<PAGE>
As Filed With the Securities and Exchange Commission on August 13, 1999.
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
AMSOUTH BANCORPORATION
(Exact name of registrant as specified in its charter)
---------------
Delaware 6060 63-0591257
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code No.) Identification No.)
d AmSouth-Sonat Tower
1900 Fifth Avenue North
Birmingham, Alabama 35203
(205) 320-7151
(Address, including ZIP Code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
Stephen A. Yoder, Esq.
Executive Vice President and General Counsel
AmSouth Bancorporation
1901 Sixth Avenue North, Suite 920
Birmingham, Alabama 35203
(Name, address, including ZIP Code, and telephone number, including area code,
of agent for service)
with copies to:
Mitchell S. Eitel, Esq. Edward D. Herlihy, Esq.
Sullivan & Cromwell Wachtell, Lipton, Rosen & Katz
125 Broad Street 51 West 52nd Street
New York, New York 10004 New York, New York 10019
---------------
Approximate date of commencement of the proposed sale of the securities to
the public: As soon as practicable after this registration statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
<CAPTION>
Proposed Proposed
Title of Each Class of Amount Maximum Maximum Amount of
Securities to be to be Offering Price Aggregate Registration
Registered Registered(1) Per Share Offering Price Fee
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock (and $21.18(3) $4,871,058,254 $358,585(4)
associated preferred
stock purchase 230,000,000
rights)(2)........... shares
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
(1) The number of shares of AmSouth common stock to be registered pursuant to
this registration statement is based upon an estimate of the maximum number
of shares of First American common stock presently outstanding or reserved
for issuance under various plans or otherwise expected to be issued or to
become issuable upon the consummation of the proposed transaction to which
this registration statement relates, multiplied by the exchange ratio of
1.871 shares of AmSouth common stock per share of First American stock.
(2) Each share of common stock is accompanied by a right to purchase Series A
Preferred Stock of AmSouth. Prior to the occurrence of certain events, none
of which have occurred as of this date, the rights will not be exercisable
or evidenced separately from the common stock.
(3) Calculated in accordance with Rules 457(f) and 457(c) under the Securities
Act of 1933, as amended, the proposed maximum offering price per share is
computed by dividing (i) the product of (A) the average of the high and low
prices of First American common stock as reported on the New York Stock
Exchange on August 11, 1999 ($39.625) and (B) 122,928,915, representing the
maximum number of shares of First American expected to be exchanged for the
AmSouth common stock being registered, by (ii) 230,000,000, representing
the maximum number of shares of AmSouth common stock to be issued in
connection with this registration statement.
(4) The registration fee of $358,585 calculated pursuant to Rules 457(f) and
457(b) under the Securities Act of 1933, as amended, is the difference
between (i) $1,354,155, the product of .000278 and the proposed maximum
aggregate offering price, and (ii) $995,570, the amount paid to the SEC on
May 31, 1999 with respect to this transaction.
---------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[LOGO OF FIRST AMERICAN CORPORATION] [LOGO OF AM SOUTH BANCORPORATION]
FIRST AMERICAN CORPORATION AMSOUTH BANCORPORATION
PROXY STATEMENT PROXY STATEMENT AND PROSPECTUS
----------------
First American has entered into a merger agreement with AmSouth. The merger
will provide AmSouth and First American stockholders with the opportunity to
participate in a premier Southeast financial services franchise that will
result from the combination of our two companies. AmSouth stockholders
immediately prior to the merger initially will own approximately 44%, and First
American stockholders immediately prior to the merger initially will own
approximately 56%, of AmSouth common stock to be outstanding immediately after
the merger.
In the merger, each share of First American common stock will be converted
into 1.871 shares of AmSouth common stock. This represents a value of $53.09
per share based on the May 28, 1999 price of AmSouth common stock. The market
price of AmSouth common stock will fluctuate prior to the merger. In addition,
the conversion of your shares of First American common stock generally will not
be taxable.
First American Stockholders AmSouth Stockholders
This document is being furnished This document is being furnished
to First American stockholders in to AmSouth stockholders in connection
connection with the solicitation of with the solicitation of proxies by
proxies by First American's board AmSouth's board of directors for use
of directors for use at the special at the special meeting of
meeting of stockholders of First stockholders of AmSouth to be held at
American to be held at the fifth- the auditorium of AmSouth Bank in the
floor auditorium of the First upper lobby of the AmSouth-Harbert
American Center in the City of Plaza, 1901 Sixth Avenue North,
Nashville, Tennessee, at 2:30 p.m., Birmingham, Alabama at 2:00 p.m.,
local time, on September 16, 1999, local time, on September 16, 1999.
where First American stockholders AmSouth stockholders will be asked to
will be asked to vote on the merger approve:
agreement.
. an amendment to the AmSouth
First American's board of certificate of incorporation that
directors has unanimously approved provides for the increase in
the merger agreement. First AmSouth common stock authorized
American's board of directors for issuance from 350 million to
believes that the merger is fair to 750 million shares; and
and in the best interests of First
American and its stockholders and . the issuance of AmSouth common
strongly encourages First American stock called for by the merger
stockholders to vote "FOR" the agreement.
proposal. Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an AmSouth's board of directors has
investment banking firm, has issued unanimously approved these proposed
its opinion to First American's actions and believes they are in the
board of directors that the best interests of AmSouth and its
consideration to be paid by AmSouth stockholders and strongly encourages
pursuant to the merger agreement is AmSouth stockholders to vote "FOR"
fair, from a financial point of these proposals. Donaldson, Lufkin &
view, to First American and its Jenrette Securities Corporation, an
stockholders. investment banking firm, has issued
its opinion to AmSouth's board of
directors that the exchange ratio of
1.871 shares of AmSouth common stock
for each share of First American
common stock is fair, from a
financial point of view, to AmSouth
and its stockholders.
AmSouth common stock is listed on the NYSE under the symbol "ASO." First
American common stock is listed on the NYSE under the symbol "FAM."
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved the AmSouth common
stock to be issued under this proxy statement/prospectus or determined
if this proxy statement/prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense. The shares of
AmSouth common stock are not savings or deposit accounts or other
obligations of any bank or savings association, and are not insured by
the Federal Deposit Insurance Corporation or any other governmental
agency.
----------------
The date of this proxy statement/prospectus is August 13, 1999, and it is
being mailed or otherwise delivered to AmSouth stockholders and First American
stockholders on or about August 18, 1999.
<PAGE>
AMSOUTH BANCORPORATION
P.O. Box 11007
Birmingham, Alabama 35288
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF AMSOUTH BANCORPORATION:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of AmSouth
Bancorporation ("AmSouth") will be held at the auditorium of AmSouth Bank in
the upper lobby of the AmSouth-Harbert Plaza, 1901 Sixth Avenue North,
Birmingham, Alabama at 2:00 p.m., local time, on September 16, 1999, for the
purpose of voting upon:
. An amendment to the AmSouth certificate of incorporation to increase the
number of authorized shares of AmSouth common stock from 350 million to
750 million shares.
. The issuance of AmSouth common stock pursuant to an Agreement and Plan
of Merger, dated as of May 31, 1999, among First American Corporation
("First American"), AmSouth and a wholly owned merger subsidiary of
AmSouth, pursuant to which First American will merge into the merger
subsidiary of AmSouth.
In the merger, each share of First American common stock will be converted
into the right to receive 1.871 shares of AmSouth common stock. The amendment
to the AmSouth certificate of incorporation increasing the number of authorized
shares of common stock will allow AmSouth to convert the shares of First
American common stock into shares of AmSouth common stock in accordance with
the terms of the merger agreement. A copy of the merger agreement is set forth
in Appendix A to the accompanying proxy statement/prospectus.
Only stockholders of record at the close of business on August 12, 1999 are
entitled to receive notice of and to vote at the special meeting or any
adjournments or postponements thereof. Approval of the amendment to the AmSouth
certificate of incorporation requires that a majority of the shares of AmSouth
common stock outstanding be voted in favor of the amendment. Approval of the
issuance of AmSouth common stock pursuant to the terms of the merger agreement
requires that a majority of the shares of AmSouth common stock voted at the
meeting, provided a quorum is present, be voted in favor of the issuance.
All stockholders are cordially invited to attend the special meeting. To
ensure your representation at the special meeting, please complete and promptly
mail your proxy in the return envelope enclosed. This will not prevent you from
voting in person, but will help to secure a quorum and avoid added solicitation
costs. Your proxy may be revoked at any time before it is voted. Your attention
is directed to the proxy statement/prospectus accompanying this notice for a
more complete statement regarding the matters proposed to be acted upon at the
special meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Diane S. Masters
Diane S. Masters
Secretary
August 13, 1999
AmSouth's board of directors unanimously recommends that stockholders vote
"FOR" approval of the amendment to the AmSouth certificate of incorporation and
the issuance of AmSouth common stock pursuant to the terms of the merger
agreement.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY, WHETHER OR NOT
YOU PLAN TO ATTEND THE SPECIAL MEETING.
<PAGE>
FIRST AMERICAN CORPORATION
First American Center
Nashville, Tennessee 37237
(615) 748-2000
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF FIRST AMERICAN CORPORATION:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of First
American Corporation ("First American") will be held in the fifth-floor
auditorium of the First American Center in the City of Nashville, Tennessee, at
2:30 p.m., local time, on September 16, 1999, to consider and act upon:
. Approval of the Agreement and Plan of Merger, dated as of May 31, 1999,
among First American, AmSouth Bancorporation, a Delaware corporation
("AmSouth"), and Alpha/Foxtrot Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of AmSouth (the "Merger Sub"), and the
transactions contemplated thereby, including the merger of Merger Sub
with and into First American.
Only stockholders of record at the close of business on August 12, 1999, are
entitled to notice of and to vote at the special meeting or any adjournments or
postponements thereof.
All stockholders are cordially invited to attend the special meeting. To
ensure your representation at the special meeting, please complete and promptly
mail your proxy in the return envelope enclosed. This will not prevent you from
voting in person, but will help to secure a quorum and avoid added solicitation
costs. Your proxy may be revoked at any time before it is voted. Your attention
is directed to the proxy statement/prospectus accompanying this notice for a
more complete statement regarding the matters proposed to be acted upon at the
special meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Mary Neil Price
Mary Neil Price
Executive Vice President General
Counsel and Corporate Secretary
August 13, 1999
First American's board of directors unanimously recommends that stockholders
vote "FOR" approval of the Agreement and Plan of Merger.
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD PROMPTLY, WHETHER OR NOT
YOU PLAN TO ATTEND THE SPECIAL MEETING.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE SPECIAL MEETINGS.... 1
SUMMARY................................................................... 2
The Merger Consideration Will Be 1.871 Shares of AmSouth Common Stock... 2
Share Information and Market Prices..................................... 2
Generally, Tax-Free Transaction for First American Stockholders......... 2
The First American Board of Directors Recommends Stockholder Approval... 2
The AmSouth Board of Directors Recommends Stockholder Approval.......... 3
Investment Bank Says the Merger Consideration Is Fair to First American
Stockholders........................................................... 3
Investment Bank Says the Merger Consideration Is Fair to AmSouth and Its
Stockholders........................................................... 3
First American to Hold Meeting on September 16, 1999.................... 3
AmSouth to Hold Meeting on September 16, 1999........................... 3
No Appraisal Rights..................................................... 4
Information Regarding AmSouth and First American........................ 4
The Merger.............................................................. 5
Pooling of Interests Accounting Treatment............................... 5
Financial Interests of Our Managements and Boards of Directors in the
Merger................................................................. 5
The Merger Agreement.................................................... 6
Termination of the Merger Agreement..................................... 6
Regulatory Approvals We Must Obtain for the Merger...................... 6
AmSouth Will Be Required to Pay First American $225 Million Under
Certain Circumstances if the Merger Is Not Completed................... 6
First American Will Be Required to Pay AmSouth $225 Million Under
Certain Circumstances if the Merger Is Not Completed................... 7
The Increase in AmSouth's Authorized Shares of Common Stock Is Necessary
to Complete the Merger................................................. 7
Selected Unaudited Historical and Pro Forma Combined Financial
Information............................................................ 8
Selected Consolidated Historical Financial Data of AmSouth.............. 10
Selected Consolidated Historical Financial Data of First American....... 11
Selected Unaudited Pro Forma Financial Data of AmSouth and First
American............................................................... 12
Where You Can Find More Information..................................... 13
AMSOUTH SPECIAL MEETING................................................... 14
Matters to Be Considered................................................ 14
Proxies................................................................. 14
Solicitation of Proxies................................................. 14
Record Date and Voting Rights........................................... 15
Recommendation of the AmSouth Board of Directors........................ 16
FIRST AMERICAN SPECIAL MEETING............................................ 16
Matters to Be Considered................................................ 16
Proxies................................................................. 16
Solicitation of Proxies................................................. 17
Record Date and Voting Rights........................................... 17
Recommendation of the First American Board of Directors................. 18
THE MERGER................................................................ 19
General................................................................. 19
The Increase in, and Issuance of, AmSouth Common Stock.................. 20
Stock Option and Incentive Plans........................................ 20
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Background of the Merger................................................ 20
AmSouth's Reasons for the Issuance of AmSouth Common Stock to First
American Stockholders; Recommendation of the AmSouth Board of
Directors.............................................................. 21
First American's Reasons for the Merger; Recommendation of the First
American Board of Directors............................................ 23
Opinion of AmSouth's Financial Advisor.................................. 24
Opinion of First American's Financial Advisor........................... 32
Interests of Management and Directors in the Merger..................... 40
Management and Operations of AmSouth After the Merger................... 44
Public Trading Markets.................................................. 45
Absence of Appraisal Rights............................................. 45
Resales of AmSouth Common Stock......................................... 45
THE MERGER AGREEMENT...................................................... 46
Introduction............................................................ 46
Terms of the Merger..................................................... 46
Closing and Effective Time of the Merger................................ 46
Conditions to Completion of the Merger.................................. 47
Representations and Warranties.......................................... 48
Covenants............................................................... 48
Additional Agreements................................................... 51
Distribution of AmSouth Certificates.................................... 53
Fractional Shares....................................................... 53
Federal Income Tax Consequences of the Merger........................... 54
Regulatory Approvals Required for the Merger............................ 55
Possible Alternative Structure.......................................... 57
Amendment, Waiver and Termination....................................... 57
STOCK OPTION AGREEMENTS................................................... 58
General................................................................. 58
Exercise; Expiration.................................................... 58
Rights of the Grantee of the Option..................................... 59
Purpose of the Agreements............................................... 60
DESCRIPTION OF AMSOUTH CAPITAL STOCK...................................... 61
Authorized Stock........................................................ 61
Common Stock............................................................ 61
AmSouth Preferred Stock................................................. 61
Stockholder Protection Rights Plan...................................... 61
Other Provisions........................................................ 62
CERTAIN DIFFERENCES IN THE RIGHTS OF AMSOUTH STOCKHOLDERS AND FIRST
AMERICAN STOCKHOLDERS.................................................... 66
Size and Classification of Board of Directors........................... 67
Removal of Directors.................................................... 67
Amendment of Certificate of Incorporation or Charter and By-laws........ 67
Stockholder Nominations and Proposals................................... 68
Special Meetings of Stockholders........................................ 69
Stockholder Action by Written Consent................................... 70
Rights Plans............................................................ 70
Appraisal and Dissenters' Rights........................................ 70
Business Combination Statutes........................................... 71
Control Share Acquisition Statutes...................................... 72
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Takeover Bid Disclosure Statutes........................................ 72
Indemnification of Officers and Directors............................... 74
REGULATION AND SUPERVISION................................................ 75
General................................................................. 75
Capital Requirements.................................................... 75
Dividend Restrictions................................................... 76
COMPARATIVE MARKET PRICES AND DIVIDENDS................................... 77
AmSouth................................................................. 77
First American.......................................................... 77
AMENDMENT TO AMSOUTH CERTIFICATE OF INCORPORATION......................... 78
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION.............. 80
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION..... 87
FORWARD-LOOKING STATEMENTS................................................ 88
EXPERTS................................................................... 88
VALIDITY OF AMSOUTH COMMON STOCK.......................................... 89
OTHER MATTERS............................................................. 89
WHERE YOU CAN FIND MORE INFORMATION....................................... 89
</TABLE>
APPENDICES:
Appendix A--Agreement and Plan of Merger, dated as of May 31, 1999, among
AmSouth Bancorporation, First American Corporation and Alpha/Foxtrot
Acquisition Corp.
Appendix B--AmSouth Stock Option Agreement, dated as of June 1, 1999, between
AmSouth Bancorporation and First American Corporation
Appendix C--First American Stock Option Agreement, dated as of June 1, 1999,
between AmSouth Bancorporation and First American Corporation
Appendix D--Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
Appendix E--Opinion of Donaldson, Lufkin & Jenrette Securities Corporation
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE SPECIAL MEETINGS
Q: What should I do?
A: After you have carefully read this document, mail your signed proxy card in
the enclosed envelope. The instructions on the accompanying proxy card will
give you more information on how to vote by mail. This will enable your
shares to be represented at the AmSouth special meeting or the First
American special meeting, as applicable.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Your broker will not be able to vote your shares without instructions from
you. You should instruct your broker to vote your shares, following the
directions your broker provides. Your failure to instruct your broker to
vote your shares will result in your shares not being voted. If you fail to
return a proxy card or abstain from voting, the effect will be a vote
against the merger.
Q: Can I change my vote after I have submitted my proxy with voting
instructions?
A: Yes. There are three ways you can change your vote. First, you may send a
written notice to the person to whom you submitted your proxy stating that
you would like to revoke your proxy. Second, you may complete and submit a
new proxy card by mail or submit your proxy with new voting instructions.
The latest vote actually received by First American or AmSouth prior to the
stockholders' meeting will be your vote. Any earlier votes will be revoked.
Third, you may attend the AmSouth special meeting or the First American
special meeting, as applicable, and vote in person. Any earlier votes will
be revoked. Simply attending the meeting without voting, however, will not
revoke your proxy. If you have instructed a broker to vote your shares, you
must follow directions you will receive from your broker to change or
revoke your proxy.
Q: Should I send in my stock certificates?
A: No. You should not send in your stock certificates at this time.
AmSouth stockholders will not exchange their certificates in the merger. The
certificates currently representing the shares of AmSouth common stock will
represent an equal number of shares of AmSouth common stock after the merger.
First American stockholders will exchange their First American common stock
certificates for AmSouth common stock certificates after we complete the
merger. Instructions for exchanging First American common stock certificates
will be sent to you promptly after the merger is completed.
Q: Whom should stockholders call with questions?
A: AmSouth stockholders should call M. List Underwood, Jr., Director of the
AmSouth Investor Relations Department, at (205) 801-0265 with any questions
about the merger and the related transactions.
First American stockholders should call Carroll E. Kimball, Director of
Investor Relations for First American, at (615) 736-6267.
<PAGE>
SUMMARY
This brief summary highlights selected information from this document. It
does not contain all of the information that is important to you. We urge you
to read the entire document carefully and the other documents to which we refer
to fully understand the merger and the related proposals. See "Where You Can
Find More Information" on page 89. Each item in this summary refers to the page
where that subject is discussed in more detail.
The Merger Consideration Will Be 1.871 Shares of AmSouth Common Stock (see page
19)
When the merger is complete, each share of First American common stock will be
converted into 1.871 shares of AmSouth common stock.
For example, if you hold 1,000 shares of First American common stock, you will
receive 1,871 shares of AmSouth common stock.
Share Information and Market Prices (see pages 19 and 77)
AmSouth common stock is traded on the NYSE under the symbol "ASO." First
American common stock is traded on the NYSE under the symbol "FAM." The
following table sets forth the end-of-day sale prices of AmSouth and First
American common stock and the equivalent merger consideration per share of
First American common stock on May 28, 1999, the last trading day before we
announced the merger, and on August 12, 1999, the latest practicable date prior
to the mailing of this document.
<TABLE>
<CAPTION>
Value of
Merger
Considera-
tion
Per Share
First of First
AmSouth American American
Common Common Common
Stock Stock Stock
------- -------- ----------
<S> <C> <C> <C>
May 28, 1999........................................ $28.38 $40.81 $53.09
August 12, 1999..................................... $21.75 $39.75 $40.69
</TABLE>
The market prices of both AmSouth and First American common stock will
fluctuate prior to the merger. You should obtain current market quotations for
AmSouth common stock and First American common stock.
Generally, Tax-Free Transaction for First American Stockholders (see page 54)
Neither of us is required to complete the merger unless we receive legal
opinions that the merger will be treated as a "reorganization" for federal
income tax purposes.
First American and AmSouth have received tax opinions from their counsel to the
effect that (based on certain facts, representations and assumptions) the
merger will be treated as a "reorganization" for federal income tax purposes.
Therefore, we expect that for United States federal income tax purposes, First
American stockholders generally will not recognize any gain or loss on the
conversion of shares of First American common stock into shares of AmSouth
common stock.
This tax treatment may not apply to certain First American stockholders.
Determining the actual tax consequences of the merger to you may be complex.
They will depend on your specific situation and on factors not within our
control. You should consult your own tax advisor for a full understanding of
the merger's tax consequences to you.
The First American Board of Directors Recommends Stockholder Approval (see page
18)
First American's board of directors believes that the merger is fair to First
American and its stockholders and in their best interests and has unanimously
approved the merger agreement. First American's board of directors recommends
that First American stockholders vote "FOR" approval of the merger agreement.
2
<PAGE>
The AmSouth Board of Directors Recommends Stockholder Approval (see page 16)
AmSouth's board of directors believes that the amendment to AmSouth's
certificate of incorporation to increase the number of shares of AmSouth common
stock authorized for issuance from 350 million to 750 million shares and the
issuance of AmSouth common stock pursuant to the merger agreement are fair to
AmSouth and its stockholders and in their best interests. AmSouth's board of
directors has unanimously approved the merger agreement and the related
amendment of AmSouth's certificate of incorporation and issuance of AmSouth
common stock. We cannot proceed with the merger unless the increase in
authorized common stock is approved. AmSouth's board of directors recommends
that AmSouth stockholders vote "FOR" approval of the amendment of AmSouth's
certificate of incorporation and the issuance of AmSouth common stock.
Investment Bank Says the Merger Consideration Is Fair to First American
Stockholders (see page 32)
Merrill Lynch, Pierce, Fenner & Smith Incorporated has served as financial
advisor to First American in connection with the merger and has given an
opinion to First American's board of directors that, as of May 31, 1999 (the
date of First American's board of directors vote on the merger) and updated as
of the date of this document, the consideration AmSouth will pay for the First
American common stock is fair to First American stockholders from a financial
point of view. A copy of the opinion delivered by Merrill Lynch is attached to
this document as Appendix D. First American stockholders should read the
opinion completely to understand the assumptions made, matters considered and
limitations of the review undertaken by Merrill Lynch in providing this
opinion. First American has agreed to pay $28.22 million to Merrill Lynch, of
which $20.47 million is payable upon the closing of the merger.
Investment Bank Says the Merger Consideration Is Fair to AmSouth and Its
Stockholders (see page 24)
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") has served as
financial advisor to AmSouth in the merger and has given an opinion to
AmSouth's board of directors that, as of May 31, 1999 (the date of AmSouth's
board of directors vote on the merger) and updated as of the date of this
document, the exchange ratio of 1.871 shares of AmSouth common stock for each
share of First American common stock is fair to AmSouth and its stockholders
from a financial point of view. A copy of the opinion delivered by DLJ is
attached to this document as Appendix E. AmSouth stockholders should read the
opinion completely to understand the assumptions made, matters considered and
limitations of the review undertaken by DLJ in providing this opinion.
DLJ will receive total fees of approximately $17 million for its services as
financial advisor to AmSouth in connection with the merger, of which $13
million is payable upon the closing of the merger.
First American to Hold Meeting on September 16, 1999 (see page 16)
The special meeting of First American stockholders will be held at 2:30 p.m.,
local time, on September 16, 1999, at the fifth-floor auditorium of the First
American Center in the City of Nashville, Tennessee. First American
stockholders will be asked to vote to approve the merger agreement that
provides for the merger of First American into AmSouth.
You can vote at the special meeting if you owned First American common stock at
the close of business on August 12, 1999. As of that date, there were
116,042,294 shares of First American common stock entitled to be voted at the
special meeting. Approval of the merger agreement requires that a majority of
the outstanding shares of First American common stock be voted in favor of the
merger.
AmSouth to Hold Meeting on September 16, 1999 (see page 14)
The special meeting of AmSouth stockholders will be held at 2:00 p.m., local
time, on September 16, 1999, at the auditorium of AmSouth Bank in the upper
lobby of the AmSouth-Harbert Plaza, 1901 Sixth Avenue North, Birmingham,
Alabama. AmSouth stockholders will be asked to vote to
3
<PAGE>
amend the AmSouth certificate of incorporation to increase the number of
authorized shares of AmSouth common stock from 350 million to 750 million
shares and to approve the issuance of AmSouth common stock pursuant to the
merger agreement.
You can vote at the special meeting if you owned AmSouth common stock at the
close of business on August 12, 1999. As of that date, there were 176,426,443
shares of AmSouth common stock entitled to be voted at the special meeting.
Approval of the amendment to the AmSouth certificate of incorporation requires
that a majority of the outstanding shares of AmSouth common stock vote in favor
of the amendment. Approval of the issuance of AmSouth common stock requires the
approval of a majority of the votes cast at the meeting to be in favor of the
issuance. However, since AmSouth cannot complete the merger without the
increase in its authorized shares, the affirmative vote of a majority of
outstanding shares of AmSouth common stock is needed to carry out the merger.
No Appraisal Rights (see page 70)
Neither AmSouth stockholders nor First American stockholders have dissenters'
appraisal rights in connection with the merger.
Information Regarding AmSouth and First American
AmSouth Bancorporation
P.O. Box 11007
Birmingham, Alabama 35288
AmSouth is a bank holding company organized in 1970 as a corporation under the
laws of Delaware and that started doing business in 1972. On June 30, 1999,
AmSouth had total consolidated assets of approximately $20.6 billion, total
deposits of approximately $13.1 billion, stockholders' equity of approximately
$1.4 billion and net income of approximately $145 million for the first six
months of 1999. AmSouth offers a broad range of bank and bank-related services
through its subsidiaries. AmSouth's principal subsidiary is AmSouth Bank, which
constitutes nearly all of the assets of AmSouth. As of June 30, 1999, on the
basis of assets, AmSouth estimates that it ranked as the 38th largest bank
holding company in the United States and the 10th largest bank holding company
headquartered in the Southeast.
AmSouth Bank is a banking corporation organized under the laws of the State of
Alabama and a wholly owned subsidiary of AmSouth. AmSouth Bank has branch
offices in Alabama, Florida, Tennessee and Georgia. As of June 30, 1999,
AmSouth Bank had total consolidated assets of approximately $20.5 billion,
total consolidated deposits of approximately $13.2 billion, stockholders'
equity of approximately $1.7 billion and net income of approximately $153
million for the six months ended June 30, 1999.
First American Corporation
First American Center
Nashville, Tennessee 37237-0700
First American Corporation, a Tennessee corporation, was incorporated in 1968.
First American is a bank holding company and a savings and loan holding
company. Through its banking and thrift subsidiaries, First American operates
in Tennessee, Mississippi, Louisiana, Kentucky, Virginia, Arkansas and Georgia.
First American's principal subsidiary is First American National Bank, a
national bank headquartered in Nashville, Tennessee (which operates as Deposit
Guaranty National Bank in Mississippi, Louisiana and Arkansas).
As of and for the six months ended June 30, 1999, First American had total
consolidated assets of approximately $21.5 billion, total deposits of
approximately $14.5 billion, stockholders' equity of approximately $1.8
billion, and net income of approximately $124 million. As of June 30, 1999,
First American National Bank had total assets of approximately $21 billion,
total deposits of approximately $14.4 billion, stockholders' equity of
approximately $1.9 billion, and net income of approximately $127 million for
the first six months of 1999. As of June 30, 1999, on the basis of assets,
First American estimates that it ranked as the 36th largest bank holding
company in the United States and the 9th largest bank holding company
headquartered in the Southeast.
4
<PAGE>
The Merger
The merger agreement is attached as Appendix A to this document. You should
read the merger agreement because it is the legal document that governs the
merger.
We propose a merger through which AmSouth will acquire First American. As a
result of this merger, First American will become a subsidiary of AmSouth and
First American's stockholders will become stockholders of AmSouth. The 12
directors of AmSouth before the merger will continue to serve as the directors
of AmSouth after the merger, together with five new directors designated by
First American, including Dennis C. Bottorff, First American's Chairman,
President and Chief Executive Officer.
