the price
offered as a percentage of tangible book value ranged from 116% to 247% with
an average of 153% as compared to 164% for the Merger; (iii) the price offered
as a percentage of assets ranged from 3.64% to 14.62% with an average of 8.50%
as compared to 10.77% for the Merger; (iv) the price offered as a multiple of
the latest twelve months earnings per share ranged from 9.9 times to 32.8
times with an average of 17.4 times as compared to 21.1 times associated with
the Merger; (v) the core deposit premium (price offered less tangible book
value divided by core deposits) ranged from 0.57% to 6.72% with a mean of
3.75% as compared to 6.38% for the Merger; (vi) the nonperforming assets as a
percentage of assets ranged from 0.46% to 5.17% with an average of 2.59% as
compared to 3.24% for Fortune; and (vii) the premium over the target's market
price per share one week prior to announcement ranged from 3.3% to 81.6%, with
an average of 36.8% as compared to a premium of 23.9% (measured as of
September 10, 1993) associated with the Merger.
Dillon Read also performed the same analysis on four thrift acquisitions by
AmSouth announced since June, 1992. The target thrifts were First Federal
Savings Bank of Calhoun, Georgia, FloridaBank, FSB, Mid-
42
<PAGE>
State Federal Savings Bank and First Chattanooga Financial Corporation. These
calculations yielded the following statistics: (i) the price offered as a
percentage of book value ranged from 126% to 179% with a mean of 148% as
compared to 151% for the Merger; (ii) the price offered as a percentage of
tangible book value ranged from 126% to 182% with a mean of 154% as compared to
164% for the Merger; (iii) the price offered as a percentage of assets ranged
from 10.05% to 20.35% with a mean of 13.53% as compared to 10.77% for the
Merger; (iv) the price offered as a multiple of the latest twelve months
earnings per share ranged from 11.2 times to 37.1 times with an average of 20.2
times as compared to 21.1 times associated with the Merger; (v) the core
deposit premium (price offered less tangible book value divided by core
deposits) ranged from 3.20% to 7.62% with a mean of 5.79% as compared to 6.38%
for the Merger; (vi) the nonperforming assets as a percentage of assets ranged
from 0.12% to 2.72% with a mean of 1.76% as compared to 3.24% for Fortune; and
(vii) the premium over the target's market price per share one week prior to
the announcement ranged from 29.2% to 69.6% with an average of 51.9% as
compared to a premium of 23.9% (measured as of September 10, 1993) associated
with the Merger.
The aforementioned comparisons are limited, in that no company or transaction
is identical to Fortune or AmSouth as it currently exists or the Merger.
Previous acquisitions generally occurred in different stock market and economic
conditions, making an analysis of the results of the foregoing not purely
mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies and other factors that could affect the public trading value of the
companies to which they are being compared.
AmSouth Analyses. Dillon Read reviewed the historical performance of AmSouth,
the historical performance of its publicly traded peers, the historical and
current stock market valuation of AmSouth and its peers, and management and
financial analysts' earnings projections for AmSouth. Dillon Read compared the
financial performance of AmSouth based on various financial measures of
earnings performance, capital adequacy, asset quality and operating efficiency
to that of a group of bank holding companies with assets ranging between $8.1
billion and $123.8 billion, including Society Corp., First Alabama Bancshares,
Inc., Comerica Incorporated, Huntington Bancshares Inc., SunTrust Banks, Inc.,
NationsBank Corporation, SouthTrust Corporation, First Union Corporation and
Barnett Banks, Inc. This analysis showed, among other things, that as of June
30, 1993, AmSouth's equity to assets ratio was 8.41% compared to a range of
6.76% to 8.51% and a mean of 7.35% for the group; AmSouth's tangible equity to
assets ratio was 7.35% compared to a range of 5.15% to 7.61% and a mean of
6.46% for the group; AmSouth's ratio of nonperforming assets to total loans and
other real estate owned was 1.08% compared to a range of 0.87% to 2.75% and a
mean of 1.85% for the group; AmSouth's ratio of reserves to nonperforming
assets was 139% compared to a range of 79% to 183% and a mean of 116% for the
group; AmSouth's return on average equity for the four quarters ended June 30,
1993 was 14.7% compared with a range of 10.5% to 19.6% and a mean of 15.9% for
the group; and AmSouth's return on average assets for the four quarters ended
June 30, 1993 was 1.23% compared with a range of 0.72% to 1.46% and a mean of
1.17% for the group. This analysis also showed, among other things, that as of
September 10, 1993, AmSouth's price earnings multiple based on 1993 estimated
earnings was 9.8 compared to a range of 9.6 to 12.1 and a mean of 10.7 for the
group, and that AmSouth's ratio of price to book value was 148.8% compared to a
range of 152.0% to 230.1% and a mean of 175.7% for the group.
Dillon Read performed the same analysis on a group of southeastern bank
holding companies with assets ranging from $5.1 billion to $13.7 billion,
including First Virginia Banks, Inc., Mercantile Bankshares Corp., First
Alabama Bancshares, Inc., Synovus Financial Corp., Signet Banking Corporation,
Central Bancshares of the South, Inc., BB&T Financial Corporation, Southern
National Corporation, First Tennessee National Corp., Central Fidelity Banks,
Inc., SouthTrust Corporation, First Citizens Bancshares, Inc., First American
Corporation, Union Planters Corporation and Crestar Financial Corporation. This
analysis showed, among other things, that as of June 30, 1993, AmSouth's equity
to assets ratio was 8.41% compared to a range of 6.72% to 11.52% and a mean of
8.05% for the group; AmSouth's tangible equity to assets ratio was 7.35%
compared to a range of 6.08% to 11.18% and a mean of 7.54% for the group;
AmSouth's ratio of
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nonperforming assets to total loans and other real estate owned of 1.08%
compared to a range of 0.72% to 2.65% and a mean of 1.44% for the group;
AmSouth's ratio of reserves to nonperforming assets was 139% compared to a
range of 91% to 236% and a mean of 169% for the group; AmSouth's return on
average equity for the four quarters ended June 30, 1993 was 14.71% compared
with a range of 12.22% to 18.14% and a mean of 15.35% for the group; and
AmSouth's return on average assets for the four quarters ended June 30, 1993
was 1.23% compared with a range of 0.94% to 1.65% and a mean of 1.20% for the
group. This analysis also showed that, among other things, as of September 10,
1993, AmSouth's price earnings multiple based on 1993 estimated earnings was
9.8 compared to a range of 9.3 to 17.8 and a mean of 11.1 for the group, and
that its ratio of price to book value of 148.8% compared to a range of 128.0%
to 278.4% and a mean of 171.7% for the group.
Discounted Cash Flow Analysis. Dillon Read analyzed the internal rate of
return to AmSouth on its proposed investment in Fortune using earnings
projected by the management of Fortune adjusted for purchase accounting,
synergistic benefits and goodwill amortization and utilizing a terminal price
earnings multiple of 12.0 times 1998 earnings. The calculations suggested a
return on the investment made in Fortune by AmSouth of 12.24%. As indicated
below, this analysis is not necessarily indicative of actual value or actual
future results and does not purport to reflect pricing multiples at which any
securities may trade at any time in the future.
The summary set forth above does not purport to be a complete description of
the presentations by Dillon Read to Fortune's Board of Directors of the
analyses performed by Dillon Read. The preparation of a fairness opinion is not
necessarily susceptible to partial analysis or summary description. Dillon Read
believes that its analysis and the summary set forth above must be considered
as a whole and that selecting portions of its analyses without considering all
analyses, or selecting part or all of the above summary without considering all
factors and analyses, would create an incomplete view of the processes
underlying Dillon Read's presentations and opinion. In addition, Dillon Read
may have given various analyses more or less weight than other analyses and 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 be Dillon Read's view of the actual
value of the Merger to Fortune or AmSouth, which date may be after the first
possible date on which the Merger could occur under the terms of the Merger
Agreement. The fact that any specific analysis has been referred to in the
summary above is not meant to indicate that such analysis was given greater
weight than any other analyses.
In performing its analyses, Dillon Read made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Fortune and AmSouth. The
analyses performed by Dillon Read are not necessarily indicative of actual
values or actual future results which may be significantly more or less
favorable than those suggested by such analyses. Such analyses were prepared
solely as part of Dillon Read's analysis of the fairness of the consideration
to be received by holders of Fortune Common Stock and Fortune Preferred Stock
in the Merger and were provided to Fortune's Board of Directors in connection
with the delivery of Dillon Read's opinion. The analyses do not purport to be
appraisals or to reflect the prices at which a company actually might be sold
or the prices at which any securities may trade at the present time or at any
time in the future.
As described above, Dillon Read's opinion and presentation to Fortune's Board
of Directors were among the many factors taken into consideration by Fortune's
Board of Directors in making its determination to approve the Merger Agreement.
In connection with their opinion dated April 4, 1994, Dillon Read confirmed
the appropriateness of their reliance on the analyses used to render their
earlier opinion by performing procedures to update certain of such analyses and
reviewing the assumptions on which such analyses were based and the factors
considered in connection therewith.
Dillon Read is an investment banking firm with experience in the valuation of
businesses and their securities in connection with transactions, including
mergers and acquisitions. Fortune selected Dillon Read to act as its financial
advisor in connection with the Merger on the basis of such experience. For its
services in connection with rendering an opinion to Fortune, Fortune has paid
Dillon Read $285,000. Fortune also has agreed to reimburse Dillon Read for its
reasonable out-of-pocket expenses, and to indemnify Dillon Read against certain
liabilities, including liabilities under the federal securities laws, relating
to or arising out of Dillon Read's engagement as financial advisor.
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EFFECTIVE DATE
The Merger will become effective on the date articles of merger are filed
with the Secretary of State of the State of Florida in accordance with the
Florida Business Corporation Act and with the Secretary of State of the State
of Delaware in accordance with the Delaware General Corporation Law, or on such
later date as the articles of merger may specify (the "Effective Date"). The
articles of merger will be filed with both states within 30 days after (a) the
later of: (i) expiration of all applicable waiting periods, if any, in
connection with approvals of governmental authorities and (ii) the receipt of
all other required approvals, or (b) on such later date as may be agreed by the
parties. After regulatory approvals that would permit consummation of the
Merger have been obtained, the parties expect that the Merger will occur on a
date that will facilitate an orderly business combination of Fortune and
AmSouth, which date may be after the first possible date on which the Merger
could occur under the terms of the Merger Agreement. The parties are unable at
this time to predict when or if the Effective Date will occur.
ELECTION AND ALLOCATION PROCEDURES
Description of Elections. Each record holder of Fortune Common Stock and of
Fortune Preferred Stock will have the right to submit an Election Form
specifying the kind of consideration sought to be received. The Election Form
and other appropriate transmittal materials will be mailed by the Exchange
Agent (AmSouth Alabama) on the Mailing Date (27 days before the expected
Effective Date, or on such other date as is mutually agreed) to each holder of
record of Fortune Common Stock and Fortune Preferred Stock as of five business
days before the Mailing Date. Holders of record of shares of Fortune Common
Stock or Fortune Preferred Stock who hold such shares as nominees, trustees, or
in other representative capacities may submit multiple Election Forms that
cover all the shares of Fortune Common Stock or Fortune Preferred Stock held by
such record holder for each beneficial owner thereof. See "Proposal to Approve
the Merger--Certain Federal Income Tax Consequences--Tax Consequences to
Fortune Shareholders Who Receive Both Cash and AmSouth Stock in the Merger."
The Election Form will permit Fortune shareholders (1) to indicate that they
elect to receive in exchange for their Fortune shares (a) only AmSouth Common
Stock (Stock Election Shares) or (b) only cash (Cash Election Shares) or (2) to
make no election (No Election Shares). The Election Form, together with stock
certificates representing all shares of Fortune stock covered thereby, must be
completed, signed and returned to the Exchange Agent no later than the Election
Deadline (5:00 p.m., Central Time, on the date that is 20 days after the
Mailing Date). If a certificate for Fortune stock has been lost, stolen or
destroyed, an Election Form will be properly completed only if accompanied by
appropriate evidence as to such loss, theft or destruction, appropriate
evidence as to the ownership of such certificate by such Fortune shareholder
and appropriate and customary indemnification. Fortune shares for which an
Election Form has not been properly completed and received by the Exchange
Agent by the Election Deadline will be deemed No Election Shares. The Election
Forms will be accompanied by instructions specifying other details of the
exchange. FORTUNE SHAREHOLDERS SHOULD NOT SEND THEIR CERTIFICATES UNTIL THEY
RECEIVE AN ELECTION FORM.
In the Merger, the aggregate number of shares of AmSouth Common Stock to be
issued and the total amount of cash payable will be fixed. Accordingly, there
can be no assurance that each Fortune shareholder will receive the form of
consideration that such holder elects. In the event that the elections result
in an oversubscription of either AmSouth Common Stock or cash, the procedures
for allocating AmSouth Common Stock and cash, described below under "Allocation
Procedures," will be followed by the Exchange Agent.
Any Election Form may be revoked or changed by written notice from the person
submitting such Election Form to the Exchange Agent, but to be effective such
notice must actually be received by the Exchange Agent at or before the
Election Deadline. The Exchange Agent will have reasonable discretion to
determine when any election, modification or revocation is received and whether
any such election, modification or revocation has been properly made, and such
determination shall be final.
Persons who become shareholders of Fortune after the date five days before
the Mailing Date and before the close of business on the day before the
Election Deadline, or any other shareholders who need an Election
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Form, may obtain copies of the Election Form upon request from AmSouth either
in writing at AmSouth Bancorporation, Post Office Box 11007, Birmingham,
Alabama 35288, Attention: Investor Relations Department, or by telephone at
205/583-4439.
Allocation Procedures. Within five business days after the Election Deadline,
the Exchange Agent will allocate among holders of Fortune Common Stock and
Fortune Preferred Stock rights to receive AmSouth Common Stock or cash as
follows (provided that in no event will the Exchange Agent be required to
effectuate the allocation before the Effective Date):
(a) If the number of AmSouth Common Stock shares to be issued for Stock
Election Shares is less than the Stock Limit, then (i) all Stock Election
Shares will be converted into AmSouth Common Stock, (ii) a sufficient
number of No Election Shares and then, if necessary, Cash Election Shares
will be selected randomly by the Exchange Agent (except as noted below) to
receive AmSouth Common Stock, so that the total of AmSouth Common Stock
shares to be issued will equal as closely as practicable the Stock Limit
and (iii) the Cash Election Shares and No Election Shares not so selected
will be converted into cash.
(b) If the number of AmSouth Common Stock shares to be issued for Stock
Election Shares exceeds the Stock Limit, then (i) all Cash Election Shares
and No Election Shares will be converted into cash, (ii) a sufficient
number of Stock Election Shares will be selected randomly by the Exchange
Agent to receive cash so that the total of AmSouth Common Stock shares to
be issued will equal as closely as practicable the Stock Limit and (iii)
the Stock Election Shares not so selected will be converted into AmSouth
Common Stock.
(c) If the number of AmSouth Common Stock shares to be issued on
conversion of Stock Election Shares equals or is nearly equal to (as
determined by the Exchange Agent) the Stock Limit, Stock Election Shares
will receive AmSouth Common Stock, and all Cash Election Shares and No
Election Shares will receive cash.
(d) If the number of AmSouth Common Stock shares to be issued on
conversion of Stock Election Shares and No Election Shares equals or is
nearly equal to (as determined by the Exchange Agent) the Stock Limit, all
Cash Election Shares will receive cash and all Stock Election Shares and No
Election Shares will receive AmSouth Common Stock.
Notwithstanding the random selection procedures described above, the Merger
Agreement provides that no particular Cash Election Shares or Stock Election
Shares will be selected randomly to receive AmSouth Common Stock or cash, as
the case may be, if such selection would threaten satisfaction of any of the
conditions to consummation of the Merger. One of the conditions to consummation
of the Merger is the receipt by the parties of an opinion from counsel and an
accounting firm that the Merger will constitute a tax-free reorganization for
federal income tax purposes.
Under applicable tax rules the inclusion of certain large Fortune
shareholders in the random selection process in the event cash elections are
oversubscribed may jeopardize the status of the Merger as a tax-free
reorganization. The two largest holders of Fortune Common Stock, The Dyson-
Kissner-Moran Corporation group (the "Moran Group"), and John T. Oxley, have
indicated to Fortune that they intend to make a cash election if the Merger is
approved. John A. Moran, a member of the Moran Group, is a director of Fortune.
Other than as a holder of Fortune Common Stock and Mr. Moran's status as both a
member of the Moran Group and as a director of Fortune, the Moran Group is not
affiliated with Fortune. Other than as a holder of Fortune Common Stock, Mr.
Oxley is not affiliated with Fortune. As of March 30, 1994, the Moran Group and
Mr. Oxley owned approximately 13.30% and 14.03%, respectively, of the
outstanding shares of Fortune Common Stock. As a result of the foregoing, in
the event cash elections are oversubscribed, the cash elections of the Moran
Group and Mr. Oxley will be satisfied on a priority basis so as not to
jeopardize the status of the Merger as a tax-free reorganization. In addition,
cash elections of other large Fortune shareholders may be satisfied on a
priority basis if necessary so as not to jeopardize the status of the Merger as
a tax-free reorganization. Thus, in circumstances where cash elections are
oversubscribed, under the terms
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of the Merger Agreement and in order to preserve the Merger as a tax-free
reorganization, the largest Fortune shareholders will be more likely to receive
their choice of cash consideration than smaller Fortune shareholders. In
general, elections to receive cash or stock by Fortune directors and executive
officers will not be satisfied on a priority basis. In the event cash elections
are oversubscribed, however, cash elections by director John A. Moran (in his
capacity as a member of the Moran Group) and possibly director Ezra K. Zilkha
(as a result of his holding 4.92% of Fortune Common Stock as of March 30, 1994)
will be given priority over other Fortune shareholders in order to preserve the
Merger as a tax-free reorganization. It is also conceivable, although unlikely,
that any other director or executive officer of Fortune would be given priority
treatment with respect to their cash elections. Priority treatment, if
applicable, is a function of the relative size of such persons' share
ownership, the Average AmSouth Closing Price and the effect of certain tax
laws. Such treatment is not a result of their status as directors or executive
officers.
Any necessary random selection process to be used by the Exchange Agent will
consist of such procedures as will be mutually determined by Fortune and
AmSouth as will be further described in the Election Form. No assurance can be
given that an election by any given shareholder, except the cash elections of
the two largest shareholders named above, will be honored. Because the number
of shares of AmSouth Common Stock to be issued and the total amount of cash to
be paid in the Merger will be fixed pursuant to the Merger Agreement, the
extent to which elections will be accommodated will depend upon the numbers of
shares which elect cash and stock and as to which no election is made.
Accordingly, a Fortune shareholder who elects to receive cash may instead
receive shares of AmSouth Common Stock (plus cash in lieu of a fractional
share) or a Fortune shareholder who elects to receive shares of AmSouth Common
Stock (plus cash in lieu of a fractional share) may instead receive all cash.
In addition, it is possible, in such cases, that a beneficial owner of Fortune
Common Stock who holds his shares in more than one record ownership or a record
holder of both Fortune Common Stock and Fortune Preferred Stock could receive
both cash (in addition to cash received in lieu of fractional shares) and
AmSouth Common Stock in the Merger. Because the tax consequences of receiving
cash, AmSouth Common Stock or a combination of cash and AmSouth Common Stock
will differ, shareholders of Fortune are urged to read carefully the
information under "Proposal to Approve the Merger--Certain Federal Income Tax
Consequences" in this Proxy Statement/Prospectus, and to consult with their own
tax advisors before returning the Election Form.
ISSUANCE OF STOCK AND PAYMENT OF CASH
General. On and after the Effective Date, AmSouth will deliver to the
Exchange Agent certificates representing the number of shares of AmSouth Common
Stock issuable and the amount of cash payable in the Merger. The Exchange Agent
will not be entitled to vote or exercise any rights of ownership with respect
to the shares of AmSouth Common Stock held by it pursuant to the Merger
Agreement, except that it will receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account
of the persons entitled thereto.
Exchange of Certificates; Delivery of AmSouth Common Stock and Cash. On the
Effective Date, holders of certificates representing Fortune Common Stock and
Fortune Preferred Stock will cease to have any rights as shareholders of
Fortune and will have only the right to receive the cash or AmSouth Common
Stock into which their Fortune shares are to be converted. No holder of
certificates formerly representing Fortune shares will be entitled to receive
either cash or shares of AmSouth Common Stock until the certificates are
surrendered to the Exchange Agent, and no interest will accrue in respect
thereof. Each AmSouth Common Stock share for which Fortune shares are exchanged
in the Merger will be deemed to have been issued on the Effective Date.
Accordingly, Fortune shareholders who receive AmSouth Common Stock in the
Merger will be entitled to vote their shares and to receive any dividends or
other distributions, without interest, that may be payable to holders of record
of AmSouth Common Stock after the Effective Date, except that no such dividend
will be remitted until the certificates representing Fortune Common Stock or
Fortune Preferred Stock have been properly delivered to the Exchange Agent.
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Until so surrendered, each certificate that before the Effective Date
represented outstanding Fortune Common Stock or Fortune Preferred Stock will,
except as otherwise provided in the Merger Agreement, be deemed to evidence
ownership of the number of shares of AmSouth Common Stock or the right to
receive the amount of cash into which the same has been converted in the
Merger. After the Effective Date, there will be no further transfers on the
records of Fortune of certificates theretofore representing Fortune Common
Stock or Fortune Preferred Stock and, if such certificates are presented to
Fortune for transfer, they will be canceled against delivery of certificates
for AmSouth Common Stock or cash.
Within five business days after the allocation described above under
"Election and Allocation Procedures--Allocation Procedures," the Exchange Agent
will distribute AmSouth Common Stock and cash with respect to shares of Fortune
Common Stock and Fortune Preferred Stock which have been properly surrendered
to the Exchange Agent. No dividends that have been declared on AmSouth Common
Stock will be remitted with respect to shares of Fortune Common Stock or
Fortune Preferred Stock that have been converted into shares of AmSouth Common
Stock in the Merger until the certificate or certificates previously
representing Fortune Common Stock or Fortune Preferred Stock have been
surrendered to the Exchange Agent, at which time such dividends will be
remitted to such person, without interest. Stock certificates will not be
delivered for fractional shares resulting from the exchange of Fortune stock
for AmSouth Common Stock. Instead, each holder of Fortune stock who would
otherwise be entitled to a fractional share will receive in lieu thereof a
check in an amount equal to the value of such fractional share based upon the
closing price of AmSouth Common Stock on the NYSE composite transactions tape
on the Effective Date.
Neither AmSouth, Fortune nor the Exchange Agent will be liable to any former
holder of Fortune Common Stock or Fortune Preferred Stock for any amount
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
Any shares of Fortune Common Stock or Fortune Preferred Stock with respect to
which dissenters' rights have been properly perfected will be treated in
accordance with the procedures described below under "Dissenters' Rights."
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations and
warranties relating to, among other things: (a) each of AmSouth's, Fortune's
and certain of their respective subsidiaries' organization and similar
corporate matters; (b) each of AmSouth's and Fortune's capital structure; (c)
authorization, execution, delivery, performance and enforceability of the
Merger Agreement and related matters; (d) conflicts under charters or bylaws,
required consents or approvals and violations of any agreements, instruments or
laws; (e) documents filed by each of AmSouth and Fortune with the Securities
and Exchange Commission (the "Commission") and the accuracy of information
contained therein; (f) absence of certain material adverse events, changes or
effects; (g) undisclosed liabilities; (h) the accuracy of information supplied
by each of AmSouth and Fortune in connection with the Registration Statement
and this Proxy Statement/Prospectus; (i) retirement and other employee plans
and matters relating to the Employee Retirement Income Security Act of 1974, as
amended; (j) litigation; (k) compliance with law; and (l) tax returns and
audits.
CERTAIN COVENANTS
Modification of Certain Fortune Policies. The Merger Agreement provides that
Fortune, at the request of AmSouth, will modify and change its loan, litigation
and real estate valuation policies and practices (including loan
classifications and levels of reserve) before the Effective Date so as to be
consistent on a mutually satisfactory basis with those of AmSouth and with
AmSouth's plans with respect to the conduct of its business following the
Merger. The Fortune policies subject to modification include potential
strategies for accelerated disposition and recovery of certain classified
assets. Fortune representations, warranties and covenants contained in the
Merger Agreement will not be deemed to be untrue or breached in any respect for
any purpose as a consequence of any modifications or changes undertaken solely
on account of the foregoing.
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The modifications required by this provision of the Merger Agreement are not
expected to have a material adverse effect upon the results of operations or
financial condition of AmSouth following the Merger. Such modifications are not
the result of any specific regulatory action.
No Solicitation. The Merger Agreement provides that Fortune and its
subsidiaries will not: (a) solicit or encourage inquiries or proposals with
respect to the purchase of all or a substantial part of the assets or equity of
Fortune or any of its subsidiaries, except as contemplated by the Merger
Agreement; or (b) except to the extent required for the discharge by the
Fortune Board of Directors of its fiduciary duties as advised in writing by
counsel, furnish any information relating to, or participate in any
negotiations or discussions concerning, any such inquiries or proposals. The
Merger Agreement provides that Fortune will notify AmSouth of any such
inquiries or proposals received by Fortune.
Indemnification. The Merger Agreement provides that from and after the
Effective Date, AmSouth (or AmSouth Florida) will indemnify, defend and hold
harmless each person who at any time before the Effective Date is or was an
officer, director, employee or agent of Fortune or Fortune Bank (or any person
who serves another entity in any such capacity at Fortune's request) against
all losses, claims, damages, costs, expenses, liabilities, fees, judgments or
amounts that are paid in settlement of or in connection with any claim, action,
suit or proceeding based in whole or in part on, or arising in whole or in part
out of, the fact that such person is or was a director, officer, employee or
agent of Fortune or of Fortune Bank, regardless of whether the claim is
asserted before or after the Effective Date. The indemnification will be
provided under the Certificate of Incorporation of AmSouth or the Articles of
Incorporation of AmSouth Florida as in effect on the date of the Merger
Agreement, to the full extent allowed for indemnification of that entity's own
directors, officers, employees and agents as the case may be.
Employee Benefit Plans. AmSouth has agreed that employees and officers of
Fortune and its subsidiaries who are employed by AmSouth or its subsidiaries
will be entitled to participate in AmSouth pension, welfare and employee
benefit plans on the same terms as AmSouth employees and officers, giving
effect to years of service with Fortune and its subsidiaries (and predecessors)
as if such service were with AmSouth (except for AmSouth's Retirement Plan, in
which case giving effect to years of service shall be for vesting purposes only
and not for benefit accrual purposes). Employees and officers of Fortune and
its subsidiaries who become employees and officers of AmSouth will also receive
compensation arrangements and fringe benefits as are provided to AmSouth's and
its subsidiaries' employees and officers of equal status and position. AmSouth
will honor Fortune's existing Severance Plan covering certain executive
officers of Fortune and Fortune Bank, as described under "Proposal to Approve
the Merger--Interests of Certain Persons in the Merger." The treatment under
the Merger Agreement of the holders of Fortune stock options is also described
therein.
Best Efforts to Consummate Merger. Fortune and AmSouth have both agreed to
use their best efforts in good faith to take or cause to be taken all action
necessary to consummate the Merger as promptly as practicable. It shall not be
a violation of this covenant, however, if the consummation of the Merger is
delayed by a resolicitation of proxies or other action arising as a result of
an acquisition by AmSouth subsequent to the date of the Merger Agreement.
AmSouth has agreed to notify the Chief Executive Officer of Fortune before
AmSouth enters into an agreement to make a material acquisition.
Redemption of Convertible Debentures. Fortune agreed to redeem its Debentures
before the Effective Date, and on December 27, 1993, Fortune called for
redemption thereof. For each $1,000 of principal amount thereof, the Debentures
were either redeemed for $1,020 in cash plus accrued interest, or converted
into Fortune Common Stock at the conversion rate of $25.50 per share. Of the
approximately $17.0 million in principal amount of Debentures outstanding on
December 31, 1993, approximately $16.8 million thereof were converted into
660,889 shares of Fortune Common Stock, and approximately $200,000 thereof were
redeemed for cash.
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CONDITIONS TO EACH PARTY'S OBLIGATIONS
The respective obligations of AmSouth and Fortune to effect the Merger are
subject to certain conditions, including, but not limited to, the following:
(a) approval of the Merger by holders of Fortune Common Stock and Fortune
Preferred Stock;
(b) procurement of all regulatory approvals and consents required for the
Merger and the Bank Merger and the expiration of all waiting periods in
connection therewith, provided, however, that no approval or consent shall
have imposed any conditions or requirements which would (i) result in any
material limitation on the ability of AmSouth effectively to exercise full
rights of ownership of all the shares of Fortune Common Stock, (ii) require
a divestiture which would constitute, if made solely by Fortune or Fortune
Bank, taken as a whole, a substantial and material portion of their
business or properties, or (iii) in the good faith reasonable judgment of
the Board of Directors of AmSouth, otherwise materially and adversely
affect the economic assumptions of the transactions contemplated hereby so
as to render inadvisable the consummation of the Merger, but only if such
regulatory conditions or requirements are a departure from past practices
of such regulators;
(c) no discovery by AmSouth of a material adverse condition with respect
to Fortune that in AmSouth's reasonable opinion would result in (i)
substantial loss or damage to the assets of Fortune and its subsidiaries
that would materially impair the ability of Fortune to conduct its
business, or (ii) a reduction of $10 million or more in Fortune's
consolidated total shareholders' equity as of June 30, 1993 (excluding,
among other things, regular quarterly dividend payments and the first $2.5
million of loss, if any, with respect to one of Fortune's largest problem
credits);
(d) no discovery by Fortune of a material adverse condition with respect
to AmSouth that in Fortune's reasonable opinion would result in (i)
substantial loss or damage to the assets of AmSouth and its subsidiaries
that would materially affect the ability of AmSouth to conduct its
business, or (ii) a reduction of $55.7 million or more in AmSouth's
consolidated total shareholders' equity as of June 30, 1993 (excluding
regular quarterly dividend payments);
(e) the absence of any unstayed or final injunction prohibiting
consummation of the Merger or of any litigation or governmental proceeding
seeking to restrain, prohibit or invalidate the Merger;
(f) receipt by each party of "comfort letters" from the other's
accountants with respect to facts concerning the financial condition of the
other party;
(g) receipt by each party of an acceptable legal opinion as is customary
in a transaction of this kind;
(h) the accuracy, in all material respects, on the Effective Date of the
representations and warranties of the other party and the compliance, in
all material respects, with the covenants of the other party;
(i) the effectiveness of the Registration Statement filed with the
Commission and compliance by AmSouth with all "blue sky" requirements
necessary to consummate the transactions contemplated by the Merger;
(j) receipt by Fortune and AmSouth from counsel and independent
accountants, respectively (who shall be entitled to rely on representations
by Fortune and AmSouth as to factual matters), of opinions, dated the
Effective Date, in form and substance satisfactory to both Fortune and
AmSouth, to the effect that for federal income tax purposes:
(i) the Merger will constitute a reorganization within the meaning
of Section 368 of the Code; and
(ii) with respect to counsel's opinion to Fortune only (except with
respect to holders of Fortune Common Stock and Fortune
Preferred Stock who exercise dissenters' rights and except for
cash in lieu of a fractional share interest paid to holders of
Fortune Common Stock or Fortune Preferred Stock):
(x) no gain or loss will be recognized by a holder of Fortune
Common Stock or Fortune Preferred Stock upon conversion in
the Merger of such stock into AmSouth Common Stock,
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(y) the basis of the shares of AmSouth Common Stock to be
received by a shareholder of Fortune will be the same as
such shareholder's basis in the Fortune Common Stock or
Fortune Preferred Stock exchanged therefor, and
(z) the holding period of the AmSouth Common Stock received in
the Merger by a holder of Fortune Common Stock or Fortune
Preferred Stock exchanged therefor will include the period
during which such holder held the Fortune Common Stock or
Fortune Preferred Stock exchanged therefor, provided that
such Fortune Common Stock or Fortune Preferred Stock was
held as a capital asset immediately before the Effective
Date.
(k) that two credits held by Fortune Bank (which as of the date of this
Proxy Statement/Prospectus are reflected on Fortune's books at
approximately $7.5 million and $2.5 million, respectively) shall be sold,
collected, written off or otherwise valued at zero by the Effective Date;
and
(l) the redemption or conversion to Fortune Common Stock of the
Debentures before the Effective Date, which has been accomplished.
If the Merger is not approved by the requisite number of holders of Fortune
Preferred Stock, the parties will use reasonable best efforts to consummate the
Merger by providing an alternate treatment of the Fortune Preferred Stock,
provided that such alternate treatment (a) does not alter the fundamental
economic assumptions upon which the Merger is based, and (b) does not require
the approval of the holders of Fortune Preferred Stock. If such an alternative
treatment is agreed upon, the holders of Fortune Preferred Stock will not be
solicited with revised disclosure materials. There can be no assurance,
however, that any alternate treatment will be mutually agreeable to the parties
or that the failure to obtain the requisite approval of the holders of Fortune
Preferred Stock will not result in termination of the Merger Agreement. See
"Proposal to Approve the Merger--Termination."
REGULATORY APPROVALS
The Merger. Section 4 of the Bank Holding Company Act of 1956, as amended,
requires that AmSouth obtain the prior approval of the Federal Reserve Board
for the indirect acquisition of certain nonbanking companies, including a
savings association such as Fortune Bank. In evaluating the Merger under this
section, the Federal Reserve Board will consider, among other things, whether
the Merger can reasonably be expected to produce benefits to the public such as
greater convenience, increased competition and gains in efficiency that
outweigh possible adverse effects such as undue concentration of resources,
decreased or unfair competition, conflicts of interest and unsound banking
practices.