AmSouth and First American believe that both companies' stockholders will
benefit from the merger because of the synergies and growth opportunities we
believe will result from combining the two companies. For a more detailed
discussion of the reasons for the merger, see pages 21 through 24.
Pooling of Interests Accounting Treatment (see page 51)
AmSouth will account for the merger as a pooling of interests for financial
reporting purposes. This means that, for accounting and financial reporting
purposes, we will treat AmSouth as if it had always been combined with First
American. Our companies' obligations to complete the merger depend on
receiving a letter from each of our independent accountants that the merger
qualifies as a pooling of interests for financial reporting purposes.
Financial Interests of Our Managements and Boards of Directors in the Merger
(see page 40)
In addition to their interests as stockholders, the directors and executive
officers of First American and AmSouth each have interests in the merger that
are different from your interests, including:
. AmSouth has entered into employment or letter agreements with some
executive officers of First American that will become effective if we
complete the merger.
. Some officers of AmSouth and First American are parties to severance
agreements with AmSouth and First American pursuant to which each will
receive severance payments if his or her employment terminates under
specified circumstances following the merger.
. We cannot determine at this time the exact amounts that may become payable
to the AmSouth executive officers. The maximum aggregate amount of these
cash severance payments to the AmSouth executive officers would be
approximately $9,675,000. However, AmSouth does not expect to make any
severance payments to the AmSouth executive officers.
. We cannot determine at this time the exact amounts that may become payable
to the five First American executive officers. However, assuming that we
complete the merger in 1999 and that each of the officers is entitled to
receive the cash severance payments under the existing severance
agreements, and, in the case of Mr. Bottorff, under his new employment
agreement, the aggregate amount of these cash severance payments would be
approximately $16,611,325 ($4,698,463 of which is pursuant to Mr.
Robinson's Employment Agreement entered into in connection with the
Deposit Guarantee transaction).
. Following the merger, AmSouth will indemnify and provide liability
insurance to the officers and directors of First American.
. Executive officers and directors of AmSouth and First American have rights
pursuant to the terms of benefit and compensation plans maintained by
AmSouth and First American that provide for stock-based awards to be
exercisable or distributable on an accelerated basis, and cash incentive
awards to be made earlier than they would have, as a result of the merger.
The approximate aggregate number of First American options that will vest
is 848,420. The approximate aggregate number of AmSouth and First American
restricted shares that will become freely transferable is 511,300 and
405,144, respectively. The approximate aggregate amount of AmSouth cash
incentive awards is $5,811,000.
5
<PAGE>
AmSouth's and First American's board of directors each was aware of these
interests and took them into account in their decision to approve the merger
agreement.
The Merger Agreement
Merger Expected to Occur in Fourth Quarter of 1999 (see page 46)
The merger will occur shortly after all of the conditions to its completion
have been satisfied or waived. Currently, we anticipate that the merger will
occur in the fourth quarter of 1999.
Conditions That Must be Satisfied for the Merger to Occur (see page 47)
Completion of the merger is subject to various conditions, including:
. approval of the merger agreement by First American's stockholders;
. approval of the amendment to the AmSouth certificate of incorporation and
of the issuance of AmSouth common stock in the merger by AmSouth's
stockholders; and
. receipt of governmental and other consents and approvals that are
necessary to permit completion of the merger.
Certain of the other conditions to the merger may be waived by AmSouth or First
American, as applicable.
Termination of the Merger Agreement (see page 57)
AmSouth and First American can agree together to abandon the merger (and
terminate the merger agreement) at any time prior to the time the merger is
completed, even after stockholder approval. Also, either First American or
AmSouth can decide, without the consent of the other, to abandon the merger if
any of the following occurs:
. The other party materially breaches a provision contained in the merger
agreement and does not (or cannot) correct the breach within 30 days.
. The merger has not been completed by February 15, 2000.
. Any regulatory authority denies an approval we need to complete the merger
or issues an order preventing the merger.
Regulatory Approvals We Must Obtain for the Merger (see page 55)
We cannot complete the merger unless it is approved by the Board of Governors
of the Federal Reserve System. We have filed applications with the Federal
Reserve Board seeking its approval. In addition, the merger is subject to the
approval of or notice to certain state and other regulatory authorities. We
have made the necessary filings with these other regulatory authorities.
Although we do not know of any reason why we cannot obtain these regulatory
approvals in a timely manner, we cannot be certain that we will obtain them, or
when we will obtain them.
AmSouth Will Be Required to Pay First American $225 Million Under Certain
Circumstances if the Merger Is Not Completed (see page 58)
In connection with the merger agreement, AmSouth granted to First American an
option to purchase shares of AmSouth common stock. Under this option, First
American may purchase up to 19.9% of the outstanding shares of AmSouth common
stock at a price per share of $28.5983. AmSouth may in certain cases be
required to repurchase this option (and/or any shares purchased under this
option) at a predetermined price. Instead of purchasing the shares, First
American may choose to surrender this option to AmSouth for a cash payment of
$225 million.
First American cannot exercise this option unless certain events occur within a
specified time period. These events can generally be described as business
combinations or acquisition transactions relating to AmSouth and certain
related events (other than the merger we are proposing in this document). We do
not know of any event that has occurred as of the date of this document that
would allow First American to exercise this option.
AmSouth agreed to grant this option to First American in order to induce First
American to enter into the merger agreement. This option could have
6
<PAGE>
the effect of discouraging other companies from trying to acquire AmSouth until
the merger is completed.
This option agreement is attached to this document as Appendix B.
First American Will Be Required to Pay AmSouth $225 Million Under Certain
Circumstances if the Merger Is Not Completed (see page 58)
In connection with the merger agreement, First American granted to AmSouth an
option to purchase shares of First American common stock. Under this option,
AmSouth may purchase up to 19.9% of the outstanding shares of First American
common stock at a price per share of $40.1625. First American may in certain
cases be required to repurchase this option (and/or any shares purchased under
this option) at a predetermined price. Instead of purchasing the shares,
AmSouth may choose to surrender this option to First American for a cash
payment of $225 million.
AmSouth cannot exercise this option unless certain events occur within a
specified time period. These events can generally be described as business
combinations or acquisition transactions relating to First American and certain
related events (other than the merger we are proposing in this document). We do
not know of any event that has occurred as of the date of this document that
would allow AmSouth to exercise this option.
First American agreed to grant this option to AmSouth in order to induce
AmSouth to enter into the merger agreement. This option could have the effect
of discouraging other companies from trying to acquire First American.
This option agreement is attached to this document as Appendix C.
The Increase in AmSouth's Authorized Shares of Common Stock Is Necessary to
Complete the Merger (see page 19)
In connection with the merger, AmSouth proposes an amendment to its certificate
of incorporation that provides for the increase in AmSouth common stock
authorized for issuance from 350 million to 750 million shares. This amendment
is necessary for us to carry out the merger. If the merger is not completed,
the proposed increase in AmSouth common stock authorized for issuance will not
be adopted.
7
<PAGE>
Selected Unaudited Historical and Pro Forma Combined Financial Information
The following table shows information about AmSouth's and First American's
basic and diluted earnings per common share, cash dividends per common share,
book value per common share, and similar information after giving effect to the
merger (which is called "pro forma" information). In presenting the pro forma
information for certain time periods, we have assumed that AmSouth and First
American merged on January 1, 1996. The pro forma information assumes that the
merger is accounted for under the pooling of interests method of accounting in
accordance with generally accepted accounting principles (commonly called
"GAAP").
We expect that we will incur merger and integration and other nonrecurring
merger related charges. We also anticipate that the merger will provide the new
company with financial benefits that include reduced operating expense and the
opportunity to earn more revenue. The pro forma information, while helpful in
illustrating the financial characteristics of the combined company under one
set of assumptions, does not reflect these expenses or benefits and,
accordingly, does not attempt to predict or suggest future results. It also
does not necessarily reflect what the historical results of the combined
company would have been had our companies been combined.
The information in the following table should be read together with the
historical financial information that we have presented in our prior filings
with the Securities and Exchange Commission (the "SEC"). We have incorporated
this material into this document by reference to those other filings. See
"Where You Can Find More Information" on page 89.
<TABLE>
<CAPTION>
As of or for
As of or for the the Year Ended
Six Months December 31,
Ended June 30, -----------------
1999 1998 1997 1996
---------------- ----- ----- -----
<S> <C> <C> <C> <C>
AMSOUTH(1)
Basic earnings per common share:
Historical................................. $0.82 $1.47 $1.23 $0.96
Pro forma.................................. 0.68 1.22 1.20 1.00
Diluted earnings per common share:
Historical................................. 0.81 1.44 1.21 0.95
Pro forma.................................. 0.67 1.20 1.18 0.98
Cash dividends declared per common share:
Historical................................. 0.34 0.57 0.51 0.48
Pro forma(2)............................... 0.34 0.57 0.51 0.48
Book value per common share:
Historical................................. 8.08 8.05
Pro forma(3)............................... 7.64 8.12
FIRST AMERICAN(4)
Basic earnings per common share:
Historical................................. $1.07 $1.88 $2.19 $1.93
Equivalent pro forma....................... 1.27 2.28 2.25 1.87
Diluted earnings per common share:
Historical................................. 1.06 1.84 2.15 1.91
Equivalent pro forma....................... 1.25 2.25 2.21 1.83
Cash dividends declared per common share:
Historical................................. 0.53 0.95 0.76 0.61
Equivalent pro forma....................... 0.64 1.07 0.95 0.90
Book value per common share:
Historical................................. 15.12 15.30
Equivalent pro forma....................... 14.29 15.19
</TABLE>
8
<PAGE>
- --------
(1) Gives effect to all stock splits, including AmSouth's three-for-two stock
split effected on May 24, 1999.
(2) Pro forma cash dividends per share represent historical dividends per share
paid by AmSouth.
(3) Pro forma book value per common share at June 30, 1999 is based on pro
forma stockholders' equity of $3,017 million and pro forma shares
outstanding of 394.9 million shares. Pro forma book values per common share
include the effect of estimated nonrecurring pre-tax merger related charges
of approximately $296 million ($205 million net of taxes).
(4) The equivalent pro forma amounts are computed by multiplying the related
pro forma amounts for AmSouth by a factor of 1.871 to reflect the exchange
ratio in the merger.
9
<PAGE>
Selected Consolidated Historical Financial Data of AmSouth
The following table presents selected consolidated historical financial data
of AmSouth derived from AmSouth's previously filed financial statements. The
interim financial information has been derived from unaudited financial
statements of AmSouth. AmSouth believes that these financial statements include
all adjustments of a normal, recurring nature and all disclosures that are
necessary for a fair statement of the results for the unaudited interim
periods. Results for the interim periods do not necessarily indicate results
which may be expected for any other interim or annual period.
The information in the following table should be read together with the
historical financial information that AmSouth has presented in its prior
filings with the SEC. AmSouth has incorporated this material into this document
by reference to those other filings. See "Where You Can Find More Information"
on page 89.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
----------------- ---------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- ------- ------- ------- ------- -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income......... $ 722 $ 724 $ 1,463 $ 1,378 $ 1,354 $ 1,273 $ 1,048
Interest expense........ 352 378 764 702 702 679 481
-------- -------- ------- ------- ------- ------- -------
Net interest income..... 370 346 699 676 652 594 567
Provision for loan loss-
es..................... 17 38 58 67 65 40 30
Noninterest revenues.... 177 184 347 266 235 231 175
Noninterest expenses.... 306 295 582 526 534 510 519
-------- -------- ------- ------- ------- ------- -------
Income before income
taxes.................. 224 197 406 349 288 275 193
Income taxes............ 79 70 143 123 105 100 66
-------- -------- ------- ------- ------- ------- -------
Net income.............. $ 145 $ 127 $ 263 $ 226 $ 183 $ 175 $ 127
======== ======== ======= ======= ======= ======= =======
PER COMMON SHARE DATA
Net income:
Basic earnings........ $ 0.82 $ 0.71 $ 1.47 $ 1.23 $ 0.96 $ 0.89 $ 0.67
Diluted earnings...... 0.81 0.70 1.44 1.21 0.95 0.88 0.66
Dividends declared...... 0.34 0.27 0.57 0.51 0.48 0.46 0.42
BALANCE SHEET DATA
At period end:
Assets................ $ 20,592 $ 19,982 $19,902 $18,622 $18,407 $17,739 $16,778
Long-term debt........ 3,714 3,146 3,240 1,633 1,436 441 379
Stockholders' equity.. 1,424 1,421 1,428 1,385 1,396 1,383 1,310
</TABLE>
10
<PAGE>
Selected Consolidated Historical Financial Data of First American
The following table presents selected consolidated historical financial data
of First American derived from First American's previously filed financial
statements. The interim financial information has been derived from unaudited
financial statements of First American. First American believes that these
financial statements include all adjustments of a normal, recurring nature and
all disclosures that are necessary for a fair statement of the results for the
unaudited interim periods. Results for the interim periods do not necessarily
indicate results which may be expected for any other interim or annual period.
The information in the following table should be read together with the
historical financial information that First American has presented in its prior
filings with the SEC. First American has incorporated this material into this
document by reference to those other filings. See "Where You Can Find More
Information" on page 89.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
----------------- ---------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- ------- ------- ------- ------- -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income......... $ 683 $ 674 $ 1,368 $ 1,299 $ 1,190 $ 1,069 $ 853
Interest expense........ 310 311 634 600 566 504 350
-------- -------- ------- ------- ------- ------- -------
Net interest income..... 373 363 734 699 624 565 503
Provision for loan loss-
es..................... 20 13 41 16 6 3 (13)
Noninterest revenues.... 242 234 477 406 312 210 188
Noninterest expenses.... 402 444 837 699 598 487 439
-------- -------- ------- ------- ------- ------- -------
Income before income
taxes.................. 193 140 333 390 332 285 265
Income taxes............ 69 54 122 142 118 103 93
-------- -------- ------- ------- ------- ------- -------
Net income.............. $ 124 $ 86 $ 211 $ 248 $ 214 $ 182 $ 172
======== ======== ======= ======= ======= ======= =======
PER COMMON SHARE DATA
Net income:
Basic earnings........ $ 1.07 $ 0.77 $ 1.88 $ 2.19 $ 1.93 $ 1.70 $ 1.64
Diluted earnings...... 1.06 0.76 1.84 2.15 1.91 1.67 1.62
Dividends declared...... 0.53 0.45 0.95 0.76 0.61 0.53 0.44
BALANCE SHEET DATA
At period end:
Assets................ $ 21,529 $ 20,064 $20,732 $18,791 $17,673 $16,527 $14,112
Long-term debt........ 1,787 610 1,153 614 441 422 271
Stockholders' equity.. 1,768 1,660 1,780 1,644 1,544 1,422 1,189
</TABLE>
11
<PAGE>
Selected Unaudited Pro Forma Financial Data of AmSouth and First American
The following unaudited selected pro forma financial data combine AmSouth's
historical results with First American's historical results, as of or for the
six months ended June 30, 1999 and 1998 and as of or for the years ended
December 31, 1998, 1997, and 1996 giving effect to the merger as if it had
occurred on January 1, 1996. The table assumes that the merger is accounted for
under the pooling of interests method of accounting in accordance with GAAP.
The information in the following table should be read together with the
historical financial information that AmSouth and First American have presented
in their prior filings with the SEC. See "Where You Can Find More Information"
on page 89.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
----------------- -----------------------
1999 1998 1998 1997 1996
-------- -------- ------- ------- -------
(In millions, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income...................... $ 1,405 $ 1,398 $ 2,831 $ 2,677 $ 2,544
Interest expense..................... 662 689 1,398 1,302 1,268
-------- -------- ------- ------- -------
Net interest income.................. 743 709 1,433 1,375 1,276
Provision for loan losses............ 37 51 99 83 71
Noninterest revenues................. 419 418 824 672 547
Noninterest expenses................. 708 739 1,419 1,225 1,132
-------- -------- ------- ------- -------
Income before income taxes........... 417 337 739 739 620
Income taxes......................... 148 124 265 265 223
-------- -------- ------- ------- -------
Net income........................... $ 269 $ 213 $ 474 $ 474 $ 397
======== ======== ======= ======= =======
PER COMMON SHARE DATA:
Net income:
Basic earnings..................... $ 0.68 $ 0.55 $ 1.22 $ 1.20 $ 1.00
Diluted earnings................... 0.67 0.54 1.20 1.18 0.98
Dividends declared(1)................ 0.34 0.27 0.57 0.51 0.48
BALANCE SHEET DATA:
At period end:
Assets............................. $ 42,104 $ 40,046 $40,634 $37,413 $36,080
Long-term debt..................... 5,501 3,756 4,393 2,247 1,877
Stockholders' equity(2)............ 3,017 3,081 3,208 3,029 2,940
</TABLE>
- --------
(1) Represents historical cash dividends per share paid by AmSouth.
(2) Pro forma stockholders' equity at June 30, 1999 includes the effect of
estimated pre-tax merger and integration and other nonrecurring merger
related charges of $296 million ($205 million net of income taxes).
12
<PAGE>
Where You Can Find More Information
This document incorporates important business and financial information
about AmSouth and First American from documents that are not included in or
delivered with this document. You can obtain documents incorporated by
reference in this document (other than certain exhibits to those documents) by
requesting them in writing or by telephone from the appropriate company at the
following addresses:
AmSouth Bancorporation
First American Corporation
M. List Underwood, Jr. Carroll E. Kimball
Investor Relations Department Director of Investor Relations
P.O. Box 11007 First American Center
Birmingham, Alabama 35288 Nashville, Tennessee 37237-0700
Phone: (205) 801-0265 Phone: (615) 736-6267
You will not be charged for any of these documents that you request. If you
would like to request documents, please do so by September 9, 1999 in order to
receive them before the special meeting.
See "Where You Can Find More Information" on page 89.
13
<PAGE>
AMSOUTH SPECIAL MEETING
This section contains information from AmSouth for AmSouth stockholders
about the stockholders meeting AmSouth has called to consider and approve
actions related to the merger.
We are mailing this document to you as an AmSouth stockholder, on or about
August 18, 1999. Together with this document, we are also sending to you a
notice of the AmSouth special meeting and a form of proxy that is solicited by
the board of directors of AmSouth for use at the AmSouth special meeting. The
special meeting will be held on September 16, 1999, at 2:00 p.m., local time,
at the auditorium of AmSouth Bank in the upper lobby of the AmSouth-Harbert
Plaza, 1901 Sixth Avenue North, Birmingham, Alabama 35203.
Matters to Be Considered
The purpose of the AmSouth special meeting is:
. to amend the AmSouth certificate of incorporation to increase the
authorized shares of AmSouth common stock from 350 million to 750
million shares; and
. to approve the issuance of shares of AmSouth common stock according to
the terms of the merger agreement.
You may also be asked to vote on a proposal to adjourn or postpone the
special meeting. We could use any adjournment or postponement for the purpose,
among others, of allowing additional time to solicit additional votes.
Proxies
You should use the proxy form accompanying this document if you are unable
or do not wish to attend the special meeting in person. You can revoke your
proxy at any time before the vote is taken at the special meeting by submitting
written notice of revocation or a properly submitted proxy of a later date, or
by attending the special meeting and voting in person. Written notices of
revocation and other communications about revoking your proxy should be
addressed to:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Ralph Chianese
All shares represented by valid proxies we receive through this
solicitation, and not revoked before they are exercised, will be voted in the
manner specified in this paragraph. If you make no specification on your
returned proxy card, your proxy will be voted in favor of the matters to be
voted upon at the AmSouth special meeting, including adoption of the amendment
to the AmSouth certificate of incorporation and approval of the issuance of
AmSouth common shares pursuant to the merger agreement. The AmSouth board of
directors is unaware of any other matters that may be presented for action at
the AmSouth special meeting. If other matters do properly come before the
special meeting, we intend that shares represented by properly submitted
proxies will be voted, or not voted, by and at the discretion of the persons
named as proxies on the proxy card. However, proxies that indicate a vote
against approval of the amendment to the AmSouth certificate of incorporation
and the issuance of AmSouth common shares will not be voted in favor of
adjourning or postponing the special meeting to solicit additional proxies.
Solicitation of Proxies
AmSouth will bear the entire cost of soliciting proxies from you, except
that First American and AmSouth have each agreed to each pay one-half of the
costs and expenses of printing and mailing this document and all filing and
other fees relating to the merger paid to the SEC. In addition to solicitation
of proxies by mail,
14
<PAGE>
AmSouth will request banks, brokers and other record holders to send proxies
and proxy material to the beneficial owners of AmSouth common stock and secure
their voting instructions, if necessary. AmSouth will reimburse the record
holders for their reasonable expenses in taking those actions. AmSouth has also
made arrangements with Morrow & Co., Inc. to assist it in soliciting proxies
from banks, brokers and nominees, and has agreed to pay $8,000 plus expenses
for these services. If necessary, AmSouth may also use several of its regular
employees, who will not be specially compensated, to solicit proxies from
stockholders, either personally or by telephone, telegram, facsimile, letter or
special delivery letter.
Record Date and Voting Rights
In accordance with Delaware law, AmSouth's by-laws and the rules of the
NYSE, August 12, 1999 has been fixed as the record date for determining the
AmSouth stockholders entitled to notice of and to vote at the special meeting.
Accordingly, you are only entitled to notice of, and to vote at, the special
meeting if you were a record holder of AmSouth common stock at the close of
business on the record date. At that time, shares of AmSouth common stock
were outstanding, held by approximately holders of record. To have a quorum
that permits us to conduct business at the special meeting, we require the
presence, whether in person or through the prior submission of a proxy, of the
holders of AmSouth common stock representing a majority of the shares
outstanding and entitled to vote on the record date. You are entitled to one
vote for each outstanding share of AmSouth common stock you held as of the
close of business on the record date.
Shares of AmSouth common stock present in person at the special meeting but
not voting, and shares of AmSouth common stock for which AmSouth has received
proxies indicating that their holders have abstained, will be counted as
present at the special meeting for purposes of determining the presence or
absence of a quorum for the transaction of business. Shares held in street name
that have been designated by brokers on proxy cards as not voted will not be
counted as votes cast for or against any proposal. These broker non-votes will,
however, be counted for purposes of determining whether a quorum exists.
The adoption of the amendment to the AmSouth certificate of incorporation
requires the affirmative vote of the holders of a majority of the outstanding
shares of AmSouth common stock entitled to vote at the AmSouth special meeting.
Under the rules of the NYSE and the AmSouth certificate of incorporation,
approval of the issuance of AmSouth common stock in the merger requires the
affirmative vote of a majority of the votes cast at the AmSouth special
meeting, provided that at least 50% of the shares entitled to vote are
represented at the AmSouth special meeting in person or by proxy. Presently,
because there are not enough shares of common stock authorized in our
certificate of incorporation to complete the merger, your adoption of this
amendment is necessary for us to carry out the transactions contemplated in the
merger agreement. Therefore, the affirmative vote of the holders of a majority
of the outstanding shares of AmSouth common stock is needed for us to proceed
with the merger.
Because the affirmative vote of the holders of a majority of the outstanding
shares of AmSouth common stock entitled to vote at the AmSouth special meeting
is needed for us to proceed with the merger, abstentions and broker non-votes
will have the same effect as votes against the merger. Accordingly, the AmSouth
board of directors urges AmSouth stockholders to complete, date and sign the
accompanying proxy and return it promptly in the enclosed, postage-paid
envelope.
As of the record date:
. Directors and executive officers of AmSouth beneficially owned
approximately 2,337,394 shares of AmSouth common stock, entitling them
to exercise approximately 1.3% of the voting power of the AmSouth common
stock entitled to vote at the special meeting. We currently expect that
each of our directors and executive officers will vote the shares of
AmSouth common stock he or she beneficially owns "FOR" approval of the
actions related to the merger.
. Directors and executive officers of First American beneficially owned
approximately 14,310 shares of AmSouth common stock, or 0.008% of the
voting power of the AmSouth common stock entitled to vote at the special
meeting.
15
<PAGE>
. First American beneficially owned 0 shares of AmSouth common stock, or
0% of the voting power of the AmSouth common stock entitled to vote at
the special meeting.
. The banking, trust and investment management subsidiaries of AmSouth, as
fiduciaries, custodians or agents, held a total of approximately
14,565,527 shares of AmSouth common stock, representing approximately
8.3% of the shares entitled to vote at the special meeting, and
maintained sole or shared voting power with respect to 8,769,169 of
these shares.
. The banking, trust and investment management subsidiaries of First
American, as fiduciaries, custodians or agents, held a total of 127,579
shares of AmSouth common stock, representing 0.07% of the shares
entitled to vote at the special meeting, and maintained sole or shared
voting power over 110,506 of these shares.
You can find additional information about the beneficial ownership of
AmSouth common stock by persons and entities owning more than 5% of the stock,
and more detailed information about the beneficial ownership of AmSouth common
stock by our directors and executive officers, in the definitive proxy
statement we filed with the SEC and sent to our stockholders in connection with
our 1999 Annual Meeting of Stockholders. See "Where You Can Find More
Information" for instructions on how you can obtain this document.
Recommendation of the AmSouth Board of Directors
The AmSouth board of directors has unanimously approved the merger agreement
and related transactions, including the amendment to the AmSouth certificate of
incorporation and the issuance of additional AmSouth common stock. The AmSouth
board of directors believes that the merger agreement and related transactions
are advisable and are in the best interests of AmSouth and the AmSouth
stockholders and recommends that the AmSouth stockholders vote "FOR" the
approval of the actions related to the merger.
FIRST AMERICAN SPECIAL MEETING
This section contains information from First American for First American
stockholders about the stockholders meeting First American has called to
consider and approve the merger agreement.
We are mailing this document to you, as a First American stockholder, on or
about August 18, 1999. Together with this document, we are also sending to you
a notice of the First American special meeting and a form of proxy that our
board is soliciting for use at the special meeting. The special meeting will be
held on Thursday, September 16, 1999 at 2:30 p.m., local time.
Matters to Be Considered
The purpose of the special meeting is to vote on the approval of the merger
agreement, dated May 31, 1999, by and among First American, AmSouth and a
subsidiary of AmSouth and the transactions contemplated in that agreement.
These include the merger of First American with a subsidiary of AmSouth, and
any other matters that may properly be submitted to a vote at the special
meeting. You may also be asked to vote upon a proposal to adjourn or postpone
the special meeting. We could use any adjournment or postponement for the
purpose, among others, of allowing more time to solicit votes to approve the
merger agreement.
Proxies
You should use the proxy form accompanying this document if you are unable
or do not wish to attend the special meeting in person. You can revoke your
proxy at any time before the vote is taken at the special meeting by submitting
written notice of revocation or a properly submitted proxy of a later date, or
by
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attending the special meeting and voting in person. Written notices of
revocation and other communications about revoking your proxy should be
addressed to:
First Chicago Trust Company
A Division of EquiServe
P.O. Box 8255
Edison, New Jersey 08818-9188
Attention: Proxy Manager
All shares represented by valid proxies we receive through this
solicitation, and not revoked before they are exercised, will be voted in the
manner specified in this paragraph. If you make no specification on your
returned proxy card, your proxy will be voted in favor of approval of the
merger agreement. The First American board of directors is presently unaware of
any other matters that may be presented for action at the special meeting. If
other matters do properly come before the special meeting, however, we intend
that shares represented by properly submitted proxies will be voted by, and at
the discretion of, the persons named as proxies on the proxy card. However,
proxies that indicate a vote against approval of the merger agreement will not
be voted in favor of adjourning or postponing the special meeting to solicit
additional proxies to approve the merger agreement.
Solicitation of Proxies
First American will bear the entire cost of soliciting proxies from you,
except that First American and AmSouth have agreed to each pay one-half of the
costs and expenses of printing and mailing this document and all filing and
other fees relating to the merger paid to the SEC. In addition to solicitation
of proxies by mail, First American will request banks, brokers and other record
holders to send proxies and proxy material to the beneficial owners of First
American common stock and secure their voting instructions, if necessary. First
American will reimburse these record holders for their reasonable expenses in
taking those actions. First American has also made arrangements with Corporate
Investor Communications, Inc. to help it in soliciting proxies from banks,
brokers and nominees, and has agreed to pay approximately $7,000 plus expenses
for these services. If necessary, First American may also use several of its
regular employees, who will not be specially compensated, to solicit proxies
from stockholders, either personally or by telephone, telegram, facsimile,
letter or special delivery letter.