The Bank Merger. AmSouth plans to merge Fortune Bank into AmSouth Florida on
the Effective Date with AmSouth Florida being the survivor. The Bank Merger is
also subject to the prior receipt of certain regulatory approvals, and there
can be no assurance that such approvals will be obtained or that the Bank
Merger will be consummated. Receipt of such regulatory approvals is a condition
to the Merger.
The Bank Merger will require the prior approvals of (i) the Federal Reserve
Board pursuant to Section 5(d)(3) of the Federal Deposit Insurance Act (the
"FDIA"), (ii) the FDIC pursuant to the Bank Merger Act, (iii) the OTS pursuant
to its transfer of assets regulations, and (iv) the Florida Department of
Banking and Finance (the "Florida Department"). In acting upon applications
under Section 5(d)(3) of the FDIA and the Bank Merger Act, the Federal Reserve
Board and the FDIC must take into consideration, among other factors, the
financial and managerial resources and future prospects of the institutions and
the convenience and needs of the communities to be served. The relevant
statutes prohibit the Federal Reserve Board and the FDIC from approving the
Bank Merger (i) 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 (ii) if its effect in
any section of the country may be substantially to lessen competition or to
tend to create a monopoly, or if it would in any other manner be a restraint of
trade, unless those agencies find that any anticompetitive effects are clearly
outweighed by the public interest and the
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probable effect of the transaction in meeting the convenience and needs of the
communities to be served. Under the Bank Merger Act, the Bank Merger may not
be consummated until the 30th day following the date of FDIC approval. The
Federal Reserve Board also has the authority to deny an application if it
concludes that the combined organization would have an inadequate capital
position or if the requirements of the Community Reinvestment Act of 1977 have
not adequately been met.
In acting upon a transfer of assets application filed with it, the OTS will
take into consideration, among other factors, the financial and managerial
resources and future prospects of the institutions, whether any supervisory
problems exist with respect to Fortune Bank and the convenience and needs of
the communities to be served.
The Florida Department will approve a transaction such as the Bank Merger if
it appears that: (i) the surviving state chartered bank meets the requirements
of Florida law as to the formation of a new state bank; (ii) the agreement
provides the surviving state bank with an adequate capital structure in
relation to its deposit liabilities and post-merger activities; (iii) the
agreement is fair; and (iv) the transaction is not contrary to public policy.
The Florida law requirements for approval of the formation of a new state bank
(which requirements will apply to the surviving state bank) include a finding
by the Florida Department that: (1) the state bank will promote public
convenience; (2) local conditions indicate reasonable promise of successful
operation for the state bank and those financial institutions already in the
primary service area; (3) the capitalization of the state bank is adequate;
(4) the capital structure meets certain requirements (including paid-in
capital of an amount not less than 50% of total capital accounts, paid-in
surplus equal to not less than 20% of paid-in capital and a fund for undivided
profits equal to not less than 5% of paid-in capital); and (5) the officers
and directors have sufficient financial institution experience. Approval by
the Florida Department is subject to receipt of federal regulatory approvals
and will be deemed revoked and terminated if such federal regulatory approvals
are not received within six months after approval by the Florida Department.
Status of Regulatory Approvals and Other Information. Applications have been
submitted seeking the approval of the OTS and the Florida Department with
respect to the Merger and/or the Bank Merger, as appropriate. Approvals of the
Federal Reserve Board and the FDIC have been obtained.
The Merger cannot proceed in the absence of the requisite regulatory
approvals. See "Proposal to Approve the Merger--Conditions to Each Party's
Obligations." There can be no assurance that the other regulatory approvals
will be obtained, and, if obtained, there can be no assurance as to the date
of any such approvals. There can also be no assurance that any such approvals
will not contain a condition or requirement that causes such approvals to fail
to satisfy the conditions set forth in the Merger Agreement and described
above under "Proposal to Approve the Merger--Conditions to Each Party's
Obligations." There can likewise be no assurance that the United States
Department of Justice or a state attorney general will not challenge the
Merger or the Bank Merger, or if such a challenge is made, as to the result
thereof.
On June 1, 1993, Fortune and Fortune Bank filed applications with the OTS
and the Florida Department for permission to convert Fortune Bank from a state
chartered savings association to a state chartered commercial bank. The
conversion has been approved by the Florida Department and the OTS. Approval
must also be obtained from the Federal Reserve Board in order to consummate
the conversion. Fortune has not yet filed an application with the Federal
Reserve Board. Fortune has agreed in the Merger Agreement that it will not
complete the conversion without AmSouth's prior written consent. The parties
do not expect that the conversion process (whether or not completed) will
materially affect the timing or prospects for the regulatory approvals of the
Merger or the Bank Merger. However, Fortune presently intends, assuming all
regulatory approvals are obtained and remain in effect, that it would complete
the conversion if the Merger is not consummated.
CONDUCT OF BUSINESS PENDING MERGER
The Merger Agreement contains certain restrictions regarding the conduct of
Fortune's and AmSouth's business pending consummation of the Merger. In
particular, Fortune has agreed that, before the Effective
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Date, except as permitted by the Merger Agreement or the Stock Option Agreement
or as otherwise consented to in writing by AmSouth, it and each of its
subsidiaries will not: (a) declare or pay any dividends on or make other
distributions in respect of any of its outstanding shares of capital stock,
except for regular quarterly dividends on Fortune Common Stock and Fortune
Preferred Stock and except for a final pro rata dividend on Fortune Common
Stock and Fortune Preferred Stock for the portion of the quarter that has
elapsed before the Effective Date occurs, or effect certain other changes in
its capitalization; (b) issue any additional shares of its capital stock, or
any options, calls or commitments relating to its capital stock, or any
convertible or similar securities, subject to certain exceptions (including
certain securities pursuant to existing benefit plans and agreements); (c) make
any increases in compensation or agree to pay any bonus, except in the ordinary
course of business consistent with past practice; (d) substantially modify its
business as heretofore conducted or enter into a new line of business; (e)
amend its articles of incorporation or bylaws or Fortune Bank's articles of
incorporation or bylaws; (f) dispose of or discontinue any major portion of its
business or property, or merge or consolidate with, or acquire all or (relative
to Fortune) a substantial portion of, the business or property of another
entity; (g) dispose of any material assets except in the ordinary course of
business; (h) enter into, terminate or modify (except as may be required by
applicable law) any pension, retirement, stock option, stock purchase, savings,
profit sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit plan or arrangement or agreement related thereto, with
respect to its directors, officers or other employees; or (i) knowingly take
any action for the purpose of causing deterioration of its customer deposit or
loan relationships, or without written notice to AmSouth, take any action that
would reasonably be likely to have such effect.
AmSouth has agreed that it will not, and will not permit any of its bank
subsidiaries to, without the prior written consent of Fortune: (a)
substantially modify the manner in which it has conducted its business; (b)
dispose of to a non-affiliate of AmSouth, or discontinue, any major portion of
its business; or (c) declare or pay any cash dividend on AmSouth Common Stock
inconsistent with prior practices (including its history of increases in cash
dividends).
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any time
before the Effective Date, whether before or after approval by the shareholders
of Fortune: (a) by mutual consent of AmSouth and Fortune; (b) by either AmSouth
or Fortune if there has been a material breach of any representation, warranty,
covenant or agreement on the part of the other party set forth in the Merger
Agreement which breach has not been cured within 45 days after notice; (c) by
either AmSouth or Fortune if the Merger is not consummated before June 30, 1994
(subject to extension to September 30, 1994, in the case of a protest to the
Merger under the Community Reinvestment Act), unless the delay is due to a
breach by the party seeking to terminate; (d) by either party if the agreement
is not approved by holders of Fortune Common Stock and Fortune Preferred Stock;
(e) by either party if regulatory approvals are not obtained, or by AmSouth if
such approvals are unreasonably conditioned; (f) by Fortune if the average
closing price of AmSouth Common Stock as reported on the NYSE composite
transactions tape over a designated time period is less than $27.00, as
described under "Proposal to Approve the Merger--Price-Based Termination"; and
(g) by AmSouth or Fortune if either discovers certain material adverse
conditions with respect to the other as described in "Proposal to Approve the
Merger--Conditions to Each Party's Obligations."
MANAGEMENT AFTER THE MERGER
The directors and officers of AmSouth and AmSouth Florida immediately prior
to the Effective Date will continue as directors and officers of those
respective entities thereafter as will those directors and officers of Fortune
Bank retained by AmSouth and AmSouth Florida. See "Election to AmSouth Board of
Directors" and "Severance Compensation Plan" below.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of Fortune's Board of Directors,
shareholders should be aware that certain members of Fortune's Board of
Directors and management may be deemed to have interests in the Merger in
addition to their interests, if any, as holders of Fortune Common Stock.
Election to AmSouth Board of Directors. Pursuant to the Merger Agreement,
John R. Torell III, Chairman of the Board of Directors and Chief Executive
Officer of Fortune, will be nominated to the Board of Directors of AmSouth as
soon as practicable after the Effective Date.
Severance Compensation Plan. Fortune's severance compensation plan was
adopted in 1992, and amended in February 1994 (the "Severance Plan"). The
Severance Plan protects certain senior management employees if a change in
control of Fortune results in voluntary or involuntary termination of
employment within two years of the change in control, provided that following
the change in control the employee's compensation is reduced or his
responsibilities are diminished. The definition of "change in control" includes
the merger of Fortune into another company. The plan provides for two levels of
severance compensation depending on the office held by plan beneficiaries.
Severance payments will not be made if the termination of employment is due to
death, retirement, termination for cause or disability. Pursuant to the Merger
Agreement, AmSouth has agreed to honor the terms and provisions of the
Severance Plan.
Upon a qualifying termination, Senior Vice Presidents of Fortune will
receive: (a) a lump sum payment equal to their respective highest weekly gross
salary during the two-year period preceding the termination multiplied by 52;
(b) a lump sum payment equal to the greater of (i) their respective bonus
payments for the last fiscal year, or (ii) a pro rata share of the anticipated
bonus for the current fiscal year (determined by the number of complete months
worked in the fiscal year divided by 12); and (c) a paid-up annuity providing
the employee with the pension benefits he would have received under the Fortune
pension plan had the employee been fully vested and remained with Fortune at
the employee's current compensation level through the date of vesting. If the
employee is vested at the time of termination, he will not receive the annuity
described in (c) above. There are 11 Senior Vice Presidents of Fortune covered
under the Severance Plan.
Upon a qualifying termination, the Chief Executive Officer, President and
Executive Vice Presidents of Fortune will be paid: (a) a lump sum payment equal
to their highest weekly salary in the preceding two-year period multiplied by
104; (b) a lump sum payment equal to an amount equal to two times the greater
of (i) their respective bonus payments for the last fiscal year, or (ii) a pro
rata share of the bonus the employee likely would have received in the current
fiscal year; and (c) a paid-up annuity providing the employee with the pension
benefits he would have received under the Fortune pension plan had the employee
been fully vested and remained with Fortune at his current compensation level
through the date of vesting. The aggregate present value of the severance
benefit may not exceed three times the employee's base amount under Section
280G of the Code. Thus, an employee may not receive more than three times the
employee's average annual income over the prior five-year period. If a change
in control occurred giving rise to payments under the Severance Plan on March
30, 1994, the approximate amounts payable to the executive officers covered
under the Severance Plan and named in the Summary Compensation Table are
estimated to be as follows: Mr. Torell, $693,560; Mr. McCraw, $723,830; Mr.
Shaw, $370,000; Mr. Gladysz, $328,000 and Mr. Griffin, $342,000.
The February 1994 Amendment will only apply to certain senior management
officers of Fortune who accept employment with AmSouth after the Merger (the
"Designated Employees"). The effect of the Amendment is as follows:
(i) a qualifying termination will only include (a) a voluntary
termination after the employee has been assigned to a job with a lower
grade than the job that the employee initially accepted at AmSouth or (b)
involuntary termination, except because of death, disability, retirement or
termination for cause;
(ii) the lump sum payment and bonus payment that may be received will be
reduced by the amount of compensation received from AmSouth during the
period for which the payment is calculated.
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The executive officers currently identified as Designated Employees are Mr.
McCraw and Mr. Shaw. The amounts that could be received under the Amendment due
to a qualifying termination cannot be determined at this time, but would be
less than the amounts shown above.
AmSouth also has entered into additional agreements with Mr. McCraw and Mr.
Shaw. The agreement with Mr. McCraw provides that AmSouth Florida will employ
Mr. McCraw as Executive Vice President and West Coast Area Executive and a
director of AmSouth Florida and will pay him a $50,000 retention bonus on
December 31, 1994 and a $50,000 retention bonus on December 31, 1995. Mr.
McCraw will be paid a base salary of $180,000 and established as a participant
in AmSouth's Executive Incentive Plan. Mr. McCraw will be granted 4,000 shares
of restricted AmSouth Common Stock and options to purchase 5,000 shares of
AmSouth Common Stock within 60 days of employment and will be provided a
monthly auto allowance, a Change in Control Agreement and country club
membership.
The agreement with Mr. Shaw provides that AmSouth Mortgage Company, Inc. will
employ Mr. Shaw as Executive Vice President and head of the Clearwater-based
operations of AmSouth Mortgage Company, Inc. upon consummation of the Merger
and will pay him (i) a bonus of $25,000 upon completion of the Merger, and (ii)
an annual base salary of $142,000. Mr. Shaw will be established as a
participant in AmSouth's Management Incentive Plan and will be granted 2,000
shares of restricted AmSouth Common Stock and options to purchase 2,500 shares
of AmSouth Common Stock. Mr. Shaw will be a director of AmSouth Mortgage
Company, Inc. and will be given an auto allowance and certain club dues.
Stock Options. The Merger Agreement provides that holders of options granted
under Fortune's stock option plans to buy shares of Fortune Common Stock that
have not been exercised before the Effective Date of the Merger, whether or not
such options are exercisable, will receive in replacement of their options to
purchase Fortune Common Stock either: (a) an option to purchase AmSouth Common
Stock on the same terms as the option to purchase shares of Fortune Common
Stock, in an amount and at a price appropriately adjusted to reflect the per
share consideration received in the Merger by holders of Fortune Common Stock;
or (b) cash in an amount equal to the difference between (i) the per share
consideration to be received in the Merger by holders of Fortune Common Stock,
and (ii) the exercise price of the subject Fortune Common Stock option. Subject
to the foregoing, each option to buy Fortune Common Stock will terminate on
consummation of the Merger. The determination of whether a Fortune option will
be converted into the right to receive cash or a substitute AmSouth option will
be made by AmSouth, in its sole discretion, on a case by case basis. As of
March 30, 1994, directors and officers as a group held options outstanding on
164,979 shares of Fortune Common Stock under these plans with an average
exercise price of $16.48. The Merger Agreement does not restrict the
exercisability, before the Merger, of options for Fortune Common Stock that
were granted under existing Fortune benefit plans. Also, the Merger Agreement
does not restrict the ability of an option holder to sell, before the Merger,
Fortune Common Stock obtained after exercise of an option.
Restricted Stock Awards. Pursuant to Fortune's 1993 Stock Incentive Plan,
1991 Stock Incentive Plan and Restricted Stock Bonus Plan, Fortune has awarded
bonuses of restricted shares of Fortune Common Stock to certain of its
directors and officers. These shares vest in accordance with a predetermined
vesting schedule. As of March 30, 1994, there were 80,242 restricted shares
issued under the 1993 and 1991 Stock Incentive Plans and 7,060 restricted
shares issued under the Restricted Stock Bonus Plan, respectively, which were
nonvested. Under the terms of the 1991 and 1993 Stock Incentive Plans and the
Restricted Stock Bonus Plan, upon a change of control of Fortune, the Board of
Directors of Fortune may vote to make a cash payment to the holders of all
nonvested shares in an amount equal to the fair market value of such nonvested
shares on the date of the change in control. Alternatively, the Compensation
Committee appointed by the Board of Directors may accelerate the vesting of
such restricted shares at any time. Under the terms of the 1993 Stock Incentive
Plan and the Restricted Stock Bonus Plan, the Board of Directors of Fortune may
instead vote to call for forfeiture of all non-vested shares on the date of the
change in control. The Board of Directors of Fortune has not yet taken any
action with regard to these alternatives. If the vesting of restricted shares
is accelerated prior to the Merger, the holders of such shares will have the
same rights with respect to the Merger as any other holder of shares of Fortune
Common Stock.
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Indemnification. For a discussion of certain agreements by AmSouth to provide
indemnification of directors and officers of Fortune, see "Proposal to Approve
the Merger--Indemnification."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The discussion below provides general information about certain expected
federal income tax consequences of the Merger. EACH FORTUNE SHAREHOLDER SHOULD
CONSULT HIS OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER
FOR SUCH SHAREHOLDER, INCLUDING THE APPLICABLE AND POSSIBLE EFFECT OF FOREIGN,
STATE AND LOCAL TAX LAWS. The consummation of the Merger is conditioned upon
the receipt by Fortune of an opinion from counsel that is satisfactory to
Fortune and upon the receipt by AmSouth of an opinion from independent
accountants that is satisfactory to AmSouth, both opinions dated the Effective
Date, to the effect that for federal income tax purposes the Merger will
constitute a reorganization within the meaning of Section 368 of the Code.
Also, counsel's opinion to Fortune is to cover the following additional federal
income tax consequences:
(a) except with respect to holders of Fortune Common Stock and Fortune
Preferred Stock who exercise dissenters' rights and except for cash
payments, including cash in lieu of a fractional share interest, to holders
of Fortune Common Stock or Fortune Preferred Stock no gain or loss will be
recognized by a holder of Fortune Common Stock or Fortune Preferred Stock
upon conversion in the Merger of such stock into AmSouth Common Stock,
(b) the basis of the shares of AmSouth Common Stock to be received by a
shareholder of Fortune will be the same as such shareholder's basis in the
Fortune Common Stock or Fortune Preferred Stock exchanged therefor, and
(c) the holding period of the AmSouth Common Stock received in the Merger
by a holder of Fortune Common Stock or Fortune Preferred Stock exchanged
therefor will include the period during which such holder held the Fortune
Common Stock or Fortune Preferred Stock exchanged therefor, provided that
such Fortune Common Stock or Fortune Preferred Stock was held as a capital
asset immediately before the Effective Date.
In rendering the foregoing opinions, counsel and the independent accountants
will be entitled to rely on representations by AmSouth and Fortune as to
factual matters.
The federal income tax consequences of the Merger to a Fortune shareholder
will differ depending primarily upon whether such shareholder receives for his
Fortune stock solely cash, solely AmSouth Common Stock (except for cash
received in lieu of fractional shares of AmSouth Common Stock) or both cash and
AmSouth Common Stock. The following discussion describes generally counsel's
opinion to Fortune with respect to the federal income tax consequences to
Fortune shareholders in each of these categories. The discussion is based on
the assumption that the Fortune shares constitute a capital asset in the hands
of the shareholders.
Tax Consequences to Fortune Shareholders Who Receive Solely Cash for their
Shares in the Merger. The exchange by a Fortune shareholder of all his Fortune
shares solely for cash in the Merger (or as the result of such shareholder's
exercise of dissenters' rights) will be a taxable transaction for federal
income tax purposes. Such a shareholder will recognize gain or loss measured by
the difference between the tax basis for his Fortune shares and the amount of
cash received (unless the receipt of cash is treated as a dividend, as
described below). In general, such gain or loss will be computed separately for
each block of stock held by the shareholder and will be capital gain or loss.
In certain circumstances, the receipt of solely cash by a Fortune shareholder
could be treated as a dividend (to the extent of the shareholder's ratable
share of applicable earnings and profits) if the shareholder constructively
owns shares of Fortune stock that are exchanged for AmSouth Common Stock in the
Merger. Additionally, in certain circumstances, although the application of the
law is not entirely clear, the receipt of solely cash by a Fortune shareholder
could be treated as a dividend (to the extent of the shareholder's ratable
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share of applicable earnings and profits) if the shareholder owns AmSouth
Common Stock, actually or constructively, after the Merger (other than AmSouth
shares received in the Merger). Generally, a shareholder constructively owns
stock that is owned by members of the shareholder's family, and by certain
controlled or related partnerships, estates, trusts and corporations, pursuant
to the constructive ownership rules of Section 318 of the Code, as well as any
shares that the shareholder has an option to acquire.
The receipt of solely cash by a Fortune shareholder in exchange for his
Fortune stock will not be treated as a dividend if such exchange or receipt
results in a meaningful reduction or a substantially disproportionate reduction
in the shareholder's ownership interest or results in a complete termination of
the shareholder's interest, taking into account, in each case, the constructive
ownership rules described above. A complete termination of a shareholder's
interest will occur if, after receipt of cash in exchange for Fortune stock,
the shareholder owns no shares of stock in AmSouth. Thus, a Fortune shareholder
who receives solely cash for all of the Fortune shares actually owned by him
will generally qualify for capital gain treatment under the complete
termination test if none of the Fortune shares constructively owned by him are
exchanged in the Merger for AmSouth Common Stock and the shareholder does not
otherwise own, actually or constructively, any shares of AmSouth Common Stock
after the Merger. Where the complete termination of interest test is not
satisfied with respect to a particular shareholder (because, for example,
Fortune shares owned by a related party are exchanged for AmSouth Common Stock
in the Merger), that shareholder will nonetheless generally be entitled to
capital gain treatment if the receipt of cash in exchange for his Fortune
shares results in a "substantially disproportionate" reduction or a
"meaningful" reduction in his ownership interest.
Although the application of the law is not entirely clear, a shareholder's
reduction in ownership interest should normally be "substantially
disproportionate," and capital gain treatment should normally result, if the
shareholder's proportionate stock interest in AmSouth immediately after the
Merger is 20% or more below what his proportionate interest in AmSouth would
have been if he had received solely AmSouth Common Stock in the Merger. Even if
such reduction in interest would not amount to 20%, the Internal Revenue
Service has indicated in published rulings that a distribution that results in
any actual reduction in interest of a small, minority shareholder in a publicly
held corporation will result in a "meaningful" reduction and will not
constitute a dividend if the shareholder exercises no control with respect to
corporate affairs.
Tax Consequences to Fortune Shareholders Who Receive Solely AmSouth Stock in
the Merger. A Fortune shareholder will recognize neither gain nor loss on the
exchange of all his Fortune shares solely for AmSouth Common Stock in the
Merger. The tax basis of the AmSouth Common Stock received in the Merger by
such a Fortune shareholder will be equal to the shareholder's tax basis for the
Fortune stock exchanged therefor, and such shareholder will include the period
during which the Fortune stock surrendered was held in his holding period for
the AmSouth Common Stock received in exchange therefor.
Fortune shareholders who receive cash in lieu of fractional shares of AmSouth
Common Stock will be treated for federal income tax purposes as if the
fractional shares were distributed as part of the exchange and then redeemed by
AmSouth. These cash payments will be treated as having been received in full
payment in exchange for the amount of AmSouth Common Stock so redeemed. The
shareholders will recognize capital gain or loss equal to the difference
between the cash received and the basis of the fractional share interest that
would have been issued.
Tax Consequences to Fortune Shareholders Who Receive Both Cash and AmSouth
Stock in the Merger. The election procedures will relate to record ownership of
each class of Fortune stock. Accordingly, it is possible that a beneficial
owner of Fortune Common Stock who holds his shares in more than one record
ownership or a record holder of both Fortune Common Stock and Fortune Preferred
Stock could receive both cash (in addition to cash received in lieu of
fractional shares of AmSouth Common Stock) and AmSouth Common Stock in exchange
for shares of Fortune stock. Fortune shareholders who receive cash in exchange
for some of their shares of Fortune stock, and who realize a gain upon the
exchange (with gain or loss computed separately for each block of Fortune stock
exchanged and measured by the excess of the fair market value of the
consideration received over the tax basis of the Fortune stock exchanged), will
recognize such
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gain only to the extent of the cash received with respect to such shares. In
certain circumstances, although the application of the law is not entirely
clear, it is possible that the cash received in the Merger by a shareholder in
exchange for some of his shares of Fortune stock will be treated for federal
income tax purposes as received by such shareholder ratably as partial
consideration (in addition to AmSouth Common Stock) for each share of Fortune
stock exchanged by him in the Merger. An analysis similar to the analysis
relating to Fortune shareholders who receive solely cash for their shares in
the Merger will apply to determine if the receipt of any of such cash by the
shareholder will be treated as the receipt of a dividend (rather than a capital
gain). No loss will be recognized by a Fortune shareholder who realizes a loss
with respect to the exchange of some of his Fortune shares for cash, but also
receives AmSouth Common Stock in exchange for other shares of Fortune stock.
BACKUP WITHHOLDING
Unless an exemption applies under the applicable law and regulations, the
Exchange Agent will be required to withhold 31% of any cash payments to which a
Fortune shareholder or other payee is entitled pursuant to the Merger unless
the shareholder or other payee provides its taxpayer identification number
(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 that accompanies the Election Form, 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 the
Exchange Agent.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. IT
DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE MERGER. THE
DISCUSSION AND THE OPINIONS DESCRIBED ABOVE ARE BASED ON CURRENTLY EXISTING
PROVISIONS OF THE CODE, EXISTING TREASURY REGULATIONS THEREUNDER AND CURRENT
ADMINISTRATIVE RULINGS AND COURT DECISIONS. THE OPINIONS DESCRIBED ABOVE ARE
NOT BINDING UPON THE INTERNAL REVENUE SERVICE, AND NO RULINGS OF THE INTERNAL
REVENUE SERVICE WILL BE SOUGHT OR OBTAINED. THERE IS NO ASSURANCE THAT THE
INTERNAL REVENUE SERVICE WILL AGREE WITH THE FOREGOING DISCUSSION OR THE
OPINIONS DESCRIBED ABOVE. ALL OF THE FOREGOING ARE SUBJECT TO CHANGE AND ANY
SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION AND THE
OPINIONS. BECAUSE OF THE COMPLEXITIES OF THE TAX LAWS IN GENERAL, AND THE
COMPLEXITIES AND UNCERTAINTIES OF THE TAX CONSEQUENCES ASSOCIATED WITH THE
RECEIPT OF CASH IN THE MERGER IN PARTICULAR, EACH FORTUNE SHAREHOLDER SHOULD
CONSULT HIS OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF
THE MERGER TO HIM, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND
FOREIGN TAX LAWS.
ACCOUNTING TREATMENT
AmSouth intends to treat the Merger as a "purchase" under GAAP. Under the
purchase method of accounting, the assets and liabilities of Fortune will be,
as of the Effective Date, recorded at their respective fair values and added to
those of AmSouth. The expected excess of the consideration paid by AmSouth over
the fair value of Fortune's assets and liabilities will be recorded as
goodwill.
All pro forma financial information contained or incorporated by reference in
this Proxy Statement/Prospectus has been prepared using the purchase method to
account for the Merger. See "Summary Condensed Consolidated Financial
Information" and "Incorporation of Certain Documents by Reference."
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NYSE LISTING
AmSouth Common Stock is listed on the NYSE. AmSouth has agreed in the Merger
Agreement to use its best efforts to assure that the shares of AmSouth Common
Stock to be issued pursuant to the Merger Agreement be authorized for listing
on the NYSE. An application will be filed by AmSouth for listing the shares of
AmSouth Common Stock on the NYSE.
EXPENSES
Except as set forth below, whether or not the Merger is consummated, all
expenses incurred in connection with the Merger Agreement shall be paid by the
party incurring such expense. Expenses incurred in connection with printing of
the Registration Statement and this Proxy Statement/Prospectus shall be shared
equally by AmSouth and Fortune. If the Merger Agreement is terminated by one
party because of another party's breach of a material representation, warranty
or covenant or because of the discovery of a material adverse condition with
respect to the other party, then the breaching party or the party with respect
to which a material adverse condition was discovered shall promptly pay its own
transaction expenses and half of the other party's transaction expenses.
CERTAIN RELATED TRANSACTIONS
THE STOCK OPTION AGREEMENT
As an inducement and a condition to AmSouth's execution of the Merger
Agreement, AmSouth and Fortune entered into the Stock Option Agreement, dated
September 13, 1993, pursuant to which Fortune granted AmSouth an option (the
"Option") entitling AmSouth to purchase up to 551,034 shares, or approximately
9.9% of the outstanding shares, of Fortune Common Stock on September 13, 1993.
The Option may be exercised, subject to termination within certain periods,
only under the circumstances described below (none of which has yet occurred to
the best of AmSouth's and Fortune's knowledge) at a cash price per share equal
to $34.25, subject to adjustment in certain circumstances.
The Stock Option Agreement is intended to increase the likelihood that the
Merger will be consummated in accordance with the terms of the Merger
Agreement, and may discourage persons from proposing a competing offer to
acquire Fortune. The existence of the Stock Option Agreement could
significantly increase the cost to a potential acquiror of acquiring Fortune,
compared to its cost had Fortune not entered into the Stock Option Agreement.
The following is a brief summary of the terms of the Stock Option Agreement,
a copy of which is attached as Annex B to this Proxy Statement/Prospectus and
is incorporated herein by reference. Such summary is qualified in its entirety
by reference to the Stock Option Agreement.
Subject to applicable law and regulatory restrictions, AmSouth may exercise
the Option, in whole or in part, only if a Purchase Event (defined below)
occurs before the Option's termination, so long as AmSouth, at the time, is not
in material breach of the Merger Agreement. "Purchase Event" means either:
(a) Fortune authorizes, recommends or publicly proposes or enters an
agreement with any person other than AmSouth to effect an Acquisition
Transaction, or fails to publicly oppose a Tender Offer or an Exchange Offer.
"Acquisition Transaction" means (i) a merger, consolidation or similar
transaction involving Fortune or Fortune Bank, (ii) the disposition, by sale,
lease, exchange, or otherwise, of assets of Fortune or Fortune Bank
representing 15% or more of the consolidated assets of Fortune and its
subsidiaries, or (iii) the issuance, sale or other disposition of securities
representing more than 25% of the voting power of Fortune or Fortune Bank,
other than the issuance of securities as a result of the conversion of Fortune
Preferred Stock or Debentures. "Tender Offer" and "Exchange Offer" mean a
tender offer or exchange offer by a person to purchase any shares of Fortune
Common Stock such that, upon consummation of such offer, such person would own
or control more than 25% of the then outstanding shares of Fortune Common
Stock; or
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(b) Any person or group (other than AmSouth or any subsidiary) acquires
beneficial ownership, or any persons form a group (as such term is defined
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
which beneficially owns or has the right to acquire beneficial ownership, of
more than 25% of the then outstanding shares of Fortune Common Stock.
The Option will terminate upon the earliest to occur of the following: (1)
immediately before the Effective Date; (2) 12 months after the first
occurrence of a Purchase Event; (3) 18 months after the termination of the
Merger Agreement following the occurrence of a Preliminary Purchase Event
(defined below); or (4) 12 months after the termination of the Merger
Agreement (i) by AmSouth pursuant to the occurrence of a material breach by
Fortune of any representation, warranty or covenant, or (ii) by the mutual
consent of AmSouth and Fortune if AmSouth at the time would have been entitled
to terminate the Merger Agreement due to a material breach by Fortune (but if
within 12 months after such termination a Purchase Event or a Preliminary
Purchase Event occurs, then the Option terminates 12 months after the first
occurrence of such event).
"Preliminary Purchase Event" means either:
(a) any person (other than AmSouth or any subsidiary) commences or files a
registration statement under the Securities Act with respect to a Tender Offer
or Exchange Offer; or
(b) the shareholders of Fortune have not approved the Merger Agreement at
the Annual Meeting, the Annual Meeting is not held or is cancelled before
termination of the Merger Agreement, or Fortune's Board of Directors withdraws
or modifies in a manner adverse to AmSouth the recommendation of Fortune's
Board of Directors with respect to the Merger Agreement, in each case, after
it has been publicly announced that any person (other than AmSouth or any
subsidiary) has (i) made, or disclosed an intention to make, a proposal to
engage in an Acquisition Transaction, (ii) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect to an Exchange
Offer, or (iii) filed an application (or given a notice), whether in draft or
final form, under the Bank Holding Company Act, the Home Owner's Loan Act of
1933, the Bank Merger Act, or the Change in Bank Control Act of 1978, for
approval to engage in an Acquisition Transaction.
If AmSouth is entitled and seeks to exercise the Option, it must send to
Fortune a written notice (the date of which is the "Notice Date") specifying
the total number of shares of Fortune Common Stock that AmSouth intends to
purchase. If prior notification to regulatory authorities is required in
connection with such purchase, Fortune must cooperate with AmSouth in the
filing of the required notice or application for approval and the obtaining of
such approval. Under applicable law, AmSouth may not acquire five percent or
more of the issued and outstanding shares of Fortune Common Stock without the
prior approval of the Federal Reserve Board. Certain other regulatory
approvals (including approvals from the OTS and the Florida Department of
Banking and Finance) may also be required before such an acquisition could be
completed.
The Option may be assigned by AmSouth (i) in whole or in part, after the
occurrence of a Purchase Event, (ii) in whole, to a wholly owned subsidiary at
any time, or (iii) in whole or in part, with the prior written approval of
Fortune. Also, any shares of Fortune Common Stock purchased upon the exercise
of the Option may, under certain circumstances, be resold by AmSouth pursuant
to certain registration rights under the Stock Option Agreement. If there is
any change in the Fortune Common Stock by reason of stock dividends, split-
ups, recapitalizations, repurchases or the like, the type and number of shares
of Fortune Common Stock subject to the Option, and the purchase price per
share, as the case may be, will be adjusted appropriately. If any additional
shares of Fortune Common Stock are issued after September 13, 1993 (other than
pursuant to an event described in the preceding sentence), the number of
shares of Fortune Common Stock subject to the Option will be adjusted so that,
after such issuance, it equals 9.9% of the number of shares of Fortune Common
Stock then issued and outstanding, without giving effect to any shares subject
to or issued pursuant to the Option.