Record Date and Voting Rights
In accordance with Tennessee law, the First American by-laws and the rules
of the NYSE, August 12, 1999 has been fixed as the record date for determining
the First American stockholders entitled to notice of and to vote at the
special meeting. Accordingly, you are only entitled to notice of, and to vote
at, the special meeting if you were a record holder of First American common
stock at the close of business on the record date. At that time, 116,042,294
shares of First American common stock were outstanding, held by approximately
16,466 holders of record. To have a quorum that permits us to conduct business
at the special meeting, we require the presence, whether in person or through
the prior submission of a proxy, of the holders of First American common stock
representing a majority of the shares outstanding and entitled to vote on the
record date. You are entitled to one vote for each outstanding share of First
American common stock you held as of the close of business on the record date.
Shares of First American common stock present in person at the special
meeting but not voting, and shares of First American common stock for which
First American has received proxies indicating that their holders have
abstained, will be counted as present at the special meeting for purposes of
determining the presence or absence of a quorum for transacting business.
Shares held in street name that have been designated by brokers on proxy cards
as not voted will not be counted as votes cast for or against any proposal.
These broker non-votes will, however, be counted for purposes of determining
whether a quorum exists.
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Under Tennessee law, approval of the merger agreement requires the
affirmative vote of the holders of a majority of the outstanding shares of
First American common stock entitled to vote at the special meeting.
Because approval of the merger agreement requires the affirmative vote of
the holders of a majority of the outstanding shares of First American common
stock entitled to vote at the special meeting, abstentions and broker non-votes
will have the same effect as votes against approval of the merger agreement.
Accordingly, the First American board of directors urges you to complete, date
and sign the accompanying proxy and return it promptly in the enclosed,
postage-paid envelope.
As of the record date:
. Directors and executive officers of First American beneficially owned
approximately 3,982,073 shares of First American common stock, entitling
them to exercise approximately 3.4% of the voting power of the First
American common stock entitled to vote at the special meeting. We
currently expect that each of our directors and executive officers will
vote the shares of First American common stock he or she beneficially
owns "FOR" approval of the merger agreement.
. Directors and executive officers of AmSouth beneficially owned 1,100
shares of First American common stock, or 0.0009% of the voting power of
the First American common stock entitled to vote at the special meeting.
. AmSouth beneficially owned 390,300 shares of First American common
stock, or 0.34% of the voting power of the First American common stock
entitled to vote at the special meeting.
. The banking, trust and investment management subsidiaries of First
American, as fiduciaries, custodians or agents, held a total of
approximately 7,182,421 shares of First American common stock,
representing approximately 0.62% of the shares entitled to vote at the
special meeting, and maintained sole or shared voting power with respect
to 3,514,374 of these shares.
. The banking, trust and investment management subsidiaries of AmSouth, as
fiduciaries, custodians or agents, held a total of 47,211 shares of
First American common stock, representing 0.039% of the shares entitled
to vote at the special meeting, and maintained sole or shared voting
power over 42,036 of these shares.
You can find additional information about beneficial ownership of First
American common stock by persons and entities owning more than 5% of the stock,
and more detailed information about beneficial ownership of First American
common stock by our directors and executive officers, in the definitive proxy
statement we filed with the SEC and sent to our stockholders in connection with
our 1999 Annual Meeting of Stockholders. See "Where You Can Find More
Information" for instructions on how you can obtain this document.
Recommendation of the First American Board of Directors
The First American board of directors has unanimously approved the merger
agreement and the transactions it contemplates, including the merger. The First
American board of directors believes that the merger agreement and the
transactions it contemplates, including the merger, are fair to, and are in the
best interests of, First American and its stockholders and recommends that
First American stockholders vote "FOR" the approval of the merger agreement.
See "The Merger--First American's Reasons for the Merger; Recommendation of
the First American Board of Directors" for a more detailed discussion of the
First American board of director's recommendation.
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THE MERGER
The discussion in this document of the merger of a newly formed and wholly
owned subsidiary of AmSouth ("Merger Sub") into First American, with First
American being the surviving corporation and becoming a subsidiary of AmSouth,
as well as a discussion of:
. the Agreement and Plan of Merger, dated as of May 31, 1999, among
AmSouth, First American and Merger Sub,
. the Stock Option Agreement, dated as of June 1, 1999, between AmSouth,
as Issuer, and First American, as Grantee (the "AmSouth stock option
agreement"), and
. the Stock Option Agreement, dated as of June 1, 1999, between First
American, as Issuer, and AmSouth, as Grantee (the "First American stock
option agreement")
does not purport to be complete and is qualified by reference to the full text
of the merger agreement, the AmSouth stock option agreement and the First
American stock option agreement, each of which is incorporated herein by
reference. Copies of the merger agreement, the AmSouth stock option agreement
and the First American stock option agreement can be found in Appendices A, B
and C to this document.
General
The merger agreement provides for the acquisition of First American by
AmSouth in a transaction in which AmSouth's newly formed subsidiary, Merger
Sub, will merge into First American. First American will be the surviving
corporation of the merger and will become a wholly owned subsidiary of AmSouth.
At the effective time of the merger (as defined below), each outstanding share
of First American common stock will be canceled and will be converted into
1.871 (the "exchange ratio") shares of AmSouth common stock.
If, prior to the effective time of the merger, the number of, or kind of,
issued and outstanding shares of AmSouth common stock is changed as a result of
a reorganization, recapitalization, reclassification, stock dividend, stock
split, or other similar transaction concerning the outstanding AmSouth common
stock and the record date for the purpose of the transaction is prior to the
effective time of the merger, then a proportionate adjustment will be made to
the exchange ratio.
The merger will become effective when both a certificate of merger has been
duly filed with the Secretary of State of Delaware and articles of merger have
been duly filed with the Secretary of State of Tennessee, or at any different
date or time that AmSouth and First American agree to and specify in those
documents.
The transaction is intended to qualify as both (1) a "pooling of interests"
for accounting and financial reporting purposes and, (2) a tax-free
"reorganization" for federal income tax purposes.
Based on the closing price per share of AmSouth common stock on the NYSE on
May 28, 1999, the last trading day prior to public announcement of the merger,
of $28.38, and giving effect to the exchange ratio, the implied per share value
of First American common stock in the merger was $53.09 as of that date. The
closing price per share of AmSouth common stock on the NYSE on August 12, 1999,
the last practicable trading day prior to the date of this document, was $21.75
and the implied per share value of First American common stock in the merger
was $40.69 as of that date. The prices of the common stock of both our
companies will fluctuate prior to the special meetings and thereafter, and you
should obtain current quotations of these prices.
As a result of the merger, AmSouth stockholders immediately prior to the
merger initially will own approximately 44%, and First American stockholders
immediately prior to the merger initially will own approximately 56%, of
AmSouth common stock to be outstanding immediately after the merger, based on
the number of shares of AmSouth common stock and First American common stock
outstanding as of August 12, 1999, and on the exchange ratio.
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The Increase in, and Issuance of, AmSouth Common Stock
In connection with the merger, AmSouth's board of directors has recommended
that AmSouth's stockholders:
. vote in favor of the amendment to the AmSouth certificate of
incorporation to increase the authorized number of shares of AmSouth
common stock to 750 million shares from the 350 million shares of common
stock that are currently authorized; and
. vote in favor of the issuance of AmSouth shares of common stock to First
American stockholders pursuant to the terms of the merger agreement.
The adoption of the amendment to the AmSouth certificate of incorporation
requires the affirmative vote of a majority of the outstanding shares of
AmSouth common stock entitled to vote at the AmSouth special meeting. To
authorize the issuance of AmSouth common stock, the holders of the majority of
the votes cast at the AmSouth special meting must vote in favor of the
issuance, provided that at least half of the shares entitled to vote are
represented at the AmSouth special meeting in person or by proxy. The increase
is a condition to the merger and the merger cannot be completed if it is not
authorized. If the AmSouth stockholders authorize the increase in AmSouth
common stock and the other conditions to the merger are met, the certificate of
amendment to effect the increase in AmSouth common stock will be filed with the
Secretary of State of the State of Delaware, and the increase in AmSouth common
stock will be effected prior to the completion of the merger. See "Amendment to
AmSouth Certificate of Incorporation."
Stock Option and Incentive Plans
Each stock option to acquire First American common stock granted under First
American's stock option and incentive plans outstanding and unexercised
immediately prior to the effective time of the merger will be converted
automatically at the effective time into, and will become, a stock option to
purchase AmSouth common stock but will continue to be governed by the terms of
First American's stock option and incentive plans. First American's stock
option and incentive plans will be assumed by AmSouth. In each case, the number
of shares of AmSouth common stock subject to the new AmSouth option will be
equal to the product of the number of shares of First American common stock
subject to the First American option and 1.871, rounded to the nearest whole
share, and the exercise price per share of First American common stock under
the First American option divided by 1.871, rounded down to the nearest whole
cent. The duration and other terms of each such new AmSouth option will be
substantially the same as the prior First American option. In any event,
options that are incentive stock options under the Internal Revenue Code shall
be adjusted as required by that law. At or prior to the effective time of the
merger, AmSouth will take all corporate action necessary to reserve for
issuance a sufficient number of shares of AmSouth common stock for delivery
upon exercise of the new AmSouth options. See "Amendment to AmSouth Certificate
of Incorporation."
Background of the Merger
Management of each company, has, over time, regularly considered the
possibility of acquisitions and strategic combinations with a variety of
financial institutions, and the potential strategic fit with institutions based
on their lines of businesses, their management and employee cultures and their
geographic locations. As part of their operations, AmSouth and First American
also regularly scrutinize the financial services industry environment,
including the recent wave of consolidation in the industry, and from time to
time have informal discussions with the managements of various financial
institutions. AmSouth and First American have each had a goal of creating a
premier Southeast banking franchise, as well as a goal of increasing their
proportions of noninterest revenues, primarily from investment-related
activities. Each organization has in recent years viewed the other as a
potential partner with whom it might work to achieve these goals.
During March and April, 1999, C. Dowd Ritter, Chief Executive Officer of
AmSouth, and Dennis C. Bottorff, Chief Executive Officer of First American,
spoke to each other several times informally about the possibility of a merger
between the two companies. On May 19, 1999, representatives of AmSouth's
financial advisors, DLJ, met with Mr. Bottorff in Nashville to discuss a
possible merger. On May 22, 1999, Messrs.
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Ritter and Bottorff met in Nashville to continue discussions, and agreed to
conduct due diligence and begin negotiation of definitive agreements for a
possible merger between the two companies.
In late May, 1999, the two companies and their respective legal and
financial advisors conducted mutual due diligence. On May 28, 1999, Messrs.
Ritter and Bottorff met to discuss the results of the due diligence and each
indicated his interest in continuing to pursue a business combination between
their companies. On May 28, 1999, Mr. Bottorff reviewed with First American's
board of directors his discussions with Mr. Ritter to date and the progress in
negotiating a definitive agreement with AmSouth. Over the next several days,
senior management of the two companies and their respective outside legal
counsel negotiated the terms of the proposed agreements.
On May 31, 1999, AmSouth's board of directors held a special meeting to
consider the proposed merger with First American. At this meeting, senior
management of AmSouth, together with financial and legal advisors, reviewed the
strategic investigation and due diligence AmSouth had conducted, the
discussions and contacts with First American to date, the historical
performance and strategies of First American and AmSouth, the financial and
other terms of the proposed transaction (including the potential pro forma
impact of the merger (taking into account possible expense savings and
operating efficiencies that might be generated by the transaction) and the
proposed numerical composition of the new AmSouth board of directors), and the
other terms of the proposed merger agreement, stock option agreements and other
agreements.
DLJ, based on the financial analysis described under "--Opinion of AmSouth's
Financial Advisor", gave its oral opinion to AmSouth's board of directors that,
as of the date of the meeting, the proposed exchange ratio in the merger was
fair, from a financial point of view, to AmSouth and its stockholders.
AmSouth's board of directors also reviewed the proposed employment arrangements
with members of First American's senior management in connection with the
proposed merger. Following further discussion and questions, AmSouth's board of
directors voted, by unanimous vote of the 12 directors present at the meeting,
to approve the proposed merger agreement and related transactions.
On May 31, 1999, the First American board of directors held a special
meeting at which senior management of First American reviewed its discussions
and negotiations with AmSouth regarding a business combination, as well as the
results of its due diligence investigation of AmSouth. Mr. Bottorff reviewed
the First American board of directors' prior discussions of possible strategic
directions for First American, reviewed the course of discussions with AmSouth
and outlined the strategic rationale for the proposed merger. Merrill Lynch
summarized certain financial information with respect to AmSouth and the
potential transaction to the First American board of directors, and Merrill
Lynch rendered an opinion that, as of May 31, 1999, the exchange ratio set
forth in the merger agreement was fair to First American stockholders from a
financial point of view. Also, at this meeting, the First American board of
directors discussed with Wachtell, Lipton, Rosen & Katz, First American's
outside counsel, the terms of the merger and the definitive agreements
documenting the transaction, and the legal standards applicable to its decision
to approve these agreements and the transactions contemplated by these
agreements. After questions by, and discussion among, the members of the First
American board of directors, and after consideration of the factors described
under "--First American's Reasons for the Merger; Recommendation of the First
American Board of Directors" the First American board of directors voted
unanimously to approve the merger agreement, the option agreements and the
transactions contemplated by those agreements.
Following conclusion of the meeting of First American's board of directors,
on May 31, 1999, First American and AmSouth executed and delivered the merger
agreement, and AmSouth executed agreements, to be effective upon completion of
the merger, with certain executive officers of First American. The following
day, AmSouth and First American entered into the stock option agreements.
AmSouth's Reasons for the Issuance of AmSouth Common Stock to First American
Stockholders; Recommendation of the AmSouth Board of Directors
AmSouth's board of directors believes that the transactions contemplated by
the merger agreement are fair to, and in the best interest of, AmSouth and its
stockholders. Accordingly, the board of directors
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decided to authorize and approve the merger agreement and to recommend that
AmSouth stockholders vote "FOR" the amendment to the AmSouth certificate of
incorporation to increase the shares of AmSouth common stock to 750 million
shares authorized and the issuance of AmSouth common stock in connection with
the merger. In reaching this decision, AmSouth's board of directors concluded
that the merger was likely to further the strategic plans of AmSouth and to
increase the value of shares of AmSouth common stock over what that value would
have been had AmSouth not agreed to the merger.
AmSouth's board of directors believes that the opportunities created by the
merger to increase the value of the AmSouth common stock more than offset any
risks inherent in the merger. In reaching this decision, AmSouth's board of
directors evaluated the information at its disposal, consulted with AmSouth's
management and outside advisors, and considered the following factors:
. The complementary and compatible nature of AmSouth's and First
American's businesses in contiguous markets. In particular, the AmSouth
board of directors considered First American's leading financial
services positions in Tennessee and the rest of the mid-South and the
business, operations, financial condition, earnings and prospects of
First American. In making its determination, AmSouth's board of
directors took into account the results of its due diligence
investigation of First American.
. Its belief that the merger will increase AmSouth's return on equity,
ranking it among the top tier of banks in the country.
. Its belief that the merger will immediately and substantially increase
earnings per share.
. The merger will double the assets of AmSouth to approximately $40
billion and the number of households served to approximately 2.1
million.
. That the transaction will help AmSouth achieve leading positions, based
on deposit shares, in key markets and across the Southeast region of the
United States, including: Nashville, TN; Birmingham, AL; Tampa-St.
Petersburg, FL; Clearwater, FL; Jackson, MS; Knoxville, TN; Chattanooga,
TN; Mobile, AL; Tri-Cities, TN; Pensacola, FL; and Montgomery, AL.
. The acquisition further diversifies AmSouth's revenue and earnings mix.
In particular, the AmSouth board of directors considered that the merger
would result in AmSouth's possessing a more balanced loan portfolio.
. Its belief that the transaction will enhance AmSouth's economies of
scale across many products and services, resulting in the achievement of
a lower efficiency ratio.
. Its belief that the merger will significantly enhance AmSouth's fee-
based business (1) by the addition of IFC Holdings (INVEST Financial
Corporation and Investment Centers of America), the country's largest
third-party marketer of investment and insurance products with
approximately $7 billion in product sales anticipated in 1999, and (2)
by the addition of First American's approximately $3 billion in mutual
fund assets under its management. These assets will nearly double
AmSouth's mutual fund assets and make it one of the Southeast's largest
bank mutual fund managers.
. Its belief that the merger will benefit AmSouth's customers. In
particular, the board of directors believes that the merger will
increase AmSouth's ability to develop and market more comprehensive
integrated investment and insurance product offerings, thus providing
superior value and integrated solutions to a broader range of customers.
AmSouth would have the largest bank platform annuity sales force in the
Southeast, and among the largest in the United States, with over 1,400
licensed employees.
. The opinion of its financial advisor, DLJ.
This discussion of the information and factors considered by the AmSouth
board of directors is not intended to be exhaustive but includes all material
factors we considered. In reaching its determination to approve the merger
agreement and to recommend the amendment to the AmSouth certificate of
incorporation to increase the shares of AmSouth common stock to 750 million
shares authorized and the issuance of AmSouth
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common stock to First American stockholders, the AmSouth board of directors did
not assign any relative or specific weight to different factors. Individual
directors may have given different weight to different factors. The AmSouth
board of directors is unanimous in its recommendation that AmSouth stockholders
vote for the amendment to the AmSouth certificate of incorporation to increase
the shares of AmSouth common stock to 750 million shares authorized and the
issuance of AmSouth common stock in connection with the merger.
First American's Reasons for the Merger; Recommendation of the First American
Board of Directors
First American's board of directors believes that the merger is fair to, and
in the best interests of, First American and its stockholders. Accordingly, the
board of directors has unanimously approved the merger agreement and
unanimously recommends that First American stockholders vote "FOR" the approval
of the merger agreement.
The First American board of directors believes that the consummation of the
merger presents a unique opportunity to combine two of the Southeast's leading
banking franchises to create a premier banking and financial services company
that can, through a powerful distribution network, offer a full range of
financial products and services in many of the region's most attractive
markets.
In reaching its decision to approve the merger agreement and the option
agreements, First American's board of directors consulted with First American
management, as well as with its financial and legal advisors, and considered a
number of factors, including the following:
. Its knowledge of First American's business, operations, financial
condition, earnings and prospects.
. The business, operations, financial condition, earnings and prospects of
AmSouth. In making its determination, the board of directors took into
account the results of First American's due diligence review of AmSouth.
. The consistency of the merger with First American's long-term goals of
achieving superior financial performance and stockholder returns.
. The unique strategic opportunity presented by a merger of First American
and AmSouth to create one of the largest banking franchises in the
Southeast, a region growing faster than the United States overall, with
over $40 billion in assets and serving more than 2 million households
through 680 branches and the largest ATM network in the region.
. Its expectation that the combined company would benefit from
significantly greater economies of scale than either First American or
AmSouth separately in its consumer banking, commercial banking, asset
management and other businesses.
. Its view that the combination of First American and AmSouth presents
manageable execution risk in view of the similar markets and customer
demographics served by First American and AmSouth, the complementary and
contiguous geographic areas served by our companies, conservative
assumptions regarding synergies and many common technology platforms and
systems.
. While realizing that there can be no assurances about future results,
its expectation of the financial impact of the merger on AmSouth, as the
issuer of the stock our stockholders will receive in the merger,
including:
. the pro forma capital ratios, asset quality and efficiency ratio of
the combined company;
. the expectation that the merger will increase AmSouth's earnings per
share beginning at completion;
. the expectation that the combined company could be expected to
realize significant operational synergies, including $133 million in
annual pre-tax expense savings by fiscal year 2001; and
. the expectation that pre-tax merger and integration and other
nonrecurring merger related charges of approximately $296 million
would be taken.
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. The complementary nature of the businesses of First American and
AmSouth. For instance, the combined company would be able to offer First
American's products and services, including investment and asset
management products, in more areas through a larger sales force.
. Its belief, and that of First American's senior management, that First
American and AmSouth share a common vision about the importance of
delivering financial performance and stockholder value and that
management and employees of First American and AmSouth possess
complementary skills and expertise.
. The structure of the merger and the terms of the merger agreement and
the stock option agreements, and the fact that the merger is intended to
qualify as a "reorganization" for federal income tax purposes and as a
"pooling of interests" for accounting and financial reporting purposes.
. The proposed arrangements with members of management of AmSouth and
First American, including the fact that Mr. Ritter would continue as
AmSouth's president and chief executive officer, that Mr. Bottorff would
enter into an employment agreement with AmSouth and would become
chairman of the board of directors of AmSouth until January 1, 2001; and
that the board of directors of the combined company would be comprised
of 12 directors designated by AmSouth and five directors designated by
First American, including Mr. Bottorff.
. The fact that directors and executive officers of First American could
be expected to receive benefits in the merger beyond their interests as
stockholders of First American, both under existing arrangements with
our company and, in the case of Mr. Bottorff and three other executive
officers of First American, as a result of new employment or severance
agreements with AmSouth. See "--Interests of Management and Directors in
the Merger" and "--Management and Operations of AmSouth After the
Merger."
. The opinion of Merrill Lynch that, as of May 31, 1999, the exchange
ratio was fair from a financial point of view to First American
stockholders. See "--Opinion of First American's Financial Advisor."
. The likelihood that the merger will be approved by the appropriate
regulatory authorities. See "The Merger Agreement--Regulatory Approvals
Required for the Merger." In this connection, we considered the
possibility that a modest amount of divestitures of some assets and
deposit liabilities could be required by regulatory authorities in
connection with the merger.
This discussion of the information and factors considered by the First
American board of directors is not intended to be exhaustive but includes all
material factors we considered. In reaching its determination to approve and
recommend the merger, the First American board of directors did not assign any
relative or specific weights to these factors. Individual directors may have
given different weight to different factors. The First American board of
directors is unanimous in its recommendation that First American stockholders
vote for approval of the merger agreement.
Opinion of AmSouth's Financial Advisor
AmSouth engaged DLJ to act as financial advisor with respect to the possible
business combination with First American. AmSouth's decision to engage DLJ was
based upon DLJ's qualifications, expertise and reputation, as well as upon its
senior bankers' familiarity and prior experience with AmSouth.
On May 31, 1999, DLJ rendered to AmSouth's board of directors its oral
opinion, which DLJ subsequently confirmed in writing, to the effect that, based
upon assumptions, limitations and qualifications set forth in its opinion, as
of May 31, 1999, the exchange ratio was fair from a financial point of view to
AmSouth and to the holders of the AmSouth common stock. DLJ confirmed its
opinion in a written opinion dated as of the date of this document (the "DLJ
opinion").
You should consider the following when reading the discussion of the DLJ
opinion in this document:
. The following description of the DLJ opinion is qualified by reference
to the full opinion located in Appendix E to this document. We urge you
to read carefully the entire DLJ opinion. The May 31,
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1999 opinion of DLJ was substantially identical to the DLJ opinion
located in Appendix E to this document.
. The DLJ opinion was necessarily based on economic, market, financial and
other conditions as they existed on the date of that opinion and on the
information made available to DLJ as of that date and, although
subsequent developments may affect the DLJ opinion, DLJ does not have
any obligation to update, revise or reaffirm its opinion.
. DLJ expressed no opinion as to the prices at which the AmSouth common
stock or the First American common stock will actually trade at any
time.
. The DLJ opinion does not address the relative merits of the merger and
the other business strategies considered by AmSouth's board of
directors, nor does it address the board of director's decision to
proceed with the merger.
. The DLJ opinion does not constitute a recommendation to any stockholder
as to how such stockholder should vote on the proposed transaction.
In arriving at the DLJ opinion, DLJ, among other things:
. reviewed the merger agreement;
. reviewed financial and other information that was publicly available or
furnished to DLJ by AmSouth and First American including First Call
earnings estimates and information provided during discussions with
their respective managements;
. reviewed certain assumptions with respect to financial projections of
AmSouth and First American, including certain cost savings and operating
synergies, and the impact of certain business divestitures, anticipated
by the management of AmSouth and First American to result from the
merger;
. compared certain financial and securities data of AmSouth and First
American with various other companies whose securities are traded in
public markets;
. reviewed the historical stock prices and trading volumes of AmSouth
common stock and First American common stock;
. reviewed prices and premiums paid in certain other business
combinations; and
. conducted such other financial studies, analyses and investigations as
DLJ deemed appropriate for purposes of its opinion.
In rendering the DLJ opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to it from public sources, that was provided to DLJ by AmSouth and First
American or their respective representatives, or that was otherwise reviewed
by DLJ in connection with its opinion and assumed that AmSouth was not aware
of any information prepared by it or its other representatives that might be
material to DLJ's opinion that was not made available to DLJ. In particular,
DLJ relied upon the estimates of the management of AmSouth of the cost savings
and operating synergies achievable as a result of the merger and the impact of
anticipated business divestitures and upon DLJ's discussion of these cost
savings, operating synergies and divestitures with the management of First
American. With respect to the financial projections that DLJ reviewed,
including cost savings and operating synergies and the impact of divestitures,
DLJ assumed that they were reasonably prepared and did not materially differ
from the best currently available estimates and judgments of the management of
AmSouth and First American as to the future operating and financial
performance of AmSouth, First American and the combined company. DLJ is not
expert in the evaluation of loan and lease portfolios for purposes of
assessing the adequacy of the allowances for losses with respect to these
portfolios and assumed, with the consent of the board of directors of AmSouth,
that these allowances for each of AmSouth and First American were in the
aggregate adequate to cover all such losses. In addition, DLJ did not review
individual credit files nor did DLJ make an independent evaluation or
appraisal of the assets and liabilities (including any hedge or derivative
positions) of AmSouth or First American or any of their subsidiaries and DLJ
was not furnished with any such evaluation or appraisal. DLJ did not assume
any responsibility for making any independent evaluation of any assets or
liabilities or for
25
<PAGE>
making any independent verification of any of the information reviewed by it.
DLJ assumed that the merger will qualify as a "pooling-of-interests"
transaction under GAAP. DLJ also assumed that the transaction will qualify as a
tax-free reorganization for United States federal income tax purposes and that
all material governmental, regulatory or other consents and approvals necessary
for the consummation of the merger will be obtained without any material
adverse effect, other than the impact of the anticipated divestitures, on the
anticipated benefits of the merger.
DLJ, as part of its investment banking services, is regularly engaged in the
valuation of businesses and securities in connection with mergers,
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
In the ordinary course of its business, DLJ and its affiliates actively trade
the securities of AmSouth and First American for their own account and for the
accounts of its customers, and, accordingly, may at any time hold a long or
short position in those securities. DLJ has acted as lead manager for a
subordinated debt offering of AmSouth and has performed investment banking and
other services for AmSouth in the past and has been compensated for such
services.
AmSouth has agreed to pay DLJ a transaction fee with respect to a business
combination of $17 million, $250,000 of which was payable upon execution of
DLJ's engagement letter, $1.75 million of which was payable upon execution of a
definitive agreement providing for the acquisition of First American by
AmSouth, $2 million of which is payable at the time AmSouth mails this document
and the remainder of which is payable upon consummation of the merger. AmSouth
has also agreed to reimburse DLJ for all out-of-pocket expenses, including
reasonable attorneys' fees and expenses, and to indemnify DLJ against
liabilities, including certain liabilities under the federal securities laws.
The following is a summary of the material financial analyses DLJ used in
connection with providing its May 31, 1999 written opinion to AmSouth's board
of directors and does not purport to be a complete description of the analyses
performed by DLJ. The following quantitative information, to the extent it is
based on market data, is based on market data as it existed at or about May 26,
1999 and is not necessarily indicative of current market conditions. You should
understand that the order of analyses (and results thereof) described does not
represent relative importance or weight given to such analyses by DLJ. The
summary of financial analyses includes information presented in tabular format.
The tables should be read together with the text of those summaries.
First American Business Review. DLJ analyzed the different business lines
comprising First American's business. In this regard, DLJ reviewed selected
five-year historical consolidated financial information of each of First
American's business lines, both in dollar terms and as a percentage of total
consolidated results, in order to assess First American's business lines and
the diversity of its business performance. DLJ also reviewed First American's
operating profitability and growth performance during such period. In addition,
DLJ discussed:
. First American's deposit market share, based on the dollar value of
deposits, in the states in which First American operates; and
. research analysts' estimates and recommendations with respect to the
First American common stock.
Pro Forma Merger Analysis. DLJ analyzed the pro forma impact of the merger
on the combined company's market capitalization (excluding management estimates
of synergies); loan portfolio contribution by business line; deposit base
contribution; noninterest income contribution; market share (excluding
divestitures expected to be required to obtain regulatory approval) based on
the dollar value of deposits in the states in which First American operates,
the states in which AmSouth operates and the states in which both entities
operate; profitability (including management estimates of synergies);
capitalization; and credit quality.