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If, before termination of the Option, Fortune enters into an acquisition
agreement with a party other than AmSouth, the acquisition agreement must make
proper provision so that the Option will, on the consummation of the
transaction contemplated thereby and upon the terms and conditions set forth
in the Stock Option Agreement, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of AmSouth, of either (x) the
acquiring person, (y) any person that controls the acquiring person, or (z)
Fortune, in case of a merger in which Fortune is the survivor. The Substitute
Option must have substantially the same terms as the Option, but in no event
will the Substitute Option be exercisable for more than 9.9% of the shares of
common stock of the issuer of the Substitute Option. If the Substitute Option
would be exercisable for more than 9.9% of such shares, the issuer of the
Substitute Option will make a cash payment to AmSouth equal to the decrease in
value of the Substitute Option resulting from the effect of this limitation.
RESALES OF AMSOUTH COMMON STOCK
All shares of AmSouth Common Stock received by Fortune shareholders in the
Merger will be freely transferable, except that shares of AmSouth Common Stock
received by persons who are deemed to be "affiliates" (as such term is defined
under the Securities Act) of Fortune before the Merger may be resold by them
only in transactions permitted by the resale provisions of Rule 145
promulgated under the Securities Act (or Rule 144 in the case of such persons
who become affiliates of AmSouth), or as otherwise permitted under the
Securities Act. Persons who may be deemed to be affiliates of Fortune or
AmSouth generally include individuals or entities that control, are controlled
by, or are under common control with, such party and may include certain
officers and directors of such party as well as principal shareholders of such
party. Fortune has agreed in the Merger Agreement to use its best efforts to
cause each director, officer and other person who is an affiliate of Fortune
to enter into a written agreement to the effect that such person will not
offer or sell or otherwise dispose of any of the shares of AmSouth Common
Stock issued to such person in or pursuant to the Merger in violation of the
Securities Act or the rules and regulations promulgated by the Commission
thereunder.
CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth certain of the material elements of the
regulatory framework applicable to banks and bank holding companies and
provides certain specific information relevant to AmSouth. Federal regulation
of financial institutions such as AmSouth is intended primarily for the
protection of depositors rather than shareholders of those entities. See
"Available Information" and "Incorporation of Certain Documents by Reference."
GENERAL
As a bank holding company, AmSouth is subject to the regulation and
supervision of the Federal Reserve Board under the Bank Holding Company Act of
1956, as amended (the "BHCA"). Under the BHCA, bank holding companies may not
in general directly or indirectly acquire the ownership or control of more
than 5% of the voting shares or substantially all of the assets of any
company, including a bank, without the prior approval of the Federal Reserve
Board. In addition, bank holding companies are generally prohibited under the
BHCA from engaging in nonbanking activities, subject to certain exceptions.
AmSouth's subsidiary banks (the "Subsidiary Banks") are subject to
supervision and examination by applicable federal and state banking agencies.
AmSouth Alabama and Citizens National Bank of Naples (which under current
plans will be merged into AmSouth Florida in May 1994) are national banking
associations subject to regulation and supervision by the Comptroller of the
Currency (the "Comptroller"). All the other Subsidiary Banks are state-
chartered banks that are not members of the Federal Reserve System, and
therefore are generally subject to the regulations of and supervision by the
FDIC. The Subsidiary Banks are also subject to various requirements and
restrictions under federal and state law, including requirements to maintain
reserves against deposits, restrictions on the types and amounts of loans that
may be granted and
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the interest that may be charged thereon and limitations on the types of
investments that may be made and the types of services that may be offered.
Various consumer laws and regulations also affect the operations of the
Subsidiary Banks. In addition to the impact of regulation, commercial banks are
affected significantly by the actions of the Federal Reserve Board as it
attempts to control the money supply and credit availability in order to
influence the economy.
Consummation of the Merger will not result in AmSouth's becoming a savings
and loan holding company subject to regulation as such.
PAYMENT OF DIVIDENDS
AmSouth is a legal entity separate and distinct from its banking and other
subsidiaries. The principal source of cash flow of AmSouth, including cash flow
to pay dividends on AmSouth Common Stock, is dividends from the Subsidiary
Banks. There are statutory and regulatory limitations on the payment of
dividends by the Subsidiary Banks to AmSouth as well as by AmSouth to its
shareholders.
AmSouth Alabama (and Citizens National Bank of Naples prior to its merger
into AmSouth Florida) is required by federal law to obtain the prior approval
of the Comptroller for the payment of dividends if the total of all dividends
declared by the Board of Directors of such bank in any year will exceed the
total of (i) the bank's net profits (as defined and interpreted by regulation)
for that year plus (ii) the retained net profits (as defined and interpreted by
regulation) for the preceding two years, less any required transfers to
surplus. A national bank also can pay dividends only to the extent that
retained net profits (including the portion transferred to surplus) exceed bad
debts (as defined by regulation).
All of the other Subsidiary Banks are subject to varying restrictions on the
payment of dividends under applicable state laws. With respect to AmSouth
Florida and AmSouth Tennessee, state law imposes dividend restrictions
substantially similar to those imposed under federal law on AmSouth Alabama.
Furthermore, if, in the opinion of the applicable federal bank regulatory
authority, a bank under its jurisdiction is engaged in or is about to engage in
an unsafe or unsound practice (which, depending on the financial condition of
the bank, could include the payment of dividends), such authority may require,
after notice and hearing, that such bank cease and desist from such practice.
The Comptroller and the FDIC have indicated that paying dividends that deplete
a bank's capital base to an inadequate level would be an unsafe and unsound
banking practice. Under the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA"), an insured bank may not pay any dividend if payment
would cause it to become undercapitalized or once it is undercapitalized. See
"FDICIA." Moreover, the Federal Reserve Board, the Comptroller and the FDIC
have issued policy statements which provide that bank holding companies and
insured banks should generally only pay dividends out of current operating
earnings.
At December 31, 1993, under dividend restrictions imposed under federal and
state laws, the Subsidiary Banks, without obtaining governmental approvals,
could declare aggregate dividends of approximately $150.0 million.
The payment of dividends by AmSouth and the Subsidiary Banks may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.
CONVERSION OF AMSOUTH ALABAMA
On January 21, 1994, AmSouth announced that applications had been filed with
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") and the State of Alabama to convert AmSouth Alabama, its largest
subsidiary bank, from a national banking association to a state-chartered bank
that is a member of the Federal Reserve System.
AmSouth Alabama's operations, including its capital adequacy and capacity for
the payment of dividends, are not expected to change in any material respect as
a result of the conversion. Following the conversion, Amsouth Alabama's primary
federal regulator would be the Federal Reserve Board. It would no longer be
subject to regulation and supervision by the Comptroller.
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As an Alabama-chartered bank, in particular AmSouth Alabama would no longer
be subject to the regulations of the Comptroller with respect to payment of
dividends, but would be subject to similar restrictions under federal law and
Alabama state law.
TRANSACTIONS WITH AFFILIATES
There are various legal restrictions on the extent to which AmSouth and its
nonbank subsidiaries can borrow or otherwise obtain credit from its Subsidiary
Banks. Each Subsidiary Bank (and its subsidiaries) is limited in engaging in
borrowing and other "covered transactions" with nonbank or non-savings bank
affiliates to the following amounts: (i) in the case of any such affiliate, the
aggregate amount of covered transactions of the Subsidiary Bank and its
subsidiaries may not exceed 10% of the capital stock and surplus of such
Subsidiary Bank; and (ii) in the case of all affiliates, the aggregate amount
of covered transactions of the Subsidiary Bank and its subsidiaries may not
exceed 20% of the capital stock and surplus of such Subsidiary Bank. Covered
transactions also are subject to certain collateralization requirements.
"Covered transactions" are defined by statute to include a loan or extension of
credit, as well as a purchase of securities issued by an affiliate, a purchase
of assets (unless otherwise exempted by the Federal Reserve Board), the
acceptance of securities issued by the affiliate as collateral for a loan and
the issuance of a guarantee, acceptance or letter of credit on behalf of an
affiliate.
CAPITAL ADEQUACY
The Federal Reserve Board has adopted risk-based capital guidelines for bank
holding companies. The minimum guideline for the ratio of total capital ("Total
Capital") to risk-weighted assets (including certain off-balance-sheet items,
such as standby letters of credit) is 8%. At least half of the Total Capital
must be composed of common stock, minority interests in the equity accounts of
consolidated subsidiaries, noncumulative perpetual preferred stock and a
limited amount of cumulative perpetual preferred stock, less goodwill and
certain other intangible assets ("Tier 1 Capital"). The remainder may consist
of subordinated debt, other preferred stock and a limited amount of loan loss
reserves. At December 31, 1993, AmSouth's consolidated Tier 1 Capital and Total
Capital ratios were 10.95% and 13.31%, respectively. At December 31, 1993, on a
pro forma combined basis after giving effect to the Merger on a purchase
accounting basis AmSouth's consolidated Tier 1 Capital and Total Capital ratios
would have been approximately 9.63% and 13.19%, respectively. Also as of that
date, on a pro forma combined basis after giving effect to the Merger and to
the Other Business Combinations referred to under "Introduction--Parties to the
Merger--AmSouth," AmSouth's consolidated Tier 1 Capital and Total Capital
ratios would have been approximately 9.69% and 13.17%, respectively.
In addition, the Federal Reserve Board has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets (the "Leverage Ratio"), of 3% for bank holding companies that
meet certain specific criteria, including having the highest regulatory rating.
All other bank holding companies generally are required to maintain a Leverage
Ratio of at least 3%, plus an additional cushion of 100 to 200 basis points.
AmSouth's Leverage Ratio at December 31, 1993 was 8.65%. At December 31, 1993,
on a pro forma combined basis after giving effect to the Merger on a purchase
accounting basis AmSouth's Leverage Ratio would have been approximately 7.13%.
Also as of that date, on a pro forma combined basis after giving effect to the
Merger and the Other Business Combinations, AmSouth's Leverage Ratio would have
been approximately 7.09%. The guidelines also provide that bank holding
companies experiencing internal growth or making acquisitions will be expected
to maintain strong capital positions substantially above the minimum
supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve Board has indicated that it will consider a
"tangible Tier 1 Capital leverage ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
Each of the Subsidiary Banks is subject to risk-based and leverage capital
requirements similar to those described above adopted by the Comptroller or the
FDIC, as the case may be. AmSouth believes that each of
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the Subsidiary Banks was in compliance with applicable minimum capital
requirements as of December 31, 1993. Neither AmSouth nor any of the
Subsidiary Banks has been advised by any federal banking agency of any
specific minimum Leverage Ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. See "FDICIA."
All of the Federal banking agencies have proposed regulations that would add
an additional risk-based capital requirement based upon the amount of an
institution's exposure to interest rate risk. In addition, bank regulators
continue to indicate their desire generally to raise capital requirements
applicable to banking organizations beyond their current levels. However, the
management of AmSouth is unable to predict whether and when higher capital
requirements would be imposed and, if so, at what levels and on what schedule.
SUPPORT OF SUBSIDIARY BANKS
Under Federal Reserve Board policy, AmSouth is expected to act as a source
of financial strength to, and to commit resources to support, each of the
Subsidiary Banks. This support may be required at times when, absent such
Federal Reserve Board policy, AmSouth may not be inclined to provide it. In
addition, any capital loans by a bank holding company to any of its subsidiary
banks are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.
Under the FDIA, a depository institution insured by the FDIC can be held
liable for any loss incurred by, or reasonably expected to be incurred by, the
FDIC after August 9, 1989 in connection with (i) the default of a commonly
controlled FDIC-insured depository institution or (ii) any assistance provided
by the FDIC to any commonly controlled FDIC-insured depository institution "in
danger of default." "Default" is defined generally as the appointment of a
conservator or receiver and "in danger of default" is defined generally as the
existence of certain conditions indicating that a default is likely to occur
in the absence of regulatory assistance.
FDICIA
On December 19, 1991, FDICIA was enacted. FDICIA substantially revised the
depository institution regulatory and funding provisions of the FDIA and makes
revisions to several other federal banking statutes. Among other things,
FDICIA requires the federal banking regulators to take prompt corrective
action in respect of FDIC-insured depository institutions that do not meet
minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." Under applicable
regulations, an FDIC-insured depository institution is defined to be well
capitalized if it maintains a Leverage Ratio of at least 5%, a risk-adjusted
Tier 1 Capital Ratio of at least 6% and a Total Capital Ratio of at least 10%
and is not otherwise in a "troubled condition" as specified by its appropriate
federal regulatory agency. An FDIC-insured depository institution is defined
to be adequately capitalized if it maintains a Leverage Ratio of at least 4%,
a risk-adjusted Tier 1 Capital Ratio of at least 4% and a Total Capital Ratio
of at least 8%. In addition, an FDIC-insured depository institution will be
considered undercapitalized if it fails to meet any minimum required measure,
significantly undercapitalized if it is significantly below such measure and
critically undercapitalized if it fails to maintain a level of tangible equity
equal to not less than 2% of total assets. An FDIC-insured depository
institution may be deemed to be in a capitalization category that is lower
than is indicated by its actual capital position if it receives an
unsatisfactory examination rating.
The capital-based prompt corrective action provisions of FDICIA and their
implementing regulations apply to FDIC-insured depository institutions and are
not applicable to holding companies which control such institutions. However,
the Federal Reserve Board has indicated that, in regulating bank holding
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companies, it will take appropriate action at the holding company level based
on an assessment of the effectiveness of supervisory actions imposed upon
subsidiary depository institutions pursuant to such provisions and regulations.
Although the capital categories defined under the prompt corrective action
regulations are not directly applicable to AmSouth under existing law and
regulations, if AmSouth were placed in a capital category it would qualify as
well capitalized as of December 31, 1993.
FDICIA generally prohibits an FDIC-insured depository institution from making
any capital distribution (including payment of dividends) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subject to restrictions on borrowing from the Federal Reserve System. In
addition, undercapitalized depository institutions are subject to growth
limitations and are required to submit capital restoration plans. A depository
institution's holding company must guarantee the capital plan, up to an amount
equal to the lesser of 5% of the depository institution's assets at the time it
becomes undercapitalized or the amount of the capital deficiency when the
institution fails to comply with the plan. The federal banking agencies may not
accept a capital plan without determining, among other things, that the plan is
based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. If a depository institution fails to submit
an acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized depository institutions are subject to appointment
of a receiver or conservator.
AmSouth believes that at December 31, 1993, all of the Subsidiary Banks were
well capitalized under the criteria described above.
Various other legislation, including proposals to revise the bank regulatory
system and to limit the investments that a depository institution may make with
insured funds, is from time to time introduced in Congress.
BROKERED DEPOSITS
The FDIC has adopted regulations under FDICIA governing the receipt of
brokered deposits. Under the regulations, a bank cannot accept, rollover or
renew brokered deposits unless (i) it is well capitalized or (ii) it is
adequately capitalized and receives a waiver from the FDIC. A bank that cannot
receive brokered deposits also cannot offer "pass-through" insurance on certain
employee benefit accounts. Whether or not it has obtained such a waiver, an
adequately capitalized bank may not pay an interest rate on any deposits in
excess of 75 basis points over certain prevailing market rates specified by
regulation. There are no such restrictions on a bank that is well capitalized.
Because all the Subsidiary Banks were well capitalized as of December 31, 1993,
AmSouth believes the brokered deposits regulation will have no material effect
on the funding or liquidity of any of the Subsidiary Banks.
FDIC INSURANCE ASSESSMENTS
The Subsidiary Banks are subject to FDIC deposit insurance assessments. As
required by FDICIA, the FDIC has adopted a new risk-based premium schedule
which has increased the assessment rates for most FDIC-insured depository
institutions. Under the new schedule, the premiums initially range from $.23 to
$.31 for every $100 of deposits. Each financial institution is assigned to one
of three capital groups--well capitalized, adequately capitalized or
undercapitalized--and further assigned to one of three subgroups within a
capital group, on the basis of supervisory evaluations by the institution's
primary federal and, if applicable, state supervisors and other information
relevant to the institution's financial condition and the risk posed to the
applicable insurance fund. The actual assessment rate applicable to a
particular institution will, therefore, depend in part upon the risk assessment
classification so assigned to the institution by the FDIC.
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The FDIC is authorized to raise insurance premiums in certain circumstances.
Any increase in premiums would have an adverse effect on AmSouth's earnings.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by a federal
bank's regulatory agency.
DEPOSITOR PREFERENCE
The recently adopted Omnibus Budget Reconciliation Act of 1993 provides that
deposits and certain claims for administrative expenses and employee
compensation against an insured depository institution would be afforded a
priority over other general unsecured claims against such an institution,
including federal funds and letters of credit, in the "liquidation or other
resolution" of such an institution by any receiver.
DESCRIPTION OF AMSOUTH CAPITAL STOCK
The following summaries of certain provisions of the Restated Certificate of
Incorporation, as amended (the "AmSouth Certificate"), and the Bylaws of
AmSouth (the "AmSouth Bylaws") and the AmSouth Rights Agreement (defined below)
do not purport to be complete and are qualified in their entirety by reference
to such instruments, each of which is incorporated by reference as an exhibit
to the Registration Statement. See "Available Information."
GENERAL
As provided in the AmSouth Certificate, AmSouth's authorized capital stock
consists of 200,000,000 shares of AmSouth Common Stock and 2,000,000 shares of
preferred stock, without par value (the "AmSouth Preferred Stock"). As of the
Record Date, there were 51,658,378 shares of AmSouth Common Stock outstanding
and 1,500,000 shares of AmSouth Common Stock were held as treasury stock. As of
the date of this Proxy Statement/Prospectus, no shares of AmSouth Preferred
Stock were issued and outstanding.
The rights of AmSouth to participate in any distribution of assets of any
subsidiary upon its liquidation or reorganization or otherwise (and thus the
ability of AmSouth's shareholders to benefit indirectly from such distribution)
would be subject to the prior claims of creditors of that subsidiary, except to
the extent that AmSouth itself may be a creditor of that subsidiary with
recognized claims. Claims on AmSouth's subsidiaries by creditors other than
AmSouth will include substantial obligations with respect to deposit
liabilities and purchased funds. See "Certain Regulatory Considerations--
Payment of Dividends" and "--Support of Subsidiary Banks."
COMMON STOCK
Dividends. Subject to the rights of holders of AmSouth Preferred Stock, if
any, to receive certain dividends prior to the declaration of dividends on
shares of AmSouth Common Stock, when and as dividends, payable in cash, stock
or other property, are declared by the AmSouth Board, the holders of AmSouth
Common Stock are entitled to share ratably in such dividends.
Voting Rights. Each holder of AmSouth Common Stock has one vote for each
share held on matters presented for consideration by the shareholders.
Preemptive Rights. The holders of AmSouth Common Stock have no preemptive
rights to acquire any additional shares of AmSouth.
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Issuance of Stock. The AmSouth Certificate authorizes the AmSouth Board to
issue authorized shares of AmSouth Common Stock without shareholder approval.
However, AmSouth Common Stock is listed on the NYSE, which requires
shareholder approval of the issuance of additional shares of AmSouth Common
Stock under certain circumstances.
Liquidation Rights. In the event of liquidation, dissolution or winding-up
of AmSouth, whether voluntary or involuntary, the holders of AmSouth Common
Stock will be entitled to share ratably in any of its assets or funds that are
available for distribution to its shareholders after the satisfaction of its
liabilities (or after adequate provision is made therefor) and after
preferences of any outstanding AmSouth Preferred Stock.
PREFERRED STOCK
AmSouth Preferred Stock may be issued from time to time as a class without
series, or if so determined by the AmSouth Board, either in whole or in part
in one or more series. The voting rights, and such designations, preferences
and relative, participating, optional or other special rights, if any, and the
qualifications, limitations or restrictions thereof, if any, including, but
not limited to, the dividend rights, conversion rights, redemption rights and
liquidation preferences, if any, of any wholly unissued series of AmSouth
Preferred Stock (or of the entire class of AmSouth Preferred Stock if none of
such shares has been issued), the number of shares constituting any such
series and the terms and conditions of the issue thereof may be fixed by
resolution of the AmSouth Board. AmSouth Preferred Stock will have a
preference over AmSouth Common Stock with respect to the payment of dividends
and the distribution of assets in the event of the liquidation or winding-up
of AmSouth and such other preferences as may be fixed by the AmSouth Board.
AMSOUTH RIGHTS AGREEMENT
Each share of AmSouth Common Stock has, and when issued each of the Merger
Shares will have, attached to it one right (an "AmSouth Right") issued
pursuant to a Stockholder Protection Rights Agreement (the "AmSouth Rights
Agreement"). Each AmSouth Right entitles its registered holder to purchase one
one-hundredth of a share of AmSouth Series A Preferred Stock, without par
value, designed to have economic and voting terms similar to one share of
AmSouth Common Stock, for $115.00 (the "Exercise Price"), subject to
adjustment, after the close of business on the earlier of (i) the tenth day
after commencement of a tender or exchange offer which, if consummated, would
result in a person's becoming the beneficial owner of 15% or more of the
outstanding shares of AmSouth Common Stock (an "Acquiring Person") and (ii)
the tenth day after the first date (the "Flip-in Date") of public announcement
that a person has become an Acquiring Person. In any case, the time described
in the foregoing sentence is referred to as the "Separation Time."
The AmSouth Rights will not be exercisable until the business day following
the Separation Time. The AmSouth Rights will expire on the earlier of (i) the
close of business on June 15, 1999 and (ii) the date on which the AmSouth
Rights are redeemed as described below (the "Expiration Time"). The AmSouth
Board may, at its option, at any time prior to the Flip-in Date, redeem all
the AmSouth Rights at a price of $0.01 per right (the "Redemption Price").
If a Flip-in Date occurs, AmSouth will ensure and provide that each AmSouth
Right (other than AmSouth Rights beneficially owned by the Acquiring Person or
any affiliate or associate thereof or by any transferees, direct or indirect,
of any of the foregoing, which AmSouth Rights shall become void) will
constitute the right to purchase from AmSouth shares of AmSouth Common Stock
having an aggregate market price equal to twice the Exercise Price for an
amount in cash equal to the then-current Exercise Price. In addition, the
AmSouth Board may, at its option, at any time after a Flip-in Date and prior
to the time that an Acquiring Person becomes the beneficial owner of more than
50% of the outstanding shares of AmSouth Common Stock, elect to exchange the
AmSouth Rights for shares of AmSouth Common Stock at an exchange ratio of one
share of AmSouth Common Stock per AmSouth Right.
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AmSouth may not consolidate or merge, or engage in certain other
transactions, with an Acquiring Person without entering into a supplemental
agreement with the Acquiring Person providing that upon consummation or
occurrence of the transaction each AmSouth Right shall thereafter constitute
the right to purchase stock of the Acquiring Person having an aggregate market
price equal to twice the Exercise Price for an amount in cash equal to the
then-current Exercise Price.
The AmSouth Rights will not prevent a takeover of AmSouth. The AmSouth
Rights, however, may have certain anti-takeover effects. The AmSouth Rights may
cause substantial dilution to a person or group that acquires 15% or more of
the outstanding AmSouth Common Stock unless the AmSouth Rights are first
redeemed by the AmSouth Board.
CHANGES IN CONTROL
Certain provisions of the AmSouth Certificate and AmSouth Bylaws may have the
effect of preventing, discouraging or delaying any change in control of
AmSouth. For a discussion of the AmSouth Rights Agreement and its effect on
potential takeovers, see "AmSouth Rights Agreement." The authority of the
AmSouth Board to issue AmSouth Preferred Stock with such rights and privileges,
including voting rights, as it may deem appropriate may enable the AmSouth
Board to prevent a change in control despite a shift in ownership of the
AmSouth Common Stock. See "General" and "Preferred Stock." In addition, the
AmSouth Board's power to issue additional shares of AmSouth Common Stock may
help delay or deter a change in control by increasing the number of shares
needed to gain control. See "Common Stock." The following provisions also may
deter any change in control of AmSouth.
Classification of Board of Directors. The AmSouth Board is divided into three
classes, each serving three-year terms, so that approximately one-third of the
directors of AmSouth are elected at each annual meeting of the shareholders of
AmSouth. Classification of the AmSouth Board has the effect of decreasing the
number of directors that could be elected in a single year by any person who
seeks to elect its designees to a majority of the seats on the AmSouth Board
and thereby could impede a change in control of AmSouth.
Removal of Directors. The AmSouth Certificate provides that a director of
AmSouth may be removed only for cause by the affirmative vote of the holders of
80% of the shares of AmSouth Common Stock then entitled to vote at an election
of directors.
Written Consent. As permitted by Delaware law, the AmSouth Certificate
prohibits AmSouth shareholders from taking any action that either is required
to be taken or may be taken at an annual or special meeting without such a
meeting, whether by written consent or otherwise.
Business Combinations. The AmSouth Certificate provides that any "Business
Combination" involving AmSouth and (i) any person that beneficially owns more
than 10% of the AmSouth Common Stock, (ii) any affiliate of AmSouth which
beneficially owned more than 10% of the AmSouth Common Stock during the prior
two years or (iii) any transferee of any shares of AmSouth Common Stock that
were beneficially owned by an "Interested Stockholder" during the prior two
years (any of the foregoing being defined for the purpose of this paragraph as
an "Interested Stockholder") must be approved by (i) the holders of not less
than 80% of the outstanding shares of AmSouth's voting stock and (ii) the
holders of not less than 67% of such voting stock held by stockholders other
than the Interested Stockholder. These special voting requirements do not
apply, however, if either (i) a majority of the Continuing Directors (as
defined) of AmSouth has approved the Business Combination or the Interested
Stockholder's becoming such or (ii) the terms of the proposed Business
Combination satisfy certain minimum price and other standards. For purposes of
these provisions, a "Business Combination" is defined to include (i) any merger
or other corporate reorganization of AmSouth with or into an Interested
Stockholder, (ii) the disposition by AmSouth of a Substantial Part (as defined)
of its assets to an Interested Stockholder, (iii) any merger or other corporate
reorganization of an Interested Stockholder with or into AmSouth, (iv) the
acquisition by AmSouth of a Substantial Part (as defined) of the assets of an
Interested Stockholder, (v) the issuance by AmSouth of any of its securities to
an Interested
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Stockholder, (vi) any recapitalization that would increase the voting power of
an Interested Stockholder, (vii) the adoption of any plan for the liquidation
or dissolution of AmSouth proposed by or on behalf of an Interested Stockholder
and (viii) any agreement providing for any of the transactions described above.
This provision is intended to deter an acquiring party from utilizing two-tier
pricing and similar coercive tactics in an attempt to acquire control of
AmSouth. However, it is not intended to, and will not, prevent or deter all
tender offers for shares of AmSouth.
Amendment of AmSouth Certificate. The provisions of the AmSouth Certificate
relating to the structure of the AmSouth Board may not be amended, altered or
repealed without the affirmative vote of 80% of the outstanding voting stock of
AmSouth. The Business Combination provision of the AmSouth Certificate may not
be amended, altered or repealed except by the supermajority vote required to
approve a Business Combination. The provision of the AmSouth Certificate
dealing with written consent in lieu of shareholders' meetings may not be
amended, altered or repealed without the affirmative vote of the holders of 67%
of the outstanding voting stock.
Delaware Business Combination Statute. Subject to certain exceptions, the
Delaware General Corporation Law (the "DGCL") prohibits AmSouth from entering
into certain "business combinations" (as defined) involving persons
beneficially owning 15% or more of the outstanding AmSouth Common Stock (or any
person who is an affiliate of AmSouth and has over the past three years
beneficially owned 15% or more of such stock) (either, for the purpose of this
paragraph, an "Interested Stockholder"), unless the AmSouth Board has approved
either (i) the business combination or (ii) prior to the stock acquisition by
which such person's beneficial ownership interest reached 15% (the "Stock
Acquisition"), the Stock Acquisition. The prohibition lasts for three years
from the date of the Stock Acquisition. Notwithstanding the preceding, the DGCL
allows AmSouth to enter into a business combination with an Interested
Stockholder if (i) the business combination is approved by the AmSouth Board
and is authorized by an affirmative vote of at least 66 2/3% of the outstanding
voting stock of AmSouth which is not owned by the Interested Stockholder or
(ii) upon consummation of the transaction which resulted in the stockholder
becoming an Interested Stockholder, such stockholder owned at least 85% of the
outstanding voting stock of AmSouth (excluding AmSouth stock held by officers
and directors of AmSouth or by certain AmSouth stock plans).
Control Acquisitions. The Change in Bank Control Act of 1978 prohibits a
person or group of persons from acquiring "control" of a bank holding company
unless the Federal Reserve Board has been given 60 days' prior written notice
of such proposed acquisition and within that time period the Federal Reserve
Board has not issued a notice disapproving the proposed acquisition or
extending for up to another 30 days the period during which such a disapproval
may be issued. An acquisition may be made prior to the expiration of the
disapproval period if the Federal Reserve Board issues written notice of its
intent not to disapprove the action. Under a rebuttable presumption established
by the Federal Reserve Board, the acquisition of more than 10% of a class of
voting stock of a bank holding company with a class of securities registered
under Section 12 of the Exchange Act, such as AmSouth, would, under the
circumstances set forth in the presumption, constitute the acquisition of
control.
In addition, any "company" would be required to obtain the approval of the
Federal Reserve Board under the BHCA before acquiring 25% (5% in the case of an
acquiror that is a bank holding company) or more of the outstanding shares of
AmSouth Common Stock, or otherwise obtaining control over AmSouth.
Changes in control of AmSouth are also subject to certain statutory notice
and approval requirements under the laws of the states in which certain of the
Subsidiary Banks are located.
COMPARISON OF RIGHTS OF SHAREHOLDERS
At the Effective Date, as a consequence of the Merger, shareholders of
Fortune, whose rights are governed by Fortune's Restated Articles of
Incorporation, as amended (the "Fortune Articles"), and Bylaws
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(the "Fortune Bylaws") and by federal law, will become shareholders of AmSouth,
and their rights as shareholders of AmSouth will be determined by the DGCL, the
AmSouth Certificate and the AmSouth Bylaws. The following is a summary of
certain material differences in the rights of shareholders of AmSouth and
Fortune. THE SUMMARY DOES NOT PURPORT TO BE A COMPLETE DISCUSSION OF, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, THE GOVERNING LAWS, THE AMSOUTH
CERTIFICATE, THE AMSOUTH BYLAWS, THE FORTUNE ARTICLES AND THE FORTUNE BYLAWS.
REMOVAL OF DIRECTORS
AmSouth. The AmSouth Certificate, as allowed by the DGCL, provides that a
director may be removed from office but only for cause and by the affirmative
vote of the holders of at least 80% of the outstanding voting shares of stock
then entitled to vote at an election of directors, voting together as a single
class.
Fortune. The Fortune Articles permit shareholders to remove a director with
or without cause, subject to certain rights of holders of Fortune Preferred
Stock, by an affirmative vote of two-thirds of the total votes eligible to be
cast at a duly constituted meeting called expressly for that purpose. The
Fortune Articles do not define the term "cause."
VACANCIES ON THE BOARD OF DIRECTORS
AmSouth. The AmSouth Certificate provides that, subject to the rights of the
holders of any AmSouth preferred stock, newly created directorships resulting
from any increase in the number of directors and any vacancy on the Board of
Directors resulting from death, resignation, retirement, disqualification,
removal or other cause shall be filled by the affirmative vote of a majority of
the remaining directors then in office who have been elected by a majority of
the holders of AmSouth capital stock entitled to vote generally for the
election of directors, even though less than a quorum. The AmSouth Certificate
provides that any directors so elected will serve for the remainder of the full
term of the class in which the new directorship was created or the vacancy
occurred.
Fortune. The Fortune Bylaws provide that any vacancy occurring on the Board
of Directors may be filled by the affirmative vote of a majority of the
remaining directors, even if the number of remaining directors does not
constitute a quorum of the Board of Directors. A director elected to fill a
vacancy holds office until the next election of directors by the shareholders.
AMENDMENTS TO THE CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
AmSouth. Under the DGCL, a corporation's certificate of incorporation can be
amended by the affirmative vote of the holders of a majority of the outstanding
shares entitled to vote thereon, and a majority of the outstanding stock of
each class entitled to vote as a class, unless the certificate requires the
vote of a larger portion of the stock. The AmSouth Certificate requires
supermajority shareholder approval to amend or repeal any provision of, or
adopt any provision inconsistent with, certain provisions in the AmSouth
Certificate governing (i) business combinations between AmSouth and an
interested shareholder, (ii) shareholder meetings and (iii) the structure of
the AmSouth Board. See "Description of AmSouth Capital Stock--Changes in
Control." As is permitted by the DGCL, the AmSouth Certificate gives its Board
of Directors the power to adopt, amend or repeal the AmSouth Bylaws. The
AmSouth shareholders entitled to vote have concurrent power to adopt, amend or
repeal the AmSouth Bylaws.
Fortune. The Fortune Articles provide that either the Board of Directors or
the shareholders may adopt, alter, amend or repeal the Fortune Bylaws. The
Board of Directors may take such action by an affirmative vote of at least two-
thirds of the directors at a meeting expressly called for that purpose.