DLJ analyzed the pro forma financial impact of the merger on both First
American's and AmSouth's fully diluted earnings per share on both a GAAP basis
and a cash basis and on the book value per share and the tangible book value
per share. For purposes of these analyses, DLJ assumed that the merger would
close in the
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<PAGE>
fourth quarter of 1999. DLJ used First Call earnings estimates for First
American and AmSouth for 1999 and 2000 and First Call's estimated long-term
growth rate estimates for later years. DLJ performed this analysis using
AmSouth management assumptions provided to DLJ as it prepared its analyses with
respect to merger cost savings, revenue enhancements and capital leverage
(including the phase-in period for achieving them), divestitures expected to be
required to obtain regulatory approval, estimated potential deposit runoffs and
the anticipated pre-tax restructuring charge. DLJ's analyses of the merger from
AmSouth's perspective showed that the merger, compared to continued operation
of AmSouth on a stand-alone basis, would be accretive to AmSouth's GAAP
estimated earnings, cash earnings, book value per share and tangible book value
per share starting in 2000. DLJ's analyses of the merger from First American's
perspective showed that the merger, compared to the continued operation of
First American on a stand-alone basis, would be accretive to First American's
GAAP estimated earnings, cash earnings and book value per share starting in
2000 and accretive to tangible book value per share starting in 2001.
Contribution Analysis. DLJ computed the contribution of AmSouth and First
American to various elements of the combined entity's income statement, balance
sheet and market capitalization excluding estimated synergies. Projected
earnings were based on First Call earnings estimates and long-term growth
rates. The following table compares the pro forma ownership of AmSouth and
First American stockholders in the combined company based upon the exchange
ratio with each company's respective contribution to each element of this
analysis:
<TABLE>
<CAPTION>
Pro Forma Ownership of Pro Forma Ownership of
AmSouth Stockholders First American
in the Combined Stockholders in the
Company Combined Company
---------------------- ----------------------
<S> <C> <C>
Implied pro forma ownership...... 44.4% 55.6%
<CAPTION>
First American
AmSouth Contribution Contribution to
to Combined Company Combined Company
---------------------- ----------------------
<S> <C> <C>
Income Statement
12 months normalized net income
at March 31, 1999............. 46.7% 53.3%
Estimated 1999 net income...... 48.4% 51.6%
Estimated forward 12 months net
income........................ 48.3% 51.7%
Estimated 2000 net income...... 48.1% 51.9%
Balance Sheet as of 3/31/99
Total loans.................... 53.3% 46.7%
Total assets................... 49.7% 50.3%
Total deposits................. 47.3% 52.7%
Tangible common equity......... 42.9% 57.1%
Common equity.................. 44.0% 56.0%
Total tangible equity.......... 42.9% 57.1%
Total equity................... 44.0% 56.0%
Market Capitalization based on:
Closing price on 5/28/99....... 51.1% 48.9%
1-month average of closing
prices ending 5/28/99......... 53.1% 46.9%
3-month average of closing
prices ending 5/28/99......... 54.1% 45.9%
6-month average of closing
prices ending 5/28/99......... 52.6% 47.4%
1-year average of closing
prices ending 5/28/99......... 50.1% 49.9%
</TABLE>
Historical Stock Price Performance Analysis. DLJ compared the daily closing
price per share of First American common stock and AmSouth common stock for the
one-year and three-year periods ended May 27, 1999. For each of First American
and AmSouth, DLJ also compared the ratio of closing stock price on May 28, 1999
to the 52-week high and low prices. DLJ noted that First American's common
stock closing price of
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<PAGE>
$40.813 on May 28, 1999 represented 80.0% of the 52-week high price and 122.1%
of the 52-week low price. AmSouth's common stock closing price of $28.375 on
May 28, 1999 represented 82.0% of the 52-week high price and 138.7% of the 52-
week low price.
Comparable Company Analysis. DLJ compared selected operating and stock
market results of First American and AmSouth to publicly available information
for a regional bank peer group that DLJ selected and deemed to be relevant. The
regional bank peer group, which included selected commercial banks with
comparable business line and market capitalization characteristics to First
American and AmSouth, consisted of:
. SouthTrust Corporation
. SunTrust Banks, Inc.
. Union Planters Corporation
. Wachovia Corporation
. Old Kent Financial Corporation
. BB&T Corporation
. Zions Bancorp
. Comerica Incorporated
. First Security Corporation
. Regions Financial Corporation
. Compass Bancshares, Inc.
. Summit Bancorp
. Hibernia Corporation
. Huntington Bancshares Incorporated
In addition, DLJ analyzed First American and AmSouth compared with their
regional bank peer group discussed above, the S&P 500 and a southeastern peer
group on the following bases:
. a total return analysis for the year-to-date, one-year, three-year and
five-year periods;
. the relative stock price performance for the one-year and three-year
periods ended May 27, 1999;
. a valuation analysis of First American and AmSouth compared with the
low, medium and high multiples of the regional bank peer group discussed
above; and
. the one-year and three-year relative forward price-to-earnings
performance based on First Call.
The southeastern peer group consisted of:
. Regions Financial Corporation . Hibernia Corporation
. SouthTrust Corporation . BB&T Corporation
. Compass Bancshares, Inc. . Wachovia Corporation
. Union Planters Corporation . SunTrust Banks, Inc.
The following tables compare selected information derived by DLJ for First
American, AmSouth and the median of the regional bank peer group:
<TABLE>
<CAPTION>
Pricing Multiples
------------------------------------------------------
Forward Forward Cash Tangible Book
Price/Earnings Price/Earnings Book Value Value
-------------- -------------- ---------- -------------
<S> <C> <C> <C> <C>
First American.......... 14.6x 13.0x 2.62x 2.99x
AmSouth................. 16.6x 15.8x 3.51x 4.18x
Regional Bank Peer Group
Median................. 14.8x 14.1x 2.82x 3.14x
Southeastern Peer Group
Median................. 14.8x 14.1x 2.74x 3.04x
<CAPTION>
Operating Statistics
------------------------------------------------------
Normalized Normalized
Return on Return on Efficiency Fee Based
Assets Common Equity Ratio Ratio
-------------- -------------- ---------- -------------
<S> <C> <C> <C> <C>
First American.......... 1.49% 17.05% 54.9% 38.5%
AmSouth................. 1.30% 18.05% 56.1% 31.1%
Regional Bank Peer Group
Median................. 1.30% 17.26% 54.0% 27.7%
Southeastern Peer Group
Median................. 1.26% 15.92% 55.0% 27.7%
</TABLE>
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<PAGE>
Discounted Dividend Analysis. DLJ performed a discounted dividend analysis
to estimate a range of present values per share of AmSouth common stock and
First American common stock assuming each entity continued to operate as a
stand-alone entity. DLJ also performed a further pro forma analysis to estimate
the range of present values per share of AmSouth common stock based on the pro
forma combined company. Analyses were conducted with and without applying the
synergies estimated by the management of AmSouth. These ranges were determined
by adding (1) the present value of the estimated future dividend stream that
each entity could generate through December 31, 2004 and (2) the present value
of the "terminal value" of each entity's common stock at December 31, 2004.
DLJ determined the range of present values per share of AmSouth and First
American common stock using the terminal year multiples and discount rates that
DLJ viewed as appropriate for companies with their risk characteristics. DLJ
used First Call earnings estimates for 1999 and 2000. For periods after 2000,
earnings were grown at First Call's estimated long-term growth rate, adjusted
to reflect an assumed constant ratio of tangible common equity to assets as DLJ
viewed as appropriate.
In calculating a terminal value of First American common stock at December
31, 2004, DLJ applied multiples ranging from 11.0x to 15.0x to forecasted cash
earnings for 2005. The dividend stream and terminal values were then discounted
back to March 31, 1999 using discount rates ranging from 11.7% to 15.7%. Based
on these assumptions, the stand-alone present value of First American common
stock ranged from $30.61 to $45.71 per share. DLJ also calculated the present
value of First American common stock using multiples ranging from 13.8x to
17.8x and management assumptions provided to DLJ as it prepared its analyses
with respect to merger cost savings and revenue enhancements (including the
phase-in period for achieving them), divestitures expected to be required to
obtain regulatory approval and estimated potential deposit runoffs. Based on
these assumptions, the present value of First American common stock ranged from
$42.48 to $61.09.
In calculating a terminal value of AmSouth common stock at December 31,
2004, DLJ applied multiples ranging from 13.8x to 17.8x to forecasted cash
earnings for 2005. The dividend stream and terminal value were then discounted
back to March 31, 1999 using discount rates ranging from 10.9% to 14.9%. Based
on these assumptions, the stand-alone present value of AmSouth common stock
ranged from $23.06 to $33.62 per share. DLJ also calculated the present value
of AmSouth common stock using management assumptions provided to DLJ as it
prepared its analyses with respect to merger cost savings and revenue
enhancements (including the phase-in period for achieving them), divestitures
expected to be required to obtain regulatory approval and estimated potential
deposit runoffs. Based on these assumptions, the present value of AmSouth
common stock ranged from $26.79 to $38.68 per share. These ranges of present
values for AmSouth common stock implied values per share of First American
common stock based on the exchange ratio of $43.15 to $62.89 per share
(excluding management assumptions) and $50.11 to $72.36 per share (including
management assumptions).
The discounted dividend analyses are not necessarily indicative of actual
values or actual future results and do not purport to reflect the prices at
which any securities may trade at the present time or at any time in the
future. Dividend discount analysis is a widely used valuation methodology, but
the results of this methodology are highly dependent upon the numerous
assumptions that must be made, including earnings growth rates, dividend payout
rates, terminal values and discount rates.
Discounted Cash Flow Analysis. DLJ performed a discounted cash flow analysis
to estimate an internal rate of return for AmSouth's investment in First
American assuming that First American were operated as a subsidiary of AmSouth.
The internal rate of return was determined by solving for the discount rate at
which the sum of (1) the present value of the estimated future dividend stream
that the subsidiary will generate through December 31, 2009, (2) the present
value of the "terminal value" of the subsidiary at December 31, 2009 and (3)
the dividend at closing of capital in excess of a ratio of tangible common
equity to assets of 6.00%, net of the initial consideration paid (based on
AmSouth's common stock price on the date prior to announcement of the merger),
is equal to zero. In determining the present value of the subsidiary cash flows
and the terminal value, DLJ used First Call earnings estimates for 1999 and
2000 and, for periods after 2000, DLJ applied First Call's long-term growth
rate, adjusted to eliminate the impact of projected share repurchases, to grow
earnings.
29
<PAGE>
DLJ also used management assumptions with respect to merger cost savings and
revenue enhancements (including the phase-in period for achieving them),
divestitures expected to be required to obtain regulatory approval and
estimated deposit runoffs. For purposes of this analysis, DLJ also assumed that
First American could dividend any capital in excess of that required to
maintain a ratio of tangible common equity to assets of 6.00%. In calculating a
terminal value of the subsidiary at December 31, 2009, DLJ applied multiples of
14.8x to 16.8x (using AmSouth's then current forward cash earnings multiple of
15.8x as a midpoint) to forecasted subsidiary cash earnings for 2010. The
analysis resulted in an internal rate of return for the subsidiary investment
of 14.4% to 15.5%.
The discounted cash flow analyses are not necessarily indicative of actual
values or actual future results and do not purport to reflect the prices at
which any securities may trade at the present time or at any time in the
future. Discounted cash flow analysis is a widely used valuation methodology,
but the results of this methodology are highly dependent upon the numerous
assumptions that must be made, including earnings growth rates, dividend payout
rates, terminal values and discount rates.
Comparable Transactions Analysis. DLJ analyzed publicly available financial,
operating and stock market information for the merger and for 15 selected
comparable domestic commercial bank merger transactions greater than $2.5
billion in transaction value. DLJ divided these transactions into the following
three groups:
. In-Market Transactions. These are transactions between banks operating
primarily in the same market. The transactions in this group were:
. NationsBank Corporation/Barnett Banks, Inc.
. First Union Corporation/Signet Banking Corporation
. Partial-Market Transactions. These are transactions between banks whose
operations overlap in some, but not all, markets. The transactions in
this group were:
. First Union Corporation/CoreStates Financial Corp., Inc.
. Fleet Financial Group, Inc./BankBoston Corp
. Wells Fargo & Company/First Interstate Bancorp
. Bank One Corporation/First Commerce Corporation
. Out-of-Market Transactions. These are transactions between merger
partners operating primarily in different markets. The transactions in
this group were:
. Firstar Corporation/Mercantile Bancorporation Inc.
. SunTrust Banks Inc./Crestar Financial Corporation
. NationsBank Corporation/Boatmen's Bancshares, Inc.
. First Bank System, Inc./U.S. Bancorp
. Star Banc Corporation/Firstar Corporation
. National City Corporation/First of America Bank Corporation
. First Union Corporation/First Fidelity Bancorporation
. Regions Financial Corporation/First Commercial Corporation
. First American Corporation/Deposit Guaranty Corp.
In each case, the stockholders of the second-named company (comparable to
First American in the merger) receive stock of the first-named company
(comparable to AmSouth in the merger) in the relevant
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<PAGE>
transaction. The following table compares information derived by DLJ about the
merger and these selected transactions:
<TABLE>
<CAPTION>
Selected Transactions
--------------------------
Range Median The Merger
------------- --------------------
<S> <C> <C> <C>
In-Market Transactions
Implied premium of offer price to market
price on last trading day prior to
announcement............................. 43.4--46.1% 44.7% 30.1%
Ratio of implied offer price to:
Book value per share.................... 3.46--4.05x 3.76x 3.41x
Tangible book value per share........... 3.67--5.96x 4.81x 3.89x
Latest 12 months earnings per share..... 24.9--25.1x 25.0x 21.2x
Forward 12 months earnings per share
based on First Call.................... 20.8--22.0x 21.4x 19.0x
Partial-Market Transactions
Implied premium of offer price to market
price on last trading day prior to
announcement............................. 12.9--25.9% 19.4% 30.1%
Ratio of implied offer price to:
Book value per share.................... 2.88--5.39x 3.38x 3.41x
Tangible book value per share........... 3.58--5.95x 3.75x 3.89x
Latest 12 months earnings per share..... 12.5--26.1x 20.3x 21.2x
Forward 12 months earning per share
based on First Call.................... 12.0--20.5x 18.6x 19.0x
Out-of-Market Transactions
Implied premium of offer price to market
price on last trading day prior to an-
nouncement............................... 3.0--40.4% 28.8% 30.1%
Ratio of implied offer price to:
Book value per share.................... 1.97--4.27x 3.78x 3.41x
Tangible book value per share........... 2.74--5.42x 4.30x 3.89x
Latest 12 months earnings per share..... 12.4--30.5x 24.2x 21.2x
Forward 12 months earnings per share
based on First Call.................... 11.0--25.8x 22.1x 19.0x
</TABLE>
In addition, DLJ calculated the median values of all of the foregoing
information with respect to all of these transactions taken together as a
group. The following table compares information derived by DLJ with respect to
the merger and these medians:
<TABLE>
<CAPTION>
Median of all
Precedent
Transactions The Merger
------------- ----------
<S> <C> <C>
Implied premium of offer price to market price on
last trading day prior to announcement.............. 27.1% 30.1%
Ratio of implied offer price to:
Book value per share............................... 3.50x 3.41x
Tangible book value per share...................... 4.00x 3.89x
Latest 12 months earnings per share................ 24.2x 21.2x
Forward 12 months earnings per share based on First
Call.............................................. 20.8x 19.0x
</TABLE>
Historical Exchange Ratio Analysis. DLJ calculated the ratio of the closing
price per share of First American common stock to the closing price per share
of AmSouth common stock for each trading day in the period from May 27, 1998 to
May 27, 1999 and compared those ratios with the exchange ratio. The results of
this calculation showed an average six-month stock price ratio of 1.360 and an
average one-year stock price ratio of 1.513 compared to the exchange ratio,
1.871. DLJ also calculated the ratio of the multiple of First American's stock
price to forward 12 months earnings per share to the multiple of AmSouth's
stock price to forward 12 months earnings per share, based on First Call
earnings estimates, over the same period. The results of this calculation
showed an average six-month ratio of 0.764 and an average one-year ratio of
0.818 compared to the ratio of 1.146 implied by the exchange ratio.
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<PAGE>
In connection with giving the DLJ opinion dated as of the date of this
document, DLJ performed procedures to update the analyses described above as it
deemed appropriate and reviewed the assumptions on which these analyses were
based and the factors considered by DLJ in performing those analyses.
The preparation of a fairness opinion is a complex process involving various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances.
Therefore, it is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses summarized above, without
considering these analyses as a whole, could create an incomplete view of the
processes underlying DLJ's opinions. In arriving at its fairness
determinations, DLJ considered the results of all those analyses and did not
attribute any particular weight to any factor or analysis considered by it.
Instead, DLJ made its determinations as to fairness on the basis of its
experience and professional judgment after considering the results of all those
analyses. No company or transaction used in the above analyses as a comparison
is directly comparable to AmSouth or First American or the merger. The analyses
were prepared solely for purposes of DLJ providing its opinions to AmSouth's
board of directors as to the fairness of the exchange ratio from a financial
point of view and do not purport to be appraisals or necessarily reflect the
prices at which businesses or securities actually may be sold. Analyses based
upon forecasts of future results are not necessarily indicative of actual
future results, which may be significantly more or less favorable than
suggested by those analyses. Because those analyses are inherently subject to
uncertainty, being based upon numerous factors or events beyond the control of
the parties or their respective advisors, none of AmSouth, First American, DLJ
or any other person assumes responsibility if future results are materially
different from those forecast.
As described above, DLJ's May 31, 1999 opinion to AmSouth's board of
directors was among many factors taken into consideration by the AmSouth board
of directors in making its determination to approve the merger agreement.
Consequently, the analyses described above should not be viewed as
determinative of the AmSouth board of directors' or AmSouth management's
opinion with respect to the value of First American, a combination of AmSouth
and First American, or of whether the AmSouth board of directors or AmSouth
management would have been willing to agree to a different exchange ratio.
AmSouth placed no limits on the scope of the analysis performed, or opinions
expressed, by DLJ.
Opinion of First American's Financial Advisor
First American retained Merrill Lynch to act as its financial advisor in
connection with the merger. On May 31, 1999, the board of directors of First
American held a meeting to evaluate the proposed merger. At this meeting,
Merrill Lynch rendered its opinion that, as of that date and based upon and
subject to the factors and assumptions set forth in its opinion, the exchange
ratio was fair, from a financial point of view, to First American stockholders.
Merrill Lynch subsequently confirmed and updated its May 31, 1999 opinion in
writing by delivering to the board of directors of First American a written
opinion dated as of the date of this joint proxy statement/prospectus. In
connection with its written opinion, Merrill Lynch confirmed the
appropriateness of its reliance on the analyses used to render its earlier
opinion. It also performed procedures to update certain of its analyses and
reviewed the assumptions used in its analyses and the factors considered in
connection with its earlier opinion.
The full text of the Merrill Lynch opinion, which describes, among other
things, the assumptions made, matters considered, and qualifications and
limitations on the review undertaken by Merrill Lynch is attached as Appendix D
to this joint proxy statement/prospectus and is incorporated in this joint
proxy statement/prospectus by reference. First American stockholders are urged
to, and should read Merrill Lynch's opinion carefully and in its entirety.
Merrill Lynch's opinion is directed to the board of directors of First American
and addresses only the fairness, from a financial point of view, of the
exchange ratio to the First American stockholders. The opinion does not address
any other aspect of the merger or any related transaction, nor does it
constitute a recommendation to any stockholder as to how to vote at the First
American special meeting. The summary of the fairness opinion set forth in this
joint proxy statement/prospectus is qualified in its entirety by reference to
the full text of the opinion.
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<PAGE>
In arriving at its opinion, Merrill Lynch, among other things:
. reviewed certain publicly available business and financial information
relating to First American and AmSouth that Merrill Lynch deemed to be
relevant;
. reviewed certain information, including financial forecasts, relating to
the respective businesses, earnings, assets, liabilities and prospects
of First American and AmSouth furnished to Merrill Lynch by the senior
management of First American and AmSouth, as well as the amount and
timing of the cost savings, revenue enhancements and related expenses
expected to result from the merger furnished to Merrill Lynch by senior
management of AmSouth;
. conducted discussions with members of senior management and
representatives of First American and AmSouth concerning the matters
described in the bullet points set forth above, as well as their
respective businesses and prospects before and after giving effect to
the merger and the expected cost savings, revenue enhancements and
related expenses expected to result from the merger;
. reviewed the market prices and valuation multiples for First American
common stock and AmSouth common stock and compared them with those of
certain publicly traded companies that Merrill Lynch deemed to be
relevant;
. reviewed the respective publicly reported financial conditions and
results of operations of First American and AmSouth and compared them
with those of certain publicly traded companies that Merrill Lynch
deemed to be relevant;
. compared the proposed financial terms of the merger with the financial
terms of certain other transactions that Merrill Lynch deemed to be
relevant;
. participated in certain discussions and negotiations with
representatives of First American and AmSouth and their financial and
legal advisors with respect to the merger;
. reviewed the potential pro forma impact of the merger;
. reviewed the merger agreement and the related stock option agreements;
and
. reviewed such other financial studies and analyses and took into account
such other matters as Merrill Lynch deemed necessary, including Merrill
Lynch's assessment of general economic, market and monetary conditions.
In rendering its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to
Merrill Lynch, discussed with, or reviewed by, or for Merrill Lynch, or
publicly available, and Merrill Lynch did not assume any responsibility for
independently verifying this information or undertake an independent evaluation
or appraisal of the assets or liabilities of First American or AmSouth nor has
Merrill Lynch been furnished any such evaluation or appraisal. Merrill Lynch is
not an expert in the evaluation of allowances for loan losses, and neither made
an independent evaluation of the adequacy of the allowances for loan losses of
First American or AmSouth, nor reviewed any individual credit files of First
American or AmSouth or been requested to conduct such a review and, as a
result, Merrill Lynch has assumed that the aggregate allowances for loan losses
for both First American and AmSouth are adequate to cover such losses and will
be adequate on a pro forma basis for the combined company. In addition, Merrill
Lynch did not assume any obligation to conduct, nor did Merrill Lynch conduct,
any physical inspection of the properties or facilities of First American or
AmSouth. With respect to the financial and operating forecast information
furnished to or discussed with Merrill Lynch by First American or AmSouth,
including the cost savings, revenue enhancements and related expenses expected
to result from the merger, Merrill Lynch assumed that the information was
reasonably prepared and reflects the best currently available estimates and
judgments of the senior management of each of First American and AmSouth as to
the future financial and operating performance of First American, AmSouth or
the combined entity, as the case may be. Merrill Lynch's opinion is necessarily
based upon market, economic and other conditions as in effect on, and on the
information made available to Merrill Lynch as of, the date of its opinion.
33
<PAGE>
For purposes of rendering its opinion, Merrill Lynch assumed that, in all
respects material to its analyses:
. the merger will be completed substantially in accordance with the terms
set forth in the merger agreement;
. the representations and warranties of each party in the merger agreement
and in all related documents and instruments referred to in the merger
agreement are true and correct;
. each party to the merger agreement and all related documents will
perform all of the covenants and agreements required to be performed by
such party under such documents;
. all conditions to the completion of the merger will be satisfied without
any waivers; and
. in the course of obtaining the necessary regulatory, contractual, or
other consents or approvals for the merger, no restrictions, including
any divestiture requirements or amendments or modifications, will be
imposed that will have a material adverse effect on the future results
of operations or financial condition of the combined entity or the
contemplated benefits of the merger, including the cost savings, revenue
enhancements and related expenses expected to result from the merger.
Merrill Lynch further assumed that the merger will be accounted for as a
"pooling-of-interests" under GAAP, and that the merger will qualify as a tax-
free reorganization for U.S. federal income tax purposes. Merrill Lynch's
opinion is not an expression of an opinion as to the prices at which shares of
First American common stock or shares of AmSouth common stock will trade
following the announcement of the merger or the actual value of the shares of
common stock of the combined company when issued pursuant to the merger, or
the prices at which the shares of common stock of the combined company will
trade following the completion of the merger.
In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control
of Merrill Lynch, First American and AmSouth. Any estimates contained in the
analyses performed by Merrill Lynch are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable
than suggested by these analyses. Additionally, estimates of the value of
businesses or securities do not purport to be appraisals or to reflect the
prices at which such businesses or securities might actually be sold.
Accordingly, these analyses and estimates are inherently subject to
substantial uncertainty. In addition, the Merrill Lynch opinion was among
several factors taken into consideration by the board of directors of First
American in making its determination to approve the merger agreement and the
merger. Consequently, the analyses described below should not be viewed as
determinative of the decision of the board of directors of First American or
management of First American with respect to the fairness of the exchange
ratio.
The following is a summary of the material financial analyses presented by
Merrill Lynch to the board of directors of First American on May 31, 1999 in
connection with the rendering of its opinion on that date. The summary is not
a complete description of the analyses underlying the Merrill Lynch opinion or
the presentation made by Merrill Lynch to the board of directors of First
American, but summarizes the material analyses performed and presented in
connection with such opinion. The preparation of a fairness opinion is a
complex analytic process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances. Therefore, a fairness opinion
is not readily susceptible to partial analysis or summary description. In
arriving at its opinion, Merrill Lynch did not attribute any particular weight
to any analysis or factor that it considered, but rather made qualitative
judgments as to the significance and relevance of each analysis and factor.
The financial analyses summarized below include information presented in
tabular format. Accordingly, Merrill Lynch believes that its analyses and the
summary of its analyses must be considered as a whole and that selecting
portions of its analyses and factors or focusing on the information presented
below in tabular format, without considering all analyses and factors or the
full narrative description of the financial analyses, including the
methodologies and assumptions underlying the analyses, could create a
misleading or incomplete view of the process underlying its analyses and
opinion. The tables alone do not constitute a complete description of the
financial analyses.
34
<PAGE>
Calculation of Implied Value of Exchange Ratio. Merrill Lynch reviewed the
terms of the merger. It noted that the exchange ratio of 1.871 shares of
AmSouth common stock for each share of First American common stock had an
implied value of $53.09 per share of First American common stock based upon the
closing price of AmSouth common stock on May 28, 1999 of $28.38 (the last
trading day prior to the presentation by Merrill Lynch to the board of
directors of First American).
Transaction Pricing Multiples. Based on an exchange ratio of 1.871 and the
closing price of AmSouth common stock on May 28, 1999 of $28.38, Merrill Lynch
also analyzed the implied per share transaction value of $53.09 as a multiple
of First American's fully diluted book value per share, fully diluted tangible
book value per share, last twelve months fully diluted earnings per share,
latest quarter annualized fully diluted earnings per share, and estimated
earnings per share for the years 1999 and 2000.
The analyses performed indicated that the per share transaction value as a
multiple of First American's fully diluted book value per share would be 3.5x
and further indicated that the per share transaction value as a multiple of
First American's fully diluted tangible book value per share would be 4.0x, in
each case based on financial data for the period ending March 31, 1999, with
fully diluted shares including options accounted for under the treasury stock
method. Merrill Lynch's analyses further indicated that the transaction value
as a multiple of the last twelve months fully diluted earnings per share would
be 21.4x, and that the transaction value as a multiple of the latest quarter
annualized fully diluted earnings per share would be 22.5x. The analyses also
indicated that the transaction value as a multiple of First American's
estimated earnings per share in each of 1999 and 2000 would be 20.0x and 17.6x,
respectively, in each case based on consensus First Call earnings estimates as
of May 28, 1999. First Call is a recognized data service that monitors and
publishes compilations of earnings estimates by selected research analysts
regarding companies of interest to institutional investors.
Merrill Lynch also analyzed the per share transaction value as a premium to
the closing price of First American common stock at different intervals prior
to the announcement of the merger. The analyses performed indicated the per
share transaction value as a premium to: (1) the closing price of First
American common stock on the day immediately prior to the announcement of the
merger was 30.1%; (2) the closing price of First American common stock one week
prior to the announcement of the merger was 31.1%; and (3) the average closing
price of First American common stock for the 30 days prior to the announcement
of the merger was 33.7%.
Historical Trading Valuation Analysis. Based on an exchange ratio of 1.871
and the closing price of AmSouth common stock on May 28, 1999 of $28.38 and on
May 21, 1999 of $29.88, Merrill Lynch also reviewed the historical trading
valuation of AmSouth common stock for different periods during the ninety-day
period prior to May 28, 1999 to determine the implied per share offer value of
the transaction to First American stockholders and the implied premium to the
average price of First American common stock for such periods. The following
table indicates the implied per share offer value of the transaction to First
American stockholders and the implied premium to the average price of First
American common stock for the periods listed.
<TABLE>
<CAPTION>
Implied Premium to
Implied Value to First American
First American Average Price
---------------- ------------------
<S> <C> <C>
May 28, 1999............................. $53.09 30%
May 21, 1999............................. 55.90 34
Five-day average......................... 53.52 33
Ten-day average.......................... 54.83 34
Fifteen-day average...................... 55.86 36
Twenty-day average....................... 56.60 39
Thirty-day average....................... 57.42 45
Sixty-day average........................ 58.39 47
Ninety-day average....................... 57.87 44
</TABLE>
35
<PAGE>
Discounted Dividend Analysis--First American. Merrill Lynch performed a
discounted dividend analysis to estimate a range of present values per share of
First American common stock assuming First American continued to operate as a
stand-alone entity. This range was determined by adding (1) the present value
of the estimated future dividend stream that First American could generate, and
(2) the present value of the "terminal value" of First American common stock at
December 31, 2004.
In calculating a terminal value of First American common stock at December
31, 2004, Merrill Lynch applied a multiple of 12.0x to 14.0x to year 2005
forecasted cash earnings. The dividend stream and terminal value were then
discounted back to March 31, 1999 using discount rates ranging from 12.0% to
14.0%, which rates Merrill Lynch viewed as the appropriate range of discount
rates for a company with First American's risk characteristics.
In performing this analysis, Merrill Lynch used First Call earnings
estimates for 1999 and 2000 of $2.66 and $3.01, respectively. For periods after
2000, earnings were assumed to increase at First Call's estimated annual long-
term earnings growth rate of 10%. Merrill Lynch also assumed an annual asset
growth rate of 5%. Merrill Lynch further assumed that earnings in excess of
those necessary to maintain First American's tangible common equity ratio at
6.00% could be paid out to First American stockholders as dividends. Based on
the above assumptions, the stand-alone present value of the First American
common stock ranged from $36.74 to $44.01 per share.
Discounted Dividend Analysis--AmSouth. Merrill Lynch also performed a
discounted dividend analysis to estimate a range of present values per share of
AmSouth common stock assuming AmSouth continued to operate as a stand-alone
entity. As with the analysis performed with regard to First American, this
range was determined by adding (1) the present value of the estimated future
dividend stream that AmSouth could generate, and (2) the present value of the
"terminal value" of AmSouth common stock at December 31, 2004.
In calculating a terminal value of AmSouth common stock at December 31,
2004, Merrill Lynch applied a multiple of 14.0x to 16.0x to year 2005
forecasted cash earnings. The dividend stream and terminal value were then
discounted back to March 31, 1999 using discount rates ranging from 12.0% to
14.0%, which rates Merrill Lynch viewed as the appropriate range of discount
rates for a company with AmSouth's risk characteristics.
In performing this analysis, Merrill Lynch used First Call earnings
estimates for 1999 and 2000 of $1.63 and $1.83, respectively. For periods after
2000, earnings were assumed to increase at First Call's estimated annual long-
term earnings growth rate of 11%. Merrill Lynch also assumed an annual asset
growth rate of 5%. Merrill Lynch further assumed that earnings in excess of
those necessary to maintain AmSouth's tangible common equity ratio at 6.00%
could be paid out to AmSouth stockholders as dividends. Based on the above
assumptions, the stand-alone present value of the AmSouth common stock ranged
from $25.25 to $30.41 per share.
Pro Forma Discounted Dividend Analysis. Merrill Lynch also performed a pro
forma discounted dividend analysis to estimate a range of present values per
share of AmSouth common stock and First American common stock based on the pro
forma combined company. This range was determined by using the same valuation
methodology applied in the preceding six paragraphs in terms of calculating the
terminal value of the combined company and the discount rates applicable to
that value. Merrill Lynch also made the same assumptions as set forth in the
preceding six paragraphs, except that: (1) earnings estimates for pro forma
AmSouth are based on First Call's Combined Consensus Equity Analysts' Estimates
increased at 11% after 2001; (2) synergies are assumed to equal $112 million
pre-tax in 2000 (excluding $17 million of capital leverage), and $168 million
pre-tax in 2001 (excluding $66 million of capital leverage), with synergies
increasing at 11% annually thereafter; (3) earnings in excess of those
necessary to maintain pro forma AmSouth's tangible common equity ratio at 6.00%
could be paid out to stockholders as dividends; and (4) in calculating a
terminal value of pro forma AmSouth's and First American's common stock at
December 31, 2004, Merrill Lynch applied a multiple of 14.0x to 16.0x to year
2005 forecasted cash earnings.
36
<PAGE>
Based on the above assumptions, the present value of pro forma AmSouth
common stock ranged from $26.30 to $31.98 per share. Merrill Lynch then applied
the exchange ratio to the pro forma discounted dividend values arrived at per
share of pro forma AmSouth common stock to determine a range of present values
per share of First American common stock, and determined that the present value
of the First American common stock under this analysis ranged from $49.20 to
$59.84 per share.
The analyses set forth in each of the preceding eight paragraphs does not
necessarily indicate actual values or actual future results and does not
purport to reflect the prices at which any securities may trade at the present
or at any time in the future. The discount rates applied to First American and
AmSouth referred to in such paragraphs were based on several factors, including
the financial advisors' knowledge of each of First American and AmSouth and the
industry in which they operate, the business risk of each company and the
overall interest rate environment as of March 31, 1999. The asset growth rates
applied for First American and AmSouth took into consideration several factors,
including the historical asset growth of each of First American and AmSouth as
well as projected long-term growth rates. Dividend discount analysis is a
widely used valuation methodology, but the results of this methodology are
highly dependent upon the numerous assumptions that must be made, including
earnings growth rates, dividend payout rates, terminal values and discount
rates.
Peer Group Stock Trading Multiple Analysis--First American. Merrill Lynch
compared selected operating and stock market results of First American to the
publicly available corresponding data for the following companies that Merrill
Lynch determined were comparable to First American:
. Regions Financial Corporation;
. SouthTrust Banks, Inc.;
. Compass Bancshares, Inc.;
. AmSouth Bancorporation;
. Union Planters Corporation;
. First Tennessee National Corporation;
. National Commerce Bancorporation; and
. Trustmark Corporation.
Merrill Lynch then determined the imputed per share value of First American
common stock based on the multiples arrived at by Merrill Lynch in its
comparability analysis.
The following table compares selected financial data of First American with
corresponding mean data for the companies selected by Merrill Lynch, which data
is based on financial data at or for the quarter ended March 31, 1999, earnings
estimates from First Call as of May 28, 1999, and market prices as of May 28,
1999. The calculations of price-to-1999 and price-to-2000 First Call estimated
earnings per share are based on estimated earnings per share calculated in
accordance with GAAP. The calculations of price-to-1999 and price-to-2000 First
Call estimated cash earnings per share are based on estimated earnings per
share plus amortization of intangible assets per share.
<TABLE>
<CAPTION>
First Call
Price/ Price/ Price/ Projected 2000
1999 2000 Price/ Price/ Price/ Stated Five-Year Price
Estimated Estimated 1999 2000 Stated Tangible EPS Earnings
GAAP GAAP Estimated Estimated Book Book Growth Growth
EPS EPS Cash EPS Cash EPS Value Value Rate Ratio
--------- --------- --------- --------- ------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch Selected
Company Average........ 17.32x 15.38x 16.37x 14.60x 3.27x 3.69x 12.0% 136%
First American.......... 15.34 13.56 14.24 12.69 2.62 2.98 10.0 136
Imputed Average Value
Per Share Based on
Selected Company Data.. $46.07 $46.28 $46.91 $46.97 $50.96 $50.41
</TABLE>
37
<PAGE>
Peer Group Stock Trading Multiple Analysis--AmSouth. Merrill Lynch also
compared selected operating and stock market results of AmSouth to the publicly
available corresponding data for the companies mentioned above (except that
First American was substituted for AmSouth) that Merrill Lynch determined were
comparable to AmSouth. Merrill Lynch then determined the imputed per share
value of AmSouth common stock based on the multiples arrived at by Merrill
Lynch in its comparability analysis.
The following table compares selected financial data of AmSouth with
corresponding mean data for the companies selected by Merrill Lynch, which data
is based on financial data at or for the quarter ended March 31, 1999, earnings
estimates from First Call as of May 28, 1999, and market prices as of May 28,
1999. The calculations of price-to-1999 and price-to-2000 First Call estimated
earnings per share are based on estimated earnings per share calculated in
accordance with GAAP.
<TABLE>
<CAPTION>
First Call
Price/ Price/ Price/ Projected 2000
1999 2000 Price/ Price/ Price/ Stated Five-Year Price
Estimated Estimated 1999 2000 Stated Tangible EPS Earnings
GAAP GAAP Estimated Estimated Book Book Growth Growth
EPS EPS Cash EPS Cash EPS Value Value Rate Ratio
--------- --------- --------- --------- ------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch Selected
Company Average........ 17.06x 15.13x 16.08x 14.34x 3.16x 3.54x 11.0% 135%
AmSouth................. 17.44 15.53 16.50 14.78 3.51 4.19 11.0 141
Imputed Average Value
Per Share Based on
Selected Company Data.. $27.75 $27.63 $27.65 $27.52 $25.57 $23.97
</TABLE>
No company or transaction used in the comparable company analyses described
above is identical to First American, AmSouth, the pro forma combined company,
or the merger, as the case may be. Accordingly, an analysis of the results of
the foregoing necessarily involves complex considerations and judgments
concerning financial and operating characteristics and other factors that could
affect the merger, public trading or other values of the companies to which
they are being compared. Mathematical analysis (such as determining the average
or median) is not in itself a meaningful method of using comparable transaction
data or comparable company data.
Break-Even Returns Analysis. Merrill Lynch performed a break-even returns
analysis to estimate a range of compound annual growth in earnings (over 1999
estimated earnings), at different terminal multiples, that would be necessary
to achieve a future stock price in three years and five years, the present
value of which was equal to the current per share offer value of $53.09 per
share contemplated in the merger. This analysis also assumed that dividends
received would be reinvested in First American common stock.
In calculating a terminal value of First American common stock in 2002 and
2004, Merrill Lynch applied an assumed price/earnings trading multiple of 13.0x
to 15.0x of next twelve months earnings (based on First American's and its peer
group's average current trading multiples), and also applied an assumed
acquisition multiple of 18.0x to 20.0x of next twelve months earnings. Merrill
Lynch then discounted these terminal values back to May 28, 1999 using a
discount rate of 13%, which rate reflects First American's average cost of
capital.
Based on a trading multiple of between 13.0x to 15.0x of next twelve months
earnings, Merrill Lynch determined that the compound annual growth rate of
earnings over 1999 estimated earnings necessary to provide First American
stockholders with the same present value as an acquisition at $53.09 per share
ranged from 22.54% to 27.77% over the next three years, and 17.71% to 21.13%
over the next five years. Based on an acquisition multiple of between 18.0x to
20.0x of next twelve months earnings, Merrill Lynch determined that the
compound annual growth rate of earnings over 1999 estimated earnings necessary
to provide First American stockholders with the same present value as an
acquisition at $53.09 per share ranged from 11.34% to 15.32% over the next
three years, and 11.13% to 13.50% over the next five years.
38
<PAGE>
Selected Merger and Acquisition Transactions. Merrill Lynch analyzed
publicly available financial, operating, and stock market information for
twelve selected merger and acquisition transactions that have been completed
since 1997 and that involved total consideration that ranged from $1.0 billion
to $10.0 billion to determine certain multiples achieved in such transactions.
Merrill Lynch then determined the imputed per share value of First American
common stock based on the multiples arrived at by Merrill Lynch in its
comparability analysis.
The following transactions were reviewed by Merrill Lynch (in each case, the
first named company is the acquiror and the second named company is the
acquired company in the transaction): HSBC Holdings PLC/Republic New York
Corporation; SunTrust Banks, Inc./Crestar Financial Corp.; Star Banc
Corporation/Firstar Corporation; Union Planters Corporation/Magna Group, Inc.;
Regions Financial Corporation/First Commercial Bancorp, Inc.; First American
Corporation/Deposit Guaranty Corp.; National City Bancorporation/First of
America Bank Corporation; Banc One Corporation/First Commerce Bancshares, Inc.;
First Union Corporation/Signet Banking Corporation; Wachovia
Corporation/Central Fidelity Banks, Inc.; First Bank System, Inc./U.S. Bancorp;
and Allied Irish Banks, P.L.C./Dauphin Deposit Corporation. Merrill Lynch
considered the earlier transactions to be reasonably similar to the merger, but
none of the transactions is identical to the merger. The following table
compares mean data for the above-referenced transactions with comparable data
for the merger and references the imputed per share value of First American
common stock based on such data.
<TABLE>
<CAPTION>
Price/
Price/ Last Price/
Transaction Price/ Tangible Twelve Price/ One Week
Value (in Book Book Months Forward Prior
millions) Value Value EPS EPS Market
----------- ------ -------- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
Merrill Lynch Selected
Company Average........ $4,617 3.47x 3.90x 24.12x 20.84x 1.29x
Merger.................. $6,395 3.49 3.98 21.41 19.95 1.31
Imputed Average Value
Per Share of First
American............... $52.76 $52.10 $59.82 $57.11 $52.18
</TABLE>
Pro Forma Financial Impact. Based on an exchange ratio of 1.871, Merrill
Lynch also analyzed the pro forma per share financial impact of the merger on
(1) AmSouth's and First American's earnings per share for 2000 and 2001, (2)
pro forma AmSouth's book value per share and tangible book value per share, and
(3) First American's dividend payments.
Merrill Lynch's analysis of the impact of the merger on AmSouth's and First
American's estimated earnings per share for both 2000 and 2001 was undertaken
both including the capital leverage and excluding the capital leverage
resulting from the merger. The analysis that included the capital leverage
resulting from the merger was based on consensus First Call earnings estimates
and estimated pre-tax synergies of $129 million in 2000 (which included $17
million of capital leverage) and $234 million in 2001 (which included $66
million of capital leverage). The analysis that excluded capital leverage was
also based on consensus First Call earnings estimates but estimated pre-tax
synergies of $112 million in 2000 (which excluded $17 million of capital
leverage) and $168 million in 2001 (which excluded $66 million of capital
leverage).
The analyses performed indicated that, on a per share basis, the merger
would be accretive to AmSouth's and First American's estimated earnings per
share in each of 2000 and 2001 both including and excluding the capital
leverage resulting from the merger.
The analyses performed also indicated that the merger would be dilutive to
pro forma AmSouth's book value per share and further indicated that the merger
would be dilutive to pro forma AmSouth's tangible book value per share, in each
case as of the completion of the merger. The book value per share and tangible
book value per share analyses included the impact of an estimated pre-tax
merger and integration charge equal to $296 million. Merrill Lynch's analysis
further indicated that the amount of dividends payable to First American
stockholders would increase by 13.6% as a result of the merger.
39
<PAGE>
The actual operating and financial results achieved by the pro forma
combined company may vary from projected results and variations may be material
as a result of business and operational risks, the timing, amount and costs
associated with achieving cost savings and revenue enhancements, as well as
other factors.
First American retained Merrill Lynch based upon its experience and
expertise. Merrill Lynch is an internationally recognized investment banking
and advisory firm. As part of its investment banking business, Merrill Lynch is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes.
In addition, in the ordinary course of its business, Merrill Lynch and its
affiliates may actively trade the debt and equity securities of First American
and AmSouth for their own account and/or the accounts of their respective
customers, and, accordingly, may at any time hold long or short positions in
these securities. In the past two years, Merrill Lynch has provided to First
American financial advisory, investment banking and other services unrelated to
the proposed merger, and has received fees for the rendering of these services.
Merrill Lynch may provide these types of services to the combined company in
the future and receive fees for those services.
Pursuant to a letter agreement between First American and Merrill Lynch,
dated as of May 25, 1999, First American agreed to pay Merrill Lynch for
financial advisory services rendered through the closing of the merger (1) a
fee of $250,000 payable upon the execution of the letter agreement, (2) a
transaction fee of $7,500,000 contingent upon and payable upon the execution of
a definitive agreement by First American to effect a business combination, and
(3) a fee equal to 0.43% of the aggregate purchase price paid in such business
combination, payable in cash if and when such business combination is
completed. Any fees paid to Merrill Lynch under items (1) and (2) will be
credited against any fees payable under item (3). First American also agreed,
among other things, to reimburse Merrill Lynch for certain expenses incurred in
connection with the services provided by Merrill Lynch, and to indemnify
Merrill Lynch and its affiliates from and against certain liabilities and
expenses, which may include certain liabilities under federal securities laws,
in connection with its engagement.
Interests of Management and Directors in the Merger
Some members of First American's and AmSouth's management, and the members
of the First American and AmSouth boards of directors, have interests in the
merger that are in addition to their interests as stockholders of First
American or AmSouth. The First American and AmSouth boards of directors were
aware of these additional interests and considered them in their decision to
approve the merger agreement.
Indemnification and Directors' and Officers' Insurance
The merger agreement provides that AmSouth will indemnify, defend and hold
harmless each present and former director and officer of First American and its
subsidiaries against all costs or expenses, including reasonable attorneys'
fees, judgments, fines, losses, claims, damages or liabilities as incurred, in
connection with any claim, action, suit, proceeding or investigation, arising
out of actions or omissions occurring at or prior to the effective time, to the
fullest extent that First American and its subsidiaries are permitted to
indemnify, and advance expenses to, their directors and officers under
applicable laws.
The merger agreement further provides that, for a period of six years
following the merger, AmSouth shall use its reasonable best efforts to provide
directors' and officers' liability insurance that serves to reimburse the
present and former officers and directors of First American or any of their
subsidiaries with respect to claims arising from facts or events occurring at
or prior to the effective time, which insurance shall contain at least the same
coverage and amounts, and contain terms and conditions no less advantageous, as
that coverage currently provided by First American. In no event, however, will
AmSouth be required to expend more than 200% of the current amount expended by
First American to maintain or procure the directors' and officers' insurance
40
<PAGE>
coverage. The merger agreement provides that if AmSouth is unable to maintain
or obtain the insurance called for by the merger agreement, AmSouth will use
its reasonable best efforts to obtain as much comparable insurance as is
available for the same amount.
New Employment Arrangements Between AmSouth and Officers of First American
In connection with entering into the merger agreement, AmSouth entered into
an employment agreement with Mr. Bottorff. The term of employment starts at the
completion of the merger and ends on January 1, 2001. Under the employment
agreement, Mr. Bottorff will serve as the Chairman of the board of directors of
AmSouth.
During the term of the employment agreement, Mr. Bottorff will be entitled
to receive a base salary at least equal to the annual base salary paid to the
chief executive officer of AmSouth and an annual bonus such that the sum of his
base salary and annual bonus is equal to the greater of the sum of the base
salary and annual bonus paid to AmSouth's chief executive officer and $1.3
million. Mr. Bottorff will also be granted 187,500 shares of restricted AmSouth
common stock on completion of the merger, which will vest on January 1, 2001
or, if earlier, upon a change in control of AmSouth. Beginning in January 2001,
Mr. Bottorff will be paid an annual retirement benefit for life of $1.25
million, less any benefits payable under First American's and AmSouth's
retirement plans. Upon Mr. Bottorff's death, his current spouse, should she
survive him, will be paid an annual benefit of 50% of his retirement benefit
for her life. The employment agreement provides that upon Mr. Bottorff's
termination of employment for any reason, AmSouth will continue to provide him
and his current spouse with medical and dental benefits for the remainder of
their lives on a basis no less favorable than those benefits that were provided
immediately prior to such termination.
The employment agreement further provides that, on a termination of Mr.
Bottorff's employment by AmSouth, other than for cause or disability, or by him
for good reason, he will be entitled to the following benefits:
. a payment of a pro rata annual bonus through the date of termination,
based on the highest annual bonus paid for any of the three years prior
to the termination date, plus
. payment of an amount equal to the product of (a) the number of months
from the date of termination until January 1, 2001, divided by 12 and
(b) the sum of his base salary and annual bonus (based on the highest
annual bonus earned in the three years prior to the termination date),
plus
. immediate vesting of his restricted stock.
If any amounts payable to Mr. Bottorff under the employment agreement or
otherwise would be subject to the excise tax under section 4999 of the Internal
Revenue Code, an additional payment will be made so that after the payment of
all income and excise taxes, Mr. Bottorff will be in the same after-tax
position as if no excise tax under section 4999 had been imposed. However, if
these additional payments (excluding any additional amounts payable due to the
excise tax) do not exceed 110% of the greatest amount that could be paid to Mr.
Bottorff without requiring payment of the excise tax, no additional payments
will be made on account of the excise tax. Instead, the payments otherwise due
to Mr. Bottorff will be reduced as necessary to prevent the application of the
excise tax. On completion of the merger, Mr. Bottorff's employment agreement
with AmSouth will supersede his change in control severance agreement with
First American described below. See "--Effect of the Merger on Existing First
American Severance/Employment Agreements."
In connection with entering into the merger agreement, AmSouth entered into
letter agreements with Dale W. Polley, Robert A. McCabe, Jr. and Allan R.
Landon that provide that, if any such executive's employment is terminated
following the completion of the merger, he will receive the payments and
benefits under his change in control agreement with First American, as if the
termination was other than for cause. See "--Effect of the Merger on Existing
First American Severance Agreements." Also, upon the attainment of age 55,
Messrs. Polley and McCabe, Jr. will be paid an annual retirement benefit for
life of $450,000, and Mr. Landon will be paid an annual retirement benefit of
$270,000, less any benefits payable under First American's and AmSouth's
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tax-qualified and non-qualified retirement plans. Each letter agreement also
provides that 50% of the annual retirement benefit will be paid to a surviving
spouse. In addition, Mr. Polley's letter agreement provides that he will be
provided with retiree medical benefits upon termination of employment.
Effect of the Merger on Existing First American Severance/Employment
Agreements
Change of control severance agreements are in effect between First American
and a number of its executive officers, including Messrs. Bottorff, Polley,
McCabe and Landon. Under the change in control severance agreements, if, during
the two-year period following a change in control, the employment of a covered
executive is terminated by the employer other than for cause or due to death or
disability, or by the covered executive for good reason, the covered executive
will be entitled to receive a payment consisting of:
. the executive's annual bonus for the full year in which the change in
control occurs, based on the higher of (a) the actual annual bonus
earned in the year of the change in control and (b) the target annual
bonus for the year of the change in control (the "annual bonus"), plus
. either two or three times the sum of the covered executive's base salary
and the annual bonus.
Pursuant to the employment agreement between First American and E.B.
Robinson, Jr., (dated as of December 7, 1997) if during the two-year period
following a change of control, his employment is terminated by the employer
other than for cause or due to death or disability, or by him for good reason,
he will be entitled to receive a payment consisting of:
. a pro-rata bonus through the date of termination, based on the highest
annual bonus earned by him in the three years prior to May 1, 1998 (the
"recent annual bonus"), plus
. the product of (a) the number of months from the date of termination
until September 30, 2003 divided by 12 (but in no event less than three)
and (b) the sum of his annual base salary and the recent annual bonus.
Mr. Robinson will also receive service credit through September 30, 2003 for
purposes of calculating the retirement benefit provided under the employment
agreement.
In addition, on a covered termination following a change in control, each
executive will be entitled to continued welfare benefit coverage for either two
or three years after the date of termination (or until September 30, 2003, if
longer, in the case of Mr. Robinson). If any amounts payable to a covered
executive under the change in control severance or employment agreements or
otherwise would be subject to the excise tax under section 4999 of the Internal
Revenue Code, an additional payment will be made so that after the payment of
all income and excise taxes, the executive will be in the same after-tax
position as if no excise tax under section 4999 had been imposed.
The transactions contemplated by the merger agreement will constitute a
change in control for purposes of the change in control severance agreements
and Mr. Robinson's employment agreement. For purposes of Mr. Bottorff's change
in control severance agreement with First American, his employment will be
deemed to be terminated other than for cause upon completion of the merger, and
Mr. Bottorff's new employment agreement with AmSouth will supersede his First
American change in control severance agreement. See "--New Employment
Arrangements Between AmSouth and Officers of First American."
The exact amounts that may become payable to the five First American
executive officers cannot be determined at this time. However, assuming that
the merger is completed in 1999 and that each of these officers is entitled,
immediately following the completion of the merger, to receive the cash
severance payments under his existing change of control severance or employment
agreement with First American, and, in the case of Mr. Bottorff, under his new
employment agreement with AmSouth as described above, the aggregate amount of
these cash severance payments payable to the executive officers would be
approximately $16,611,325.
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Effect of the Merger on Existing First American Stock-Based Rights
The merger agreement provides that, on completion of the merger, each
outstanding and unexercised stock option to purchase shares of First American
common stock granted under First American's stock-based plans will no longer
represent the right to acquire shares of First American common stock and will
become a right to acquire AmSouth common stock.
Under First American's stock-based plans, unvested stock options will become
fully vested and exercisable, and restrictions (including performance goals) on
restricted stock awards will generally lapse, on a change in control of First
American. The transactions provided for by the merger agreement will constitute
a change in control under these plans. Accordingly, in connection with such
change in control:
. the aggregate number of stock options to acquire shares of First
American common stock held by executive officers of First American that
will vest in connection with the merger is 753,620.
. the aggregate number of shares of First American common stock underlying
awards of restricted stock held by executive officers of First American
that will become freely transferable in connection with the merger is
405,144.
. the aggregate number of stock options to acquire shares of First
American common stock held by non-employee directors of First American
that will vest in connection with the merger is 94,800.
Effects of the Merger on Existing AmSouth Incentive Plans and Severance
Agreements
A "change of control" will be deemed to have occurred under certain of
AmSouth's incentive compensation plans in connection with the merger.
Accordingly:
. approximately 827,015 unvested options to purchase AmSouth stock will
become fully vested and exercisable, none of which are held by executive
officers and directors of AmSouth.
. restrictions will lapse with respect to approximately 1,005,755 shares
of restricted stock of AmSouth, approximately 511,300 shares of which
are held by executive officers and directors; and
. approximately $5,811,000 would become due to AmSouth's executive
officers and directors. The actual cash awards payable, however, may be
different from the foregoing estimate, depending upon the future
performance of AmSouth and the date of the merger.
AmSouth also has in place severance agreements with its executive officers
and a number of other senior officers of the company that provide that if
within two years after the completion of the merger any executive officer's
employment is terminated by AmSouth other than for cause or any executive
officer terminates his or her employment for good reason (each as defined in
the severance agreements) such executive officer would be entitled to receive a
lump sum cash payment from AmSouth in an amount equal to three times:
. the executive's highest annual base salary prior to termination; plus
. the executive's annual bonus (computed as the greatest of (1) the
greatest annual bonus earned for the three previously completed fiscal
years, (2) the executive's base bonus opportunity for the bonus plan
year in which the executive was terminated, or (3) a pro rata bonus for
the year of termination based on actual performance of AmSouth compared
to pre-established criteria under AmSouth's short term incentive plan);
plus
. the executive's annual automobile allowance, if any, and the executive's
annual club dues bonus, if any; plus
. the value of an independently determined competitive annual long term
incentive grant (in the 50th percentile compared to AmSouth's peer
group) provided that if the executive has an outstanding grant under
AmSouth's long term incentive compensation plan with a performance
period of more than one year, the amount payable will be reduced pro
rata based on the remaining performance period as of termination.
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In addition, each executive would be entitled to receive:
. the present value of the executive's benefits under AmSouth's
supplemental retirement plan, calculated as if the executive were fully
vested as of the date of the change of control and the executive's
employment continued for another three years; plus
. the amount of benefits accrued by the executive under AmSouth's
supplemental thrift plan, if any; plus
. any relocation benefits that the executive may be entitled to receive
pursuant to AmSouth's relocation plan; plus
. any unpaid salary and a pro rata bonus for the portion of the year
worked up to the date of the executive's termination; plus
. continuation for three years of all welfare plan benefits for the
executive and his or her family; plus
. outplacement services at AmSouth's expense for three years following
termination or until the executive obtains comparable employment; plus
. distribution of the entire balance of the executive's account under the
AmSouth deferred compensation plan.
In addition, if any amounts payable to a covered executive under the
severance agreements or otherwise, or to the chief executive officer pursuant
to the provisions of his employment agreement, would be subject to the excise
tax under section 4999 of the Internal Revenue Code, an additional payment will
be made so that after the payment of all income and excise taxes, the executive
will be in the same after-tax position as if no excise tax under section 4999
has been imposed.
Payments described above under the severance agreements are only required to
be made if there is both a change in control and a termination of employment
within the two-year period following the change in control. Thus, no payments
may in fact be made pursuant to the severance agreements in connection with the
merger. For this reason the exact amounts that may become payable to the
AmSouth executive officers cannot be determined at this time. However, if the
cash payments described above were made under the severance agreements for all
executive officers upon the completion of the merger in 1999, then the
aggregate severance payment (before giving effect to the additional payments
necessary to place the executive officers in a comparable after-tax position
described in the preceding paragraph) would total approximately $9,675,000.