Similarly, such action by shareholders requires an affirmative vote of at least
two-thirds of the total votes eligible to be cast at a meeting called expressly
for that purpose.
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The Fortune Articles require the vote of a majority of all the total votes
eligible to be cast at a meeting of shareholders to amend, alter, change or
repeal the provisions of the Fortune Articles. However, the affirmative vote of
the holders of two-thirds of the total votes eligible to be cast at a meeting
of shareholders is required to amend, alter, change or repeal the provisions of
the Fortune Articles described above relating to the election of directors, the
amendment of the Fortune Bylaws, shareholder action without a meeting, special
meetings of shareholders and approval of mergers and business combinations, as
well as to amend the provisions of the Fortune Articles relating to such two-
thirds vote requirement.
AUTHORIZED CAPITAL STOCK
AmSouth. The AmSouth Certificate authorizes the issuance of up to 200,000,000
shares of AmSouth Common Stock, of which 51,658,378 shares were outstanding and
1,500,000 shares were held as treasury shares as of the Record Date and up to
2,000,000 shares of AmSouth Preferred Stock, of which no shares were issued or
outstanding as of the Record Date. The AmSouth Preferred Stock is issuable in
series, each series having such rights and preferences as the AmSouth Board may
fix and determine by resolution.
Fortune. The Fortune Articles authorize the issuance of up to 10,000,000
shares of Fortune Common Stock, of which 6,358,514 shares were issued and
outstanding as of the Record Date and up to 3,000,000 shares of Fortune
Preferred Stock, of which 1,380,000 shares were issued and outstanding as of
the Record Date.
Pursuant to the Merger Agreement, holders of Fortune Preferred Stock will
receive either cash or AmSouth Common Stock in exchange for their shares. The
shares of AmSouth Common Stock to be issued in connection with the Merger do
not have dividend, liquidation, redemption, voting, or conversion rights that
are similar or equivalent to the rights of holders of Fortune Preferred Stock
described below.
Under the Fortune Articles, holders of shares of Fortune Preferred Stock are
entitled to receive, when and as declared by Fortune's Board of Directors out
of assets legally available therefor, cash dividends at the rate per annum of
$2.00 per share, payable quarterly in arrears on March 1, June 1, September 1
and December 1 of each year. Such dividends are cumulative from the date of
original issue. Unless full cumulative dividends on all outstanding shares of
Fortune Preferred Stock are paid or declared and set apart for payment for all
past dividend payment periods (i) no dividends may be paid or declared and set
apart for payment, or other distribution made (other than stock dividends) upon
the Fortune Common Stock or on any other stock of Fortune ranking junior to the
Fortune Preferred Stock, (ii) no Fortune Common Stock, or any other stock of
Fortune ranking junior to, or on a parity with the Fortune Preferred Stock as
to dividends or upon liquidation may be redeemed, purchased, or otherwise
acquired for any consideration by Fortune (except for conversion of such junior
or parity stock into, or exchange of such junior or parity stock for, stock
ranking junior to the Fortune Preferred Stock as to dividends and upon
liquidation).
Upon any voluntary or involuntary liquidation, dissolution or winding up of
Fortune, the holders of Fortune Preferred Stock are entitled to receive out of
assets of Fortune available for distribution to shareholders, before any
distribution of assets is made to holders of Fortune Common Stock or of any
other shares of Fortune stock ranking as to such distribution junior to the
Fortune Preferred Stock, liquidating distributions in the amount of $25 per
share plus accrued and unpaid dividends. After payment of such liquidating
distributions, the holders of shares of Fortune Preferred Stock are not
entitled to any further participation in any distribution of assets of Fortune.
The Fortune Preferred Stock is redeemable at the option of Fortune for cash
on at least 30 but not more than 60 days' notice at any time in whole or in
part, after December 1, 1996. With respect to any such redemption, the Fortune
Preferred Stock is redeemable at certain redemption prices as set forth in the
Fortune Articles.
The Fortune Articles provide that, except as indicated below, or except as
expressly required by applicable law, the holders of the Fortune Preferred
Stock have no voting rights. If the equivalent of six
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quarterly dividends payable on the Fortune Preferred Stock are in arrears, the
number of directors of Fortune are to be increased by two and the holders of
Fortune Preferred Stock voting separately as a class are entitled to elect two
directors to fill such vacancies. Also, the affirmative vote or consent of the
holders of at least 66 2/3% of the outstanding shares of Fortune Preferred
Stock is required to (1) authorize, create, issue or reclassify any authorized
stock of Fortune into, or authorize, create, or issue any obligations or
security convertible into or evidencing a right to purchase, any shares of, or
increase the authorized or issued amount of, any class or series of stock of
Fortune ranking prior to the Fortune Preferred Stock with respect to payment
of dividends or the distribution of assets on liquidation, dissolution or
winding up, and (2) amend, alter or repeal, whether by merger or otherwise,
the provisions of the Fortune Articles, so as to adversely affect the powers,
preferences, privileges or rights of shares of the Fortune Preferred Stock.
The Fortune Articles provide that, in the case of a transaction such as the
Merger, the holders of Fortune Preferred Stock shall have the right to convert
their shares into one "Conversion Unit." A Conversion Unit shall consist of
the kind and amount of consideration that would be receivable by a holder of
the number of shares of Fortune Common Stock issuable upon conversion of the
Fortune Preferred Stock immediately before such transaction. The Fortune
Articles also provide that, in a transaction such as the Merger, if (i) more
than 50% of the consideration to the holders of Fortune Common Stock consists
of common stock that has been admitted for listing on a national securities
exchange or quoted on the NMS ("Public Stock"), such as the AmSouth Common
Stock, then a holder of Fortune Preferred Stock (in lieu of the right to
convert into one Conversion Unit) shall have the right to convert his shares
into shares of such Public Stock at an adjusted conversion price as determined
pursuant to a formula set forth in the Fortune Articles and (ii) if 50% or
less of the consideration to holders of Fortune Common Stock consists of
Public Stock, then a holder of Fortune Preferred Stock (in lieu of the right
to receive one Conversion Unit) shall have the right to convert his shares
into one or more Conversion Units as determined pursuant to a formula set
forth in the Fortune Articles.
Under terms of the Merger Agreement, a holder of Fortune Preferred Stock
will have the right to receive the kind and amount of consideration (either
cash or AmSouth Common Stock) that a holder of Fortune Common Stock will
receive (subject to the election and allocation procedures described herein)
multiplied by 1.333333 (the number of shares of Fortune Common Stock issuable
upon conversion of one share of Fortune Preferred Stock as provided in the
Fortune Articles). The Merger Agreement does not provide for the issuance of
any AmSouth Preferred Stock to holders of Fortune Preferred Stock. As a
result, the Merger could be deemed to adversely affect certain powers,
preferences, privileges or rights of shares of Fortune Preferred Stock, and
therefore, the Merger is being submitted to a vote of the holders of the
Fortune Preferred Stock.
Shares of Fortune Preferred Stock are convertible to Fortune Common Stock at
the holder's option at the conversion price of $18.75 per share, subject to
certain adjustments.
CHANGES IN CONTROL
AmSouth. As a Delaware corporation, AmSouth is subject to the business
combination statute described under the heading "Description of AmSouth
Capital Stock--Changes in Control--Delaware Business Combination Statute." As
a bank holding company, acquisitions of control of AmSouth are also subject to
the Change in Bank Control Act of 1978 and the BHCA as described under the
heading "Description of AmSouth Capital Stock--Changes in Control--Control
Acquisitions." The AmSouth Articles also contain provisions regarding
shareholder approval of business combinations under certain circumstances, as
described under the heading "Description of AmSouth Capital Stock--Changes in
Control--Business Combinations."
Fortune. The Fortune Articles have similar provisions regarding shareholder
approval of proposed business combinations. In general, the fair price
provision of the Fortune Articles requires the approval by the holders of two-
thirds of the voting power of the outstanding capital stock of Fortune
entitled to vote generally in the election of directors as a condition for
mergers and certain other business combinations of Fortune ("Business
Combinations") involving, as a party to any such Business Combination, any
beneficial
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holder of more than 10% of such voting power (an "Interested Shareholder")
unless the transaction is either approved by at least a majority of the
members of the Board of Directors who are unaffiliated with the Interested
Shareholder and were directors before the Interested Shareholder became an
Interested Shareholder (the "Continuing Directors"), or certain minimum price
and procedural requirements are met. The term "Continuing Directors" also
includes certain successors to Continuing Directors if unaffiliated with the
Interested Shareholder. The term "Interested Shareholder" also refers to
certain assignees of Interested Shareholders and to affiliates of Fortune who,
within two years before the date in question, beneficially held 10% or more of
the voting power of the outstanding stock of Fortune entitled to vote
generally in the election of directors.
The FBCA regulates the voting of shares of certain Florida corporations by
persons who acquire a large block of stock in those corporations. The FBCA
restricts the voting rights of a person who acquires "control shares" in an
"issuing public corporation." The DGCL does not contain a similar "control
share" provision. "Control shares" are defined under the FBCA as those shares
that, when added to all other shares of the issuing public corporation owned
by a person or in respect to which that person may exercise or direct the
exercise of voting power, would entitle that person to exercise the voting
power of the corporation in the election of directors within any of the
following ranges of voting power: (a) one-fifth or more but less than one-
third of all voting power; (b) one-third or more but less than a majority of
all voting power; or (c) a majority or more of all voting power. An "issuing
public corporation" is a corporation that has (i) 100 or more shareholders;
(ii) its principal place of business, its principal office or substantial
assets within Florida; and (iii) either (A) more than 10% of its shareholders
resident in Florida, (B) more than 10% of its shares owned by Florida
residents or (C) 1,000 shareholders resident in Florida.
If a control share acquisition has been made, the control shares have no
voting rights unless the holders of a majority of shares other than those held
by the interested shareholder and by members of the corporation's management
grant voting rights to those shares. The interested shareholder has the right
to request a shareholders' meeting to determine his voting rights within 50
days of the date the interested shareholder gives notice of his control share
acquisition to the corporation. The notice must contain certain information
concerning the interested shareholder and the acquisition of his shares. The
interested shareholder must pay the expenses of the shareholders' meeting. If
no notice is filed with the corporation within 60 days of the date of the
control share acquisition, the corporation has the right to redeem the control
shares.
If an interested shareholder acquires a majority of the outstanding shares
of the corporation and is granted voting rights pursuant to the procedure
outlined above, the other shareholders of the corporation have dissenters'
rights to require the corporation to purchase their shares for a "fair value."
The term "fair value" is defined as a value not less than the highest price
paid per share by the acquiring person in the control share acquisition.
The FBCA contains several provisions by which acquisitions approved by a
corporation's board of directors may be structured to avoid these provisions.
For example, the corporation can elect not to be subject to these provisions
by adopting an amendment to its articles of incorporation or bylaws expressly
stating that such provisions shall not apply to the corporation. In addition,
such provisions will not apply to an acquisition if the corporation executes a
merger agreement with the interested shareholder.
The Change in Savings and Loan Control Act of 1978 prohibits a person or
group of persons from acquiring "control" of a savings and loan holding
company, such as Fortune, unless the OTS has been given 60 days prior written
notice of such proposed acquisition and within that time period the OTS has
not issued a notice disapproving the proposed acquisition or extending for up
to another 30 days the period during which such a disapproval may be issued.
An acquisition may be made prior to the expiration of the disapproval period
if the OTS issues written notice of its intent not to disapprove the
acquisition. Under a rebuttable presumption established by the OTS, the
acquisition of more than 10% of a class of voting stock of a savings and loan
holding company would, under the circumstances set forth in the presumption,
constitute the acquisition of control.
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In addition, any "company" would be required to obtain the approval of the
OTS under the Home Owners Loan Act before acquiring 25% (10% if the
circumstances under a rebuttable presumption established by the OTS apply) or
more of the outstanding shares of Fortune Common Stock, or otherwise obtaining
control over Fortune.
SHAREHOLDER RIGHTS PLAN
AmSouth. As described above (see "Description of AmSouth Capital Stock--
AmSouth Rights Agreement"), AmSouth adopted the AmSouth Rights Agreement in
1989. When issued upon consummation of the Merger, the Merger Shares will have
attached AmSouth Rights.
Fortune. The Fortune Board has not adopted a shareholder rights plan.
PREVENTION OF GREENMAIL
AmSouth. AmSouth has no provision directly applicable to greenmail.
Fortune. The Fortune Articles provide that any direct or indirect purchase or
other acquisition by Fortune of its securities from any person or group that
(i) holds 5% or more of the class of equity securities to be purchased or
otherwise acquired (an "Interested Securityholder"), and (ii) has beneficially
owned such securities for less than two years, is required to be approved by
the affirmative vote of the holders of a majority of the voting power of the
outstanding capital stock of Fortune entitled to vote generally in the election
of directors, excluding such stock beneficially owned by such Interested
Securityholder, provided that shareholder approval is not required if the
purchase occurs as part of a tender or exchange offer by Fortune to purchase
securities of the same class made on the same terms to all holders of such
securities and in compliance with the applicable requirements of the Exchange
Act.
SPECIAL MEETINGS OF SHAREHOLDERS; ACTION WITHOUT A MEETING
AmSouth. Under the AmSouth Certificate and Bylaws, a special meeting of
AmSouth's shareholders may only be called by the AmSouth Board, the Chief
Executive Officer of AmSouth or the holders of a majority of the outstanding
AmSouth Common Stock entitled to be voted for directors. Under the AmSouth
Certificate and Bylaws, no action required to be taken or which may be taken at
any annual or special meeting of AmSouth shareholders may be taken without such
a meeting.
Fortune. The Fortune Bylaws provide that shareholder action may be taken at
the annual meeting of shareholders or at a special meeting of shareholders
called by the Chairman of the Board of Directors or the president, or a
majority of the Board of Directors or the holders of not less than one-third of
the outstanding capital stock entitled to vote at the meeting. The Fortune
Bylaws do not prohibit shareholder action by written consent. In addition, the
FBCA permits the holders of 10% of the outstanding shares entitled to vote at a
shareholders' meeting to require that such a meeting be called. A corporation
may, in its articles of incorporation, raise the percentage of shareholders
necessary to call a meeting from 10%, but may not raise it above 50%.
PREEMPTIVE RIGHTS
AmSouth. The holders of AmSouth Common Stock have no preemptive rights to
acquire any additional shares of AmSouth Common Stock or any other shares of
AmSouth Capital Stock.
Fortune. The holders of Fortune Common Stock and Fortune Preferred Stock have
no preemptive rights to acquire any shares of Fortune Common Stock or any other
shares of Fortune Capital Stock.
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PROXY REQUIREMENTS
AmSouth. Under the DGCL, proxies are valid for up to three years unless
otherwise specified therein. Under the DGCL, a proxy is irrevocable if it
specifically states that it is irrevocable and if it is also coupled with an
interest sufficient in law to support that power.
Fortune. Under the FBCA, proxies are valid for an eleven-month period unless
otherwise specified therein. In addition, the FBCA specifies that, when an
appointment form conspicuously states that it is irrevocable, proxies from
pledgees, purchasers, creditors, contract employees and persons designated in a
shareholder agreement are irrevocable.
DERIVATIVE ACTIONS
AmSouth. The DGCL permits shareholders to bring derivative actions on behalf
of AmSouth.
Fortune. The FBCA permits shareholders to bring derivative actions on behalf
of Fortune. Under the FBCA, however, a shareholder must obtain court approval
if he wishes to settle or discontinue a derivative action. If the court finds
that the derivative action was without reasonable cause, the court may require
the plaintiff to pay the defendant's reasonable expenses.
AFFILIATED TRANSACTIONS
AmSouth. As a Delaware corporation, AmSouth is subject to the business
combination statute described under the heading "Description of AmSouth Capital
Stock--Changes in Control--Delaware Business Combination Statute."
Fortune. The FBCA requires that any affiliated transaction, which term
includes a merger, sale of significant assets of the corporation and similar
extraordinary corporate transactions, between the corporation and an interested
shareholder (generally defined as any person who is the beneficial owner of
more than 10% of the outstanding voting shares of the corporation) be approved
by the affirmative vote of the holders of two-thirds of the voting shares of
the corporation other than the shares beneficially owned by the interested
shareholder. The voting requirements of the FBCA will not apply, however, to an
affiliated transaction if: (a) the affiliated transaction has been approved by
a majority of the corporation's disinterested directors; (b) the corporation
has not had more than 300 shareholders at any time during the preceding three
years; (c) the interested shareholder has been the beneficial owner of at least
80 percent of the corporation's outstanding voting shares for at least five
years; (d) the interested shareholder is the beneficial owner of at least 90
percent of the outstanding voting shares of the corporation; or (e) certain
fair price requirements have been met.
DIRECTORS' LIABILITY
AmSouth. The AmSouth Certificate, as allowed by Delaware law, provides that a
director of AmSouth will have no personal liability to AmSouth or its
shareholders for monetary damages for breach of his or her fiduciary duty as a
director except (a) for any breach of the director's duty of loyalty to the
corporation or its shareholders, (b) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of laws, (c) for the
payment of certain unlawful dividends and the making of certain stock purchases
or redemptions or (d) for any transaction from which the director derived an
improper personal benefit. This provision would absolve directors of personal
liability for negligence in the performance of duties, including gross
negligence. It would not permit a director to be exculpated, however, for
liability for actions involving conflicts of interest or breaches of the
traditional "duty of loyalty" to AmSouth and its shareholders, and it would not
affect the availability of injunctive or other equitable relief as a remedy.
Fortune. The FBCA provides that a director of a Florida corporation, such as
Fortune, will have no personal liability to Fortune or any other person for
monetary damages for any statement, vote, decision or failure to act regarding
corporate management or policy, unless the director breaches or fails to
perform his
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<PAGE>
duties as a director and the breach or failure constitutes: (a) a violation of
criminal law, unless the director had reasonable cause to believe his conduct
was lawful; (b) a transaction from which the director derived an improper
personal benefit, either directly or indirectly; (c) an assent to an unlawful
declaration of dividends or distribution of Fortune's assets, or any unlawful
purchase of Fortune's own shares; (d) in an action by or in the right of
Fortune or a shareholder, conscious disregard for the best interests of Fortune
or willful misconduct; or (e) in an action by any person other than Fortune or
its shareholders, recklessness, or an act or omission committed in bad faith,
or with malicious purpose, or in a manner exhibiting wanton and willful
disregard of human rights, safety or property. These provisions would absolve
directors of personal liability for negligence in the performance of their
duties, including gross negligence, and would further absolve directors of
personal liability for breaches of the traditional "duty of loyalty" unless one
of the five factors set forth above was found to be present. The provisions of
the FBCA are self-implementing in that a corporation need not take any action
to avail its directors of these protections.
INDEMNIFICATION
AmSouth. Section 145 of the DGCL contains detailed and comprehensive
provisions providing for indemnification of directors and officers of Delaware
corporations against expenses, judgments, fines and settlements in connection
with litigation. Under the DGCL, other than an action brought by or in the
right of AmSouth, such indemnification is available if it is determined that
the proposed indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of AmSouth
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his or her conduct was unlawful. In actions brought by or in the
right of AmSouth, such indemnification is limited to expenses (including
attorneys' fees) actually and reasonably incurred if the indemnitee acted in
good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of AmSouth and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
has been adjudged to be liable to AmSouth unless and only to the extent that
the Court of Chancery or the court in which the action was brought determines
upon application that in view of all the circumstances of the case, he or she
is fairly and reasonably entitled to indemnity for such expenses as the court
deems proper. To the extent that the proposed indemnitee has been successful on
the merits or otherwise in defense of any action, suit or proceeding (or any
claim, issue or matter therein), he or she must be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith. AmSouth's Certificate provides for indemnification of the
directors and officers of AmSouth against liabilities to the extent provided by
Delaware law.
Fortune. The Fortune Bylaws provide for indemnification of directors and
officers to the extent permitted by applicable law. The general effect of the
bylaw provisions is to indemnify any director or officer against any liability
arising from any action or suit to the full extent permitted by Florida law, as
discussed in the following paragraphs.
The FBCA establishes the scope of indemnification that a Florida corporation
such as Fortune may provide for officers, directors, employees and agents of
such corporation. A Florida corporation is permitted to indemnify any person
who may be a party to any third party action if the person is or was a
director, officer, employee or agent of the corporation and acted in good faith
and in a manner reasonably believed to be in, or not opposed to, the best
interests of the corporation. With respect to any criminal action or
proceeding, to be indemnified, the person must have had no reasonable cause to
believe the conduct was unlawful. A Florida corporation also may advance
indemnification expenses so long as indemnification is permitted under the
circumstances.
A Florida corporation is also permitted to indemnify any person who may be a
party to a derivative action if the person is or was a director, officer,
employee or agent of the corporation and acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation. However, no indemnification may be made for any claim, issue or
matter for which the person was found to be liable unless a court determines
that, despite adjudication of liability but in view of all circumstances of the
case, the person was fairly and reasonably entitled to indemnity.
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Any indemnification made under the circumstances described above, unless
pursuant to a court determination, may be made only after a determination that
the person to be indemnified has met these standards of conduct. This
determination is to be made by a majority vote of a quorum consisting of the
disinterested directors of the board of directors, by independent legal counsel
or by a majority vote of the disinterested shareholders. The board of directors
also may designate a special committee of disinterested directors to make this
determination.
It is mandatory for a Florida corporation to indemnify a director, officer,
employee or agent against expenses actually and reasonably incurred, provided
the person has been successful in defense of any proceeding referred to in the
above discussion of permissive indemnifications.
A Florida corporation may to a certain extent deviate from the
indemnification procedures under the FBCA through a bylaw, agreement or vote of
shareholders or disinterested directors. Indemnification, however, may not be
made to or on behalf of any director, officer, employee or agent whose actions
or omissions were found to be material to the cause of action adjudicated and
whose actions or omissions constituted: (1) a violation of criminal law, unless
the person believed the conduct was lawful or had no reasonable cause to
believe it was unlawful; (2) a transaction in which the person derived an
improper benefit; or (3) willful misconduct or conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
RIGHTS OF DISSENTING SHAREHOLDERS
AmSouth. Under the DGCL, a shareholder has the right, in certain
circumstances, to dissent from certain corporate transactions and receive the
fair market value (excluding any appreciation or depreciation as a consequence
or in expectation of the transaction) of his shares in cash in lieu of the
consideration he otherwise would have received in the transaction. Such fair
value is determined by the Delaware Court of Chancery if a petition for
appraisal is timely filed. Appraisal rights are not available, however, to
shareholders of a corporation (i) unless otherwise provided in such
corporation's certificate of incorporation (which the AmSouth Certificate does
not so provide), if the shares are listed on a national securities exchange (as
is AmSouth Common Stock) or quoted on the NMS or held of record by more than
2,000 shareholders (as is AmSouth Common Stock), and shareholders are permitted
by the terms of the merger or consolidation to accept in exchange for their
shares (a) shares of stock of the surviving or resulting corporation, (b)
shares of stock of another corporation listed on a national securities exchange
or held of record by more than 2,000 shareholders, (c) cash in lieu of
fractional shares of such stock or (d) any combination thereof or (ii) in a
merger if such corporation is the surviving corporation and no vote of its
shareholders is required.
Fortune. Under the FBCA, a shareholder is entitled to dissent and obtain
payment of the fair value of his shares in the event of, among other things,
(i) consummation of a plan of merger to which the corporation is a party, if
either (a) shareholder approval is required and the shareholder is entitled to
vote on the merger or (b) the corporation is a subsidiary that is owned 80% by
and is merged into its parent; (ii) consummation of a plan of 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 plan; (iii)
consummation of a sale or exchange of substantially all of the property of the
corporation other than in the usual and regular course of the business if
shareholder approval is required; (iv) an amendment to the charter that
materially and adversely affects the rights in respect of the dissenter's
shares in specified ways; or (v) any corporate action pursuant to a shareholder
vote to the extent that the charter, bylaws or board resolutions provide that
dissenters' rights shall apply. No holder of any shares of any class or series
is entitled to dissent, however, if such shares are either listed on a national
securities exchange or are held of record by no less than 2,000 shareholders.
Fortune shares are held of record by less than 2,000 shareholders and are not
registered on a national securities exchange, and, therefore, holders of
Fortune Common Stock and Fortune Preferred Stock will have dissenters' rights
as a result of the Merger. See "Dissenters' Rights."
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DIVIDENDS
AmSouth. The DGCL provides that, subject to any restrictions in the
corporation's certificate of incorporation, dividends may be declared from the
corporation's surplus or, if there is no surplus, from its net profits for the
fiscal year in which the dividend is declared and the preceding fiscal year.
Dividends may not be declared, however, if the corporation's capital has been
diminished to an amount less than the aggregate amount of all capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. Substantially all of the funds
available for the payment of dividends by AmSouth are derived from its
Subsidiary Banks. There are various statutory limitations on the ability of
AmSouth's Subsidiary Banks to pay dividends to AmSouth. See "Certain Regulatory
Matters."
Fortune. The FBCA provides that, subject to restrictions in a corporation's
charter, the corporation may declare and pay a dividend to its shareholders
unless Fortune would not be able to pay its debts as they become due in the
usual course of business or Fortune's total assets would be less than the sum
of its total liabilities plus the amount that would be needed, in the case of
dissolution, to satisfy the preferential rights of shareholders whose
preferential rights are superior to those receiving the dividend. Substantially
all of the funds available for the payment of dividends by Fortune are derived
from Fortune Bank. There are various statutory limitations on the ability of
Fortune Bank to pay dividends to Fortune.
DISSENTERS' RIGHTS
Under Section 607.1320 of the FBCA, Fortune shareholders have certain
dissenters' or appraisal rights. Specifically, a shareholder may dissent from
the Merger and elect to have the "fair value" of his shares (exclusive of any
appreciation or depreciation in value arising from the expectation of the
Merger) judicially determined and paid in cash, provided the shareholder
complies with the provisions of the FBCA. The following is only a summary of
the statutory procedures to be followed by a Fortune shareholder in order to
dissent from the Merger and perfect dissenters' rights under the FBCA.
Shareholders are encouraged to read Section 607.1320 and certain other
provisions of the FBCA attached as Annex E, and to consult their individual
advisors.
Any Fortune shareholder who elects to exercise his right to dissent from the
Merger and demand appraisal of the "fair value" of his shares must satisfy each
of the following conditions: Before the shareholder vote on the proposed
Merger, a shareholder who wishes to assert his right to dissent must deliver to
Fortune written notice of intent to demand payment for his shares ("Notice of
Intent"). The Notice of Intent must be in addition to and separate from any
proxy or vote against the Merger. The dissenting shareholder must either vote
against the Merger or abstain from voting. A vote in favor of the Merger,
either by proxy or in person, will nullify any previously filed Notice of
Intent. Within ten days of the shareholder vote, every shareholder who filed a
Notice of Intent and who did not vote in favor of the Merger will receive
written notice of the approval of the Merger. Within 20 days after receiving
this notice, a dissenting shareholder must file with Fortune a notice of
election to dissent ("Notice of Dissent"). This Notice of Dissent must state
the shareholder's name and address, the number, classes and series of shares as
to which he dissents, and a demand for payment for the fair value of his
shares. The dissenting shareholder who files a Notice of Dissent must
simultaneously surrender to Fortune the certificates for any certificated
shares as to which he dissents. The transfer of any uncertificated shares may
be restricted as of the date the shareholder files his Notice of Dissent. If a
dissenting shareholder fails to comply with any of these conditions and the
Merger becomes effective, he may be required to accept shares of AmSouth Common
Stock or cash in accordance with the formula provided in the Merger Agreement.
Any Notice of Intent or Notice of Dissent should be addressed to Fortune
Bancorp, Inc., 16120 U.S. Highway 19 North, Clearwater, Florida 34624,
Attention: Corporate Secretary, and should be executed by, or on behalf of, the
holder of record. The Notice of Intent and the Notice of Dissent must
reasonably inform Fortune of the identity of the shareholder and that such
shareholder is thereby objecting to the Merger and
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electing to receive the fair cash value of his shares. Once a shareholder who
has dissenters' rights files a Notice of Dissent and otherwise complies with
the procedures outlined above, he is entitled only to payment of the fair cash
value of his shares, and is no longer entitled to vote or exercise any other
rights as a Fortune shareholder.
The right of a dissenting shareholder to be paid fair value terminates, and
his status as a shareholder is restored without prejudice to any corporate
proceedings that may have taken place in the interim, if (a) the demand for
payment is withdrawn (which may occur at any time before an offer is made by
Fortune to pay for the dissenting shareholder's shares); (b) the Merger is
abandoned or the shareholders by a later vote revoke their approval of the
Merger; (c) no demand or petition for the determination of fair value by a
court has been made or filed within the time period contemplated by the FBCA;
or (d) a court of competent jurisdiction determines that the shareholder is not
entitled to dissenters' rights.
Fortune must make a written offer to pay fair value to all dissenting
shareholders who have made a proper demand for payment. This written offer must
be made within ten days after expiration of the 20-day period in which Fortune
shareholders may file their Notices of Dissent, or within ten days after the
Effective Date of the Merger, whichever is later (but in no case later than 90
days from the shareholders' vote approving the Merger). The written offer shall
reflect Fortune's estimate of the fair value for such shares. Fortune's offer
must be accompanied by a balance sheet and a profit and loss statement. If
within 30 days after Fortune's offer, the offer is accepted by the dissenting
shareholder or the fair value of the dissenting shareholder's shares is
otherwise agreed upon between the dissenting shareholder and Fortune, payment
for the shares must be made within 90 days after the consummation of the
Merger.
Under Florida law, AmSouth assumes the duty to make prompt payment of fair
value to dissenting shareholders after the Merger becomes effective. After the
shareholder receives payment by AmSouth of the agreed value, he will cease to
have any interest in the Fortune shares. If the fair value of the dissenting
shareholder's shares is not agreed upon by the dissenting shareholder, then a
judicial determination of the fair value may be required. As the surviving
corporation, AmSouth may file an action requesting judicial determination of
the fair value of Fortune shares held by dissenting shareholders. Filing must
occur within 30 days after receipt of written demand from any dissenting
shareholder given within 60 days after the Effective Date of the Merger. In the
absence of a written demand by a shareholder, AmSouth may, at its election,
file an action any time within such period of 60 days. If AmSouth fails to
institute such an action, dissenting Fortune shareholders may do so in
Fortune's name. All dissenting Fortune shareholders, wherever residing, shall
be made parties to the proceeding as an action against their shares. A copy of
the initial pleading must be served on each dissenting shareholder.
Within ten days of a judicial determination of the fair value after the
Effective Date, AmSouth would be required to pay each dissenting shareholder
the fair value as determined by the court. The judgment may include a fair rate
of interest at the discretion of, and determined by, the court. Upon payment of
the judgment, the dissenting shareholder will cease to have any interest in the
shares.
The expenses of any such proceeding will be determined by the court and be
assessed against the surviving corporate entity, AmSouth, but all or any part
of such expenses may be apportioned and assessed as the court may deem
equitable against any or all the dissenting shareholders who are parties to the
proceeding to whom Fortune shall have made an offer to pay for the shares, if
the court finds that the action of such shareholders in failing to accept such
offer was arbitrary, vexatious or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, appraisers
appointed by the court, but shall exclude the fees and expenses of counsel for,
and experts employed by, any party. If the fair value of the shares, as
determined, materially exceeds the amount Fortune offered to pay therefor or if
no offer was made, the court may award to any shareholder who is a party to the
proceeding such sum as the court may determine to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.
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ELECTION OF DIRECTORS
(Proposal No. 2)
The Bylaws of Fortune provide that the Board of Directors shall consist of
eight members. The directors are divided into three classes with three
directors in each of two classes and two directors in one class. The term of
only one class of directors expires in each year, and their successors are
elected for terms of three years and until their successors are duly elected
and qualified.
At the Annual Meeting three directors will be elected. The nominees, Edward
N. Ney, John R. Torell III and Ezra K. Zilkha, are currently serving as
directors. Each nominee listed below has indicated his willingness to serve if
elected. However, if any nominee fails to stand for election or is otherwise
unable to serve, the proxies received in response to this solicitation will be
voted for a replacement nominee as determined by a majority vote of the Board
of Directors.
<TABLE>
<CAPTION>
NAME POSITIONS HELD TERM EXPIRES(A) DIRECTOR SINCE
---- -------------- --------------- --------------
<C> <S> <C> <C>
NOMINEES:
Edward N. Ney....... Director 1994 1992
John R. Torell III.. Director, Chairman of 1994 1990
the Board, and Chief
Executive Officer
Ezra K. Zilkha...... Director 1994 1990
CONTINUING DIRECTORS:
H. Richard Carter... Director 1995 1984
Llewellyn Jenkins... Director 1996 1992
Rausey W. Mason..... Director 1995 1984
Roy J. McCraw, Jr. . Director, President, and 1995 1991
Chief Operating Officer
John A. Moran....... Director 1996 1987
</TABLE>
- --------
(a) If the Merger is approved by Fortune shareholders, all Fortune directors'
terms will expire on the Effective Date of the Merger.
The principal occupation for the last five years and background of each
nominee and continuing director of Fortune is set forth below:
H. Richard Carter, 68, a medical doctor who has retired from practice,
joined Fortune Bank, the principal subsidiary of Fortune, as a director in
1968.
Llewellyn Jenkins, 74, is a past President of American Bankers Association
and the former Vice Chairman of the Board of Manufacturers Hanover Trust
Company, where he served as Executive Vice President in charge of the National
Division. He served the American Bankers Association from 1980 to 1983 in the
respective roles of president-elect, president, and chairman. He served with
Manufacturers Hanover Trust Company from 1946 (joining what was the Central
Hanover Bank & Trust Co.) until his retirement in 1983. He was appointed to
the boards of Fortune and Fortune Bank in June, 1992.
Rausey W. Mason, 56, was elected Executive Vice President of Fortune Bank in
September, 1983, and became President in March, 1984. He served as Chief
Executive Officer of Fortune Bank from January, 1990, to April, 1991, and as
President and Chief Executive Officer of Fortune from July, 1990, to April,
1991. In April, 1991, he was elected Vice Chairman of Fortune, and retired
from that position in March, 1992.
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Roy J. McCraw, Jr., 47, was elected President and Chief Operating Officer of
Fortune and Fortune Bank in May 1991. Before assuming these positions, he was
the Executive Vice President/Regional Executive for First Union National Bank.
He held that position since 1986.
John A. Moran, 61, is a director and Chairman of the Executive Committee of
The Dyson-Kissner-Moran Corporation, a private investment company. He served as
President of that company from 1975 through 1984 and as Chairman of that
company from 1984 through February, 1992. He served as Chairman of the Board,
President, and Chief Executive Officer of Fortune, and as Chairman of the Board
of Fortune Bank from January, 1990, to July, 1990.
Edward N. Ney, 68, is a former U.S. Ambassador to Canada. Nominated to the
post in March, 1989, he served in that capacity until early July, 1992. He is
the former Chairman, President, and Chief Executive Officer of Young & Rubicam,
Inc., an independent advertising/communications company. Following 35 years of
service with Young & Rubicam, he relinquished his post as Chairman in November,
1986, to become Chairman of a new company, Paine Webber/Young and Rubicam
Ventures. He also became a Vice Chairman and Director of Paine Webber, Inc. He
was appointed to the boards of Fortune and Fortune Bank in July, 1992.
John R. Torell III, 54, was appointed to the boards of Fortune and Fortune
Bank in May, 1990, and was elected Chairman of the Board of each in July, 1990,
and named Chief Executive Officer of Fortune and Fortune Bank in April, 1991.
He is Chairman of Torell Management, Inc. (a financial advisory firm). He is
also a director of American Home Products, Inc., VOLT Information Services,
Inc., and various investment companies managed by PaineWebber Incorporated or
Mitchell Hutchins Asset Management, Inc. Previously, he was President of
Manufacturers Hanover Corporation and Manufacturers Hanover Trust Company.
Also, he was Chairman, President, and Chief Executive Officer of CalFed, Inc.,
and Chairman of its major subsidiary, California Federal Bank.
Ezra K. Zilkha, 68, is Chairman and President of Zilkha & Sons, Inc., a
private investment company. He is also a director of Chicago Milwaukee Corp.,
Newhall Management Company, CIGNA Corp., Cambridge Associates, and Lewis Bailey
Associates, Inc. He was appointed to the boards of Fortune and Fortune Bank in
1990.
CORPORATE GOVERNANCE, COMMITTEES AND MEETINGS
During fiscal 1993, the Board of Directors of Fortune held 10 meetings. No
incumbent director attended fewer than 75% of the aggregate of (1) the total
number of meetings of the Board of Directors, and (2) the total number of
meetings held by all committees of the Board of Directors on which the director
served during the applicable period.
The Board of Directors of Fortune acts as a nominating committee for
selecting the nominees of the Board of Directors for election as directors. The
Board of Directors' nominations for the Annual Meeting already have been made.
Fortune's Bylaws require that shareholder nominations for director be made
pursuant to timely notice in writing to the Secretary of Fortune. To be timely,
notice must be delivered or mailed to and received at the principal executive
offices of Fortune not less than 30 days nor more than 90 days before the
meeting. However, if less than 45 days' notice or prior public disclosure of
the date of the meeting is given or made to shareholders, notice to be timely
must be so received by Fortune not later than the close of business on the 15th
day following the day on which notice of the date of the meeting was mailed or
such public disclosure was made. Public disclosure of the date of the Annual
Meeting was made on April 1, 1994, by filing a Form 8-K under the Exchange Act.
A shareholder's notice of nomination must also set forth certain information
specified in Article III, Section 13, of Fortune's Bylaws concerning each
person the shareholder proposes to nominate for election and the shareholder
giving the notice. The Bylaws provide
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that no person may be elected as a director unless nominated in accordance with
the procedures set forth in the Bylaws. Under the Bylaws, shareholder
nominations for the Annual Meeting must be received on or before April 18,
1994, in order to be timely.
The Board of Directors of Fortune has appointed an Audit Committee, which is
chaired by Ezra K. Zilkha and includes Messrs. Jenkins and Carter as members.
During fiscal 1993, the Audit Committee held seven meetings. The Audit
Committee reviews annual financial statements and the scope of the independent
annual audit and internal audits. The committee also reviews the independent
public accountants' letter to management concerning the effectiveness of
internal financial and accounting controls and management's response to that
letter. In addition, Fortune's Audit Committee reviews and recommends to the
Board of Directors the firm to be engaged as independent public accountants.
The Audit Committee may also examine and consider other matters relating to the
financial affairs of Fortune as they determine appropriate.
The Board of Directors of Fortune also has appointed a Compensation
Committee, which is chaired by John A. Moran and includes Messrs. Ney and
Zilkha as members. During fiscal 1993, Fortune's Compensation Committee held
four meetings. The Compensation Committee fixes compensation for key officers.
The Board of Directors of Fortune also has appointed an Executive Committee,
which is chaired by John R. Torell III, and includes Messrs. Moran and Zilkha
as members. During fiscal 1993, the Executive Committee held two meetings.
The Board of Directors of Fortune also has appointed a Credit Quality and
Fair Lending Committee, which is chaired by H. Richard Carter, and includes
Messrs. Jenkins and Mason as members. During fiscal 1993, the Credit Quality
and Fair Lending Committee held nine meetings.
COMPENSATION OF DIRECTORS
Directors who are officers or employees of Fortune or Fortune Bank receive no
fees for their services as directors. Non-employee directors of Fortune receive
$250 for each board meeting attended and $300 for each committee meeting
attended. Non-employee directors of Fortune Bank receive an annual fee of
$8,000, $1,100 for each board meeting attended and $300 for each committee
meeting attended.
Fortune has a Directors' Retirement Plan for directors of Fortune Bank who
have served as such for 12 years or more before retirement. Under the terms of
the plan, such directors, upon retirement, receive monthly payments equal to
the greater of (i) $1,450, (ii) the then current monthly compensation for
active directors of Fortune Bank for regular monthly meetings or (iii) the then
current monthly compensation for active directors of Fortune for regular
monthly meetings of Fortune's Board of Directors. Benefits are payable to the
director for life following retirement. However, the retired director must
agree to provide consulting services to Fortune Bank to the extent his health
permits and may not, without consent of Fortune Bank, serve as director,
officer or employee of any unaffiliated bank, savings institution or holding
company thereof having an office in any county in Florida in which Fortune Bank
had an office at the date of such director's retirement. If a retired director
dies before having received benefits for a period of 12 years following
retirement, benefits will be paid to his estate for the remainder of such 12-
year period. No contributions were made by Fortune to this plan during fiscal
1993.
STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 30, 1994 with respect
to the ownership of shares of Fortune stock owned by each person believed by
management to be the beneficial owner of more than 5% of any class of Fortune's
outstanding stock. This information is based on the most recent Schedule 13D or
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13G provided to Fortune. Except as otherwise indicated, the persons shown in
the table have sole voting and dispositive power with respect to the entire
number of shares reported.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF CLASS
NAME AND ADDRESS TITLE OF CLASS OWNERSHIP(A) OUTSTANDING(B)
---------------- -------------- ------------ ----------------
<S> <C> <C> <C>
AmSouth Bancorporation
Birmingham, Alabama............ Common Stock 551,034(c) 8.66
Group consisting of:
The Dyson-Kissner-Moran Corpo-
ration,
Charles H. Dyson, John A. Moran
and the Estate of Margaret M.
Dyson.......................... Common Stock 846,425(d) 13.30
John T. Oxley
Tulsa, OK...................... Common Stock 893,151 14.03
</TABLE>
- --------
(a) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner of a security for purposes of the Rule if he or she
has or shares voting power or dispositive power with respect to such
security or has the right to acquire such ownership within 60 days. As used
herein, "voting power" is the power to vote or direct the voting of shares,
and "dispositive power" is the power to dispose or direct the disposition
of shares.
(b) For the purpose of computing the percentage of outstanding stock owned by
each beneficial owner, any securities that are not outstanding, but that
are subject to options, warrants, rights, or conversion privileges
exercisable within 60 days of March 30, 1994, are deemed to be outstanding
in determining the percentage owned by such person but are not deemed
outstanding in determining the percentage owned by any other person. At
March 30, 1994, 6,364,600 shares of Fortune Common Stock were outstanding
(excluding shares of the common stock which could be acquired upon the
exercise of options, warrants, rights or conversion privileges within 60
days of March 30, 1994), and 1,380,000 shares of Fortune Preferred Stock
were outstanding.
(c) Represents shares that may be issued pursuant to the Stock Option
Agreement.
(d) According to information supplied to Fortune by the group, these shares are
owned beneficially as follows: The Dyson-Kissner-Moran Corporation ("DKM")
(625,114 shares), Charles H. Dyson (115,703 shares), Estate of Margaret M.
Dyson (35,031 shares) and John A. Moran (70,577 shares). Each of these
persons disclaims beneficial ownership of the shares owned by any of the
other persons, except that Messrs. Dyson and Moran, and the Estate of Mrs.
Dyson state that they may be deemed to have beneficial ownership of the
shares of Fortune Common Stock owned by DKM by virtue of their being
shareholders, directors and/or officers of DKM.
83
<PAGE>
The following table sets forth information as of March 30, 1994, with respect
to the shares of Fortune Common Stock beneficially owned by all of Fortune's
directors and nominees named in this Proxy Statement/Prospectus, Fortune's five
most highly compensated executive officers and by all directors and executive
officers of Fortune as a group. Except as otherwise noted, each beneficial
owner listed has sole investment and voting power with respect to the shares of
common stock indicated. None of Fortune's directors and nominees owns any
Fortune Preferred Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF COMMON
NAME BENEFICIAL OWNERSHIP(A)(B) STOCK OUTSTANDING
---- -------------------------- -----------------
<S> <C> <C>
H. Richard Carter....... 5,911 *
Martin W. Gladysz....... 30,528 *
Bruce W. Griffin........ 25,237 *
Llewellyn Jenkins....... 6,000 *
Rausey W. Mason......... 44,549 *
Roy J. McCraw, Jr....... 40,605 *
John A. Moran........... 846,425 13.30
Edward N. Ney........... 11,200 *
Hugh J. Shaw............ 29,984 *
John R. Torell III...... 86,181 1.35
Ezra K. Zilkha.......... 313,045 4.92
All directors and execu-
tive
officers as a group (11
persons)............... 1,439,665 22.62
</TABLE>
- --------
* The percentage of outstanding common stock is less than 1%.
(a) Excludes shares of common stock subject to outstanding stock options unless
such options are exercisable within 60 days after March 30, 1994. Of the
amounts shown in the table, Messrs. Carter, Jenkins, Mason, McCraw, Moran,
Ney, Torell, Zilkha, Gladysz, Griffin and Shaw hold options to purchase
5,000, 5,000, 5,000, 5,633, 5,000, 5,000, 23,332, 5,000, 11,700, 12,000 and
11,700 shares, respectively.
(b) Includes shares awarded to directors and officers of Fortune under the
Restricted Stock Bonus Plan that have not vested as follows: Mr. Mason,
1,400 shares; Mr. McCraw, 11,455 shares; Mr. Torell, 22,910 shares; Mr.
Gladysz, 7,172 shares; Mr. Griffin, 7,072 shares; Mr. Shaw, 6,972 shares;
all directors and officers, 60,981 shares.
(c) Includes 150,734 shares owned by other members of a group, beneficial
ownership of which is disclaimed by Mr. Moran.
84
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Compensation
Committee") determines annually the compensation (including awards under
compensation plans) to be paid to Fortune's chief executive officer and other
executive officers, including the executive officers named in the Summary
Compensation Table. The Compensation Committee reviews and evaluates
information supplied by management, including data and recommendations by any
compensation consultants employed by Fortune. Members of the Compensation
Committee are Messrs. Moran (Chairman), Ney and Zilkha, all of whom are outside
directors. The Compensation Committee held four meetings during fiscal 1993.
Objectives. Fortune's compensation policies are structured to enable the
company to attract, hold and motivate highly qualified executive officers and
to reward contributions to the institution's success. The objective is to
create a highly competitive management team that will consistently produce
superior results for Fortune and its shareholders.
The Compensation Committee believes that its compensation policies should be
measured and appraised within the context of similar plans at other major
financial institutions in the Southeast portion of the United States. To that
end, the Compensation Committee authorized a study by outside consultants in
1992 to review and recommend salary grades for executive and all other officers
of Fortune based upon comparisons with competing companies. The same salary
grades were used in 1993 without change. The consultants were also commissioned
to review all other aspects of Fortune's short and long term benefit plans and
to measure these programs against the competition as well.
The compensation of executive officers includes salary, bonus, and long term
stock awards.
Salary. The Compensation Committee annually reviews the base salary of each
executive officer in relation to the previously established salary grades and
with regard to general industry conditions or trends. The Compensation
Committee's policy is to set salaries in relation to the contribution of each
incumbent and to grant merit increases based on individual performance. The
Compensation Committee considers the financial condition of the corporation,
earnings in an absolute manner and in relation to the previously established
business plan, other measures of banking success such as the level of problem
assets and, importantly, the degree of difficulty in achieving these levels.
Executive officer compensation for the last three years is listed on page 89.
Bonus. The Compensation Committee grants annual bonus awards based upon
achievement of corporate goals as measured against the company's business plan
and individual performance within the context of that plan. An aggregate bonus
pool for potential awards is established on a formula basis for use throughout
Fortune; that formula sets target incentive amounts as a percentage of current
annualized salary. Individual awards are granted on the basis of personal
performance in meeting the goals of the corporation as a whole and also in
meeting the goals of the incumbent's own division. Executive officer bonuses
for the last three years are listed on page 89.
Stock Awards. The Compensation Committee believes that including a portion of
an executive's annual incentive compensation in the form of stock awards rather
than cash bonuses encourages the executive to have the common goal with outside
shareholders of increasing the price of the Fortune stock over any given period
of time. The Compensation Committee encourages management's stock ownership.
The long term incentive compensation program consists of stock options that
vest at the time of the grant and restricted stock awards that vest equally
over a given period of time. The Compensation Committee grants awards based
upon the individual executive's contribution in the previous year based upon
achievement of corporate and individual goals. Restricted Stock awards, while
granted for achieving performance expectations, have the added feature of being
paid out over a four or five year time frame. The purpose of the extended
vesting period is to encourage the executive to devote his/her energies to
Fortune rather than to seek career
85
<PAGE>
opportunities elsewhere. The Compensation Committee believes restricted stock
awards compensate the executive for current performance but also encourage long
term loyalty.
All stock award programs were previously authorized by the shareholders at
the 1982, 1985, 1991 and 1993 annual meetings. Executive officer stock awards
for the last three years are listed on page 89.
Members of Compensation Committee:
John A. Moran, Chairman
Edward N. Ney
Ezra K. Zilkha
86
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following graphs compare cumulative total shareholder return on Fortune
Common Stock for the three years and the five years ended September 30, 1993,
respectively, with that of the Standard and Poor's Composite Index ("S&P 500")
and a peer group stock performance index defined as follows: 28 banks and
thrifts in the Southeast United States (the "Peer Group"). The graphs show the
comparative values for $100 invested on September 30, 1990 and September 30,
1988, respectively.
THREE YEAR TOTAL RETURN CHART
(DIVIDENDS REINVESTED)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
TOTAL RETURN
--------------------------
YEAR FORTUNE S&P 500 PEER GROUP
---- ------- ------- ----------
<S> <C> <C> <C>
1990.............................................. $100.00 $100.00 $100.00
1991.............................................. 90.85 131.16 189.86
1992.............................................. 228.21 145.65 248.96
1993.............................................. 383.62 164.87 311.11
</TABLE>
87
<PAGE>
FIVE YEAR TOTAL RETURN CHART
(DIVIDENDS REINVESTED)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
TOTAL RETURN
--------------------------
YEAR FORTUNE S&P 500 PEER GROUP
---- ------- ------- ----------
<S> <C> <C> <C>
1988.............................................. $100.00 $100.00 $100.00
1989.............................................. 75.46 133.01 141.29
1990.............................................. 28.64 120.72 81.59
1991.............................................. 26.02 158.34 154.91
1992.............................................. 65.36 175.83 203.13
1993.............................................. 109.87 198.69 253.84
</TABLE>
88
<PAGE>
Certain of the executive officers of Fortune are also executive officers of
Fortune Bank. Because the business of Fortune primarily consisted of the
business of Fortune Bank at September 30, 1993, the close of Fortune's most
recent fiscal year, Fortune has set forth below information regarding the cash
compensation earned or awarded for the last three years paid to Fortune Bank's
five most highly compensated executive officers whose aggregate cash
compensation exceeded $100,000. Executive officers of Fortune Bank do not
receive additional compensation for serving as executive officers of Fortune.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------------
(A) (B) (C) (D) (E) (F) (G) (H)
RESTRICTED ALL OTHER
NAME AND OTHER ANNUAL STOCK COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(4) AWARDS(1) OPTIONS (2)
------------------ ---- ------ ----- --------------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John R. Torell III...... 1993 $180,000 $100,000 -- $118,357 13,322 $4,664
Chief Executive Officer 1992 150,000 75,000 -- 215,000 -- 4,500
1991 132,500 -- -- -- 30,000 750
Roy J. McCraw, Jr. ..... 1993 237,000 75,000 -- 59,179 6,666 7,116
President and Chief 1992 230,076 50,000 -- 107,500 -- 2,312
Operating Officer(3) 1991 90,865 25,000 -- -- 15,000 --
Martin W. Gladysz....... 1993 120,000 38,000 -- 35,500 4,000 3,587
Executive Vice
President, 1992 115,000 25,000 -- 72,566 -- 3,444
Treasurer & Chief 1991 110,135 2,500 -- 2,000 3,300
Financial Officer --
Bruce W. Griffin........ 1993 120,000 45,000 -- 35,500 4,000 3,587
Executive Vice Presi-
dent 1992 116,269 25,000 -- 81,990 -- 3,444
1991 100,404 2,500 -- -- 5,000 3,300
Hugh J. Shaw............ 1993 135,000 43,000 -- 35,500 4,000 4,005
Executive Vice Presi-
dent 1992 115,000 35,000 -- 76,342 -- 3,444
1991 110,135 2,500 -- -- 2,000 3,300
</TABLE>
- --------
(1) At September 30, 1993, Messrs. Torell, McCraw, Gladysz, Griffin, and Shaw
held 21,668, 10,834, 7,638, 6,733, and 7,556 shares of restricted stock,
respectively, valued at approximately $636,500, $318,200, $224,400,
$197,800 and $222,000, respectively, based on a market value of $29.375 per
share. Of these shares, 18,727 shares, 15,851 shares, 15,551 shares and
4,301 shares vest in fiscal 1994, 1995, 1996 and 1997. The remaining shares
vest ratably through fiscal 2000.
(2) Represents the employer matching contributions to the Financial
Institutions Thrift Plan.
(3) Mr. McCraw joined Fortune as President and Chief Operating Officer in May,
1991.
(4) Aggregate amount of other annual compensation does not exceed the lesser of
$50,000 or 10% of the executive officer's salary and bonuses.
89
<PAGE>
The following table provides certain information regarding the stock options
granted during fiscal 1993 to the named executive officers.
OPTION GRANTS IN FISCAL 1993
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------ ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED #(1) FISCAL YEAR PER SHARE DATE 5% 10%
---- ------------ ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John R. Torell III...... 13,332 12.9% $17.75 02/18/03 $ 148,785 $ 377,162
Roy J. McCraw, Jr....... 6,666 6.4 17.75 02/18/03 74,393 188,581
Martin W. Gladysz....... 4,000 3.9 17.75 02/18/03 44,640 113,160
Bruce W. Griffin........ 4,000 3.9 17.75 02/18/03 44,640 113,160
Hugh J. Shaw............ 4,000 3.9 17.75 02/18/03 44,640 113,160
</TABLE>
- --------
(1) The number of shares of Fortune Common Stock underlying these options at
September 30, 1993, was 5,589,178.
(2) Assuming the option is not terminated on the Effective Date of the Merger.
AGGREGATED OPTION EXERCISES IN
FISCAL 1993 AND SEPTEMBER 30, 1993 OPTION VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS AT FISCAL YEAR END MONEY OPTIONS AT FISCAL YEAR END
ACQUIRED ON VALUE REALIZED -------------------------------- --------------------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- -------------- -------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
John R. Torell III...... -- -- 43,332 -- $ 743,735 --
Roy J. McCraw, Jr. ..... -- -- 21,666 -- 373,742 --
Martin W. Gladysz....... 988 5,187 13,700 -- 206,588 --
Bruce W. Griffin........ -- -- 12,000 -- 200,500 --
Hugh J. Shaw............ 1,092 5,460 13,700 -- 206,588 --
</TABLE>
- --------
(1) Column (d) lists the total options held by the named executive officers as
of September 30, 1993. As of that date, such executive officers also held
an aggregate of 34,582 shares of Fortune Common Stock. As a consequence,
executive officers share with all shareholders the risk of future changes
in the market value of Fortune Common Stock, which will depend upon, among
other factors, Fortune's future performance and such executive officer's
contribution to that performance.
PENSION PLAN
Fortune Bank maintains a qualified, defined benefit pension plan (the
"Pension Plan") for its employees through the Financial Institutions Retirement
Fund, White Plains, New York, a multi-employer plan. In general, all full-time
employees of Fortune Bank who have attained the age of 21 are eligible to
participate in the Pension Plan after completion of one year of service. The
Pension Plan provides generally for monthly payments to or on behalf of each
covered employee upon each employee's retirement at age 65, disability or
death, based upon such employee's average annual salary over the five
consecutive years of highest salary during benefit service ("High-5 Average")
before retirement, disability or death, and upon each employee's years of
service. Fortune Bank's policy is to accrue and fund the employer's portion of
the normal pension
90
<PAGE>
costs. The plan is subject to the Employee Retirement Income Security Act of
1974. Employees are not required to contribute to the Pension Plan, and
benefits are integrated with social security benefits based on each member's
covered compensation level with career average minimum.
The following table indicates the annual retirement benefit that would be
payable under the plan upon retirement at age 65 to a participant electing to
receive his or her retirement benefit in the standard form of benefit, assuming
various specified levels of plan compensation and various specified years of
credited service.
ANNUAL PENSION BENEFIT
BASED ON YEARS OF BENEFIT SERVICE
<TABLE>
<CAPTION>
HIGH-5 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
AVERAGE BENEFIT BENEFIT BENEFIT BENEFIT BENEFIT BENEFIT BENEFIT
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE
- ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 40,000 $ 5,900 $ 9,300 $12,800 $ 16,300 $ 19,800 $ 23,300 $ 26,800
60,000 9,400 14,600 19,800 25,100 30,300 35,600 40,800
80,000 12,900 19,800 26,800 33,800 40,800 47,800 54,800
100,000 16,400 25,100 33,800 42,600 51,300 60,100 68,800
120,000 19,900 30,300 40,800 51,300 61,800 72,300 82,800
140,000 23,400 35,600 47,800 60,100 72,300 84,600 86,800
160,000 26,900 40,800 54,800 68,800 82,800 96,800 110,800
180,000 30,400 46,100 61,800 77,600 93,300 109,100 111,759*
200,000 33,900 51,300 68,800 86,300 103,800 111,759* 111,759*
220,000 37,400 56,600 75,800 95,100 111,759* 111,759* 111,759*
240,000 40,900 61,800 82,800 103,800 111,759* 111,759* 111,759*
260,000 44,400 67,100 89,600 111,759* 111,759* 111,759* 111,759*
</TABLE>
- --------
* Maximum benefit under current tax laws.
As of September 30, 1993, Messrs. Gladysz, Griffin, McCraw, Shaw and Torell
had approximately 10, 10, 1, 21, and 3 years of benefit service, respectively,
under the Pension Plan. For the individual officers named in the Summary
Compensation Table, the compensation recognized under the Pension Plan for 1993
is the amount shown in the table for the year 1993 as "Salary" (column (c)) and
"Bonus" (column (d)).
All employees of Fortune Bank and its subsidiaries may contribute from 2% to
15% of their monthly salaries to a thrift plan through the Financial
Institutions Thrift Plan. Fortune Bank contributes an amount equal to 100% of
the employee's contributions which do not exceed 3% of the employee's monthly
salary. At the employee's option, these funds are invested in an equity-index
fund, an aggressive growth fund, a fixed-income fund insured by insurance
company GICs or short term fixed income funds insured by United States
government securities. Certain of these funds may be designated tax-deferred
under Section 401(k) of the Code. Subject to certain restrictions, the employee
may make a total or partial withdrawal of the funds contributed, including the
employer's contribution, at any time, but not more than once in any calendar
year.
SEVERANCE COMPENSATION PLAN
Fortune's Severance Plan protects certain management employees in the event a
take-over of Fortune results in voluntary or involuntary termination of
employment within two years of the take-over and a reduction in compensation or
diminished responsibilities. Severance payments will not be made if the
termination of employment is due to death, retirement, termination for cause or
disability. (See "Proposal to Approve the Merger--Interest of Certain Persons
in the Merger").
CERTAIN TRANSACTIONS
During the past year certain directors and executive officers of Fortune
and/or one or more of their associates had banking transactions in the ordinary
course of business with Fortune Bank. Such transactions
91
<PAGE>
included loans made in the ordinary course of business. All such loans were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other persons
and did not involve more than the normal risk of collectibility or present
other favorable features.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires Fortune's directors, certain
officers and any persons holding more than 10% of Fortune stock to report their
initial ownership of Fortune stock and any subsequent changes in that ownership
to the Commission. Specific due dates for these reports have been established,
and Fortune is required to disclose in this Proxy Statement/Prospectus any
failure to file by these dates during 1993. All of these filing requirements
were satisfied, except that Messrs. Torell, McCraw, Gladysz, Griffin, Shaw,
Coleman and two former executives filed late reports covering issuance of
restricted stock bonus shares on February 18, 1993. The delay in filing was due
to a clerical error, and the required reports were filed as soon as the error
was discovered. In making these disclosures, Fortune has relied on written
representations of its directors and officers and copies of the reports that
they have filed with the Commission.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal No. 3)
The Board of Directors has appointed the firm of KPMG Peat Marwick as
independent public accountants to audit the books and records of Fortune for
the fiscal year ending September 30, 1994, subject to ratification of such
appointment by the shareholders. KPMG Peat Marwick has been acting as
independent public accountants of Fortune Bank since 1969. Unless otherwise
indicated, properly executed proxies will be voted in favor of ratifying the
appointment of KPMG Peat Marwick. Representatives of the firm will be present
at the Annual Meeting and will be given an opportunity to make a statement if
they desire to do so and to respond to appropriate questions from shareholders.
No determination has been made as to what action the Board of Directors would
take if the shareholders do not ratify the appointment.
VALIDITY OF AMSOUTH COMMON STOCK
The validity of the shares of AmSouth Common Stock to be issued in connection
with the Merger will be passed upon by Carl L. Gorday, Birmingham, Alabama,
Counsel to AmSouth.
EXPERTS
The financial statements incorporated in the Proxy Statement/Prospectus by
reference to the Annual Report on Form 10-K of Fortune for the year ended
September 30, 1993, have been so incorporated in reliance on the reports of
KPMG Peat Marwick, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
The consolidated financial statements of AmSouth Bancorporation included and
incorporated by reference in AmSouth's Annual Report (Form 10-K) for the year
ended December 31, 1993, have been audited by Ernst & Young, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
SHAREHOLDER PROPOSAL INFORMATION
In the event that the Merger has not been consummated before December 5,
1994, any proposal intended to be presented by any shareholder for action at
the 1995 Annual Meeting of the Shareholders of
92
<PAGE>
Fortune must be received by the Corporate Secretary of Fortune at 16120 U.S.
Highway 19 North, Clearwater, Florida 34624-6895, not later than that date, in
order for the proposal to be considered for inclusion in the proxy statement
and proxy relating to the 1995 Annual Meeting. Nothing in this paragraph shall
be deemed to require Fortune to include in its proxy statement and proxy
relating to the 1995 Annual Meeting any shareholder proposal that does not meet
all of the requirements for inclusion established by the Commission in effect
at the time. In addition, Fortune's Bylaws require shareholder notice of
proposals and nominations for director to be delivered to the Corporate
Secretary of Fortune not less than 30 days nor more than 90 days before the
date of an annual meeting, unless notice or public disclosure of the date of
the meeting occurs less than 45 days before the date of the meeting, in which
event shareholders may deliver such notice not later than the 15th day
following the day on which notice of the date of the meeting was mailed or
public disclosure thereof was made. No notices of new business have been
received by Fortune with respect to the 1994 Annual Meeting.
GENERAL
As of the date of this Proxy Statement, the Board of Directors of Fortune
knows of no matters to be brought before the Annual Meeting other than those
specifically listed in the Notice of Annual Meeting of Shareholders. However,
if further business is properly presented, the proxy holders will vote the
proxies on such matters in accordance with the determination of the Board of
Directors.
The Board of Directors of Fortune urges each shareholder, whether or not he
or she intends to be present at the Annual Meeting, to complete, sign and
return the enclosed proxy as promptly as possible.
By order of the Board of Directors
of Fortune Bancorp, Inc.
/s/ John R. Torell III
John R. Torell III
Chairman of the Board
and Chief Executive Officer
Clearwater, Florida
April 5, 1994
93
<PAGE>
ANNEXES
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF THE 12TH DAY OF SEPTEMBER, 1993
BETWEEN
FORTUNE BANCORP, INC.
AND
AMSOUTH BANCORPORATION
<PAGE>
Agreement and Plan of Merger, dated as of the 12th day of September, 1993
(the "Plan"), between Fortune Bancorp, Inc. (the "Company"), which is the sole
shareholder of Fortune Bank, a savings bank (the "Bank"), and AmSouth
Bancorporation ("AmSouth").
Recitals:
A. The Company. The Company is a corporation duly organized and existing in
active status under the laws of the State of Florida, with its principal
executive offices located in Clearwater, Florida. As of September 11, 1993, the
Company had 10,000,000 authorized shares of common stock, each of $.01 par
value, and 3,000,000 shares of preferred stock, each of $.01 par value, (no
other class of capital stock being authorized) of which no more than 5,573,475
shares of common stock were issued and outstanding, and no shares were held as
treasury stock, and 1,380,000 shares of preferred stock were issued and
outstanding and none were held as treasury stock.
B. AmSouth. AmSouth is a corporation duly organized and existing in good
standing under the laws of the State of Delaware with its principal executive
offices located in Birmingham, Alabama. As of August 31, 1993, AmSouth had
200,000,000 authorized shares of common stock, each of $1.00 par value, and
2,000,000 authorized shares of preferred stock, no par value (no other class of
capital stock being authorized), of which 45,350,302 shares of common stock
were outstanding and 1,500,000 shares were held as treasury stock. No shares of
preferred stock were issued and outstanding and none were held as treasury
stock.
C. The Bank. The Bank is a savings association duly organized and existing in
active status under the laws of the State of Florida and is a wholly-owned
subsidiary of the Company, with its principal executive offices located in
Clearwater, Florida. As of the date hereof, Bank has 10,000,000 authorized
shares of common stock, each of $.01 par value, and 3,000,000 authorized shares
of preferred stock, each of $.01 par value, of which 20,000 shares are
designated as Series A Preferred Stock and 1,040,000 are designated as Series B
Preferred Stock (no other class of capital stock being authorized) of which
2,614,737 shares of common stock are issued and outstanding, and no shares are
held as treasury stock; and 20,000 shares of Series A Preferred Stock and
1,040,000 shares of Series B Preferred Stock are issued and outstanding and
none are held as treasury stock.
D. Rights, Etc. With respect to the Company and the Bank, there are no shares
of common stock or preferred stock reserved for issuance, and the Company and
the Bank have no commitment to issue or sell any such shares or any securities
or obligations convertible into or exchangeable for, or giving any person any
right to subscribe for or acquire from the Company or the Bank any such shares,
and no securities or obligations representing such rights are outstanding,
except pursuant to the Stock Option Agreement (as defined below), the Restated
Articles of Incorporation, as amended, of the Company and the indenture with
respect to the Company Convertible Debentures (as defined below), and except as
set forth in Schedule 1 hereto.
E. Board Approvals. As of the date of execution hereof, the Boards of
Directors of the Company and AmSouth have approved this Plan and have
authorized the execution hereof at meetings of their respective Boards of
Directors.
F. Stock Option Agreement. AmSouth and the Company will enter into a Stock
Option Agreement, within one day of the date hereof, in the form annexed hereto
as Annex 1 (the "Stock Option Agreement").