Retention/Incentive Program to be Established
In connection with the merger, First American and AmSouth will establish a
retention/incentive pool in an aggregate amount of up to $25 million to be
allocated among the senior management of First American (other than Mr.
Bottorff) by Mr. Bottorff in consultation with Mr. Ritter. First American
employees who are covered by a change in control severance agreement (other
than Messrs. McCabe and Landon) will only be eligible to participate in the
incentive portion of the retention/incentive pool. This retention/incentive
pool may also be used to provide other benefits, such as post-retirement
benefits.
Management and Operations of AmSouth After the Merger
First American will be the surviving corporation resulting from the merger
with Merger Sub, and become a wholly owned subsidiary of AmSouth. First
American will continue to be governed by the laws of the State of Tennessee and
will operate in accordance with its charter and by-laws as in effect
immediately prior to the effective time. However, all stockholders of First
American will become AmSouth stockholders as a result of the merger, and their
rights will be governed by AmSouth's certificate of incorporation and by-laws
and by Delaware law.
The twelve directors of AmSouth before the merger will continue to be the
directors of AmSouth after the merger, except that five additional directors
will be designated by First American to the AmSouth board of directors,
including Mr. Bottorff, who will also serve as chairman of the board of
directors.
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Public Trading Markets
AmSouth common stock is currently listed on the NYSE under the symbol "ASO."
First American common stock is currently listed on the NYSE under the symbol
"FAM." Upon completion of the merger, First American common stock will be
delisted from the NYSE and deregistered under the Securities Exchange Act of
1934. The authorization for listing on the NYSE of the newly issued AmSouth
common stock issuable to First American stockholders pursuant to the merger
agreement is a condition to the completion of the merger.
Absence of Appraisal Rights
Appraisal rights are statutory rights that enable stockholders who object to
certain extraordinary transactions, such as mergers, to demand that the
corporation pay the fair value for their shares as determined by a court in a
judicial proceeding instead of receiving the consideration offered to
stockholders in connection with the extraordinary transaction. Appraisal rights
are not available in all circumstances.
AmSouth stockholders are not entitled to appraisal rights under Delaware law
in connection with the merger because Delaware law does not require that
AmSouth stockholders approve the merger agreement.
First American stockholders are not entitled to appraisal rights under
Tennessee law in connection with the merger because First American common stock
is expected to continue to be listed on the NYSE as of the closing date of the
merger.
Resales of AmSouth Common Stock
The shares of AmSouth common stock to be issued in connection with the
merger will be freely transferable under the Securities Act, except for shares
issued to any stockholder who may be deemed to be an "affiliate" (generally
including, without limitation, directors, certain executive officers, and
beneficial owners of 10% or more of any class of capital stock) of First
American for purposes of Rule 145 under the Securities Act as of the date of
the special meeting. Affiliates may not sell their shares of AmSouth common
stock acquired in the merger except pursuant to an effective registration
statement under the Securities Act or an applicable exemption from the
registration requirements of the Securities Act, including Rule 145.
First American has agreed in the merger agreement to use its reasonable best
efforts to cause each person who may be deemed to be an "affiliate" of First
American to execute and deliver to AmSouth an agreement pursuant to which that
person agrees, among other things, not to offer to sell, transfer or otherwise
dispose of any of the shares of AmSouth common stock distributed to him or her
pursuant to the merger except in compliance with Rule 145 under the Securities
Act, or in a transaction that, in the opinion of counsel reasonably
satisfactory to AmSouth, is otherwise exempt from the registration requirements
of the Securities Act, or in an offering registered under the Securities Act.
AmSouth may place restrictive legends on certificates representing AmSouth
common stock issued to all persons who are deemed to be "affiliates" of First
American under Rule 145. This document does not cover any resales of AmSouth
common stock received in the merger.
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THE MERGER AGREEMENT
The following describes certain aspects of the proposed merger, including
material provisions of the merger agreement. The following description of the
merger agreement does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the merger agreement, which is
attached as Appendix A and is incorporated by reference in this document. All
AmSouth stockholders and First American stockholders are urged to read the
merger agreement carefully and in its entirety.
Introduction
The merger agreement provides for the acquisition of First American by
AmSouth in a transaction in which Merger Sub, a newly formed subsidiary of
AmSouth, will merge with and into First American. First American will be the
surviving corporation of the merger and a subsidiary of AmSouth.
Terms of the Merger
At the time the merger becomes effective, each share of issued and
outstanding First American common stock will be canceled and cease to be
outstanding and will be converted into the right to receive 1.871 (the
"exchange ratio") shares of AmSouth common stock.
The merger agreement provides that, subject to stockholder approval, AmSouth
would increase the authorized number of shares of AmSouth common stock to
shares from the 350 million shares currently authorized to 750 million shares,
and issue shares of AmSouth common stock to First American stockholders. The
merger cannot be completed unless this increase is effected.
The transaction is intended to qualify as a "pooling of interests" for
accounting and financial reporting purposes and as a tax-free "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, for
federal income tax purposes.
As a result of the merger, AmSouth stockholders immediately prior to the
merger initially will own approximately 44%, and First American stockholders
immediately prior to the merger initially will own approximately 56%, of
AmSouth common stock to be outstanding immediately after the merger, based on
the number of shares of AmSouth common stock and First American common stock
outstanding as of August 12, 1999, and on the exchange ratio.
Closing and Effective Time of the Merger
The merger will be consummated if all of the following occur:
. the merger agreement is approved by the First American stockholders,
. the increase in authorized AmSouth common stock and the issuance of
AmSouth common stock to First American stockholders pursuant to the
merger agreement is approved by the AmSouth stockholders, and
. AmSouth and First American obtain all required consents and approvals
and all other conditions to the merger are either satisfied or waived.
The merger will become effective when both the certificate of merger is duly
filed with the Secretary of State of the State of Delaware and the articles of
merger are duly filed with the Secretary of State of the State of Tennessee, or
at a later time as may be indicated in the certificates or articles. AmSouth
and First American each has the right to terminate the merger agreement if the
merger is not completed by February 15, 2000.
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Conditions to Completion of the Merger
The obligations of AmSouth and First American to consummate the merger are
subject to the satisfaction or written waiver prior to the effective time of
the following conditions:
. the merger agreement is approved by the stockholders of First American;
. the stockholders of AmSouth adopt and approve the amendment to the
AmSouth certificate of incorporation to increase the authorized number
of shares of AmSouth common stock to 750 million shares and the issuance
of shares of AmSouth common stock to First American stockholders
pursuant to the merger agreement;
. any required regulatory approvals that are necessary to permit
consummation of the merger, including those described below under "--
Regulatory Approvals Required for the Merger", are received and remain
in effect, and all applicable waiting periods have expired, without any
conditions that would, following the effective time, have a material
adverse effect on AmSouth and its subsidiaries or First American and its
subsidiaries;
. no court or regulatory authority has taken any action prohibiting the
consummation of the merger;
. the registration statement of which this document constitutes a part is
declared effective by the SEC and is not subject to a stop order or any
threatened stop order;
. the shares of AmSouth common stock issuable in the merger are approved
for listing on the NYSE;
. the representations and warranties of each party are true and correct
other than any inaccuracies that would not be reasonably likely,
individually or in the aggregate, to have a material adverse effect on
the financial condition, results of operations or business of the party
by whom the representations and warranties were made and its
subsidiaries taken as a whole, and each party has performed in all
material respects all of the obligations required to be performed by it
at or prior to the effective time of the merger pursuant to the merger
agreement, and shall have delivered certificates confirming satisfaction
of these requirements;
. AmSouth receives the opinion of Sullivan & Cromwell substantially to the
effect that, on the basis of facts, representations and assumptions
described in that opinion that are consistent with the state of facts
existing at the effective time:
. the merger will be treated as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code; and
. AmSouth, First American and Merger Sub will each be a party to the
reorganization under Section 368(b) of the Internal Revenue Code;
. First American receives the opinion of Wachtell, Lipton, Rosen & Katz
substantially to the effect that, on the basis of facts, representations
and assumptions described in that opinion that are consistent with the
state of facts existing at the effective time:
. the merger will be treated as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code;
. AmSouth, First American and Merger Sub will each be a party to the
reorganization under Section 368(b) of the Internal Revenue Code;
and
. no gain or loss will be recognized by First American stockholders
who receive only shares of AmSouth common stock in exchange for all
of their First American common stock (except with respect to cash
received instead of a fractional share interest in AmSouth common
stock);
. AmSouth and First American receive letters from independent public
accountants in form and substance satisfactory to AmSouth and First
American stating that the merger will qualify for pooling-of-interests
accounting treatment; and
. the amendment to the AmSouth certificate of incorporation increasing the
number of authorized shares of AmSouth common stock to 750 million
shares has become effective.
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No assurances can be provided as to when or if all of the conditions to the
merger can or will be satisfied or waived by the appropriate party. As of the
date of this document, the parties have no reason to believe that any of these
conditions will not be satisfied.
Representations and Warranties
The merger agreement contains various representations and warranties made by
AmSouth and First American, some of which are qualified as to materiality,
regarding the following matters, among others:
. corporate existence, organization, standing, authority and
capitalization;
. ownership of the shares of capital stock of its material subsidiaries,
and the corporate existence, organization, standing and authority of its
material subsidiaries;
. corporate power and authority to execute, deliver and perform its
obligations under the transaction documents, and to consummate the
merger, subject only to stockholder approval;
. that the merger agreement and the related transactions will not result
in a violation of AmSouth's or First American's organizational documents
or contracts to which AmSouth or First American, or any of their
subsidiaries, is a party, or violate any law, rule or regulation;
. absence of regulatory disqualifications;
. consents and regulatory approvals necessary to complete the merger;
. documents filed with the SEC, including financial statements, and the
accuracy of information contained in them;
. absence of certain material adverse events, changes or effects;
. pending or threatened suits, actions or other proceedings;
. no claims for brokerage commissions, except to the financial advisors of
AmSouth and First American in connection with the merger;
. employee benefit plans;
. labor matters;
. environmental matters;
. derivative instruments;
. insurance matters;
. tax matters;
. compliance with laws and required licenses and permits;
. accounting matters, including qualification of the merger as a "pooling
of interests" transaction;
. material contracts;
. the application of antitakeover laws to the merger;
. rights agreements will not be triggered; and
. year 2000 compliance.
Covenants
Conduct of Business Pending the Merger
The following is a general summary of the agreements AmSouth and First
American have regarding their actions prior to the merger. We urge you to read
the merger agreement, which is attached to this document as Appendix A, for a
more complete description of these agreements.
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AmSouth and First American have each agreed as to itself and each of its
subsidiaries, from the date of the merger agreement to the completion of the
merger, unless the other party otherwise approves in writing, and except as
otherwise expressly contemplated by the merger agreement or disclosed to the
other party, that, among other things:
. it will not conduct its business and the business of its subsidiaries
other than in the ordinary and usual course or fail to use reasonable
efforts to preserve their business organizations and assets and maintain
their rights, franchises and existing relations with customers,
suppliers, employees and business associates, or take any action
reasonably likely to materially impair its ability to perform its
obligations under the merger agreement or the option agreements or to
consummate the related transactions;
. it will not, other than AmSouth shares to be issued to the First
American stockholders pursuant to the merger agreement or to rights
previously disclosed and outstanding on the date of the merger
agreement, (1) issue, sell or otherwise permit to become outstanding, or
dispose of or encumber or pledge or authorize or propose the creation
of, any additional shares of its stock or any rights (except in
connection with acquisitions otherwise permitted under the merger
agreement), (2) enter into any agreement with respect to the foregoing
or (3) permit any additional shares of its stock to become subject to
new grants, except in the ordinary course of business, of employee or
director stock options, other rights or similar stock-based employee
rights;
. it will not (1) make, declare, pay or set aside for payment any dividend
(other than (A) dividends from its wholly owned subsidiaries to it or
another of its wholly owned subsidiaries and (B) regular quarterly
dividends on its common stock at a rate equal to the rate paid by it
during the fiscal quarter immediately preceding the date of the merger
agreement (but including any increases in dividends as are consistent
with past practice in the ordinary course of business)) on or in respect
of, or declare or make any distribution on, any shares of its stock or
(2) directly or indirectly adjust, split, combine, redeem, reclassify,
purchase or otherwise acquire, any shares of its capital stock;
. it will not enter into or amend or renew any employment, consulting,
severance or similar agreements or arrangements with any of its
directors, officers or employees or those of its subsidiaries, or
release or otherwise terminate the employment of any employee, except in
the ordinary course of business, or terminate the employment of any
employee who is covered by a change in control agreement except for
cause as defined in that agreement, or hire any new employees above the
rank of vice president, or grant any salary or wage increase or increase
any employee benefit (including incentive or bonus payments), except (1)
for normal individual increases in compensation to employees in the
ordinary course of business consistent with past practice, (2) for other
changes that are required by applicable law and (3) to satisfy
previously disclosed contractual obligations existing as of the date of
the merger agreement;
. it will not enter into, establish, adopt or materially amend (except (1)
as may be required by applicable law or (2) to satisfy previously
disclosed contractual obligations existing as of the date of the merger
agreement) 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 (or similar arrangement) related
thereto, in respect of any of its directors, officers or employees or
those of its subsidiaries, or take any action to accelerate the vesting
or exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder;
. it will not sell, transfer, mortgage, encumber or otherwise dispose of
or discontinue any of its assets, deposits, business or properties
except for sales, transfers, mortgages, encumbrances or other
dispositions or discontinuances in the ordinary course of business
consistent with past practice and in a transaction that, together with
any other transactions, is not material to it and its subsidiaries,
taken as a whole;
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. it will not acquire (other than by way of foreclosures or acquisitions
of control in a fiduciary or similar capacity or in satisfaction of
debts previously contracted in good faith, in each case in the ordinary
and usual course of business consistent with past practice) all or any
portion of the assets, business, deposits or properties of any other
entity except in the ordinary course of business consistent with past
practice and in a transaction that, together with any other
transactions, is not material to it and its Subsidiaries, taken as a
whole;
. it will not amend its certificate of incorporation or by-laws or the
certificate of incorporation or by-laws (or similar governing documents)
of any of its subsidiaries, except that AmSouth will amend its
certificate of incorporation to permit the AmSouth shares to be issued
to the First American stockholders pursuant to the merger agreement;
. it will not implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or
applicable regulatory accounting requirements;
. it will not (1) enter into, renew or terminate, or make any payment not
then required under, any contract or agreement, other than loans and
other transactions made in the ordinary course of the banking business,
that calls for aggregate annual payments of $2 million or more and which
is not terminable on 60 days or less notice without payment of a premium
or penalty or (2) enter into any contract or agreement pertaining to the
use of the name "First American" or any derivative thereof unless the
contract or agreement provides that the name "AmSouth" can be
substituted therefor or that the contract or agreement can be canceled
by First American or its successor without any appreciable penalty;
. it will not, other than in the ordinary course of business, settle any
claim, action or proceeding against it, except for any claim, action or
proceeding in an amount or for consideration, considered individually or
in the aggregate for all settlements, that is not material to it and its
subsidiaries, taken as a whole, and would not impose any material
restriction on the business of First American after the effective date
or create precedent for claims that are reasonably likely to be material
to it and its subsidiaries, taken as a whole;
. it will not (1) take, or knowingly fail to take, any action that would,
or is reasonably likely to, prevent or impede the merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code or qualifying for pooling-of-interests accounting treatment
or (2) take any action that is reasonably likely to result in (A) any of
the conditions to the merger not being satisfied or (B) a material
violation of any provision of the merger agreement except as may be
required by applicable law or regulation;
. it will not, other than in the ordinary course of business, make any
capital expenditures in excess of (A) $2 million per project or related
series of projects or (B) $8 million in total;
. it will not borrow money other than in the ordinary course of business;
and
. it will not agree or commit to do any of the foregoing.
In addition, AmSouth and First American have agreed to coordinate the
declaration of any dividends or other distributions with respect to the AmSouth
common stock and the First American common stock and any related record dates
and payment dates. AmSouth and First American intend that holders of shares of
AmSouth and First American common stock shall not receive more than one
dividend, or fail to receive one dividend, for any calendar quarter on their
shares of common stock (including any shares of AmSouth common stock received
in exchange in the merger).
Agreement Not to Solicit Other Offers
Each of AmSouth and First American has also agreed that it will not, and
will cause its subsidiaries and its subsidiaries' representatives not to,
initiate or solicit any inquiries or any offer relating to a tender offer,
exchange offer, merger, consolidation, business combination or similar proposal
involving AmSouth or First
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American (this type of proposal is referred to in this document as an
"acquisition proposal") or waive any provision of or amend the terms of the
AmSouth rights agreement or the First American rights agreement, respectively,
in respect of an acquisition proposal. Each of AmSouth and First American have
agreed that it will immediately stop any activities, discussions or
negotiations conducted with any persons other than First American or AmSouth,
as the case may be, with respect to any of the foregoing and will use its
reasonable best efforts to enforce any confidentiality or similar agreement
relating to an acquisition proposal. Each of AmSouth and First American have
agreed that it will promptly (within 24 hours) advise the other party following
the receipt of any acquisition proposal (including the identity of the person
making the acquisition proposal), and will keep the other party apprised of any
developments on a current basis.
Additional Agreements
Expenses and Fees
Each party will be responsible for all expenses incurred by it in connection
with the negotiation and consummation of the transactions contemplated by the
merger agreement. AmSouth and First American have agreed, however, to share
equally any SEC fees and printing expenses.
Accounting Treatment
AmSouth and First American intend for the merger to be accounted for as a
"pooling of interests," as that term is used under GAAP, for accounting and
financial reporting purposes. Based on the advice of their respective
independent public accountants to date, AmSouth and First American believe that
the merger will qualify for this treatment. Under the "pooling of interests"
method of accounting, AmSouth will restate its consolidated financial
statements for prior periods at the effective time of the merger to include the
assets, liabilities, stockholders' equity and results of operations of First
American as if First American had always been a wholly owned subsidiary of
AmSouth. Completion of the merger is conditioned on receipt by AmSouth and
First American of letters from their respective independent public accounting
firms to the effect that the merger will qualify as a "pooling of interests"
for accounting purposes.
Stock Exchange Listing of AmSouth Common Stock
AmSouth has agreed to use commercially reasonable efforts to list the shares
of AmSouth common stock to be issued to the holders of First American common
stock on the NYSE prior to the effective date.
Other Agreements
The merger agreement contains additional agreements relating to the conduct
of the parties prior to the merger, including the following:
. to promptly make their respective filings with applicable governmental
entities;
. to use reasonable best efforts in obtaining all necessary regulatory
approvals and consents;
. to give prompt notice of any event or circumstance known which is
reasonably likely to result in a material adverse effect or a material
breach of a party's representations or agreements in the merger
agreement;
. to afford the other party reasonable access to information pertaining to
it;
. to use reasonable best efforts in good faith to take all actions to
permit completion of the merger as promptly as practicable;
. in the case of AmSouth, to take all action necessary to convene a
meeting of its stockholders as promptly as practicable to consider and
vote upon the increase in authorized AmSouth common stock and the
issuance of AmSouth common stock in the merger;
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. in the case of First American, to take all action necessary to convene a
meeting of its stockholders as promptly as practicable to approve the
merger agreement;
. to have their boards of directors maintain recommendations to their
stockholders in favor of the transactions contemplated by the merger
agreement and use their reasonable best efforts to obtain stockholder
approval;
. to consult with and obtain the consent of the other before issuing any
press release with respect to the merger or the merger agreement;
. to use their reasonable best efforts to cause their directors and
officers to enter into agreements intended to assure compliance with
securities and pooling rules in any sales of First American or AmSouth
common stock;
. to take all necessary steps within their control to avoid the
application to the merger of any applicable antitakeover laws or
defensive provisions of their certificates of incorporation or by-laws;
. in the case of AmSouth, to comply with the employee benefit plans of
First American;
. to not redeem the rights issued pursuant to their rights agreements or
modify such agreements, except as required to consummate the merger;
. in the case of AmSouth, to maintain First American's charitable
commitment to its communities through the First American charitable
foundation; and
. in the case of AmSouth, to exempt from liability under Section 16(b) of
the Securities Exchange Act of 1934 the issuance of shares of AmSouth
common stock pursuant to the merger to corporate insiders of First
American.
Post-Merger Compensation and Benefits
The merger agreement provides that after the effective time, the combined
company will honor existing First American benefit plans and will provide
employees of First American who remain employees after the effective time (the
"continuing employees") with employee benefits which are no less favorable in
the aggregate than those provided to similarly situated employees of AmSouth
and its subsidiaries. The merger agreement provides that any continuing
employees generally will receive credit under AmSouth's employee benefit plans
for their service with First American or any of its subsidiaries prior to the
effective time, to the extent First American credited that service under a
comparable plan, for the purpose of determining eligibility to participate,
vesting and benefit accrual, but not for the purpose of benefit accrual under a
defined benefit pension plan. The merger agreement provides that AmSouth
generally will cause any and all pre-existing condition limitations and waiting
periods under group health plans to be waived with respect to the continuing
employees and their eligible dependents. The merger agreement further provides
that the combined company will cause to be credited any deductibles or out-of-
pocket expenses incurred by employees of First American and their beneficiaries
and dependents during the portion of the calendar year prior to their
participation in AmSouth benefit plans. AmSouth and First American agree to
honor all vested or accrued benefit obligations to, and contractual rights of,
current and former employees of First American and its subsidiaries, including,
without limitation, any benefits or rights arising as a result of the merger.
In connection with the merger, First American and AmSouth have established a
retention pool in an aggregate amount of up to $15 million to be allocated
among the employees of First American (other than senior management) who are
deemed critical to consummation and implementation of the merger.
Treatment of Outstanding Options
At the effective time, each First American stock option, whether vested or
unvested, is to be converted into an option to purchase shares of AmSouth
common stock and shall no longer represent a right to acquire shares of First
American common stock. These options shall be adjusted so that (1) the number
of shares of
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AmSouth common stock purchasable upon exercise of the First American stock
option shall be equal to the number of shares of First American common stock
that were purchasable under the First American stock option immediately prior
to the effective time multiplied by the exchange ratio, and rounded to the
nearest whole share, and (2) the per share exercise price under each First
American stock option shall be adjusted by dividing the per share exercise
price of the First American stock option by the exchange ratio, and rounding
down to the nearest cent. However, each First American stock option which is
intended to be an "incentive stock option" shall be adjusted in accordance with
the requirements of the Internal Revenue Code. Accordingly, with respect to any
incentive stock options, fractional shares shall be rounded down to the nearest
whole number of shares and where necessary the per share exercise price shall
be rounded down to the nearest cent. At or prior to the effective time, AmSouth
must take all corporate action necessary to reserve for issuance a sufficient
number of shares of AmSouth common stock for delivery upon exercise of the
First American stock options assumed by it in accordance with the merger
agreement. As soon as practicable after the effective time, AmSouth must file a
registration statement in appropriate form covering the issuance of AmSouth
common stock subject to the First American stock options that are converted
pursuant to the terms of the merger.
Distribution of AmSouth Certificates
At or prior to the effective time, AmSouth shall cause to be deposited with
AmSouth's exchange agent for the benefit of the holders of certificates
formerly representing shares of First American common stock, certificates
representing the shares of AmSouth common stock.
Promptly after the effective date, AmSouth will send transmittal materials
to each First American stockholder for use in exchanging his or her
certificates representing shares of First American common stock for shares of
AmSouth common stock. First American stockholders should not surrender their
certificates for exchange until they receive the letter of transmittal and
instructions. The exchange agent will deliver certificates for AmSouth common
stock and/or a check for any fractional share interests or dividends or
distributions once it receives the certificates representing a holder's shares
of First American common stock. No party will be liable to any stockholder for
any amount properly delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
If you participate in First American's Dividend Reinvestment and Stock
Purchase Plan, the First American shares held in your account under the plan
will be converted to shares of AmSouth common stock at the exchange rate. These
AmSouth shares will then be held in an account for you under AmSouth's Dividend
Reinvestment and Common Stock Purchase Plan and you will be considered a
participant in AmSouth's plan. If you do not want to become a participant in
AmSouth's plan, you should terminate your participation in First American's
plan prior to the effective date.
Following the 30th day after the effective date, AmSouth will not pay any
dividends or other distributions with respect to AmSouth common stock with a
record date occurring after the effective time to any former First American
stockholder who has not exchanged his or her certificates representing First
American common stock. After exchanging his or her certificates for AmSouth
stock certificates, all paid dividends and other distributions and, if
applicable, a check for the amount to be paid for any fractional shares will be
delivered to that stockholder, in each case without interest.
After the effective time, there will be no transfers of shares of First
American common stock on First American's stock transfer books. If certificates
representing shares of First American common stock are presented for transfer
after the effective time, the exchange agent or AmSouth will cancel and
exchange them for certificates representing shares of AmSouth common stock and
a check for the amount to be paid for fractional shares of AmSouth common
stock, if any.
Fractional Shares
AmSouth will not issue any fractional shares of AmSouth common stock.
Instead, a First American stockholder who would otherwise have received a
fraction of a share of AmSouth common stock will receive
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cash (without interest). The amount of cash received will be determined by
multiplying the fraction of AmSouth common stock the stockholder would have
been entitled to receive by the average of the last reported sale prices of
AmSouth common stock, as reported by the NYSE Composite Transactions Reporting
System (as reported in The Wall Street Journal or other reliable source), for
the five trading days immediately preceding the effective date. Holders will
not be entitled to dividends, voting rights or any other rights as a
stockholder with respect to any fractional shares.
Federal Income Tax Consequences of the Merger
The following is a summary of the material U.S. federal income tax
consequences to holders of First American common stock who hold the stock as a
"capital asset" within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code"). Special tax consequences may be applicable to
particular classes of taxpayers, such as financial institutions, insurance
companies, tax-exempt organizations, broker-dealers, traders in securities that
elect to apply a mark-to-market method of accounting, persons that hold First
American common stock as part of a hedge, straddle or conversion transaction,
persons who are not citizens or residents of the United States and stockholders
who acquired their shares of First American common stock through the exercise
of an employee stock option or otherwise as compensation. The following
represents general information only and is based upon the Code, its legislative
history, existing and proposed regulations thereunder, published rulings and
decisions, all as currently in effect as of the date hereof, and all of which
are subject to change, possibly with retroactive effect. Tax considerations
under state, local and foreign laws are not addressed in this document. All
stockholders should consult with their own tax advisors as to the particular
tax consequences of the merger to them, including the applicability and effect
of the alternative minimum tax and any state, local or foreign income and other
tax laws and of changes in those tax laws.
Tax Consequences of the Merger Generally. AmSouth will not be obligated to
complete the merger unless AmSouth receives an opinion of its counsel, Sullivan
& Cromwell, dated the closing date of the merger, to the effect that, on the
basis of facts, representations and assumptions set forth in that opinion, the
merger will be treated as a reorganization within the meaning of Section 368(a)
of the Code and that AmSouth, First American and Merger Sub will each be a
party to the reorganization under 368(b) of the Code. First American will not
be obligated to complete the merger unless First American receives an opinion
of its special counsel, Wachtell, Lipton, Rosen & Katz, dated the closing date
of the merger, to the effect that, on the basis of facts, representations and
assumptions set forth in that opinion, (1) the merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code, (2) AmSouth,
First American and Merger Sub will each be a party to the reorganization under
Section 368(b) of the Code and (3) no gain or loss will be recognized by First
American stockholders who receive solely shares of AmSouth common stock in
exchange for all their First American common stock, except with respect to cash
received instead of a fractional share interest in AmSouth common stock.
Neither of these tax opinions will be binding on the Internal Revenue Service,
but neither AmSouth nor First American intends to request any ruling from the
Internal Revenue Service as to the U.S. federal income tax consequences of the
merger.
AmSouth and First American have received opinions of Sullivan & Cromwell and
Wachtell, Lipton, Rosen & Katz, respectively, in each case dated the date of
this document, to the foregoing effect. Sullivan & Cromwell and Wachtell,
Lipton, Rosen & Katz have delivered their respective opinions on the basis of
facts, representations and assumptions set forth in such opinions that are
consistent with the state of facts expected to exist at the effective time of
the merger. In rendering their respective opinions, Sullivan & Cromwell and
Wachtell, Lipton, Rosen & Katz have required and relied upon certain
representations contained in certificates of officers of AmSouth and First
American. Based on those opinions, for U.S. federal income tax purposes (1) no
gain or loss will be recognized by AmSouth or First American pursuant to the
merger and (2) a stockholder of First American who receives solely AmSouth
common stock in exchange for its shares of First American
common stock in the merger will not recognize any gain or loss (except, as
discussed below, with respect to cash received instead of fractional shares of
AmSouth common stock).