In consideration of their mutual promises and obligations, including the
promises and obligations under the Stock Option Agreement and the Voting
Agreements, the parties hereto adopt and make this Plan and prescribe the terms
and conditions thereof and the manner and basis of carrying it into effect,
which shall be as follows:
A-1
<PAGE>
I. THE MERGER
I(A) The Continuing Corporation. The Company shall be merged into AmSouth
(the "Merger"), the separate existence of the Company shall cease, and AmSouth
(sometimes hereinafter referred to as the "Continuing Corporation") shall
survive, all with the effect provided by the General Corporation Law of the
State of Delaware and, to the extent applicable, the Florida law of
corporations. The Merger will be treated by the parties as a reorganization,
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
I(B) Rights, Etc. The Continuing Corporation shall thereupon and thereafter
possess all the rights, privileges, immunities and franchises, of a public as
well as of a private nature, of each of the merging corporations; and all
property, real, personal and mixed, and all debts due on whatever account, and
all other choses in action, and all and every other interest, of or belonging
to or due to each of the corporations so merged, shall be taken and deemed to
be transferred to and vested in the Continuing Corporation without further act
or deed; and the title to any real estate or any interest therein, vested in
any of such corporations, shall not revert or be in any way impaired by reason
of the Merger.
I(C) Liabilities, Etc. The Continuing Corporation shall thenceforth be
responsible and liable for all the liabilities, obligations and penalties of
each of the corporations so merged.
I(D) Charter; By-Laws; Directors and Officers. The Certificate of
Incorporation and By-Laws of the Continuing Corporation shall be those of
AmSouth, as in effect immediately prior to the Effective Date (as defined in
Article IX) of the Merger. The directors and officers of AmSouth immediately
prior to the Effective Date shall be the directors and officers of the
Continuing Corporation until their successors are elected and qualify;
provided, however, that John R. Torell shall be nominated to be a director of
AmSouth as soon as practicable after the Effective Date.
I(E) Subsidiaries. The Company and AmSouth anticipate that (i) immediately
before the Effective Date (as defined below), if all conditions to the
consummation of the Merger have been satisfied or waived, or (ii) on or after
the Effective Date Bank will merge with a subsidiary of AmSouth (the
"Subsidiary Reorganization"), at the discretion of AmSouth.
II. TERMS OF THE MERGER.
Subject to the provisions of this Plan:
II(A) Subject to clause (3) of this Paragraph (A) and Paragraph (C) of
Article II:
(1) Each share of Company common stock, par value $.01 per share (the
"Company Common Stock"), issued and outstanding on the Effective Date
shall become and be converted into the right to receive, at the
election of each holder thereof subject to the provisions of Paragraph
(B) below, either (i) a number of shares of common stock, par value
$1.00 per share ("AmSouth Common Stock"), of AmSouth equal to the sum
of .538522 and the ratio of $17.125 to the Average Closing Price (as
defined below) (the "Conversion Ratio"), or (ii) cash equal in amount
to the sum of $17.125 and the product of .538522 and the Average
Closing Price (the "Cash Consideration"), and each share of Company
Preferred Stock, par value $.01 per share (the "Company Convertible
Preferred Stock") issued and outstanding on the Effective Date shall
become and be converted into the right to receive at the election of
each holder thereof subject to the provisions of Paragraph (B) below,
either (x) a number of shares of AmSouth Common Stock equal to the
product of the Conversion Ratio and 1.333333 or (y) cash in an amount
equal to the product of the Cash Consideration and 1.333333; provided,
(subject to Paragraph (B) below) that the number of shares of AmSouth
Common Stock which will be issued (the "Stock Limit") shall equal the
number obtained by multiplying (1) 1.077044 by (2) the product of (a)
the total number of shares (including shares described in clause (4)(i)
and excluding shares described in clause (4)(ii) of this Paragraph
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(A)) of Company Common Stock and Company Common Stock Equivalents
outstanding on the Effective Date by (b) .50; and provided, further,
that the Stock Limit may be adjusted upward in a mutually acceptable
manner if necessary in the event neither Holland & Knight nor Sullivan
& Cromwell can give an opinion that the Merger qualifies as a
reorganization within the meaning of Section 368 of the Code. In the
event of any recapitalization, reclassification, stock split,
consolidation or similar change in the AmSouth Common Stock, the
Conversion Ratio and Cash Consideration will be appropriately adjusted
to reflect such change;
(2) For purposes of this Plan:
(i) Average Closing Price shall mean the average of the closing
prices of shares of AmSouth Common Stock as reported on the New York
Stock Exchange Composite Transaction Tape for the ten (10)
consecutive trading days ending on the tenth business day prior to
the Effective Date.
(ii) Company Common Stock Equivalents shall mean the shares of
Company Common Stock into which each share of Company Convertible
Preferred Stock (as defined below) would convert if such share of
Company Convertible Preferred Stock had been converted into Company
Common Stock on the day prior to the date of this Plan and as though
this Plan had never been contemplated.
(3) notwithstanding any other provisions hereof, no fractional shares
of AmSouth Common Stock and no certificates or scrip therefor, or other
evidence of ownership thereof, will be issued; instead, AmSouth shall
pay to each holder of Company Common Stock or Company Convertible
Preferred Stock who would otherwise be entitled to fractional shares
pursuant to clause (1) of this Paragraph (A) an amount in cash
determined by multiplying such holder's fractional interest by the
closing price for AmSouth Common Stock on the Effective Date on the New
York Stock Exchange.
(4) notwithstanding any other provisions hereof, (i) each share of
Company Common Stock and Company Convertible Preferred Stock the holder
of which has perfected his right to dissent under applicable law and
has not effectively withdrawn or lost such right as of the Effective
Date (the "Dissenting Shares") shall not be converted into or represent
a right to receive shares of AmSouth Common Stock or cash hereunder,
and the holder thereof shall be entitled only to such rights as are
granted by applicable law, and (ii) each share of Company Common Stock
and Company Convertible Preferred Stock held directly or indirectly by
the Company or the Bank (other than shares held in a fiduciary capacity
or in satisfaction of a debt previously contracted) shall not be
converted into or represent a right to receive shares of AmSouth Common
Stock or cash hereunder, and such shares shall be cancelled.
II(B) An election form and other appropriate transmittal materials as
AmSouth and the Company shall mutually agree ("Election Form") will be sent
twenty-seven (27) days before the anticipated Effective Date or on such
other date as AmSouth and the Company shall mutually agree (the "Mailing
Date") to each holder of record of Company Common Stock and Company
Convertible Preferred Stock as of five (5) business days prior to the
Mailing Date permitting such holder (or in the case of nominee record
holders, the beneficial owner through proper instructions and
documentation) (i) to elect to receive only AmSouth Common Stock with
respect to such holder's Company Common Stock or Company Convertible
Preferred Stock as hereinabove provided (the "Stock Election Shares"), (ii)
to elect to receive only cash with respect to such holder's Company Common
Stock or Company Convertible Preferred Stock as hereinabove provided (the
"Cash Election Shares"), or (iii) to indicate that such holder makes no
such election (the "No-Election Shares"). Any shares of Company Common
Stock and Company Convertible Preferred Stock with respect to which the
holder thereof shall not, as of the Election Deadline, (as defined below),
have submitted to AmSouth Bank N.A. as an exchange agent (the "Exchange
Agent"), an effective, properly completed Election Form shall be deemed to
be No-Election Shares.
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The term "Election Deadline", shall mean 5:00 p.m., Central Time, on the
20th day following but not including the Mailing Date or such other date as
the Company and AmSouth shall mutually agree upon. AmSouth shall make an
election form available to all persons who become holders of Company Common
Stock or Company Convertible Preferred Stock between the date five (5) days
prior to the Mailing Date and the close of business on the day prior to the
Election Deadline; provided that the Company will provide to the Exchange
Agent in a timely manner all information necessary to comply with this
provision.
Any election to receive AmSouth Common Stock or cash shall have been
properly made only if the Exchange Agent shall have actually received a
properly completed Election Form by the Election Deadline. An Election Form
will be properly completed only if accompanied by certificates (or
customary affidavits and indemnities regarding the loss thereof)
representing all shares of Company Common Stock or Company Convertible
Preferred Stock covered thereby. Any Election Form may be revoked or
changed by the person submitting such Election Form to the Exchange Agent
at or prior to the Election Deadline. The certificate or certificates
representing Company Common Stock or Company Convertible Preferred Stock
relating to any revoked Election Form shall be promptly returned without
charge to the person submitting the Election Form to the Exchange Agent.
The Exchange Agent shall have reasonable discretion to determine when any
election, modification or revocation is received and whether any such
election, modification or revocation has been properly made.
Within five business days after the Election Deadline, the Exchange Agent
shall effectuate the allocation among holders of Company Common Stock and
Company Convertible Preferred Stock of rights to receive AmSouth Common
Stock or cash in the Merger in accordance with the Election Forms as
follows (provided, however, that in no event shall the Exchange Agent be
required to effectuate the allocation prior to the Effective Date):
(i) If the number of shares of AmSouth Common Stock that would be
issued upon the conversion into AmSouth Common Stock of the Stock
Election Shares is less than the Stock Limit, then:
(1) all Stock Election Shares will be converted into the right to
receive AmSouth Common Stock,
(2) the Exchange Agent will select first from among the holders of
No-Election Shares and then (if necessary) from among the holders of
Cash Election Shares, by random selection (as described below), a
sufficient number of such holders ("Stock Designees") such that the
number of shares of AmSouth Common Stock that will be issued upon
the conversion into AmSouth Common Stock of shares of Company Common
Stock and Company Convertible Preferred Stock held by the Stock
Designees will, when added to the number of shares of AmSouth Common
Stock that will be issued upon the conversion of the Stock Election
Shares, equal as closely as practicable the Stock Limit, and all
shares held by the Stock Designees will be converted into the right
to receive AmSouth Common Stock (provided, that no particular holder
of Cash Election Shares will be deemed to be a Stock Designee if
such designation would threaten satisfaction of any of the
conditions to consummation of the Merger in Article VII), and
(3) the Cash Election Shares and the No-Election Shares not held
by Stock Designees will be converted into the right to receive cash;
or
(ii) If the number of shares of AmSouth Common Stock that would be
issued upon the conversion into AmSouth Common Stock of the Stock
Election Shares is greater than the Stock Limit, then:
(1) all Cash Election Shares and No-Election Shares will be
converted into the right to receive cash,
(2) the Exchange Agent will select from among the holders of Stock
Election Shares, by random selection (as described below), a
sufficient number of such holders to receive cash
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("Cash Designees") such that the number of shares of AmSouth Common
Stock that will be issued upon the conversion of the Stock Election
Shares not held by Cash Designees will, equal as closely as
practicable the Stock Limit, and all shares held by the Cash
Designees will be converted into the right to receive cash
(provided, that no particular holder of Stock Election Shares will
be deemed to be a Cash Designee if such designation would threaten
satisfaction of any of the conditions to consummation of the Merger
in Article VII), and
(3) All Stock Election Shares not held by the Cash Designees will
be converted into the right to receive AmSouth Common Stock; or
(iii) If the number of shares of AmSouth Common Stock that would be
issued upon the conversion into AmSouth Common Stock of the Stock
Election Shares is equal or nearly equal (as determined by the Exchange
Agent) to the Stock Limit, then subparagraphs (i) and (ii) above and
subparagraph (iv) below shall not apply and all Stock Election Shares
will be converted into the right to receive AmSouth Common Stock and
all Cash Election Shares and No-Election Shares will be converted into
the right to receive cash; or
(iv) If the number of shares of AmSouth Common Stock that would be
issued upon the conversion into AmSouth Common Stock of the Stock
Election Shares and No-Election Shares would equal or nearly equal (as
determined by the Exchange Agent) the Stock Limit, then subparagraphs
(i), (ii) and (iii) above shall not apply and all Cash Election Shares
will be converted into the right to receive cash and all Stock Election
Shares and No-Election Shares will be converted into the right to
receive AmSouth Common Stock.
The selection process to be used by the Exchange Agent shall consist of
such processes as shall be mutually determined by the Company and AmSouth
as shall be further described in the Election Form. On the Effective Date
of the Merger, AmSouth shall issue to the Exchange Agent the number of
shares of AmSouth Common Stock issuable and the amount of cash payable in
the Merger. Upon completion of the allocation procedure described above,
AmSouth shall, if necessary, issue to the Exchange Agent any additional
shares of AmSouth Common Stock in exchange for cash or issue to the
Exchange Agent any additional cash in exchange for AmSouth Common Stock, as
may be required to effect the conversion of Company Common Stock and
Company Convertible Preferred Stock as contemplated hereby. Within 5
business days after the allocation described above, the Exchange Agent
shall distribute AmSouth Common Stock and cash as provided herein. The
Exchange Agent shall not be entitled to vote or exercise any rights of
ownership with respect to the shares of AmSouth Common Stock held by it
from time to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect to such
shares for the account of the persons entitled thereto.
After the completion of the foregoing allocation, each holder of an
outstanding certificate or certificates which prior thereto represented
shares of Company Common Stock or Company Convertible Preferred Stock who
surrenders such certificate or certificates to the Exchange Agent will,
upon acceptance thereof by the Exchange Agent, be entitled to a certificate
or certificates representing the number of full shares of AmSouth Common
Stock or the amount of cash into which the aggregate number of shares of
Company Common Stock or Company Convertible Preferred Stock previously
represented by such certificate or certificates surrendered shall have been
converted pursuant to this Plan and, if such holder's shares of Company
Common Stock or Company Convertible Preferred Stock have been converted
into AmSouth Common Stock, any other distribution theretofore paid with
respect to the AmSouth Common Stock issuable in the Merger, in each case
without interest. The Exchange Agent shall accept such certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent
may impose to effect an orderly exchange thereof in accordance with normal
exchange practices. Each outstanding certificate which prior to the
Effective Date of the Merger represented Company Common Stock or Company
Convertible Preferred Stock and which is not surrendered to the Exchange
Agent in accordance with the procedures provided for herein shall, except
as otherwise herein provided, until duly surrendered to the Exchange Agent
be deemed to evidence ownership of the number of shares of AmSouth Common
Stock or the right to receive the amount of cash into which such
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Company Common Stock or Company Convertible Preferred Stock shall have been
converted. After the Effective Date of the Merger, there shall be no
further transfer on the records of the Company of certificates representing
Company Common Stock or Company Convertible Preferred Stock and if such
certificates are presented to the Company for transfer, they shall be
cancelled against delivery of certificates for AmSouth Common Stock or cash
as hereinabove provided. No dividends which have been declared will be
remitted to any person entitled to receive shares of AmSouth Common Stock
under this Article II until such person surrenders the certificate or
certificates representing Company Common Stock or Company Convertible
Preferred Stock, at which time such dividends shall be remitted to such
person, without interest.
Neither the Exchange Agent nor any party to this Plan shall be liable to
any holder of stock for any consideration paid to a public official
pursuant to applicable abandoned property, escheat or similar laws. AmSouth
and the Exchange Agent shall be entitled to rely upon the stock transfer
books of the Company to establish the identity of those persons entitled to
receive consideration specified in this Plan, which books shall be
conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock, AmSouth and the Exchange Agent shall be entitled to
deposit any consideration represented thereby in escrow with an independent
third party and thereafter be relieved with respect to any claims thereto.
II(C) The Company will have a right to elect to abandon the Merger and
terminate the Plan, (and no provision of this Article II except this
Paragraph (C) shall apply) if its Board of Directors so determines by a
majority vote of the members of its entire board, at any time during the
ten-day period commencing with the Approval Date if the average closing
prices of AmSouth Common Stock as reported on the New York Stock Exchange
Composite Transactions Tape for the ten (10) consecutive trading days
ending on the date (the "Approval Date") of the last federal regulatory
approval (excluding any applicable waiting period) required for
consummation of the Merger shall be less than $27.00;
subject, however, to the following three sentences. If the Company makes
an election to abandon the Merger, it shall give prompt written notice to
AmSouth (provided that such notice of election may be withdrawn at any time
within the aforementioned ten-day period). During the seven-day period
commencing with its receipt of such notice, AmSouth shall have the option
to increase the value of the cash, the AmSouth Common Stock or a
combination thereof being offered to shareholders of the Company such that
the per share value of the cash and stock consideration (valued at the
average closing price of AmSouth Common Stock computed in accordance with
this Paragraph II(C) in the case of the stock consideration) is at least
equal to the per share consideration which would have been received if the
average closing price computed in accordance with this Paragraph II(C) had
been $27.00 per share (provided that the Merger shall qualify as a
reorganization within the meaning of Section 368 of the Code). If AmSouth
so elects within such seven-day period, it shall give prompt written notice
to the Company of such election and the increase in the average per share
value of the cash and stock consideration whereupon no termination shall
have occurred and this Plan shall remain in effect in accordance with its
terms (except as the value of the cash and/or stock consideration shall
have been so modified).
II(D) Each stock option to purchase shares of Company Common Stock,
including options granted but not yet vested, (except options granted
pursuant to the Stock Option Agreement) not exercised prior to the
Effective Date shall be converted into the right to receive in AmSouth's
sole discretion on a case-by-case basis with respect to each holder of such
options either (1) an option to purchase, on the same terms as the option
to purchase shares of Company Common Stock, shares of AmSouth Common Stock
in an amount and at a price appropriately adjusted to reflect the per share
consideration received by holders of Company Common Stock in the Merger; or
(2) cash in an amount equal to the difference between (a) the per share
consideration to be received by holders of Company Common Stock in the
Merger and (b) the exercise price of such option, whereupon such option
shall terminate.
II(E) Appendix A hereto illustrates, among other things, the value to be
received per share of Company Common Stock, whether in cash or AmSouth
Common Stock, at varying Average Closing
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Prices of AmSouth Common Stock as well as the Conversion Ratio. For
purposes of this Appendix it has been assumed that all of the Company
Convertible Preferred Stock will have been converted to Company Common
Stock at a conversion ratio of 1.333333.
III. ACTIONS PENDING MERGER.
III(A) Without the prior written consent or approval of AmSouth (except for
(7)(ii) below in which case only prior written notification to AmSouth is
required), the Company will not, and will not permit any subsidiary to:
(1) in the case of the Company and not the Bank, make, declare or pay any
dividend other than its regular quarterly common cash dividend of $.075 per
share and its regular quarterly preferred stock dividend of $.50 per share
(provided that for the quarter in which the Effective Date occurs, the
Company may declare and pay a final dividend in an amount per share equal
to $.075 for common stock (and $.50 for preferred stock) multiplied by the
fraction that is equal to the portion of the quarter that has elapsed prior
to the Effective Date); or declare or make any distribution of, or directly
or indirectly combine, redeem, reclassify, purchase or otherwise acquire,
any shares of its capital stock or authorize creation or issuance of or
issue any additional shares of its capital stock, or any options, calls or
commitments relating to its capital stock or any securities or obligations
convertible into or exchangeable for or giving any person any right to
subscribe for or acquire from the Company or any subsidiary shares of
capital stock, except pursuant to the Stock Option Agreement, the Restated
Articles of Incorporation, as amended, of the Company and the indenture
with respect to the Company Convertible Debentures and except pursuant to
plans or agreements as existing on the date hereof and disclosed in
Schedule 1, provided that no stock options, restricted stock or similar
benefits may be issued pursuant to any existing Company plans without the
prior written approval of AmSouth except for grants of stock options to be
made in January 1994 not in excess of 100,000 shares of Company Common
Stock, and at not less than the fair market value of Company Common Stock
on the date of grant, or, except as disclosed to AmSouth in Schedule 1,
incur any long term debt (except as incurred by the Bank in the ordinary
course of business);
(2) (i) enter into any employment contracts with, increase the rate of
compensation of, or pay or agree to pay any bonus to, any of its directors,
officers or employees, except in the ordinary course of business consistent
with past practices as disclosed in Schedule 1, or (ii) employ any new
officer or employee at an annual salary that is in excess of $50,000;
provided, however, that the Company and its subsidiaries may replace
officers and employees whose employment is terminated after the date hereof
without AmSouth's consent so long as AmSouth receives prior written notice
of such replacement.
(3) except as disclosed to AmSouth in Schedule 1, enter into, terminate
or modify (except as may be required by applicable law) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees;
(4) substantially modify the manner in which it has heretofore conducted
its business, enter into any new line of business, engage or employ any
consultant or advisor not engaged or employed on the date hereof as
disclosed in Schedule 1 except that the Company may engage or employ such
persons without AmSouth's consent if a third party makes an offer to
acquire the Company) or amend its (or the Bank's) Charter, or, its (or the
Bank's) By-laws;
(5) dispose of or discontinue any major portion of its business or
property, or merge or consolidate with, or acquire all or (relative to the
Company) any substantial portion of, the business or property of any other
entity;
(6) dispose of any material assets except in the ordinary course of
business;
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(7) knowingly take any action (i) for the purpose of, or (ii) that would
reasonably be likely to have the effect of, causing deterioration of its
valuable customer deposit or loan relationships; or
(8) agree to take any of the foregoing actions.
III(B) Without the prior written consent of the Company, AmSouth will not,
and will not permit any bank subsidiary, to:
(1) substantially modify the manner in which it has heretofore conducted
its business;
(2) dispose of to a non-affiliate of AmSouth, or discontinue, any major
portion of its business;
(3) declare or pay any cash dividend on AmSouth Common Stock inconsistent
with prior practices (including its history of increases in cash
dividends); or
(4) agree to take any of the foregoing actions.
IV. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents and warrants to AmSouth, and AmSouth represents
and warrants to the Company, as follows:
IV(A) the facts set forth in the recitals of this Plan with respect to it
are true and correct; in the case of the Company and its subsidiaries, the
copies of the Company's and the Bank's Charter and By-Laws and in the case
of AmSouth, the copies of its Certificate of Incorporation and By-Laws are
correct and complete, and the minute books of the Company and its
subsidiaries and AmSouth and its subsidiaries contain complete and accurate
records of all meetings and other corporate actions held or taken since
January 1, 1990, by their respective shareholders and Boards of Directors
(including committees thereof);
IV(B) the outstanding shares of it and its subsidiaries are validly
issued and outstanding, fully paid and (subject to 12 U.S.C. (S)55 in the
case of a national bank subsidiary) non-assessable, and subject to no
preemptive rights;
IV(C) each of it and its subsidiaries has the corporate power and
authority to carry on its business as it is now being conducted and to own
or lease all its material properties and assets;
IV(D) as of the date hereof, the outstanding shares of capital stock of
each of its subsidiaries are owned by it, free and clear of all liens,
claims, encumbrances and restrictions on transfer, except as set forth in
Schedule 1 hereto;
IV(E) subject to any necessary receipt of approval by its shareholders
and the regulatory and other approvals referred to in Paragraphs (B) and
(C) of Article VII, this Plan has been authorized by all necessary
corporate action of it and is a valid and binding agreement of it
enforceable against it in accordance with its terms, subject as to
enforcement to bankruptcy, reorganization, insolvency and other laws of
general applicability relating to or affecting creditors rights and to
general equity principles and except that the availability of the equitable
remedies of specific performance or injunctive relief are subject to the
discretion of the court before which any proceedings may be brought;
IV(F) except as disclosed in Schedule 1, the execution, delivery and
performance of this Plan by it does not, and the consummation of the
transactions contemplated hereby by it will not, constitute (i) a breach or
violation of, or a default under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of it, or any of its subsidiaries, or to which it,
or any of its subsidiaries, is subject, which breach, violation or default
would have a material adverse effect on the financial condition, results of
operations, business or business plans of it and its subsidiaries taken as
a whole or enable any party to enjoin the transactions contemplated hereby,
or (ii) a breach or violation of, or a default under, the Charter, Articles
of Incorporation, or Certificate of Incorporation, as the case may be, or
By-laws of it or its subsidiaries; and the consummation of the transactions
contemplated hereby will not require any consent or approval under any such
law, rule, regulation, judgment, decree, order, governmental permit or
license or the consent or approval of any
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other party to any such agreement, indenture or instrument, other than (a)
the required approvals of applicable regulatory authorities and others
referred to in Paragraphs (B) and (C) of Article VII, (b) the approval of
shareholders of the Company, (c) such approvals, consents or waivers as are
required under the federal and state securities or "Blue Sky" laws in
connection with the transactions contemplated by this Plan, and (d) any
other consents or approvals the absence of which would not result in a
material adverse effect on the financial condition, results of operations,
business or business plans of it and its subsidiaries taken as a whole;
IV(G) as of their respective dates, none of its Annual Reports on Form
10-K for its two most recent fiscal years, its most recent Quarterly Report
on Form 10-Q, any Current Report on Form 8-K of it since December 31, 1990
and any proxy statement or registration statement of it since December 31,
1990, each in the form (including exhibits) filed with the Securities and
Exchange Commission (the "SEC") or any such report to be filed subsequent
to the date hereof (collectively, its "Financial Reports"), contained or
will contain any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading. Each of the balance sheets in or incorporated by
reference into the Financial Reports fairly presents or will fairly present
the financial position of the entity or entities to which it relates as of
its date and each of the statements of operations and retained earnings and
cash flows or equivalent statements in the Financial Reports (including any
related notes and schedules) fairly presents or will fairly present the
results of operations, retained earnings and cash flows, as the case may
be, of the entity or entities to which it relates for the periods set forth
therein (subject in the case of unaudited interim statements, to normal
year-end audit adjustments which will not be material in amount or effect
to such entities taken as a whole), in each case in accordance with
generally accepted accounting principles applicable to the particular
entity consistently applied during the periods involved, except as may be
noted therein; and independent public accountants for it have rendered or
will render an unqualified opinion with respect to each audited financial
statement included in the Financial Reports or, if qualified, such
qualification is reasonably satisfactory to the other party hereto;
IV(H) (i) in the case of the Company only, except as set forth in
Schedule 1, to the best knowledge of the Company, all evidences of
indebtedness in original principal amount in excess of $50,000 reflected as
assets in the Company's Financial Reports are in all respects binding
obligations of the respective obligors named therein and no material amount
of such assets is subject to any defenses which may be asserted against it
or any of its subsidiaries; (ii) in the case of the Company and AmSouth,
(a) the allowances for possible loan losses shown on the Financial Reports
as of June 30, 1993 are adequate in all material respects, under the
principles described in Paragraph (G) of Article IV, to provide for
possible losses, net of recoveries relating to loans previously charged
off, on loans outstanding (including accrued interest receivable), (b) each
such allowance has been established in accordance with the principles
described in Paragraph (G) of this Article IV; and (iii) in the case of the
Company only, the Bank has duly filed in correct form its Thrift Financial
Report with the Office of Thrift Supervision for the period ended June 30,
1993 (which Report is accurate and complete in all material respects);
IV(I) (1) it will deliver to the other party copies of the federal income
tax returns of it for each of the last three fiscal years and all schedules
and exhibits thereto. Except as disclosed to the other party in Schedule 1,
each of it and its subsidiaries has duly filed all Federal, state and local
information returns and tax returns required to be filed by it and its
subsidiaries on or prior to the date hereof (all such returns to the best
knowledge of it being accurate and complete in all material respects) and,
to the best knowledge of it, has duly paid or made provisions for the
payment of all taxes and other governmental charges which have been
incurred or are due or claimed to be due from them by Federal, state or
local taxing authorities (including, without limitation, those due in
respect of their properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than taxes or other charges
(i) which are not yet delinquent or are being contested in good faith and
set forth in Schedule 1 or (ii) have not been finally determined. Except as
disclosed to the other party in Schedule 1, in the reasonable
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opinion of the respective managements of it and its subsidiaries, the
amounts set up as liabilities for taxes on the latest Financial Reports are
sufficient in the aggregate for the payment of all unpaid Federal, state
and local taxes (including any interest or penalties thereon), whether or
not disputed or accrued, for the period ended June 30, 1993 or for any year
or period prior thereto, and for which it or any of its subsidiaries may be
liable in its own right or as transferee of the assets of, or successor to,
any corporation, person, association, partnership, joint venture or other
entity. Except as disclosed to the other party in Schedule 1, the Federal
income tax returns of it and its subsidiaries have been examined by the
appropriate taxing authorities for all years as set forth on Schedule 1
hereto, and all deficiencies asserted as a result of such examinations have
been satisfied. Except as disclosed to the other party in Schedule 1, to
the best knowledge of it and its subsidiaries, there are no material
disputes pending, or claims asserted for, taxes or assessments upon it or
any of its subsidiaries, nor has it or any of its subsidiaries been
requested to give any currently effective waivers extending the statutory
period of limitation applicable to any Federal, state or local income tax
return for any period.
(2) (i) proper and accurate amounts have been withheld by it and its
subsidiaries from their employees and others for all prior periods in
compliance in all material respects with the tax withholding provisions of
applicable Federal, state and local laws and regulations, and proper due
diligence steps have been taken in connection with back-up withholding,
(ii) Federal, state and local returns which are accurate and complete in
all material respects have been filed by it and each of its subsidiaries
for all periods for which returns were due with respect to income tax
withholding, Social Security and unemployment taxes and (iii) the amounts
shown on such returns to be due and payable have been paid in full or, in
the reasonable opinion of the respective managements of it and each of its
subsidiaries, adequate provision therefore has been included by either it
or its subsidiaries in its or their most recent Financial Reports.
IV(J) except as disclosed in Schedule 1, there has been no material
adverse change in its consolidated financial condition, results of
operations, business or business plans since June 30, 1993.
IV(K) except as disclosed in the Financial Reports or in Schedule 1, no
material litigation, proceeding or controversy before any court,
governmental agency or arbitrator is pending which in the opinion of
management and its legal counsel is likely to have a material adverse
effect on its consolidated financial condition, results of operations,
business or business plans or prevent consummation of the transactions
contemplated hereby, and, to the best of its knowledge, no such litigation,
proceeding or controversy has been threatened or is contemplated, nor is
there, to the best of its knowledge, a reasonable basis for any such
litigation, proceeding or controversy; no judgment, decree, injunction,
rule or order of any court, governmental agency or arbitrator is
outstanding against it or any of its subsidiaries having or which, insofar
as reasonably can be foreseen, in the future would have a material adverse
effect on the financial condition, results of operations, business, or
business plans of it and its subsidiaries taken as a whole; there is no
default under any material contract or agreement to which it or any of its
subsidiaries is a party which has had or would have a material adverse
effect on its consolidated financial condition, results of operations,
business or business plans; and neither it nor any of its subsidiaries is
subject to any agreement, memorandum of understanding or similar
arrangement with any regulatory authority materially restricting its
operations or requiring that certain actions be taken;
IV(L) in the case of the Company only, except as disclosed in the
Financial Reports or in Schedule 1, and except for this Plan and the Stock
Option Agreement, neither it nor its subsidiaries are bound by any material
contract to be performed after the date hereof other than contracts which
are cancelable on less than 90 days notice without material penalty or cost
to, or material disruption of the business of, it and its subsidiaries
taken as a whole;
IV(M) all negotiations relative to this Plan and the transactions
contemplated hereby have been carried on by it directly with the other
parties hereto and no action has been taken by it that would give rise to
any valid claim based upon the transactions contemplated hereby against any
party hereto for a
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brokerage commission, finder's fee or other like payment other than any fee
payable by the Company to Dillon, Read & Co., Inc. and except for any fee
payable by AmSouth to Salomon Brothers Inc.
IV(N) with respect to each employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that covers any of its or their employees (the "Employee Benefit
Plans") (but, in the case of the Company, with respect to the Financial
Institutions Retirement Fund and the Financial Institutions Thrift Plan, to
the best of its knowledge only), it, each of its subsidiaries and each of
the Employee Benefit Plans substantially comply with all laws, requirements
and orders under ERISA and the Code, the breach or violation of which could
reasonably be expected to have a material adverse effect on its business;
the present value of all of the assets of each of its Employee Benefit
Plans that is subject to Title IV of ERISA equals or exceeds the present
value of all of the benefits accrued under each such Employee Benefit Plan
as of the end of the most recent plan year with respect to such Employee
Benefit Plans ending prior to the date hereof, calculated on the basis of
the actuarial assumptions used in the last actuarial valuation for each
such Employee Benefit Plan; none of the employees of it or any of its
subsidiaries is covered by a collective bargaining agreement; neither it
nor any of its subsidiaries has ever contributed to a "multiemployer plan"
as defined in Section 3(37) of ERISA; neither the Employee Benefit Plans
nor any fiduciary or administrator with respect thereto has engaged in a
"prohibited transaction" as defined in Section 406 of ERISA or, where
applicable, Section 4975 of the Code for which no exemption is applicable,
that could reasonably be expected to have a material adverse effect on its
business; and there have been no "reportable events" within the meaning of
Section 4043 of ERISA for which the thirty-day notice has not been waived
and neither it nor any of its subsidiaries have incurred and do not expect
to incur any liability to the Pension Benefit Guaranty Corporation or any
Employee Benefit Plan with respect to the termination of an Employee
Benefit Plan subject to Title IV of ERISA.