Exchange of First American Common Stock Solely for AmSouth Common Stock. A
stockholder of First American who receives solely AmSouth common stock in
exchange for its shares of First American common
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stock in the merger generally will not recognize any gain or loss upon the
exchange. The stockholder may recognize gain or loss, however, with respect to
cash received instead of a fractional share of First American common stock, as
discussed below. The aggregate adjusted tax basis of the shares of AmSouth
common stock received in the exchange (including fractional shares deemed
received and redeemed as described below) will be equal to the aggregate
adjusted tax basis of the shares surrendered, and the holding period of the
AmSouth common stock (including fractional shares deemed received and redeemed
as described below) will include the holding period of the shares of First
American common stock surrendered.
Cash Received Instead of a Fractional Interest of AmSouth Common Stock. A
stockholder of First American who receives cash instead of a fractional share
of AmSouth common stock will be treated as having received the fractional share
pursuant to the merger and then as having exchanged the fractional share for
cash in a redemption by AmSouth subject to Section 302 of the Code. This deemed
redemption will be treated as a sale of the fractional share, provided that it
is not "essentially equivalent to a dividend" or is "substantially
disproportionate" with respect to the First American stockholder. If the deemed
redemption is treated as a sale of a fractional share, a First American
stockholder will recognize capital gain or loss equal to the difference between
the amount of cash received and the portion of the basis of the shares of
AmSouth common stock allocable to the fractional interest. This capital gain or
loss will be long-term capital gain or loss if, as of the date of the exchange,
the holding period for the shares is greater than one year.
Backup Withholding and Information Reporting. Payments of cash to a holder
surrendering shares of First American common stock will be subject to
information reporting and "backup" withholding at a rate of 31% of the cash
payable to the holder, unless the holder furnishes its taxpayer identification
number in the manner prescribed in applicable Treasury Regulations, certifies
that number is correct, certifies as to no loss of exemption from backup
withholding and meets certain other conditions. Any amounts withheld from
payments to a holder under the backup withholding rules will be allowed as a
refund or credit against the holder's U.S. federal income tax liability,
provided the required information is furnished to the Internal Revenue Service.
Regulatory Approvals Required for the Merger
AmSouth and First American have agreed to use their reasonable best efforts
to obtain all regulatory approvals required to consummate the transactions
contemplated by the merger agreement, which include approval from the Board of
Governors of the Federal Reserve System and various state and other regulatory
authorities, and have completed the filing of these applications and
notifications prior to the date of this document. The merger cannot proceed in
the absence of these regulatory approvals. There can be no assurance that these
regulatory approvals will be obtained, and, if obtained, there can be no
assurance as to the date of any such approvals or the absence of any litigation
challenging such approvals. There can likewise be no assurance that the United
States Department of Justice or any state attorney general will not attempt to
challenge the merger on antitrust grounds, or, if such a challenge is made,
there can be no assurance as to its result.
AmSouth and First American are not aware of any other material governmental
approvals or actions that are required prior to the parties' consummation of
the merger other than those described below. It is presently contemplated that
if any such additional governmental approvals or actions are required, such
approvals or actions will be sought. There can be no assurance, however, that
any such additional approvals or actions will be obtained.
Federal Reserve Board. The merger is subject to approval by the Federal
Reserve Board pursuant to Sections 3 and 4 of the Bank Holding Company Act of
1956 and Section 25(a) of the Federal Reserve Act. AmSouth has filed the
required application and notifications with the Federal Reserve Board for
approval of the merger. Assuming Federal Reserve Board approval, the merger may
not be consummated until 30 days after such approval, during which time the DOJ
may challenge the Merger on antitrust grounds. With the approval of the Federal
Reserve Board and the DOJ, the waiting period may be reduced to no less than 15
days.
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The Federal Reserve Board is prohibited from approving any transaction under
the applicable statutes that would result in a monopoly, or that would 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 that
may have the effect in any section of the United States of substantially
reducing competition, or tending to create a monopoly, or resulting in a
restraint of trade, unless the Federal Reserve Board finds that the anti-
competitive effects of the transaction are clearly outweighed in the public
interest by the probable effect of the transaction in meeting the convenience
and needs of the communities to be served.
In addition, in reviewing a transaction under the Bank Holding Company Act,
the Federal Reserve Board will consider the financial and managerial resources
of the companies and their subsidiary banks. It will also consider the
convenience and needs of the communities to be served. As part of its
consideration of these factors, we expect that the Federal Reserve Board will
consider the regulatory status of AmSouth and First American, our respective
progress in achieving resolution of Year 2000 computer problems and the overall
capital and safety and soundness standards established by and under the Federal
Deposit Insurance Corporation Improvement Act of 1991.
Under the Community Reinvestment Act of 1977 the Federal Reserve Board will
take into account the performance record of each of AmSouth and First American
in meeting the credit needs of the entire community, including low- and
moderate-income neighborhoods, served by each company. Both AmSouth Bank and
First American National Bank have sponsored a variety of programs and services
which are designed to meet the credit needs of low-to-moderate income persons
and communities they serve. For example, AmSouth Bank has provided leadership
and financial support for the Alabama Multifamily Loan Consortium, a nonprofit
organization whose mission is to provide affordable housing financing
particularly in rural parts of Alabama. Similarly, First American National Bank
has successfully sponsored and serviced affordable housing grants through the
Federal Home Loan Bank, in all of its service areas. Each of AmSouth Bank and
First American National Bank has received a satisfactory Community Reinvestment
Act rating from its federal regulator.
The Federal Reserve Board will furnish notice and a copy of the application
for approval of the merger to the Office of the Comptroller of the Currency,
the Federal Deposit Insurance Corporation, the Office of Thrift Supervision,
and the appropriate state regulatory authorities. These agencies have 30 days
to submit their views and recommendations to the Federal Reserve Board. The
Federal Reserve Board must hold a public hearing if it receives a written
recommendation of disapproval of the application from any of these agencies
within the 30-day period. Furthermore, the Bank Holding Company Act and Federal
Reserve Board regulations require publication of notice of, and the opportunity
for public comment on, the application submitted by AmSouth for approval of the
merger, and authorize the Federal Reserve Board to hold a public hearing or
meeting in connection therewith if the Federal Reserve Board determines that
such a hearing or meeting would be appropriate. Any hearing, meeting or
comments from third parties could prolong the review of our application.
If the DOJ were to commence an antitrust action, it would stay the
effectiveness of Federal Reserve Board approval of the merger unless a court
specifically orders otherwise. In reviewing the merger, the DOJ could analyze
the merger's effect on competition differently than the Federal Reserve Board.
It is possible that the DOJ could reach a different conclusion than the Federal
Reserve Board regarding the merger's competitive effects. In particular, the
DOJ may focus on the impact of the merger on competition for loans and other
financial services to small- and middle-market businesses. Failure of the DOJ
to object to the merger may not prevent private persons or state attorneys
general from filing antitrust actions.
First American's and AmSouth's rights to exercise their respective options
under the option agreements also require the prior approval of the Federal
Reserve Board, to the extent that the exercise of their options under the
option agreements would cause First American or AmSouth to own more than 5% of
the outstanding shares of the other. Each of AmSouth and First American has
filed or intends to file the required application and notifications with the
Federal Reserve Board for approval of the exercise of its option under the
relevant Option Agreement. In considering whether to approve First American's
or AmSouth's right to exercise its
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respective option, the Federal Reserve Board would generally apply the same
statutory criteria it would apply to its consideration of approval of the
merger.
State Regulatory Authorities. Applications or notifications have been filed
with the Office of Thrift Supervision and with various state regulators as the
merger may be considered to cause acquisitions or changes in control of
subsidiaries of First American doing business in these states. In addition, the
merger may be reviewed by the attorneys general in the states where AmSouth and
First American own banking subsidiaries. Such authorities may be empowered
under the applicable state laws and regulations to investigate and/or
disapprove the merger under the circumstances and based upon the review set
forth in applicable state laws and regulations.
Possible Alternative Structure
The merger agreement provides that prior to the consummation of the merger,
AmSouth and First American may agree to change the structure of the merger. Any
change to the structure of the merger would not change the amount or form of
consideration that First American stockholders and stock optionholders would
receive pursuant to the merger. In addition, any different structure would have
to take place according to the same timetable and not be prejudicial to the
interests of AmSouth stockholders and First American stockholders.
Amendment, Waiver and Termination
Prior to the effective time, certain provisions of the merger agreement may
be waived by the party benefitted by those provisions or may be amended or
modified, by written agreement between AmSouth, Merger Sub and First American.
However, after the First American special meeting the merger agreement may not
be amended in violation of Tennessee law, and after the AmSouth special
meeting, the merger agreement may not be amended in violation of Delaware law.
The merger agreement may be terminated, and the merger abandoned, at any
time prior to the effective time by mutual consent of AmSouth and First
American if the majority of each board of directors determines in a vote to do
so. In addition, the merger agreement may be terminated, and the merger
abandoned, prior to the effective time by either AmSouth or First American, if
a majority of its board of directors determines in a vote to do so if:
. the other party breaches (a) a representation or warranty contained in
the merger agreement, or (b) a covenant or other agreement contained in
the merger agreement, which cannot be or has not been cured within 30
days after written notice is given to the breaching party;
. the merger is not completed by February 15, 2000, unless the party
seeking to use this as a basis for termination knowingly caused the
delay; or
. the approval of a governmental authority required for consummation of
the merger and the other transactions contemplated by the merger
agreement is denied by final, nonappealable action of that authority.
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STOCK OPTION AGREEMENTS
The following description sets forth the material provisions of each of the
AmSouth stock option agreement and the First American stock option agreement,
but does not purport to be complete and is subject to the full texts of, and
qualified in its entirety by reference to, these agreements, which are attached
as Appendices B and C, respectively, to this document and are incorporated
herein by reference. All AmSouth stockholders and First American stockholders
are urged to read each of the AmSouth stock option agreement and the First
American stock option agreement carefully and in its entirety.
General
As an inducement for AmSouth to enter into the merger agreement, First
American and AmSouth entered into the First American stock option agreement
pursuant to which First American granted AmSouth an option (the "First American
option") to purchase shares of First American common stock. As an inducement
for First American to enter into the merger agreement, the parties also entered
into the AmSouth stock option agreement pursuant to which AmSouth granted First
American an option (the "AmSouth option") to purchase shares of AmSouth common
stock. Except as otherwise noted below, the terms and conditions of the AmSouth
stock option agreement and the First American stock option agreement are
identical in all material respects.
Exercise; Expiration
AmSouth granted First American an option to purchase up to 35,025,240 shares
of AmSouth common stock and First American granted AmSouth an option to
purchase up to 23,250,165 shares of First American common stock. Although these
numbers are subject to adjustment in certain cases, as described below, they
will never exceed 19.9% of the number of shares of AmSouth or First American
common stock, as the case may be, outstanding immediately before exercise of
the option. The exercise price of the AmSouth option is $28.5983 per share of
AmSouth common stock and the exercise price of the First American option is
$40.1625 per share of First American common stock, but each per share option
price is subject to adjustment in certain cases (this exercise price, as
adjusted, is referred to below as the "option price").
Each of AmSouth and First American can exercise its option if both an
"initial triggering event" and a "subsequent triggering event" occur prior to
the occurrence of an "exercise termination event," as these terms are defined
below. The purchase of any shares of AmSouth and First American common stock
pursuant to the options is subject to compliance with applicable law.
The option agreements generally define the term "initial triggering event"
to mean any of the following events or transactions:
. the issuer of the option or one of its significant subsidiaries, without
the prior written consent of the grantee of the option, enters into an
agreement to engage in an "acquisition transaction" (as defined below)
with a third party or the board of directors of the issuer of the option
recommends that the stockholders of the issuer of the option approve or
accept any acquisition transaction, other than the merger;
. a third party acquires beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of the
issuer of the option's common stock;
. the stockholders of the issuer of the option voted but failed to approve
the merger agreement at the special meeting or the special meeting has
been canceled or otherwise not held in violation of the merger agreement
and prior to the stockholder vote or cancellation a third party has
announced an acquisition transaction;
. the board of directors of the issuer of the option withdraws or
adversely modifies its recommendation that the stockholders of the
issuer of the option approve the merger agreement, or the issuer of the
option and any of its subsidiaries, without the prior written consent of
the grantee of the option,
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authorize, recommend or propose an agreement to engage in an acquisition
transaction with a third party;
. a third party has made a bona fide proposal to the issuer of the option
or its stockholders to engage in an acquisition transaction and this
proposal has been publicly announced;
. a third party has filed with the SEC a registration statement or tender
offer materials with respect to a potential exchange offer or tender
offer that would constitute an acquisition transaction, or filed a
preliminary proxy statement with the SEC with respect to a potential
vote by its stockholders to approve the issuance of shares to be offered
in an exchange or tender offer;
. the issuer of the option willingly breaches any covenant or obligation
contained in the merger agreement after a third party has proposed an
acquisition transaction, and following the breach the grantee of the
option is entitled to terminate the merger agreement; or
. a third party has filed an application or notice with the Federal
Reserve Board or other federal or state bank regulatory or antitrust
authority for approval to engage in an acquisition transaction.
As used in the stock option agreements, the term "acquisition transaction"
means: (1) a merger or consolidation or any similar transaction, involving the
issuer of the option (other than certain mergers involving only the issuer of
the option and its subsidiaries); (2) a purchase, lease or other acquisition of
all or any substantial part of the assets or deposits of the issuer of the
option or any of its subsidiaries; or (3) a purchase or other acquisition of
securities representing 10% or more of the voting power of the outstanding
common stock of the issuer of the option or any of its subsidiaries.
The stock option agreements generally define the term "subsequent triggering
event" to mean any of the following events or transactions: (1) the acquisition
by a third party of beneficial ownership of 25% or more of the issuer of the
option's then outstanding common stock; or (2) the issuer of the option or any
of its subsidiaries, without the prior written consent of the grantee of the
option, enters into an agreement to engage in an acquisition transaction with a
third party or the board of directors of the issuer of the option recommends
that the stockholders of the issuer of the option approve or accept any
acquisition transaction, other than the merger; provided that for purposes of
the definition of "subsequent triggering event," the percentage referred to in
clause (3) of the definition of "acquisition transaction" above shall be 25%
rather than 10%.
The stock option agreements define the term "exercise termination event" to
mean any of the following: (1) completion of the merger; (2) termination of the
merger agreement in accordance with its terms, if before an initial triggering
event; provided that this would not include a termination of the merger
agreement by the grantee of the option based on a willful breach of a
representation, warranty, covenant or other agreement contained in the merger
agreement; or (3) the passage of 18 months (subject to extension in order to
obtain required regulatory approvals) after termination of the merger agreement
if the termination follows the occurrence of an initial triggering event or is
a termination of the merger agreement by the grantee of the option based on a
willful breach by the issuer of the option of a representation warranty,
covenant or other agreement contained in the merger agreement.
If the option becomes exercisable, it may be exercised in whole or in part
within six months following the subsequent triggering event. The times during
which the grantee has the right to exercise the option and certain other rights
under the stock option agreement are subject to an extension in order to obtain
required regulatory approvals and comply with applicable regulatory waiting
periods and to avoid liability under Section 16(b) of the Exchange Act. The
option price and the number of shares issuable under the option are subject to
adjustment in the event of specified changes in the capital stock of the issuer
of the option.
Rights of the Grantee of the Option
At any time after a "repurchase event" (as defined below), upon request, the
issuer of the option may be required to repurchase the option and all or any
part of the shares issued under the option. The repurchase of the option shall
be at a price per share equal to the amount by which the option repurchase
price (as defined in
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the stock option agreement) exceeds the option price. The term "repurchase
event" is defined to mean: (1) the acquisition by any third party of beneficial
ownership of 50% or more of the outstanding shares of the issuer of the
option's common stock or of beneficial ownership of 20% or more of the then
outstanding common stock if the issuer of the option shall have redeemed its
shareholder rights or amended its shareholder rights plan in violation of the
merger agreement; or (2) the consummation of an acquisition transaction;
provided that for purposes of the definition of "repurchase event," the
percentage referred to in clause (3) of the definition of "acquisition
transaction" above shall be 25% rather than 10%.
The stock option agreements also provide that the grantee of the option may,
at any time within 90 days after a repurchase event, surrender the option (and
any shares issued under the option held by the grantee) for a cash fee equal to
$225 million (1) plus, if applicable, the aggregate purchase price actually
paid by the grantee of the option for any shares issuable under the option and
(2) minus, if applicable, the excess of (x) the net price, if any, received by
the grantee of the option or its subsidiary pursuant to the sale of option
shares to any unaffiliated party, over (y) the grantee of the option's purchase
price of the option shares.
If prior to an exercise termination event, the issuer of the option enters
into certain transactions in which it is not the surviving corporation, certain
fundamental changes in the capital stock of the issuer of the option occur, or
the issuer of the option sells all or substantially all of its or certain of
its subsidiaries' assets, the option will be converted into or exchangeable for
an option (the "substitute option"), at the grantee of the option's election,
of either (1)(A) the continuing or surviving person of a consolidation or
merger with the issuer of the option, (B) the acquiring person in a plan of
exchange in which the issuer of the option is acquired, (C) the issuer of the
option in a merger or plan of exchange in which the issuer of the option is the
acquiring person, or (D) the transferee of all or substantially all of the
assets of the issuer of the option or its significant subsidiary or (2) any
person that controls any of these entities. The substitute option will have the
same terms and conditions as the original option. However, if the terms of the
substitute option cannot, for legal reasons, be the same as those of the
option, the terms of the substitute option will be as similar as possible and
at least as advantageous to the grantee.
Purpose of the Agreements
Arrangements such as the stock option agreements are customarily entered
into in connection with announced mergers involving publicly traded companies
to increase the likelihood that the transactions will be consummated in
accordance with their terms, and to compensate the person granted the option
for the efforts undertaken and the expenses and losses incurred by the person
if the transaction is not completed. The stock option agreements may have the
effect of discouraging offers by third parties to acquire the issuer of the
option, even if those persons were prepared to offer to pay consideration to
the issuer of the option's stockholders that has a higher current market price
than the shares of the grantee of the option common stock to be received by the
holders pursuant to the merger agreement. Also, following consultation with our
respective independent accountants, we believe that the exercise or repurchase
of either of the stock options is likely to prohibit another acquiror from
accounting for any acquisition of the issuer of the stock option using the
"pooling of interests" accounting method for a period of two years.
To our best knowledge no event giving rise to the right to exercise either
option has occurred as of the date of this document.
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DESCRIPTION OF AMSOUTH CAPITAL STOCK
The following summary of certain provisions of the Certificate of
Incorporation of AmSouth and AmSouth's by-laws and of the Rights Agreement (as
defined below) is not intended to be complete and is qualified in its entirety
by reference to these documents, each of which is an exhibit to AmSouth's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998. See
"Where You Can Find More Information."
Authorized Stock
AmSouth's certificate of incorporation currently authorizes the issuance of
up to 350 million shares of AmSouth common stock and 2 million shares of
preferred stock. The proposed amendment to the AmSouth certificate of
incorporation would increase the number of authorized shares of AmSouth common
stock to 750 million shares.
Common Stock
The shares of AmSouth common stock entitle the holders thereof (1) to
dividends when, as and if declared by the AmSouth board of directors, subject
to any rights of any holders of AmSouth preferred stock that may be
outstanding, (2) to one vote per share on each matter submitted to AmSouth
stockholders for their vote and (3) to participate equally in the assets of
AmSouth remaining after a liquidation, dissolution or winding up of AmSouth.
Holders of AmSouth common stock are not entitled to preemptive rights.
Dividends. AmSouth's ability to pay dividends is limited by certain
restrictions imposed on Delaware corporations. Under these restrictions,
dividends may be paid only out of AmSouth's surplus, as defined by the Delaware
General Corporation Law ("DGCL") or, if there is no surplus, AmSouth's net
profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year.
Most of AmSouth's cash flow, and therefore its ability to pay dividends,
comes from dividends and other capital distributions, if any, from AmSouth
Bank, and those dividends and other capital contributions are subject to
regulatory restrictions. See "Regulation and Supervision--Capital
Requirements."
AmSouth Preferred Stock
Shares of AmSouth preferred stock may be issued in one or more series as
determined by the AmSouth board of directors. The AmSouth board of directors
will determine by resolution the powers, designations, preferences and
relative, participating, optional or other rights, if any, and the
qualifications, limitations or restrictions of any series of AmSouth preferred
stock, including the number of shares, dividend rights, redemption rights,
liquidation preferences, voting rights and conversion rights. At present, there
are no shares of AmSouth preferred stock outstanding.
Stockholder Protection Rights Plan
Each share of AmSouth common stock has attached to it one right (a "Right")
issued pursuant to a Stockholder Protection Rights Agreement, dated as of
December 18, 1997 (the "Rights Agreement"), between AmSouth and The Bank of New
York (successor to AmSouth Bank), as Rights Agent. Each Right entitles its
registered holder to purchase one-thousandth of a fully paid share of Series A
preferred stock, without par value, for $88.89 (the "Exercise Price"), subject
to adjustment, after the close of business on the earlier of (1) the tenth
business day after commencement of a tender or exchange offer which, if
consummated, would result in a person becoming the Beneficial Owner (as defined
in the Rights Agreement) of 15% or more of the outstanding shares of AmSouth
common stock (an "Acquiring Person") and (2) the tenth business day after the
first date (the "Flip-in Date") of public announcement by AmSouth that any
person has become an Acquiring Person. In any case, this time is referred to as
the "Separation Time."
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The Rights will be exercisable at any time following the Separation Time.
The Rights will expire on the earlier of (1) the close of business on March 13,
2008; (2) redemption, as described below; (3) an exchange for common stock, as
described below; or (4) the merger of AmSouth into another corporation pursuant
to an agreement entered into prior to a Flip-in Date. The AmSouth board of
directors may, at its option, at any time prior to occurrence of a Flip-in
Date, redeem all (but not less than all) of the then outstanding Rights at a
price of $0.01 per Right, subject to adjustment.
If a Flip-in Date occurs, each Right (other than those beneficially owned by
the Acquiring Person or any affiliate or associate of the Acquiring Person or
by any transferees of any of the foregoing), will constitute the right to
purchase shares of AmSouth common stock having an aggregate market price equal
to twice the average daily closing prices per share of the common stock on each
of the 20 consecutive trading days preceding the Flip-in Date, subject to
adjustment. In addition, the AmSouth board of directors may, at its option, at
any time between a Flip-in Date and 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 all (but not less than all) of the then
outstanding Rights for shares of AmSouth common stock at an exchange ratio of
one share of AmSouth common stock per Right, subject to adjustment.
AmSouth has agreed not to consolidate or merge or participate in a share
exchange, or engage in certain other transactions or sell or otherwise transfer
assets aggregating more than 50% of the assets or generating more than 50% of
the operating income or cash flow of AmSouth, with an Acquiring Person without
entering into a supplemental agreement with the Acquiring Person providing
that, upon consummation or occurrence of the transaction, each Right shall
thereafter constitute the right to purchase common 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 Rights will not prevent a takeover of AmSouth. The Rights, however, may
have certain antitakeover effects. The Rights may cause substantial dilution to
a person or group that acquires 15% or more of the outstanding AmSouth common
stock unless the Rights are first redeemed by the AmSouth board of directors. A
description of the Rights Agreement specifying the terms of the Rights has been
included in reports filed by AmSouth under the Exchange Act. See "Where You Can
Find More Information." The foregoing description of the Rights is qualified in
its entirety by reference to the Rights Agreement.
Other Provisions
Board of Directors. AmSouth's certificate of incorporation and by-laws
provide that subject only to the rights, if any, of holders of preferred stock
with respect to the election of directors, the number of directors will be
determined by the AmSouth board of directors. The directors are divided into
three classes of as nearly equal size as possible, with one class elected
annually to serve for a term of three years. The classification of the AmSouth
board of directors may discourage any takeover of AmSouth because a stockholder
with a majority interest in AmSouth would have to wait for at least two
consecutive annual meetings of stockholders to elect a majority of the members
of the AmSouth board of directors.
Cumulative Voting. AmSouth's certificate of incorporation does not authorize
cumulative voting for the election of directors of AmSouth.
Stockholder Nominations. AmSouth's certificate of incorporation and by-laws
provide that stockholder nominations for election of directors at an annual
meeting of stockholders must be stated in writing and filed with the Secretary
of AmSouth between 60 and 90 days prior to the first anniversary date of the
previous year's annual meeting. With respect to an election of directors to be
held at a special meeting of stockholders, notice of nomination must be
delivered not earlier than the 90th day prior to the special meeting and not
later than the later of the 60th day prior to the special meeting or the 10th
day after the day on which public announcement is first made of the date of the
special meeting. AmSouth's by-laws also require that any notice of nomination
by a stockholder provide certain information concerning the stockholder and his
or her nominee, including, among
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other things, the information regarding the nominee as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the SEC, and
the consent of the nominee to serve as a director of AmSouth if elected. The
presiding officer at the meeting may refuse to acknowledge the nomination of
any person not made in compliance with these procedures.
Removal of Directors. AmSouth's certificate of incorporation and by-laws
provide that with the exception of directors elected under special
circumstances by any class or series of preferred stock any director or the
entire board of directors may be removed only for cause and only with the
affirmative vote of at least 80% of the combined voting power of the then
outstanding shares of capital stock of AmSouth entitled to vote generally at an
election of directors.
The provisions of AmSouth's certificate of incorporation and by-laws giving
the AmSouth board of directors the power to determine the exact number of
directors and to fill any vacancies or newly created positions and allowing
removal of directors only for cause upon the vote of at least 80% of the shares
entitled to vote generally at an election of directors are intended to insure
that the classified board provisions are not circumvented by the removal of
incumbent directors. Furthermore, as discussed below, holders of a majority of
AmSouth common stock outstanding and entitled to vote in the election of
directors must give no less than 60 days' advance written notice in order to
call special meetings of stockholders; as a result, a stockholder seeking to
have a director removed for cause generally will only be able to do so at an
annual meeting of stockholders. These provisions of AmSouth's certificate of
incorporation and AmSouth's by-laws make the removal of any director more
difficult, even if the removal of a director were desired by the stockholders
of AmSouth. In addition, these provisions of AmSouth's certificate of
incorporation and AmSouth's by-laws could make a takeover of AmSouth more
difficult under circumstances where the potential acquiror seeks to do so
through obtaining control of the AmSouth board of directors.
Special Meetings of Stockholders. AmSouth's certificate of incorporation and
by-laws provide that special meetings of stockholders may be called, upon not
less than 10 days' advance written notice by resolution of the AmSouth board of
directors or by the Chief Executive Officer. As described above, holders of a
majority of AmSouth common stock outstanding and entitled to vote in the
election of directors may call a special meeting of stockholders upon not less
than 60 days' advance written notice.
The provisions relating to special meetings of stockholders are intended to
enable the AmSouth board of directors to determine if it is appropriate for
AmSouth to incur the expense of a special meeting in order to present a
proposal to AmSouth stockholders. If the AmSouth board of directors determines
not to call a special meeting, stockholder proposals could not be presented to
the stockholders for action until the next annual meeting or until a meeting is
called by the holders of a majority of AmSouth common stock outstanding and
entitled to vote in the election of directors. In addition, these provisions of
AmSouth's certificate of incorporation and by-laws could make a takeover of
AmSouth more difficult under circumstances where the potential acquiror seeks
to do so through obtaining control of the AmSouth board of directors.
Action of Stockholders by Written Consent. AmSouth's certificate of
incorporation expressly denies AmSouth stockholders the right to act by written
consent without a meeting.
The purpose of this provision of AmSouth's certificate of incorporation is
to prevent any person or persons holding the requisite percentage of the voting
stock of AmSouth to take corporate action without giving notice to other
stockholders and without the procedures of a stockholder meeting.
Voting at a Meeting. AmSouth's by-laws provide that when a quorum is present
at any meeting, the vote of the holders of a majority of the stock that has
voting power present in person or represented by proxy will decide any question
brought before the meeting, unless a different vote is required by Delaware law
or AmSouth's certificate of incorporation.
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Notice of Stockholder Proposals. AmSouth's certificate of incorporation and
by-laws provide that proposals by stockholders of business to be considered at
an annual meeting must be stated in writing and filed with the Secretary not
later than 60 days and not earlier than 90 days prior to the first anniversary
date of the preceding year's annual meeting. However, if the annual meeting is
more than 30 days before or more then 60 days after the anniversary date of the
preceding year's annual meeting, notice by the stockholders must be delivered
not earlier than the 90th day prior to the annual meeting and no later than the
close of business on the later of the 60th day prior to the annual meeting or
the tenth day following the day on which public announcement of the date of the
annual meeting is first made by AmSouth.