IV(O) in the case of the Company only, except as disclosed in Schedule 1
each of it and its subsidiaries has good and marketable title, free and
clear (except as indicated in the Financial Reports) of liens and
encumbrances of a material nature, to its real property that are material
to its business on a consolidated basis; except as disclosed in Schedule 1,
with respect to all real property owned by the Company or its subsidiaries
or any interest in property that would give rise to liability under any
Environmental Law (as defined below) (the "Real Property") (i) to the
knowledge of the Company there are no pending or threatened claims against
the Company or any such subsidiary or any prior owner of such Real Property
except for any claims that would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; (ii) no substance whether
liquid, solid or gas, the use or disposal of which is regulated under any
federal, state or local environmental law, regulation, or decree applicable
to the Company, including the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601, et.
seq. ("Environmental Law") or which is classified or designated as
hazardous or toxic under any Environmental Law ("Hazardous Substance") has
been or has been threatened to be discharged, released or emitted into the
air, water, surface water, ground water, land surface or subsurface strata
or transported to or from the Real Property except for any release or
discharge that would not have a material adverse effect on any Real
Property; (iii) there are no storage tanks underground or otherwise present
on the Real Property; (iv) all permits and licenses (the "Permits")
required under any Environmental Law have been issued in favor of the
Company and have been in full force and effect at all times when the
Permits were required, except to the extent that any failure to have such a
Permit in effect at any time would not have a material adverse effect on
the Company and its subsidiaries taken as a whole; and the Permits are
transferable to AmSouth without the consent of the issuer of the Permit or
any governmental or judicial authority and without AmSouth being required
to provide any form of security or assurance and otherwise at no cost to
AmSouth; (v) no event has occurred which would constitute a default or
violation under any Permit except for any such default that would not have
a material adverse effect on the Company and its subsidiaries, taken as a
whole; and (vi) no part of the Real Property has been or is listed as a
site containing Hazardous Substances;
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IV(P) it knows of no reason why the regulatory and other approvals
referred to in paragraphs (B) and (C) of Article VII should not be obtained
without the imposition of any condition of the type referred to in the
proviso following such paragraph (C);
IV(Q) in the case of AmSouth only, the AmSouth Common Stock to be issued
in the Merger will have been duly authorized and, when issued in accordance
with the terms of the Plan, will be validly authorized and issued and fully
paid and nonassessable, and no shareholder of AmSouth will have any
preemptive rights thereto;
IV(R) in the case of AmSouth only, it will have available sufficient cash
and AmSouth Common Stock at or prior to the Effective Date to exchange for
shares of Company Common Stock and Company Common Stock Equivalents to be
converted into the right to receive AmSouth Common Stock or the Cash
Consideration pursuant to this Plan;
IV(S) all of its and its subsidiaries' material contracts are in full
force and effect, and neither it nor any of its subsidiaries (nor, to the
best of its knowledge, any other party to any such contract) has breached
any provision of, or is in default in any respect under the terms of, any
such contract and no party to any such contract will have the right to
terminate any or all of the provisions of any such contract as a result of
the transactions contemplated by this Plan if the effect of such breach,
default or right to terminate, alone or in the aggregate, may be material
to the business, financial condition or results of operations of it and its
subsidiaries taken as a whole;
IV(T) it and each of its subsidiaries are, in the conduct of their
businesses, in compliance with all federal, state and local laws, statutes,
ordinances and regulations, the failure to comply with which would
materially adversely affect its consolidated financial condition, results
of operations, business or business plans. Neither it nor any of its
subsidiaries has received any notification (not disclosed in Schedule 1)
from any agency or department of any federal, state or local government or
any staff thereof asserting, other than in a regular report of examination,
that it or any of its subsidiaries is not in compliance with any of the
statutes, regulations or ordinances which such governmental authority or
regulatory agency enforces, which noncompliance would have a material
adverse effect on its consolidated financial condition, results of
operations, business or business plans, or threatening to revoke any
license, franchise, permit or governmental authorization, and none of them
is subject to any formal agreement with any such regulatory agency with
respect to any of their assets or businesses;
IV(U) (1) in the case of the Company only, except for the contracts,
plans and documents listed on Schedule 1 hereto (copies of which have been
or will be provided to AmSouth), neither the Company nor any subsidiary of
the Company is a party to or subject to;
(i) any employment, consulting or severance contract or arrangement
with any employee, officer or director of the Company or of any one or
more of its subsidiaries or with any former employee, officer or
director of any of them, or with any other person or entity;
(ii) any plan, arrangement or contract providing for bonuses,
pensions, options, deferred compensation, retirement payments,
incentive plans, contingent pay, profit sharing or similar arrangements
for or with its officers, directors or employees or former directors,
officers or employees; and
(2) in the case of the Company and AmSouth, except for the contracts,
plans and documents listed on Schedule 1 hereto (copies of which have been
or will be provided to the other party), neither it nor any of its
subsidiaries is a party to or subject to:
(i) any contract materially limiting the freedom of it or any of its
subsidiaries to engage in any type of banking or bank-related business;
or
(ii) any contract which contains a financial covenant or other
restriction that would have a material adverse effect upon the
business, financial condition, results of operations or business plans
of the Continuing Corporation and its subsidiaries taken as a whole;
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IV(V) it has disclosed in Schedule 1, as to it and each of its
subsidiaries, (i) each contractual restriction or limitation on the payment
of dividends, and (ii) the amount available for dividends as of June 30,
1993; except as disclosed, there are no restrictions or limitations with
respect to dividends which it may declare and pay, except limitations under
federal or state banking or thrift laws, as applicable, and state corporate
statutes;
IV(W) (i) no representation or warranty contained in this Plan, and no
provisions hereof, to the best of its knowledge, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make statements herein not misleading; (ii) no information
material to the Merger which is necessary to make the representations and
warranties herein contained not misleading, to the best of its knowledge,
has been withheld from the other party, or will be omitted from Schedule 1;
and (iii) whenever reference is made herein to the delivery of copies of
documents and instruments to AmSouth or the Company, such copies are true
and accurate reproductions of original documents and instruments in the
possession of the party delivering same;
IV(X) Schedule 1 sets forth a complete and accurate list and description
accompanied by complete and accurate copies of all insurance policies in
force naming the Company, any of its subsidiaries or any employees of any
of them as an insured or beneficiary or as a loss payable payee (excluding
homeowners, automobile and consumer loan policies in which the Bank is
identified as the loss payee lender) or for which the Company or any of its
subsidiaries has paid or is obligated to pay all or part of the premiums.
Neither the Company nor its subsidiaries have received notice of any
pending or threatened termination or retroactive premium increase with
respect thereto, and the Company and its subsidiaries are in compliance
with all conditions contained therein, the noncompliance with which could
result in termination of insurance coverage or increased premiums for prior
or future periods. There are no pending material claims against such
insurance by the Company or any of its subsidiaries as to which insurers
have denied liability, and there exists no material claim under such
insurance that has not been properly filed by the Company or its
subsidiaries; and
IV(Y) in the case of the Company only, the transactions contemplated by
this Agreement and the Stock Option Agreement are not prohibited by any
anti-takeover or similar provisions of applicable laws or any such
provisions contained in their Articles of Association, Charter or Bylaws.
IV(Z) except as disclosed in Schedule 1, neither it nor any of its
subsidiaries is a party to any agreement or instrument that might
reasonably be expected to have a material adverse effect on the financial
condition, results of operations, business or business plans of it and its
subsidiaries taken as a whole or that might reasonably be expected to
threaten or impede the consummation of the transactions contemplated by
this Agreement.
V. COVENANTS.
The Company hereby covenants to AmSouth, and AmSouth hereby covenants to
the Company, that:
V(A) it shall use its best efforts in good faith to take or cause to be
taken all action necessary or desirable under this Plan on its part as
promptly as practicable so as to permit the consummation of the
transactions contemplated by this Plan as promptly as practicable and to
cooperate fully with the other parties hereto to that end (it being
understood that a resolicitation of proxies or other action arising as a
consequence of an acquisition by AmSouth shall not violate this covenant
even if such resolicitation or other action may delay consummation of the
Merger but that such resolicitation shall be at the sole expense of
AmSouth);
V(B) the Company will cooperate with AmSouth in the preparation of a
registration statement (the "Registration Statement") with respect to the
AmSouth Common Stock to be issued in the Merger; the Registration Statement
shall include the proxy statement ("the Company Proxy Statement") to be
submitted to the Company's shareholders in connection with the transactions
contemplated hereby; and
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the Company Proxy Statement and the Registration Statement shall conform to
all applicable legal requirements;
V(C) in the case of AmSouth only, it shall, as promptly as practicable
following the preparation of the Registration Statement, file the
Registration Statement with the SEC, and AmSouth shall use all reasonable
efforts to have the Registration Statement declared effective by the SEC as
promptly as practicable and to maintain the effectiveness of such
Registration Statement;
V(D) when the Registration Statement or any post-effective amendment
thereto shall become effective, and at all times subsequent to such
effectiveness, such Registration Statement and all amendments or
supplements thereto, with respect to all information set forth therein
furnished or to be furnished by the Company relating to the Company and its
subsidiaries and by AmSouth relating to AmSouth and its subsidiaries, (i)
will comply in all material respects with the provisions of the Securities
Act of 1933 (the "Securities Act"), the rules and regulations of the SEC
thereunder and any other applicable statutory or regulatory requirements
and (ii) will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances under which
they are made, not misleading. In no event, however, shall any party hereto
be liable for any untrue statement of a material fact or omission to state
a material fact in the Registration Statement made in reliance upon, and in
conformity with, written information concerning another party hereto
furnished by such other party hereto specifically for use in the
Registration Statement or for any other failure to comply with such laws
caused by the other party. AmSouth will advise the Company, promptly after
AmSouth receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been
filed, of the issuance of any stop order or the suspension of the
qualification of the AmSouth Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of
the Registration Statement or for additional information;
V(E) in the case of AmSouth only, it shall use its best efforts to
obtain, prior to the Effective Date, all necessary state securities laws or
"blue sky" permits and approvals required to carry out the transactions
contemplated by this Plan, provided that AmSouth shall not be required by
virtue thereof to submit to general jurisdiction in any state, and will
prepare and submit to the New York Stock Exchange a listing application
covering the AmSouth Common Stock issuable in connection with the Merger
and will use its best efforts to obtain, prior to the Effective Date,
approval for the listing of such stock upon official notice of issuance;
V(F) it agrees that, unless approved by the other party hereto in
advance, it will not issue any press release or written statement for
general circulation or other written public disclosure relating to the
transactions contemplated hereby, except as otherwise required by law;
V(G) (1) upon reasonable notice, it shall (and shall cause each of its
subsidiaries to) afford to the other party 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 its subsidiaries' properties, books, contracts, commitments
and records and, during such period it shall (and it shall cause each of
its subsidiaries to) furnish promptly to the other party (a) a copy of each
report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, (b) notice of
(i) any material change in the business of it or any of its significant
subsidiaries, (ii) any significant governmental complaints, investigations
or hearings (or communications indicating that the same may be
contemplated), and (iii) the institution or threat of material litigation
involving it or any of its subsidiaries and (c) all other information
concerning its business, properties and personnel as the other party may
reasonably request, provided that no investigation pursuant to this
Paragraph (G) shall affect or be deemed to modify any representation or
warranty made by, or the conditions to the obligations to consummate the
Merger of, either party to this Plan; and (2) each party hereto will not
use any nonpublic information or documents obtained pursuant to this Plan
for any purpose unrelated to the consummation of the transactions
contemplated by this Plan and, prior to
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consummation of the Merger, subject to the requirements of law, will hold
all such information and documents, including those obtained pursuant to
this paragraph, in confidence unless and until such time as such
information or documents become publicly available (other than by reason of
any action or failure to act by such party) or if it is advised by counsel
that any such information or document is required by law to be disclosed,
and in the event of the termination of this Plan, each party will deliver
to the others all documents so obtained by it;
V(H) in the case of the Company only, neither it nor any of its
subsidiaries shall solicit or encourage inquiries or proposals with respect
to or, except to the extent required for the discharge by the Board of
Directors of the Company of their fiduciary duties as determined upon
written advice of counsel, furnish any information relating to or
participate in any negotiations or discussions concerning, any acquisition
or purchase of all or a substantial portion of the assets of, or of a
substantial equity interest in, the Company or any of its subsidiaries or
any business combination with the Company or any of its subsidiaries other
than as contemplated by this Plan; shall notify AmSouth immediately if any
such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated with, it; shall immediately cease any negotiations or discussions
existing at the date hereof concerning the foregoing and require the return
to it of any information furnished by it to such party; and shall instruct
its employees, officers, directors, agents, advisors and affiliates to
comply with the above;
V(I) in the case of the Company only, it will use its best efforts to
obtain an agreement in the form of Annex 3 (the "Agreement of Affiliates")
from each affiliated shareholder of the Company (the "Affiliated
Shareholders") prior to the Effective Date. The Affiliated Shareholders
shall be those shareholders of the Company who may, in the opinion of
counsel for the Company, be deemed to be "affiliates" of the Company within
the meaning of Rule 145 under the Securities Act, and who may, in the
opinion of such counsel, be deemed, pursuant to the provisions of Rule 145,
to be "underwriters", as such term is defined in the Securities Act, on
resale of the AmSouth Common Stock acquired hereunder (herein referred to
as the "Acquired Securities");
V(J) in the case of the Company only, except to the extent legally
required for the discharge by the board of directors of its fiduciary
duties as determined upon written advice of counsel, the board of directors
of the Company shall recommend that the holders of the Company Common Stock
and the Company Convertible Preferred Stock (unless the parties have
mutually agreed that no vote of such holders is required) vote in favor of
and approve the Merger at the shareholders meeting called for that purpose
and the Company commits that it will within ten (10) days of the date of
this Plan obtain an agreement (the "Voting Agreements") from each of its
directors substantially in the form set forth in Annex 2;
V(K) in the case of the Company only, subject to applicable regulations,
it shall at the request of AmSouth modify and change its loan, litigation
and real estate valuation policies and practices (including loan
classifications and levels of reserves) prior to the Effective Date so as
to be consistent on a mutually satisfactory basis with those of AmSouth and
to AmSouth's plans with respect to the conduct of the Company's business
following the Merger. The Company shall not be required to modify or change
any such policies or practices, however, until the earlier of (i) such time
as AmSouth acknowledges that all conditions to its obligation to consummate
the Merger set forth in Article VII have been waived or satisfied and (ii)
immediately prior to the Effective Date. The Company's representations,
warranties and covenants contained in this Plan shall not be deemed to be
untrue or breached in any respect for any purpose as a consequence of any
modifications or changes undertaken solely on account of this Paragraph (K)
of Article V;
V(L) in the case of AmSouth only, it agrees (i) that employees and
officers of the Company and its subsidiaries who become officers and
employees of AmSouth or its subsidiaries shall, at and after the Effective
Date, be entitled to participate in AmSouth pension, welfare and employee
benefit plans on the same terms and conditions as employees and officers of
AmSouth, giving effect to years of service with the Company and its
subsidiaries or any predecessors thereof as if such service were with
AmSouth;
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provided, however, that in the case of AmSouth's Retirement Plan, giving
effect to years of service shall be for vesting purposes only and not for
benefit accrual purposes; and provided, further, that such employees shall
not be subject to any exclusion for pre-existing conditions, and shall
receive credit toward any deductible and co-payments under any welfare
benefit plans sponsored by AmSouth or its subsidiaries to the extent such
deductible and co-payments have been satisfied under the respective welfare
benefit plans of the Company or its subsidiaries; (ii) that employees and
officers of the Company and its subsidiaries who become officers and
employees of AmSouth or its subsidiaries will, at and after the Effective
Date, receive compensation arrangements and fringe benefits as are provided
to AmSouth's and its subsidiaries' employees and officers of equal status
and position; and (iii) AmSouth will honor the Company's existing Severance
Compensation Plan covering certain of its executive officers;
V(M) AmSouth shall continue to satisfy the current public information
requirements of Rules 144 and 145 of the Securities and Exchange Commission
with respect to the AmSouth Common Stock, and to provide the Affiliates
with such other information as they may reasonably require and to otherwise
cooperate with them to facilitate any sales of AmSouth Common Stock in
compliance with Rules 144 and 145;
V(N) in the case of the Company only, it shall cause the Company's 10%
Convertible Debentures Due 2010 (the "Company Convertible Debentures") to
be redeemed prior to the Effective Date, if not sooner converted into
Company Common Stock;
V(O) AmSouth acknowledges that the Bank has submitted applications to
federal and state regulatory agencies for conversion to a state-chartered
commercial bank and that the board of directors of the Company has approved
such conversion. AmSouth hereby consents to the Company's continuing to
seek regulatory approval for such transaction and recognizes the Company's
present intention to effect the conversion if the Merger is not
consummated. The Company agrees that it will not consummate the conversion
without AmSouth's prior written consent;
V(P) AmSouth will notify the Chief Executive Officer of the Company prior
to AmSouth entering into a definitive agreement to make a material
acquisition (or series of transactions that aggregate into a material
acquisition);
V(Q) if this Plan is not approved by the requisite number of shares of
Company Convertible Preferred Stock, the parties will use reasonable best
efforts to consummate the transactions contemplated hereby by providing an
alternate treatment of the Company Convertible Preferred Stock mutually
agreeable to the Chief Executive Officers of both the Company and AmSouth,
provided that the alternate treatment (i) does not alter the fundamental
economic assumptions upon which the transactions contemplated by this
Agreement are based and (ii) will not require the approval of the holders
of the Company Convertible Preferred Stock; and
V(R) AmSouth hereby irrevocably agrees that it shall, and it shall cause
AmSouth Bank of Florida to, indemnify any person who is now, was formerly,
or becomes prior to the Effective Date, a director, officer, employee or
agent of the Company or the Bank or any person who serves another entity in
these capacities (or as a partner) at the request of the Company (each an
"Indemnified Party"). Each Indemnified Party will be indemnified against
all losses, expenses, claims, damages, costs, judgments, fees, amounts paid
in settlement, or liabilities (the "Indemnified Liabilities") in connection
with any claim, action, suit or proceeding based on or arising in whole or
in part out of the fact that such person is or was an Indemnified Party
(the "Eligible Claims"). The Company agrees that it will provide to AmSouth
within 10 days of the date hereof (and will update from time to time as the
facts require) a list of all Indemnified Parties who have been requested by
the Company to serve as a director, officer, employee, partner or agent for
another entity together with the name of each entity so served.
The indemnification provided for in this Section shall be applied by AmSouth
and AmSouth Bank of Florida in good faith and shall be provided regardless of
whether an Eligible Claim is asserted before or after the Effective Date. The
indemnification will be provided under the Certificate of Incorporation of
AmSouth or the Articles of Incorporation of AmSouth Bank of Florida, as
applicable, as in effect on the date hereof, to
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the full extent allowed for indemnification of that entity's own directors,
officers, employees and agents. Both the Company and the Bank are included in
the definition of "Corporation" as including constituent corporations absorbed
in a merger. Further, provisions relating to advances of expenses incurred in
the defense of any claim, action or suit are fully applicable to each
Indemnified Party.
Indemnified Parties shall be so indemnified either by AmSouth or AmSouth Bank
of Florida, as follows: (a) indemnification for each Indemnified Party for
Eligible Claims based on acts prior to the Effective Date shall be provided by
AmSouth, (b) indemnification for each Indemnified Party for Eligible Claims
based on acts after the Effective Date shall be provided by (i) AmSouth if the
Indemnified Party is, at the time the Eligible Claim is asserted, a director,
officer, employee or agent of AmSouth or (ii) AmSouth Bank of Florida if the
Indemnified Party is, at the time the Eligible Claim is asserted, a director,
officer, employee or agent of AmSouth Bank of Florida.
Except to the extent prohibited by statute or applicable banking regulation,
the indemnification provided for by this Section is mandatory and obtainable by
the Indemnified Party as a matter of right so long as the Indemnified Party
meets the requirements for indemnification under the applicable provisions of
the Certificate of Incorporation of AmSouth or the Articles of Incorporation of
AmSouth Bank of Florida, as applicable. AmSouth agrees that, unless required by
law or applicable banking regulation, it will not amend, and will prevent
AmSouth Bank of Florida from amending, the Certificate or Charter provisions
providing indemnification under this Section to restrict the rights of granted
in this Section unless and then only to the same extent that the rights of
AmSouth or AmSouth Bank of Florida's own directors, officers, employees or
agents are also restricted.
VI. REGULATORY APPROVALS.
As promptly as practicable after the date hereof:
VI(A) AmSouth and the Company shall cooperate in the preparation and
submission of applications to the appropriate regulatory agencies for
approval of the Merger, including but not limited to the Federal Reserve
Board, the Office of Thrift Supervision, the Federal Deposit Insurance
Corporation, Florida Department of Banking and Finance and such other
agencies, approval of which may be required for the Subsidiary
Reorganization (the "Regulatory Approvals") and shall deliver to the other
copies of all such filings and applications promptly after they are filed;
and the parties agree to use reasonable best efforts to resolve promptly
all objections to the Merger under any antitrust laws by any agency which
must issue a Regulatory Approval, the U.S. Department of Justice or any
other governmental entity with jurisdiction; and
VI(B) all other appropriate action shall be duly taken to secure the
Regulatory Approvals and all other approvals, consents and rulings to
satisfy all other requirements prescribed by law which are necessary for
the consummation of the transactions contemplated hereby.
VII. CONDITIONS TO CONSUMMATION.
The consummation of the Merger is conditioned upon:
VII(A) approval of the relevant aspects of this Plan and the transactions
contemplated hereby by the holders of the requisite number of outstanding
shares of Company Common Stock and, to the extent required, by the
requisite number of the holders of the Company Convertible Preferred Stock;
VII(B) procurement of the Regulatory Approvals and the conclusion of any
statutory waiting periods in connection therewith;
VII(C) procurement of all other regulatory consents and approvals and
satisfaction of all other requirements prescribed by applicable laws, rules
or regulations which are necessary to the consummation of the transactions
contemplated by this Plan; provided, however, that no approval or
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<PAGE>
consent in Paragraph (B) or (C) of this Article VII shall have imposed any
conditions or requirements which would (i) result in any material
limitation on the ability of AmSouth effectively to exercise full rights of
ownership of all the shares of Company Common Stock or (ii) require a
divestiture which would constitute, if made solely by the Company or the
Bank, taken as a whole, a substantial and material portion of their
business or properties or (iii) in the good faith reasonable judgment of
the Board of Directors of AmSouth, otherwise materially and adversely
affect the economic assumptions of the transactions contemplated hereby so
as to render inadvisable the consummation of the Merger but only if such
regulatory conditions or requirements are a departure from past practices
of such regulators;
VII(D) there shall have been no discovery by AmSouth of a material
adverse condition with respect to the Company or the Bank. For purposes of
this Paragraph (D) of Article VII a "material adverse condition" is a
condition which either alone or when aggregated with other conditions has
resulted or, in the reasonable opinion of AmSouth, would result, in (i) a
substantial loss or damage to the properties or assets of the Company and
its subsidiaries taken as a whole or AmSouth and its subsidiaries taken as
a whole whether or not insured, that would materially affect or impair the
ability of the Company or AmSouth to conduct its business as presently
conducted, or (ii) a reduction of $10,000,000 (Ten Million Dollars) or more
(individually or in the aggregate), excluding the $2.5 million referred to
in Section VII(R), in the consolidated total shareholders' equity of the
Company from the amounts reflected on the June 30, 1993 Financial Reports
of the Company; provided, however, that for purposes of the calculations
contemplated herein, consolidated total shareholders' equity of the Company
shall not be reduced by addition by the Company to the allowance for
possible loan losses prior to the Effective Date in accordance with
Paragraph (K) of Article V, by any purchase accounting adjustments, the
payment of its per share regular quarterly dividend of $.075 and its per
share regular quarterly preferred dividend of $ .50 or redemption of
Company Convertible Debentures, and that such additions, adjustments or
payments or redemptions shall not represent a material adverse condition
with respect to the Company;
VII(E) there shall have been no discovery by the Company of a material
adverse condition with respect to AmSouth. For purposes of this Paragraph
(E) of Article VII a "material adverse condition" is a condition which
either alone or when aggregated with other conditions has resulted or, in
the reasonable opinion of the Company, would result, in (i) a substantial
loss or damage to the properties or assets of AmSouth whether or not
insured, that would materially affect or impair the ability of AmSouth and
its subsidiaries taken as a whole to conduct its business as presently
conducted, or (ii) a reduction of $55,700,000 (Fifty-Five Million Seven
Hundred Thousand Dollars) or more (individually or in the aggregate) in the
consolidated total shareholders' equity of AmSouth from the amounts
reflected on the June 30, 1993 Financial Reports of AmSouth; provided
however, that for purposes of the calculations contemplated herein,
consolidated total shareholders' equity of AmSouth shall not be reduced by
the payment of its per share regular quarterly dividend consistent with
historical practice, and that such payment shall not represent a material
adverse condition with respect to AmSouth;
VII(F) there being no unstayed or final injunction, and no statute, rule
or regulation shall have been enacted or promulgated, prohibiting the
consummation of the Merger and no litigation or proceeding by any
governmental authority shall be pending or threatened before any court or
agency seeking to restrain, prohibit or invalidate the transactions
provided for in this Plan;
VII(G) the Company and its directors shall have received from Ernst &
Young comfort letters, dated shortly prior to (1) the date of the mailing
of the Proxy Statement and (2) the Effective Date, in form and substance
satisfactory to the Company, with respect to facts concerning AmSouth's
financial condition, which letters shall be based upon then customary
specified procedures undertaken by such firm in similar transactions;
VII(H) AmSouth and its directors and officers who sign the Registration
Statement shall have received from KMPG Peat Marwick, comfort letters,
dated shortly prior to (1) the date of the mailing of the Proxy Statement
and (2) the Effective Date, in form and substance satisfactory to AmSouth,
with respect to facts concerning the Company's financial condition, which
letters shall be based upon then customary specified procedures undertaken
by such firm in similar transactions;
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<PAGE>
VII(I) the Company and its directors shall have received an opinion,
dated the Effective Date, of Maria B. Campbell, counsel for AmSouth, or
other counsel acceptable to the Company, containing such opinions as are
customary in a transaction of this kind;
VII(J) AmSouth and its directors and officers who sign the Registration
Statement shall have received an opinion, dated the Effective Date, of
Holland & Knight, counsel for the Company, or other counsel acceptable to
AmSouth, containing such opinions as are customary in a transaction of this
kind;
VII(K) each of the representations, warranties and covenants contained
herein of the Company shall be true in all material respects on, or
complied with in all material respects by, the Effective Date as if made on
such date (or on the date when made in the case of any representation or
warranty which specifically relates to any earlier date) except, in the
case of such representations or warranties, where the failure to be true
would not have a material adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries
taken as a whole; and AmSouth shall have received certificates signed by
the Chief Executive Officer and the Chief Financial Officer of the Company,
dated the Effective Date, to such effect;
VII(L) each of the representations, warranties and covenants contained
herein of AmSouth shall be true in all material respects on, or complied
with in all material respects by, the Effective Date as if made on such
date (or the date when made in the case of any representation or warranty
which specifically relates to an earlier date) except, in the case of such
representations and warranties, where the failure to be true would not have
a material adverse effect on the business, financial condition or results
of operations of AmSouth and its subsidiaries taken as a whole; and the
Company shall have received certificates signed by the Chief Executive
Officer and Chief Financial Officer of AmSouth, dated the Effective Date,
to such effect;
VII(M) the Registration Statement shall have become effective and no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been initiated
or threatened by the SEC;
VII(N) AmSouth shall have received all state securities laws and "blue
sky" permits and other authorizations necessary to consummate the
transactions contemplated hereby;
VII(O) [THIS PARAGRAPH INTENTIONALLY OMITTED]
VII(P) (a) the Company and its directors and (b) AmSouth and its
directors and officers who sign the Registration Statement shall have
received from Holland & Knight and Ernst & Young, respectively, opinions,
dated the Effective Date, in form and substance satisfactory to the Company
and AmSouth, respectively, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, (1) the Merger
will for federal income tax purposes constitute a reorganization within the
meaning of Section 368, or any successor thereto, of the Code and (2) with
respect to the Holland & Knight opinion only, that, (except with respect to
holders of Company Common Stock who exercise dissenters' rights and except
for cash payments, including cash in lieu of a fractional share interest,
(i) no gain or loss will be recognized by a holder of Company Common Stock
or Company Convertible Preferred Stock upon conversion in the Merger of
Company Common Stock or Company Convertible Preferred Stock into AmSouth
Common Stock, (ii) the basis of AmSouth Common Stock to be received in the
Merger by a holder of Company Common Stock or Company Convertible Preferred
Stock will be the same as such holder's basis in the Company Common Stock
or Company Convertible Preferred Stock exchanged therefor, and (iii) the
holding period of AmSouth Common Stock to be received in the Merger by a
holder of Company Common Stock or Company Convertible Preferred Stock will
include the period during which such holder held the Company Common Stock
or Company Convertible Preferred Stock exchanged therefor, provided that
such Company Common Stock or Company Convertible Preferred Stock was held
as a capital asset immediately prior to the consummation of the Merger; in
rendering such opinions, such tax advisors may rely upon certificates of
officers of AmSouth and the Company as to factual matters;
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VII(Q) all necessary approvals of (i) the holders of the Company
Convertible Preferred Stock (including without limitation any approval of
amendments to the terms of the Company Convertible Preferred Stock) unless
the parties have mutually agreed that no vote of such holders is required
and (ii) any other person or entity shall have been obtained in order that
the holders of the Company Convertible Preferred Stock will be required to
receive the consideration described in Article II of this Agreement;
VII(R) prior to the Effective Date the credits listed on Schedule 2 and
Schedule 3 will have been sold, collected, written off, or otherwise valued
at zero ($-0-) by the Company, provided that any loss to the Company from
the credit listed on Schedule 2 and any loss to the Company in excess of
$2.5 million from the credit listed on Schedule 3 will be considered in
determining a material adverse condition for purposes of Article VII(D)
VII(S) the Company Convertible Debentures shall have been redeemed or
converted prior to the Effective Date;
provided, however, that a failure to satisfy any of the conditions set forth
in Paragraphs (D), (H), (J), (K), (R) or (S) of this Article VII shall only
constitute conditions if asserted by AmSouth; and a failure to satisfy any of
the conditions set forth in Paragraphs (E), (G), (I) or (L) of this Article VII
shall only constitute conditions if asserted by the Company.
VIII. TERMINATION.
This Plan may be terminated prior to the Effective Date, either before or
after its approval by shareholders:
VIII(A) by the mutual consent of AmSouth and the Company, if the Board of
Directors of each so determines by vote of a majority of the members of its
entire Board;
VIII(B) by AmSouth or the Company, if its Board of Directors so
determines by vote of a majority of the members of its entire Board, in the
event of a material breach by the other of any representation, warranty or
agreement contained herein which is not cured within 45 days after the date
of written notice from the other party hereto;
VIII(C) by AmSouth or the Company, if its Board of Directors so
determines by vote of a majority of the members of its entire Board, in the
event that the Merger is not consummated by June 30, 1994 unless the
failure to so consummate by such time is due to a breach of the Plan by the
party seeking to terminate; provided that if the Regulatory Approvals have
not been obtained due to a protest under the Community Reinvestment Act in
time to allow consummation by June 30, 1994, such deadline shall
automatically be extended to September 30, 1994;
VIII(D) subject to the provisions of Section V(Q), by AmSouth or the
Company if this Plan is not approved by the requisite vote of the
shareholders of the Company;
VIII(E) by AmSouth or the Company if the Regulatory Approvals are not
obtained or by AmSouth if the Regulatory Approvals contain any condition of
the type referred to in the proviso following Paragraph (C) of Article VII;
VIII(F) by the Company as provided in Paragraph (C) of Article II;
VIII(G) by AmSouth in the event it discovers a material adverse condition
(as defined in Paragraph (D) of Article VII) with respect to the Company or
the Bank;
VIII(H) by the Company in the event it discovers a material adverse
condition (as defined in Paragraph (E) of Article VII) with respect to
AmSouth;
VIII(I) by AmSouth as provided in Paragraph (I) of Article X; and
VIII(J) by AmSouth in the event the Stock Option Agreement is not
executed and delivered by the Company within one day of the date of this
Plan.
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<PAGE>
IX. CLOSING.
On a date chosen by AmSouth which shall be no later than thirty days after
the later of (i) the expiration date of any applicable waiting period in
connection with any Regulatory Approval and (ii) the receipt of all other
required approvals, or by such later date as may be mutually agreed by the
Chief Executive Officer of the Company and by the Chief Executive Officer of
AmSouth for appropriate business reasons (the "Closing Date"), appropriate
documents to consummate the Merger shall be executed in accordance with all
appropriate legal requirements and shall be delivered and/or filed as required
by law, and the Merger provided for herein shall become effective upon such
filings or on such later date as may be specified in the documents (the date of
such filing or such later date being herein called the "Effective Date");
provided, however, that if the conditions of Paragraph (C) of Article II are
met, the Closing shall not take place until the expiration of all time periods
allowed by said Paragraph (C) for notice and other actions have expired. The
closing shall take place in Birmingham, Alabama.
X. OTHER MATTERS.
X(A) The agreements of the parties which by their terms are to be performed
in whole or in part after the Effective Date shall survive the Effective Date,
shall be enforceable only by the parties hereto, and shall not create any third
party beneficiary rights; provided that John R. Torell may enforce Section
I(D), the participants in the Severance Compensation Plan may enforce Section
V(L)(iii), the Affiliates may enforce Section V(M) and the Indemnified Parties
may enforce Section V(R). All other representations, warranties, agreements and
covenants shall be deemed to be conditions of the Merger and shall not survive
the Effective Date. If this Plan shall be terminated, the agreements of the
parties in Paragraph (M) of Article IV, Paragraph (G)(2) of Article V and
Paragraphs (E), (F) and (H) of this Article X shall survive such termination.
X(B) Prior to the Effective Date, any provision of this Plan may be (i)
waived by the party benefited by the provision or (ii) amended or modified at
any time (including the structure of the transaction) by an agreement in
writing among the parties hereto approved by their respective Boards of
Directors and executed in the same manner as this Plan, except that, after the
vote by the shareholders of the Company, the method for determining the number
of shares of AmSouth Common Stock per share of Company Common Stock and cash to
be received by the shareholders of the Company in the Merger shall not be
changed except as provided in Paragraph (C) of Article II.
X(C) This Plan may be executed in one or more counterparts, each of which
shall be deemed to constitute an original. This Plan shall become effective
when one counterpart has been signed by each party hereto.
X(D) This Plan shall be governed by, and interpreted in accordance with, the
laws of the state of Alabama, except as federal law and Florida law may be
applicable and except to the extent that the General Corporation Law of
Delaware governs the merger of a Delaware corporation.
X(E)(i) Except as otherwise provided herein or in the Stock Option Agreement,
each of the parties shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial or other consultants,
investment bankers, accountants and counsel. The parties agree to divide
equally the costs of printing the Registration Statement and Company Proxy
Statement. For purposes of this Paragraph (E) of Article X, all such properly
documented expenses described in this Paragraph (E) of Article X shall be
defined as "Transaction Expenses."
(ii) Notwithstanding the provisions of (i) above, if this Plan is terminated
by a party hereto because of a breach of a material representation, warranty or
covenant by the other party or discovery of a material adverse condition with
respect to the other party, then the breaching party or the party with respect
to which a material adverse condition was discovered shall promptly pay its own
Transaction Expenses and fifty percent (50%) of the other party's Transaction
Expenses.
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<PAGE>
(iii) Final settlement with respect to payment of such fees and expenses by
the parties shall be made within thirty (30) days of the termination of this
Plan.
X(F) Each of the parties and their respective agents, investment bankers,
attorneys and accountants will maintain the confidentiality of all information
provided in connection herewith which has not been publicly disclosed except to
the extent that disclosure may be required by law.
X(G) All notices, requests and other communications hereunder to a party
shall be in writing and shall be deemed to have been duly given when delivered
by hand, telegram, facsimile or telex (confirmed in writing) to such party at
its address set forth below or such other address as such party may specify by
notice to the parties hereto.
If to AmSouth to: AmSouth Bancorporation
1400 AmSouth/Sonat Tower
Birmingham, Alabama 35203
Attn: Chairman of the Board and Chief Executive Officer
Copy to: Maria B. Campbell
AmSouth Bancorporation
Suite 920 AmSouth/Harbert Plaza
1901 6th Avenue North
Birmingham, Alabama 35203
If to the Company, to: Fortune Bancorp, Inc.
16120 U.S. 19 N.
Clearwater, Florida 34624
Copies to: Michael L. Jamieson
Holland & Knight
400 North Ashley
Tampa, Florida 33602
David L. Ansell
Fried, Frank, Harris,
Shriver & Jacobson
Suite 800
1001 Pennsylvania Avenue N.W.
Washington, D.C. 20004
X(H) This Plan represents the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and supersedes any and all
other oral or written agreements heretofore made.
X(I) Notwithstanding anything to the contrary herein, it is understood that
at the date of execution of this Plan, the parties have not had the opportunity
to compile Schedule 1 hereto. No later than 5 days after the date of execution
of this Plan each party shall have provided the other party with all documents
and disclosures constituting Schedule 1 hereto. No later than 30 days after the
date of execution of this Plan AmSouth shall have completed its investigation
and analysis of the Company and the Bank (provided, that such time may be
extended by mutual agreement of the Chief Executive Officer of AmSouth and the
Company if Company's and Bank's records and independent third party appraisals
on commercial property are not made available to AmSouth in a timely manner).
If (i) AmSouth's investigation and review of the Company and its subsidiaries
discloses matters which AmSouth in good faith believes either (A) to be
inconsistent in any material and adverse respect with any of the
representations or warranties of the Company, which relate to its financial
condition or results of operations, to any supporting documentation concerning
such financial condition or results of operations or to the ability of the
Company to consummate the transactions
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<PAGE>
contemplated by this Agreement, or (B) in the reasonable judgment of AmSouth
(x) to be of such significance as to materially and adversely affect the
condition of the Company and its subsidiaries, taken as a whole, or (y) to
deviate materially and adversely from the financial statements for the nine
months ended June 30, 1993 of the Company, (ii) AmSouth notifies the Company of
such matters within 35 days of the date of this Agreement, and (iii) such
matters, in the reasonable judgment of AmSouth, (A) are not capable of being
cured or (B) have not been cured within 30 days after written notice thereof to
the Company by AmSouth; then AmSouth may terminate this Plan in its sole
discretion without any liability to the Company. Failure to terminate this Plan
in accordance with this Section X(I) shall not affect the ability of a party to
terminate this Plan as provided in Article VIII. Prior to the Effective Date,
each party will promptly notify the other party of any inaccuracy in Schedule 1
as of the date hereof which comes to its attention after the date hereof.
In Witness Whereof, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers and their corporate
seals to be hereunto affixed, all as of the day and year first above written.
Attest: AmSouth Bancorporation
/s/ Maria B. Campbell /s/ John W. Woods
- ------------------------------------- By: ---------------------------------
SECRETARY CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
(Corporate Seal)
Attest: Fortune Bancorp, Inc.
/s/ Kay R. Degen /s/ John R. Torell, III
- ------------------------------------- By: ---------------------------------
SECRETARY CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
(Corporate Seal)
A-23
<PAGE>
ANNEX B
STOCK OPTION AGREEMENT
<PAGE>
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of September 13, 1993 (the "Agreement"), by
and between Fortune Bancorp, Inc., a Florida corporation ("Issuer") and AmSouth
Bancorporation, a Delaware corporation ("Grantee").
Whereas, Grantee and Issuer have entered into an Agreement and Plan of Merger
dated as of September 12, 1993 (the "Merger Agreement"), providing for, among
other things, the merger of Issuer with and into Grantee, with Grantee as the
surviving corporation; and
Whereas, as a condition and inducement to Grantee's execution of the Merger
Agreement, Grantee has requested that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as defined below);
Now, Therefore, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but not defined herein
shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 551,034 (as adjusted as set forth herein) shares (the "Option
Shares") of Common Stock, par value $.01 per share ("Issuer Common Stock"), of
Issuer at a purchase price per Option Share (the "Purchase Price") payable in
cash equal to $34.25.
3. Exercise of Option.
(a) If not in material breach of the Merger Agreement, Grantee may exercise
the Option, in whole or in part, at any time and from time to time, but only
following the occurrence of a Purchase Event (as defined below). The Option
shall terminate and be of no further force and effect upon the earliest to
occur of (i) immediately prior to the Effective Date, (ii) 12 months after the
first occurrence of a Purchase Event, (iii) 18 months after the termination of
the Merger Agreement following the occurrence of a Preliminary Purchase Event
(as defined below), or (iv) 12 months after the termination of the Merger
Agreement by Grantee pursuant to Section VIII(B) thereof or by Grantee and
Issuer pursuant to Section VIII(A) thereof if Grantee shall at the time have
been entitled to terminate the Merger Agreement pursuant to Section VIII(B)
thereof (provided, however, that if within 12 months after such termination a
Purchase Event or a Preliminary Purchase Event shall occur, then
notwithstanding anything to the contrary contained herein, this Option shall
terminate 12 months after the first occurrence of such an event); and provided
further, that any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law, including, without limitation, the
Bank Holding Company Act of 1956, as amended (the "BHC Act"), and the Home
Owner's Loan Act, as amended ("HOLA"), and shall be subject to the condition
that no preliminary or permanent injunction or order prohibiting or restraining
such transaction shall be in effect.
(b) As used herein, a "Purchase Event" means any of the following events:
(i) Issuer shall have authorized, recommended, publicly proposed or
publicly announced an intention to authorize, recommend or propose, or
entered into an agreement with any person (other than Grantee or any
subsidiary of Grantee) to effect an Acquisition Transaction or failed to
publicly oppose a Tender Offer or an Exchange Offer (as defined below). As
used herein, the term Acquisition Transaction shall mean (A) a merger,
consolidation or similar transaction involving Issuer or Fortune Bank, a
savings bank (the "Bank"), (B) the disposition, by sale, lease, exchange or
otherwise, of Assets of Issuer or the Bank representing 15% or more of the
consolidated assets of Issuer and its subsidiaries or (C) the issuance,
sale or other disposition of (including by way of merger, consolidation,
share exchange or any
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<PAGE>
similar transaction) securities representing more than 25% of the voting
power of Issuer or the Bank other than the issuance of securities as a
result of the conversion of convertible preferred stock or debentures (any
of the foregoing an "Acquisition Transaction"); or
(ii) any person (other than Grantee or any subsidiary of Grantee), shall
have acquired beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") ) or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, more than 25% of the then outstanding shares of Issuer Common
Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the following
events:
(i) any person (other than Grantee or any subsidiary of Grantee) shall
have commenced (as such term is defined in Rule 14d-2 under the Exchange
Act) or shall have filed a registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to, a tender offer
or exchange offer to purchase any shares of Issuer Common Stock such that,
upon consummation of such offer, such person would own or control more than
25% of the then outstanding shares of Issuer Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the holders of Issuer Common Stock shall not have approved the
Merger Agreement at the meeting of such stockholders held for the purpose
of voting on the Merger Agreement, such meeting shall not have been held or
shall have been canceled prior to termination of the Merger Agreement or
Issuer's Board of Directors shall have withdrawn or modified in a manner
adverse to Grantee the recommendation of Issuer's Board of Directors with
respect to the Merger Agreement, in each case after it shall have been
publicly announced that any person (other than Grantee or any subsidiary of
Grantee) shall have (A) made, or disclosed an intention to make, a proposal
to engage in an Acquisition Transaction, (B) commenced a Tender Offer or
filed a registration statement under the Securities Act with respect to an
Exchange Offer or (C) filed an application (or given a notice), whether in
draft or final form, under the BHC Act, HOLA, the Bank Merger Act or the
Change in Bank Control Act of 1978, for approval to engage in an
Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Grantee wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 15 business days from the Notice Date for
the closing (the "Closing") of such purchase (the "Closing Date"). If prior
notification to or approval of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), the Office of Thrift Supervision ("OTS")
or any other regulatory authority is required in connection with such purchase,
Issuer shall cooperate with Grantee in the filing of the required notice or
application for approval and the obtaining of such approval.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Grantee shall (i) pay to Issuer, in immediately
available funds by wire transfer to a bank account designated by Issuer, an
amount equal to the Purchase Price multiplied by the number of Option Shares to
be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 12(f)
hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a),
(i) Issuer shall deliver to Grantee (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances
of any kind whatsoever, and (B) if the Option is exercised in
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<PAGE>
part only, an executed new agreement with the same terms as this Agreement
evidencing the right to purchase the balance of the shares of Issuer Common
Stock purchasable hereunder, and (ii) Grantee shall deliver to Issuer a letter
reasonably satisfactory in form and substance to counsel to Issuer agreeing
that Grantee shall not offer to sell or otherwise dispose of such Option Shares
in violation of the provisions of Rule 144 promulgated under the Securities
Act, or this Agreement.
(c) Certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF SEPTEMBER 13,
1993. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of
compliance with the Securities Act.
5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Due Authorization. Issuer has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly
executed and delivered by Issuer.
(b) Authorized Stock. Issuer has taken all necessary corporate and other
action to authorize and reserve and to permit it to issue, and, at all
times from the date hereof until the obligation to deliver Issuer Common
Stock upon the Exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, shares of Issuer Common Stock
necessary for Grantee to exercise the Option, and Issuer will take all
necessary corporate action to authorize and reserve for issuance all
additional shares of Issuer Common Stock or other securities which may be
issued pursuant to Section 7 upon exercise of the Option. The shares of
Issuer Common Stock to be issued upon due exercise of the Option, including
all additional shares of Issuer Common Stock or other securities which may
be issuable pursuant to Section 7, upon issuance pursuant hereto, shall be
duly and validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all liens, claims, charges and encumbrances of
any kind or nature whatsoever, including any preemptive rights of any
stockholder of Issuer.
(c) Board Action. The Board of Directors of Issuer has approved this
Agreement and the consummation of the transactions contemplated hereby. The
performance by Issuer of this Agreement and the transactions contemplated
hereby (including the exercise of the Option) do not require any approval
of the stockholders of Issuer, and are not, and will not be, limited in any
manner by any provision of Issuer's Charter or Bylaws.
6. Representation and Warranties of Grantee. Grantee hereby represents and
warrants to Issuer that:
(a) Due Authorization. Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This Agreement has been
duly executed and delivered by Grantee.
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<PAGE>
(b) Purchase Not for Distribution. This Option is not being, and any
Option Shares or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public distribution thereof
and will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities
Act.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by reason of a stock
dividend, stock split, split-up, recapitalization, combination, exchange of
shares, repurchase of shares or similar transaction, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Grantee shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Grantee would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
shall become outstanding after the date of this Agreement (other than pursuant
to an event described in the first sentence of this Section 7(a)), the number
of shares of Issuer Common Stock subject to the Option shall be adjusted so
that, after such issuance, it together with any shares of Issuer Common Stock
previously issued pursuant hereto, equals 9.9% of the number of shares of
Issuer Common Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement: (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one
of its subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property or the outstanding shares of Issuer Common Stock immediately
prior to such merger shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than Grantee or one of its Subsidiaries, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of Grantee, of either (i)
the Acquiring Corporation (as defined below), (ii) any person that controls the
Acquiring Corporation, or (iii) in the case of a merger described in clause
(ii), the Issuer (such person being referred to as the "Substitute Option
Issuer").
(c) The Substitute Option shall have the same terms as the Option, provided,
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to Grantee. The Substitute Option Issuer shall also enter
into an agreement with the then holder or holders of the Substitute Option in
substantially the same form as this agreement, which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
the Substitute Common Stock (as is hereinafter defined) as is equal to the
Assigned Value (as is hereinafter defined) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as is hereinafter defined). The exercise price of
the Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(I) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the
B-4
<PAGE>
continuing or surviving person, and (iii) the transferee of all or any
substantial part of the Issuer's assets (or the assets of its
Subsidiaries).
(II) "Substitute Common Stock" shall mean the common stock issued by the
Substitute Option Issuer upon exercise of the Substitute Option.
(III) "Assigned Value" shall mean the highest of (i) the price per share
of the Issuer Common Stock at which a tender offer or exchange offer
therefor has been made by any person (other than Grantee), (ii) the price
per share of the Issuer Common Stock to be paid by any person (other than
the Grantee) pursuant to an agreement with Issuer, and (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the
NASDAQ/NMS (or if Issuer Common Stock is not quoted on the NASDAQ/NMS, the
highest bid price per share on any day as quoted on the principal trading
market or securities exchange on which such shares are traded as reported
by a recognized source chosen by Grantee) within the six-month period
immediately preceding the agreement; provided, however, that in the event
of a sale of less than all of Issuer's assets, the Assigned Value shall be
the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by Grantee (or by a
majority in interest of the Grantees if there shall be more than one
Grantee (a "Grantee Majority")), divided by the number of shares of the
Issuer Common Stock outstanding at the time of such sale. In the event that
an exchange offer is made for the Issuer Common Stock or an agreement is
entered into for a merger or consolidation involving consideration other
than cash, the value of the securities or other property issuable or
deliverable in exchange for the Issuer Common Stock shall be determined by
a nationally recognized investment banking firm mutually selected by
Grantee and Issuer (or if applicable, Acquiring Corporation), provided that
if a mutual selection cannot be made as to such investment banking firm, it
shall be selected by Grantee. (If there shall then be more than one
Grantee, any such selection shall be made by a Grantee Majority.)
(IV) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls or is controlled by
such merger person, as Grantee may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 9.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 9.9% of the aggregate of the shares of Substitute Common Stock
but for this clause (f), the Substitute Option Issuer shall make a cash payment
to Grantee equal to the excess of (i) the value of the Substitute Option
without giving effect to the limitation in this clause (f) over (ii) the value
of the Substitute Option after giving effect to the limitation in this clause
(f). This difference in value shall be determined by a nationally recognized
investment banking firm selected by Grantee (or a Grantee Majority).
(g) Issuer shall not enter into any transaction described in subsection (b)
of this Section 7 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the shares of
Substitute Common Stock are in no way distinguishable from or have lesser
economic value than other shares of common stock issued by the Substitute
Option Issuer).
(h) The provisions of Sections 9 and 10 shall apply, with appropriate
adjustments, to any securities for which the Option becomes exercisable
pursuant to this Section 7 and as applicable, references in such sections to
"Issuer", "Option", "Purchase Price" and "Issuer Common Stock" shall be deemed
to be references to
B-5
<PAGE>
"Substitute Option Issuer", "Substitute Option", "Substitute Purchase Price"
and "Substitute Common Stock", respectively.
8. [Reserved]
9. Registration Rights. Issuer shall, if requested by Grantee (or if
applicable, a Grantee Majority) at any time and from time to time within three
years of the first exercise of the Option, as expeditiously as possible prepare
and file up to two registration statements under the Securities Act if such
registration is necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to Grantee upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Grantee, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best
efforts to qualify such shares or other securities under any applicable state
securities laws. Grantee agrees to use all reasonable efforts to cause, and to
cause any underwriters of any sale or other disposition to cause, any sale or
other disposition pursuant to such registration statement to be effected on a
widely distributed basis so that upon consummation thereof no purchaser or
transferee shall own beneficially more than 2% of the then outstanding voting
power of Issuer. Issuer shall use all reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or waivers
of other parties which are required therefor and to keep such registration
statement effective for such period not in excess of 180 days from the day such
registration statement first becomes effective as may be reasonably necessary
to effect such sale or other disposition. The obligations of Issuer hereunder
to file a registration statement and to maintain its effectiveness may be
suspended for one or more periods of time not exceeding 60 days in the
aggregate if the Board of Directors of Issuer shall have determined that the
filing of such registration statement or the maintenance of its effectiveness
would require disclosure of nonpublic information that would materially and
adversely affect Issuer. Any registration statement prepared and filed under
this Section 9, and any sale covered thereby, shall be at Issuers expense
except for underwriting discounts or commissions, brokers' fees and the fees
and disbursements of Grantee's counsel related thereto. Grantee shall provide
all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. The parties will indemnify each
other and any underwriters in the customary manner in connection with any such
registration. If during the time periods referred to in the first sentence of
this Section 9 Issuer effects a registration under the Securities Act of Issuer
Common Stock for its own account or for any other stockholders of Issuer (other
than on Form S-4 or Form S-8, or any successor forms or any form with respect
to a dividend reinvestment or similar plan), it shall allow Grantee the right
to participate in such registration, and such participation shall not affect
the obligation of Issuer to effect two registration statements for Grantee
under this Section 9; provided that, if the managing underwriters of such
offering advise Issuer in writing that in their opinion the number of shares of
Issuer Common Stock requested by Grantee to be included in such registration,
together with the shares of Issuer Common Stock proposed to be included in such
registration, exceeds the number which can be sold in such offering, Issuer
shall include the shares requested to be included therein by Grantee pro rata
with the shares intended to be included therein by Issuer. In connection with
any registration pursuant to this Section 9, Issuer and Grantoree shall provide
each other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification and contribution in connection with such
registration. Notwithstanding anything to the contrary contained herein, (i) in
no event shall Issuer be obligated to effect more than two registrations
hereunder (ii) the Issuer will not be required to file any such registration
statement during any period of time (not to exceed 90 days after such request
in the case of clauses (A), (B), and (C) below) when (A) the Issuer is in
possession of material non-public information which it reasonably believes
would be detrimental to be disclosed at such time and, in the opinion of
counsel to Issuer, such information would have to be disclosed if a
registration statement were filed at the time; (B) the Issuer is required under
the Securities Act to include audited financial statements for any period in
such registration statement and such financial statements are not yet available
for inclusion in such registration statement; or (C) the Issuer determines, in
good faith and in its reasonable judgment, that such registration would
interfere with any bonafide financing, acquisition, or other material
transaction involving the Issuer or any of its affiliates and (iii) unless
Grantee (or if applicable, a Grantee
B-6
<PAGE>
Majority) shall have made a request to Issuer to effect the registration of all
of the shares issuable to Grantee upon exercise of the Option prior to the
termination of the Option pursuant to Section 3(a), Issuer's obligation under
this Section 9 with respect to the registration of such shares shall terminate
upon termination of the Option pursuant to Section 3(a).
10. Quotation; Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise to the Option are then authorized for quotation or
trading or listing on the NASDAQ/NMS or any securities exchange, Issuer, upon
the request of Grantee, will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of Issuer Common Stock
or other securities to be acquired upon exercise of the Option on the
NASDAQ/NMS or such other securities exchange and will use its best efforts to
obtain approval, if required, of such quotation or listing as soon as
practicable.
11. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Issuer
Common Stock purchasable hereunder. The terms "Agreement" and "Option" as used
herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute a contractual obligation on the part of Issuer,
whether or not the Agreement so lost, stolen, destroyed or mutilated shall at
any time be enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in Section 9, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the parties hereto.
(c) Entire Agreement: No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or a federal or state regulatory agency to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to
acquire, the full number of shares of Issuer Common Stock as provided in
Sections 3 (as adjusted pursuant to Section 7), it is the express intention of
Issuer to allow Grantee to acquire such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law rules.
(e) Descriptive Heading. The descriptive headings contained herein are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
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<PAGE>
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to Issuer to:
AmSouth Bancorporation
1400 AmSouth/Sonat Tower
Birmingham, Alabama 35203
Attn: Chairman of the Board and Chief Executive Officer
with a copy to:Maria B. Campbell
AmSouth Bancorporation
Suite 920 AmSouth/Harbert Plaza
1901 6th Avenue North
Birmingham, Alabama 35203
If to Grantee to:
Fortune Bancorp, Inc.
16120 U.S. Highway 19 North
Clearwater, FL 34624
Attn: Chairman of the Board and Chief Executive Officer
with a copy to:Holland & Knight
400 North Ashley
Suite 2300
Tampa, Florida 33601
Attn: Michael L. Jamieson
Fried, Frank Harris Shriver & Jacobson
1001 Pennsylvania Avenue, NW
Suite 800
Washington, DC 20004-2505
Attn: David L. Ansell
(g) Counterparts. This Agreement and any amendments hereto may be executed in
two counterparts, each of which shall be considered one and the same agreement
and shall become effective when both counterparts have been signed, it being
understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement may be
enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
(k) Except to the extent Grantee exercises the Option, Grantee shall have no
rights to vote or receive dividends or have any other rights as a shareholder
with respect to shares of Issuer Common Stock covered hereby.
B-8
<PAGE>
In Witness Whereof, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
Attest: AmSouth Bancorporation (Grantee)
/s/ Maria B. Campbell /s/ John W. Woods
- ------------------------------------- By: ---------------------------------
SECRETARY CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
(Corporate Seal)
Fortune Bancorp, Inc. (Issuer)
Attest:
/s/ John R. Torell, III
/s/ Kay R. Degen By: ---------------------------------
- ------------------------------------- CHAIRMAN OF THE BOARD AND
SECRETARY CHIEF EXECUTIVE OFFICER
(Corporate Seal)
B-9
<PAGE>
ANNEX C
FORM OF VOTING AGREEMENT
<PAGE>
Mr. John W. Woods
Chairman of the Board and
Chief Executive Officer
AmSouth Bancorporation
1900 Fifth Avenue North
Birmingham, Alabama 35288
Re: Fortune Bancorp, Inc.
Dear Mr. Woods:
I am writing to confirm the following agreement between AmSouth
Bancorporation ("AmSouth") and me regarding the pending merger between Fortune
Bancorp, Inc. ("Fortune") and AmSouth. As an inducement to AmSouth entering
into the Agreement and Plan of Merger (the "Agreement") dated September 12,
1993 with Fortune, for a period of twelve months from the date of this letter I
agree to vote all of the shares of Fortune that I own or otherwise have the
power to vote in favor of the merger of Fortune and AmSouth and in favor of the
other transactions contemplated by the Agreement. Furthermore, for the same
period of time, I will vote against any business combination or other
reorganization of any kind involving Fortune or its subsidiaries with any
entity other than AmSouth. It is expressly understood and acknowledged by the
parties hereto that nothing contained herein is intended to restrict me from
voting on any matter, or otherwise from acting, in my capacity as a director of
Fortune with respect to any matter, including but not limited to, the general
management or over-all operation of Fortune, or any other exercise of my
fiduciary responsibilities.
If the Agreement is terminated, I will have no further obligations under this
letter after the date of such termination. I further agree that if I sell any
of the shares subject to this agreement (other than in an arms-length
transaction through a broker in the market and any other transaction which is
bona fide and entered into by me in good faith), I will obtain from the
purchaser thereof an agreement in favor of AmSouth in the same form as this
agreement.
Sincerely yours,
/s/
[FORTUNE DIRECTOR]
C-1
<PAGE>
ANNEX D
OPINION OF DILLON, READ & CO., INC.
<PAGE>
[LOGO OF DILLON, READ & CO. INC. APPEARS HERE]
April 4, 1994
The Board of Directors
Fortune Bancorp, Inc.
16120 U.S. 19 North
Clearwater, FL 34624
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the outstanding shares of Common Stock, par value $.01
per share (the "Common Shares"), and the holders of Series A 8% Cumulative
Convertible Preferred Stock, par value $0.01 per share (the "Preferred
Shares"), of Fortune Bancorp, Inc. (the "Company") of the consideration, as
herein defined, offered by AmSouth Bancorporation ("AmSouth") to such holders
in the proposed merger (the "Merger") of the Company into AmSouth, pursuant to
the Agreement and Plan of Merger dated as of the 12th day of September, 1993,
between the Company and AmSouth (the "Agreement"). The number of shares of
AmSouth common stock and the amount of cash that will be exchanged for each
share of Fortune common and preferred stock (the "Consideration") will be
determined by applying a formula as set forth in the Agreement.
Dillon, Read & Co. Inc. ("Dillon Read"), as part of its investment banking
services, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distribution of listed and
unlisted securities and private placements, and valuations for estate,
corporate and other purposes. Dillon Read has not been retained to provide
investment banking or advisory services to the Company outside of rendering
this fairness opinion. We have acted exclusively for the Board of Directors of
the Company in rendering this fairness opinion and will receive a fee from the
Company for our services.
In arriving at our opinion, we have reviewed and analyzed, among other
things: (i) the Agreement; (ii) Annual Reports to Shareholders and Annual
Reports on Form 10-K of the Company and AmSouth for five years ended September
30, 1993 and December 31, 1993, respectively; (iii) certain interim reports to
shareholders and Quarterly Reports on Form 10-Q of the Company and AmSouth and
certain other communications from the Company and AmSouth to their respective
shareholders; (iv) certain internal financial analyses and forecasts for the
Company and AmSouth prepared by its management or consultants retained by its
management. We also have held discussions with members of the senior management
of the Company and AmSouth regarding their respective past and current business
operations, financial condition and future prospects. In addition, we have
reviewed the reported price and trading activity for the Common Shares and
AmSouth common stock, compared certain financial and stock market information
for the Company and AmSouth with similar information for certain other
companies, the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the thrift and commercial
banking industries and performed such other studies and analyses we considered
relevant.
We have relied without independent verification upon the accuracy and
completeness of all the financial and other information reviewed by us for the
purposes of this opinion. In this regard, we have assumed that the financial
forecasts have been reasonably prepared on a basis reflecting the best
currently available
D-1
<PAGE>
[LOGO OF DILLON, READ & CO. INC. APPEARS HERE]
judgments and estimates of the management of the Company and AmSouth and such
forecasts will be realized in the amounts and at the time contemplated thereby.
We are not experts in the evaluation of loan portfolios or the allowance for
loan losses with respect thereto and have assumed the allowance for the Company
and AmSouth are adequate to cover such losses. In addition, we have not
reviewed individual credit files nor have we made an independent evaluation or
appraisal of the assets and liabilities of the Company or AmSouth or any of
their subsidiaries and we have not been furnished with any such evaluation or
appraisal.
Based upon and subject to the foregoing and other such matters we consider
relevant, it is our opinion that, as of the date hereof, the Consideration
offered in the Merger is fair, from a financial point of view, to the holders
of the Common Shares and to the holders of the Preferred Shares of the Company.
Very truly yours,
/s/ Dillon, Read & Co. Inc.
DILLON, READ & CO. INC.
D-2
<PAGE>
ANNEX E
FLORIDA BUSINESS CORPORATION ACT (S)(S) 1301, 1302, 1320
<PAGE>
Florida Business Corporation Act (S)(S) 1301, 1302, 1320
SECTION 607.1301 DISSENTERS' RIGHTS; DEFINITIONS.
The following definitions apply to ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value of
the shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on which
the corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of a
merger pursuant to s. 607.1104, the day prior to the date on which a copy of
the plan of merger was mailed to each shareholder of record of the subsidiary
corporation.
SECTION 607.1302 RIGHT OF SHAREHOLDERS TO DISSENT.
(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its parent
under s. 607.1104, and the shareholders would have been entitled to
vote on action taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation, other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but not including
a sale pursuant to court order or a sale for cash pursuant to a plan by
which all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation is
a party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely
affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of
his shares;
2. Altering or abolishing the voting rights pertaining to any of his
shares, except as such rights may be affected by the voting rights of
new shares then being authorized of any existing or new class or series
of shares;
3. Effecting an exchange, cancellation, or reclassification of any of
his shares, when such exchange, cancellation, or reclassification would
alter or abolish his voting rights or alter his percentage of equity in
the corporation, or effecting a reduction or cancellation of accrued
dividends or other arrearages in respect to such shares;
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4. Reducing the stated redemption price of any of his redeemable
shares, altering or abolishing any provision relating to any sinking
fund for the redemption or purchase of any of his shares, or making any
of his shares subject to redemption when they are not otherwise
redeemable;
5. Making noncumulative, in whole or in part, dividends of any of his
preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of his preferred
shares; or
7. Reducing any stated preferential amount payable on any of his
preferred shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his shares.
SECTION 607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
(1) (a) If a proposed corporate action creating dissenters' rights under s.
607.1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights and be accompanied by a copy of ss. 607.1301, 607.1302, and 607.1320. A
shareholder who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written notice of
his intent to demand payment for his shares if the proposed action is
effectuated, and
2. Not vote his shares in favor of the proposed action. A proxy or vote
against the proposed action does not constitute such a notice of intent to
demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each
shareholder simultaneously with any request for his written consent or, if such
a request is not made, within 10 days after the date the corporation received
written consents without a meeting from the requisite number of shareholders
necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his shares pursuant to paragraph
(1)(a) or, in the case of action authorized by written consent, to each
shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him, any shareholder who
elects to dissent shall file with the corporation a notice of such election,
stating his name and address, the number, classes, and series of shares as to
which he dissents, and a demand for payment of the fair value of his shares.
Any shareholder failing to file such election to dissent within the period set
forth shall be bound by the terms of the proposed corporate action. Any
shareholder filing an election to dissent shall deposit his certificates for
certificated shares with the corporation simultaneously with the filing of the
election to dissent. The corporation may restrict the transfer of
uncertificated shares from the date the shareholder's election to dissent is
filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall
not be entitled to vote or to exercise any other rights of a shareholder. A
notice of election may be withdrawn in writing by the shareholder at any time
before an offer is made by the corporation, as provided in subsection (5), to
pay for his shares. After such offer, no such notice of election may be
withdrawn unless the corporation consents thereto. However, the right of such
shareholder to be paid the fair value of his shares shall cease, and he shall
be reinstated to have all his rights as a shareholder as of the filing of his
notice of election, including any intervening preemptive rights and the right
to payment
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of any intervening dividend or other distribution or, if any such rights have
expired or any such dividend or distribution other than in cash has been
completed, in lieu thereof, at the election of the corporation, the fair value
thereof in cash as determined by the board as of the time of such expiration or
completion, but without prejudice otherwise to any corporate proceedings that
may have been taken in the interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder is
not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value
for such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more
than 12 months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month
period ended on the date of such balance sheet or, if the corporation was
not in existence throughout such 12-month period, for the portion thereof
during which it was in existence.
(6) If within 30 days after the making of such offer any shareholder accepts
the same, payment for his shares shall be made within 90 days after the making
of such offer or the consummation of the proposed action, whichever is later.
Upon payment of the agreed value, the dissenting shareholder shall cease to
have any interest in such shares.
(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it make the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30
days thereafter, then the corporation, within 30 days after receipt of written
demand from any dissenting shareholder given within 60 days after the date on
which such corporate action was effected, shall, or at its election at any time
within such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a
copy of the initial pleadings in such proceeding upon each dissenting
shareholder who is a resident of this state in the manner provided by law for
the service of a summons and complaint and upon each nonresident dissenting
shareholder either by registered or certified mail and publication or in such
other manner as is permitted by law. The jurisdiction of the court is plenary
and exclusive. All shareholders who are proper parties to the proceeding are
entitled to judgment against the corporation for the amount of the fair value
of their shares.
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The court may, if it so elects, appoint one or more persons as appraisers to
receive evidence and recommend a decision on the question of fair value. The
appraisers shall have such power and authority as is specified in the order of
their appointment or an amendment thereof. The corporation shall pay each
dissenting shareholder the amount found to be due him within 10 days after
final determination of the proceedings. Upon payment of the judgment, the
dissenting shareholder shall cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair rate of
interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined by the
court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the
shares, if the court finds that the action of such shareholders in failing to
accept such offer was arbitrary, vexatious, or not in good faith. Such expenses
shall include reasonable compensation for, and reasonable expenses of, the
appraisers, but shall exclude the fees and expenses of counsel for, and experts
employed by, any party. If the fair value of the shares, as determined,
materially exceeds the amount which the corporation offered to pay therefor or
if no offer was made, the court in its discretion may award to any shareholder
who is a party to the proceeding such sum as the court determines to be
reasonable compensation to any attorney or expert employed by the shareholder
in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed value
thereof or pursuant to payment of the judgment entered therefor, as provided in
this section, may be held and disposed of by such corporation as authorized but
unissued shares of the corporation in the case of other treasury shares, except
that, in the case of a merger, they may be held and disposed of as the plan of
merger otherwise provides. The shares of the surviving corporation into which
the shares of such dissenting shareholders would have been converted had they
assented to the merger shall have the status of authorized but unissued shares
of the surviving corporation.
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