AmSouth's by-laws also provide that the notice required to be delivered by a
stockholder who wishes to propose business at an annual meeting must set forth
certain information concerning that stockholder.
Indemnification of Directors and Officers. AmSouth's certificate of
incorporation provides indemnification rights to any person who is a party to
any action (other than an action by or in the right of AmSouth) because a
person has served as a director, officer, employee or agent of AmSouth (or of
any other entity, at the request of AmSouth) with respect to expenses,
judgments, fines and amounts paid in settlement. These indemnification
provisions apply if the director, officer, employee or agent 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 a criminal action or
proceeding, if that person had no reasonable cause to believe that his or her
conduct was unlawful. These persons are entitled to indemnification rights in
an action by or in the right of AmSouth with respect to expenses, subject to
the same standards, except where there is a finding of liability (in which case
indemnification is permitted only if a court determines that indemnification is
fair and reasonable).
Under AmSouth's certificate of incorporation, indemnification of the costs
and expenses (including attorneys' fees) of defending any action is required to
be made to any director, officer, employee or agent of AmSouth who is
successful (on the merits or otherwise) in defending any action, suit or
proceeding. Indemnification shall be made by AmSouth upon determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he or she has met the applicable standard of conduct. The
determination as to whether the person has met the applicable standard of
conduct is made by a majority vote of a quorum of the board of directors
consisting of disinterested directors, by independent legal counsel in a
written opinion, or by the stockholders.
AmSouth's certificate of incorporation also permits AmSouth to advance
expenses to its directors, officers, employees and agents in connection with
any civil or criminal suit or proceeding.
Amendment of Certificate of Incorporation. Under AmSouth's certificate of
incorporation, repeal, alteration, amendment or rescission of certain of its
provisions requires the approval of holders of at least 67% of the outstanding
shares of AmSouth common stock entitled to vote generally for the election of
directors. The provisions subject to the 67% stockholder approval requirement
include provisions relating to (1) written consents of stockholders, (2)
special meetings of stockholders, (3) election of directors and (4) amendment
of the 67% stockholder approval requirement itself. The provisions of the
AmSouth certificate of incorporation relating to the structure of the AmSouth
board of directors 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 of incorporation may
not be amended, altered or repealed except by the affirmative vote of the
holders of 80% of the outstanding voting stock and the affirmative vote of the
holders of not less than 67% of the voting stock held by stockholders other
than an Interested Stockholder (as defined below). Amendment of any other
provision of AmSouth's certificate of incorporation requires only a majority of
the total votes eligible to be cast at a meeting for the election of Directors.
Amendment of By-Laws. AmSouth's certificate of incorporation and by-laws
provide that AmSouth's by-laws may be made, altered, amended or repealed by
resolutions adopted by a majority of the AmSouth board of directors or the
approval of a majority, 67% or 80% of the outstanding shares of the AmSouth
common stock entitled to vote generally for the election of directors,
depending on the provision of the by-laws to be adopted, altered, amended or
repealed.
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The requirement of an increased stockholder vote for the amendment of
certain provisions of AmSouth's by-laws is intended to prevent a stockholder
controlling a majority of the AmSouth common stock from avoiding the
requirements of important provisions of AmSouth's by-laws simply by amending or
repealing them. Thus, the holders of a minority of the shares of the AmSouth
common stock could block the future repeal or modification of AmSouth's by-laws
even if the action were deemed beneficial by the holders of more than a
majority (although less than two-thirds) of the AmSouth common stock.
Business Combinations with Interested Stockholders. AmSouth's certificate of
incorporation provides that any Business Combination involving AmSouth and any
person (with certain exceptions) who is the "Beneficial Owner" (as defined) of
more than 10% of the AmSouth common stock, any affiliate of AmSouth which is
the Beneficial Owner of more than 10% of the AmSouth common stock during the
prior two years or any transferee of any shares of the 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 the holders of not less
than 80% of the outstanding shares of AmSouth's capital stock entitled to vote
generally and the holders of not less than 67% of the voting stock held by
stockholders other than the Interested Stockholder. These special voting
requirements do not apply, however, if either a majority of the Continuing
Directors (as defined) of AmSouth has approved the Business Combination or a
stockholder becoming an Interested Stockholder or 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:
. any merger or other corporate reorganization of AmSouth with or into an
Interested Stockholder;
. the disposition by AmSouth of a Substantial Part (as defined) of its
assets to an Interested Stockholder;
. any merger or other corporate reorganization of an Interested
Stockholder with or into AmSouth;
. the acquisition by AmSouth of a Substantial Part (as defined) of the
assets of an Interested Stockholder;
. the issuance by AmSouth of any of its securities to an Interested
Stockholder;
. any recapitalization that would increase the voting power of an
Interested Stockholder;
. the adoption of any plan for the liquidation or dissolution of AmSouth
proposed by or on behalf of an Interested Stockholder; and
. 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.
Delaware Business Combination Statute. Section 203 of the DGCL is intended
to discourage certain takeover practices by impeding the ability of a hostile
acquiror to engage in certain transactions with the target company.
In general, Section 203 provides that a person or entity that owns 15% or
more of the outstanding voting stock of a Delaware corporation (an "Interested
Stockholder") may not consummate a merger or other business combination
transaction with that corporation at any time during the three-year period
following the date that person or entity became an Interested Stockholder,
unless an exemption described below is applicable. The term "business
combination" is defined broadly to cover a wide range of corporate transactions
including mergers, sales of assets, issuances of stock, transactions with
subsidiaries and the receipt of disproportionate financial benefits.
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The statute exempts the following transactions from the requirements of
Section 203: (1) any business combination if, prior to the date a person became
an Interested Stockholder, the board of directors approved either the business
combination or the transaction which resulted in the stockholder's becoming an
Interested Stockholder; (2) any business combination involving a person who
acquired at least 85% of the outstanding voting stock in the transaction in
which he or she became an Interested Stockholder, with the number of shares
outstanding calculated without regard to those shares owned by the
corporation's directors who are also officers or by certain employee stock
plans; (3) any business combination with an Interested Stockholder that is
approved by the board of directors and by two-thirds of the outstanding voting
stock not owned by the Interested Stockholder; and (4) certain business
combinations that are proposed after the corporation had received other
acquisition proposals and that are approved or not opposed by a majority of
certain continuing members of the board of directors. AmSouth's certificate of
incorporation does not contain an election, as permitted by Delaware law, to be
exempt from the requirements of Section 203.
Other Factors Affecting Acquisitions of Control. AmSouth's certificate of
incorporation currently authorizes the issuance of 350 million shares of
AmSouth common stock and 2 million shares of AmSouth preferred stock. The
proposed amendment to the AmSouth certificate of incorporation would increase
the number of authorized shares of AmSouth common stock to 750 million shares.
The authorized but unissued shares of the AmSouth common stock and the AmSouth
preferred stock provide the AmSouth board of directors with flexibility to
effect certain financings, acquisitions, stock dividends, stock splits and
employee stock options without the need for a stockholder vote. The AmSouth
board of directors, consistent with its fiduciary duties, could also authorize
the issuance of these shares, and could establish voting, conversion,
liquidation and other rights for the AmSouth preferred stock being issued, in
an effort to deter attempts to gain control of AmSouth.
CERTAIN DIFFERENCES IN THE RIGHTS OF AMSOUTH
STOCKHOLDERS AND FIRST AMERICAN STOCKHOLDERS
At the effective time, First American stockholders who receive AmSouth
common stock automatically will become stockholders of AmSouth, and their
rights as stockholders will be determined by AmSouth's certificate of
incorporation, AmSouth's by-laws and the DGCL, instead of by First American's
charter and First American's by-laws and the TBCA. The following is a summary
of the material differences in the rights of holders of AmSouth and First
American common stock. This summary is necessarily general and does not purport
to be a complete discussion of, and is qualified in its entirety by reference
to, the DGCL, the TBCA, the certificate of incorporation or charter, the by-
laws and the rights agreements of each corporation.
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Size and Classification of Board of Directors
AmSouth. AmSouth's certificate of incorporation provides that the size of
the AmSouth board of directors shall be fixed from time to time by a vote of
the two-thirds of the directors then in office who have been elected by the
stockholders.
AmSouth's by-laws do not provide for a minimum or maximum number of
directors. Currently, the AmSouth board of directors has 12 members.
AmSouth's certificate of incorporation and by-laws provide that the board of
directors will be divided into three classes of directors as nearly equal in
number as possible, and the members of each class shall be elected for a term
of three years.
AmSouth's certificate of incorporation and by-laws provide that vacancies
may be filled by the affirmative vote of a majority of the directors remaining
in office who were elected by the stockholders, whether or not a quorum or, in
the event there is only one director, by the sole remaining director. Each
director chosen to fill a vacancy will hold office for the full term of the
class of directors in which he or she has been elected and until a successor is
elected and qualified.
First American. First American's charter and by-laws provide that the First
American board of directors shall be fixed from time to time by a vote of the
majority of the directors then in office.
First American's by-laws provide that the board of directors shall consist
of no fewer than nine and no more than 27 members. Currently, the First
American board of directors has 22 members.
First American's charter provides that the First American board of directors
will be divided into three classes of directors as nearly equal in number as
possible, and the members of each class shall be elected for three years.
First American's charter provides that vacancies may be filled by a vote of
the majority of the directors remaining in office, whether or not a quorum, or
by the sole remaining director, and any director chosen to fill a vacancy will
hold office for the full term of the class of directors in which he or she has
been elected and until a successor is elected and qualified.
Removal of Directors
AmSouth. AmSouth's certificate of incorporation and by-laws provide that
with the exception of directors elected under special circumstances by any
class or series of preferred stock, any director or the entire board of
directors may be removed only for cause and only with the affirmative vote of
at least 80% of the then-outstanding combined voting power of the shares of
capital stock of AmSouth entitled to vote generally at an election of
directors.
First American. First American's charter and by-laws provide that with the
exception of directors elected by a voting group entitled to elect one or more
directors, any director may be removed for cause (as defined by the laws of
Tennessee) by the affirmative vote of the holders of at least 75% of the shares
of First American capital stock entitled to vote at a special meeting of
stockholders called for that purpose.
Amendment of Certificate of Incorporation or Charter and By-laws
AmSouth. Under AmSouth's certificate of incorporation, repeal, alteration,
amendment or rescission of certain provisions in AmSouth's certificate of
incorporation requires the approval of the holders of at least 67% of the
outstanding shares of AmSouth common stock entitled to vote generally for the
election of directors. The provisions subject to the 67% stockholder approval
requirement include provisions relating to: (1) written consents of
stockholders; (2) special meetings of stockholders; (3) election of directors;
and (4) amendment of the 67% stockholder approval requirement itself. The
provision of the AmSouth certificate of incorporation relating to the structure
of the AmSouth board of directors may not be amended, altered or repealed
without the affirmative vote of 80% of the outstanding voting stock of AmSouth.
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Under the DGCL, all other amendments of the AmSouth certificate of
incorporation require the affirmative vote of holders of a majority of the
total votes eligible to be cast at a meeting for the election of directors
(unless a class vote is required by the DGCL). The business combination
provision of the AmSouth certificate of incorporation provides that any
Business Combination requires the affirmative vote of the holder of not less
than 80% of the outstanding shares generally and not less than 67% of the
voting stock held by stockholders other than an Interested Stockholder (as
defined above).
AmSouth's certificate of incorporation and by-laws provide that AmSouth's
by-laws may be made, altered, amended or repealed by a resolution adopted by a
majority of the AmSouth board of directors, or by the stockholders (subject to
certain supermajority voting requirements).
First American. Under First American's charter, repeal, alteration, amendment
or rescission of certain provisions in First American's certificate of
incorporation requires the approval of the holders of at least 75% of the votes
entitled to be cast by all holders of voting stock, voting together as a single
class at a meeting called for that purpose and a majority of the votes entitled
to be cast by all holders of voting stock, other than the shares beneficially
owned by an Interested Stockholder (as defined). The provisions subject to the
75% stockholder approval requirement include provisions relating to: (1) size
and classification of the board of directors; (2) removal of directors; (3)
limitations on voting rights and (4) approval of certain business combinations.
All other amendments of First American's charter require the affirmative
vote of holders of a majority of the total votes eligible to be cast by that
voting group, if the amendment would create dissenters' appraisal rights as to
that group, and otherwise by a majority of the votes cast. The business
combination provision of First American's charter provides that any Business
Combination requires the affirmative vote of 75% of the votes entitled to be
cast by all holders of voting stock voting together as a single class at a
meeting of stockholders called for such purpose and a majority of the votes
entitled to be cast by all holders of voting stock, other than the shares
beneficially owned by an Interested Stockholder.
First American's charter provides that First American's by-laws may be made,
altered, amended or repealed by a resolution adopted by a majority of the First
American board of directors.
Stockholder Nominations and Proposals
AmSouth. AmSouth's certificate of incorporation and by-laws provide that
proposals by stockholders of business to be considered at an annual meeting
must be stated in writing and filed with AmSouth's Secretary not later than 60
days and not earlier than 90 days prior to the first anniversary date of the
preceding year's annual meeting. However, if the annual meeting is more than 30
days before or more than 60 days after the anniversary date of the preceding
year's annual meeting, notice by the stockholders must be delivered not earlier
than the 90th day prior to the annual meeting and no later than the close of
business on the later of the 60th day prior to the annual meeting or the tenth
day following the day on which public announcement of the date of the annual
meeting is first made by AmSouth.
AmSouth's certificate of incorporation and by-laws provide that stockholder
nominations for election of directors at an annual meeting of stockholders must
be stated in writing and filed with the Secretary of AmSouth between 60 and 90
days prior to the anniversary date of the previous year's annual meeting.
With respect to an election of directors to be held at a special meeting of
stockholders, notice of nomination must be delivered not earlier than the 90th
day prior to the special meeting and not later than the later of the 60th day
prior to the special meeting or the 10th day after the day on which public
announcement is first made of the date of the special meeting.
AmSouth's by-laws also require that any notice of nomination by a
stockholder provide certain information concerning the stockholder and his or
her nominee, including, among other things, the information regarding the
nominee as would be required to be included in a proxy statement filed pursuant
to the proxy rules of the SEC, and the consent of the nominee to serve as a
director of AmSouth if elected.
The presiding officer at the meeting may refuse to acknowledge the
nomination of any person not made in compliance with these procedures.
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First American. First American's by-laws provide that proposals by
stockholders of business to be considered at an annual meeting must be stated
in writing and filed with First American's Secretary not later than 90 days
prior to the first anniversary date of the preceding year's annual meeting
before another date which the First American board of directors may determine,
provided that the deadline imposed by the board of directors is more than 60
days following the public announcement of the deadline.
First American's by-laws provide that stockholder nominations for election
of directors at an annual meeting of stockholders must be stated in writing and
filed with First American's Secretary not later than 90 days prior to the first
anniversary date of the preceding year's annual meeting before another date
which the First American board of directors may determine, provided that the
deadline imposed by the board of directors is more than 60 days following the
public announcement of the deadline.
With respect to an election of directors or a stockholder proposal to be
submitted at a special stockholders' meeting, nomination notices and
stockholder proposals must be delivered to the First American Secretary no
later than the close of business on the 15th day following the day on which
notice of the date of the special meeting of stockholders was given.
First American's by-laws also require that any notice of nomination by a
stockholder provide certain information concerning the stockholder and his or
her nominee, including, among other things, (a) the name, date of birth,
business address and residence address of the nominee, (b) the business
experience during the past five years of the nominee, (c) whether the nominee
is or has ever been a director, officer or owner of 5% or more of any class of
capital stock, partnership interests or other equity interest of any
corporation, partnership or other entity, (d) any directorships held by the
nominee and (e) whether the nominee has been convicted in any criminal
proceedings in the past five years. The person submitting the nomination must
provide his or her name and business address, his or her name and business
address as they appear on the corporation's records and the class and number of
shares of the corporation which are beneficially owned by that person. A
written consent to being named in a proxy statement as a nominee, and to serve
as a director if elected, signed by the nominee, must also be filed with any
nomination notice.
The presiding officer at the meeting may refuse to acknowledge the
nomination of any person not made in compliance with these procedures.
Special Meetings of Stockholders
AmSouth. AmSouth's certificate of incorporation and by-laws provide that
special meetings of stockholders may be called, upon not less than 10 days'
advance written notice by resolution of the AmSouth board of directors or by
the Chief Executive Officer. As described above, holders of a majority of the
AmSouth common stock outstanding and entitled to vote in the election of
directors may call a special meeting of stockholders upon not less than 60
days' advance written notice.
First American. The TBCA provides that a special meeting of stockholders may
be called by a corporation's board of directors or by the persons authorized to
call special meetings under the corporation's articles of incorporation and by-
laws or, unless the articles of incorporation provide otherwise, by written
demand of the stockholders having at least 10% of all the votes entitled to be
cast on an issue to be considered at the proposed special meeting.
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First American's by-laws provide that special meetings of First American
stockholders may be called by the board of directors, the Chairman of the board
of directors, the Vice Chairman of the board of directors or the President of
First American, and must be called by the Chairman of the board of directors,
the Vice Chairman of the board of directors or by the President of First
American no sooner than 75 days and no later than 90 days after receipt of a
written demand for a special meeting from First American stockholders owning at
least 10% of the entire capital stock of First American issued and outstanding
and entitled to vote at that meeting, together with a certified check for
$50,000 payable to First American to cover First American's expenses in
connection with that meeting.
Stockholder Action by Written Consent
AmSouth. AmSouth's certificate of incorporation expressly denies AmSouth
stockholders the right to act by written consent without a meeting.
First American. First American's by-laws provide that stockholders may take
action by the unanimous written consent of all stockholders entitled to vote.
Rights Plans
AmSouth. As discussed under "Description of AmSouth Capital Stock--
Stockholder Protection Rights Plan," each share of AmSouth common stock has
attached to it one Right issued pursuant to the Rights Agreement.
First American. Each share of the First American common stock has attached
to it one Right issued pursuant to its Rights Agreement.
Appraisal and Dissenters' Rights
AmSouth. Delaware law provides stockholders of a corporation involved in a
merger the right to demand and receive payment of the fair value of their stock
in certain mergers. However, appraisal rights are not available to holders of
shares
. listed on a national securities exchange;
. designated as a national market system security on an interdealer
quotation system operated by the National Association of Securities
Dealers, Inc.; or
. held of record by more than 2,000 stockholders;
unless holders of stock are required to accept in the merger anything other
than any combination of
. shares of stock or depository receipts of the surviving corporation in
the merger;
. shares of stock or depository receipts of another corporation that, at
the effective date of the merger, will be either
. listed on a national securities exchange,
. designated as a national market system security on an interdealer
quotation system operated by the National Association of Securities
Dealers, Inc., or
. held of record by more than 2,000 holders; or
. cash instead of fractional shares of the stock or depository receipts
received.
Dissenters' rights are not available to the AmSouth stockholders with
respect to the merger because Delaware law does not require that AmSouth
stockholders vote to approve the merger agreement.
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First American. Tennessee law generally provides dissenters' rights for:
. mergers and share exchanges that would either (a) require stockholder
approval or (b) involve the merger of a subsidiary corporation with its
parent as defined under Tennessee law;
. sales of substantially all the assets of the corporation that would
require stockholder approval (other than sales that are in the usual and
regular course of business and certain liquidations and court-ordered
sales);
. certain amendments to the charter that materially and adversely affect
rights in respect of a dissenter's shares; and
. actions taken pursuant to a stockholder vote to the extent the charter,
by-laws or a resolution of the board of directors provides that
stockholders are entitled to dissenters' rights.
To perfect these appraisal rights, the stockholder must (a) file a written
objection with the corporation prior to the vote stating that the stockholder
intends to demand payment for his or her shares if the action is taken and (b)
not vote in favor of the proposed action. Dissenters' rights are not available
for any shares which are listed on an exchange registered under Section 6 of
the Exchange Act or are "national market system securities" as defined in rules
adopted under the Exchange Act. First American common stock is, and is expected
to be at the completion of the merger, listed on the New York Stock Exchange
and therefore dissenters' rights are not available to the First American
stockholders with respect to the merger.
Business Combination Statutes
AmSouth. Section 203 of the DGCL prohibits "business combinations,"
including mergers, sales and leases of assets, issuances of securities and
similar transactions by a corporation or a subsidiary with an "interested
stockholder" who beneficially owns 15 percent or more of a corporation's voting
stock, within three years after the person or entity becomes an interested
stockholders, unless
. the transaction that will cause the person to become an interested
stockholder is approved by the board of directors of the target prior to
the transaction,
. after the completion of the transaction in which the person becomes an
interested stockholder, the interested stockholder holds at least 85% of
the voting stock of the corporation not including (a) shares held by
officers and directors of interested stockholders and (b) shares held by
specified employee benefit plans or
. after the person becomes an interested stockholder, the business
combination is approved by the board of directors and holders of at
least 66 2/3% of the outstanding voting stock, excluding shares held by
the interested stockholder.
The merger is not governed by the limitations set forth in Section 203. The
AmSouth board of directors unanimously approved and adopted the merger
agreement and the AmSouth stock option agreement before they were executed.
First American. Tennessee's Business Combination Act (the "Tennessee
Business Combination Act") provides that an interested stockholder (defined as
a person beneficially owning, either directly or indirectly, 10% or more of the
voting securities in a Tennessee corporation) cannot engage in a business
combination with that corporation unless the transaction takes place at least
five years after the interested stockholder first became an interested
stockholder, and unless either the transaction (a) is approved by at least two-
thirds of the shares of the corporation not beneficially owned by an interested
stockholder or (b) satisfies certain fairness conditions specified in the
Tennessee Business Combination Act relating to the price to be paid to the non-
interested stockholders in such transactions.
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These provisions apply to Tennessee corporations unless one of two events
occurs. A business combination with an entity can proceed without the five-year
moratorium if the business combination or the transaction resulting in the
stockholder becoming an interested stockholder is approved by the target
corporation's board of directors before that entity becomes an interested
stockholder. Alternatively, the corporation may enact a charter amendment or by-
law to remove itself entirely from the Tennessee Business Combination Act. This
charter amendment or by-law must be approved by a majority of the stockholders
who have held shares for more than one year prior to the vote and may not take
effect for at least two years after the vote. First American has not adopted
such a provision in the First American charter or the First American by-laws
removing First American from coverage under the Tennessee Business Combination
Act. The merger is not governed by the Tennessee Business Combination Act
because the First American board of directors approved the merger agreement and
the First American stock option agreement before they were executed.
Control Share Acquisition Statutes
AmSouth. Delaware does not have a control share acquisition statute.
First American. The Tennessee Control Share Acquisition Act ("TCSAA") takes
away the voting rights of a purchaser's shares any time an acquisition of
shares in a Tennessee corporation brings the purchaser's voting power to 20%,
33 1/3% or more than 50% of all voting power in such corporation (a "control
share"). The purchaser's voting rights can be maintained or re-established only
by a majority vote of all the shares entitled to vote generally with respect to
the election of directors other than those shares owned by the acquirer and the
officers and inside directors of the corporation.
After acquiring a control share, the TCSAA provides a procedure by which a
purchaser may demand a special meeting of stockholders to conduct such a vote.
The purchaser can demand such a meeting before acquiring a control share, but,
can do so only if it holds at least 10% of outstanding shares and announces a
good faith intention to make the control share acquisition. The TCSAA applies
only to a corporation that has adopted a provision in its charter or by-laws
declaring that the TCSAA will apply. First American has not adopted any such
provision in the First American charter or First American by-laws electing
protection under the TCSAA and therefore is not subject to the TCSAA.
Takeover Bid Disclosure Statutes
AmSouth. Delaware does not have a takeover bid disclosure statute.
First American. The Tennessee Investor Protection Act (the "TIPA") provides
that unless a Tennessee corporation's board of directors has recommended a
takeover offer to stockholders, no offeror beneficially owning 5% or more of
any class of equity securities of the offeree company, any of
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which was purchased within the preceding year, may make a tender offer for
class of equity security of the offeree company if after completion the offeror
would be a beneficial owner of more than 10% of any class of outstanding equity
securities of the company unless the offeror, before making such purchase,
. makes a public announcement of his or her intention with respect to
changing or influencing the management or control of the offeree
company;
. makes a full, fair and effective disclosure of such intention to the
person from whom he or she intends to acquire such securities; and
. files with the Tennessee Commissioner of Commerce and Insurance (the
"Commissioner") and the offeree company a statement signifying such
intentions and containing such additional information as may be
prescribed by the Commissioner.
The offeror must provide that any equity securities of an offeree company
deposited or tendered pursuant to a takeover offer may be withdrawn by an
offeree at any time within seven days from the date the offer has become
effective following filing with the Commissioner and the offeree company and
public announcement of the terms or after 60 days from the date the offer has
become effective. If the takeover offer is for less than all the outstanding
equity securities of any class, such an offer also must accept securities pro
rata if the number of securities tendered is greater than the number the
offeror has offered to accept and pay for. If such an offeror varies the terms
of the takeover offer before its expiration date by increasing the
consideration offered to offerees, the offeror must pay the increased
consideration for all equity securities accepted, whether accepted before or
after the variation in the terms of the offer.
Any person making a takeover offer involving a Tennessee corporation shall
file a registration statement with the Commissioner and send a copy of the
registration statement by certified mail to the offeree company. The
registration statement shall contain such information as set forth in the
statute. The TIPA does not apply to an offer involving a vote by holders of
equity securities of the offeree company, pursuant to its charter, on a merger,
consolidation or sale of corporate assets in consideration of the issuance of
securities of another
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corporation, or on a sale of its securities in exchange for cash or securities
of another corporation. The TIPA does not apply to the merger because the First
American board of directors has recommended acceptance of the merger to its
stockholders. The merger therefore does not involve a "takeover offer" within
the meaning of the TIPA.
Indemnification of Officers and Directors
AmSouth. Delaware law provides that, subject to certain limitations in the
case of "derivative" suits brought by a corporation's stockholders in its name
a corporation may indemnify any person who is made a party to any third party
suit or proceeding on account of being a director, officer, employee or agent
of the corporation against expenses, including attorney's fees, judgments,
fines and amounts paid in settlement reasonably incurred by him in connection
with the action, through, among other things, a majority vote of a quorum
consisting of directors who were not parties to the suit or proceeding if the
person
. acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation (or, in some
circumstances, at least not opposed to its best interests); and
. in a criminal proceeding, had no reasonable cause to believe his conduct
was unlawful.
AmSouth's certificate of incorporation provides that AmSouth must indemnify
each person who is party to any threatened, pending or completed action, suit
or proceeding by reason of the fact that person is or was a director, officer,
employee or agent of AmSouth against all expenses, judgments, fines and amounts
paid in settlement or incurred in connection with that action. AmSouth can only
eliminate or limit the liability of a director, officer, employee or agent if:
. that person acted in good faith and in a manner that such person
reasonably believed to be in or not opposed to the best interests of
AmSouth; and
. with respect to any criminal action or proceeding, that person had no
reasonable cause to believe his or her conduct was unlawful.
See "Description of AmSouth Capital Stock--Other Provisions--Indemnification of
Directors and Officers."
First American. The TBCA permits indemnification of directors and officers
for expenses (including attorneys' fees) incurred in a proceeding and amounts
paid or incurred in satisfaction of judgments, fines and settlements of any
proceedings (other than derivative actions) if such person
. acted in good faith and reasonably believed that his or her conduct was
in the best interest of the corporation (or, in some circumstances, at
least not opposed to its best interests) and,
. if criminal, had no reasonable cause to believe his conduct was
unlawful.
A corporation may not, under this statute, indemnify a director if he or she
was adjudged liable to the corporation in a derivative action or if he was
adjudged liable on the basis that he received an improper personal benefit.
Unless limited by its charter, the TBCA requires indemnification of a director
or officer for his reasonable expenses if he is wholly successful in defense of
a proceeding brought because he was a director or officer.
The TBCA states that a company can provide for additional indemnification in
its charter or by-laws, except that no indemnification may be made if a final
adjudication adverse to the director or officer establishes his liability (a)
for any breach of loyalty to the corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law or (c) for unlawful distributions under the TBCA. The
First American by-laws provide indemnification for officers and directors to
the fullest extent permitted by law against all expense, liability and loss.
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REGULATION AND SUPERVISION
The following discussion sets forth the material elements of the regulatory
framework applicable to bank holding companies and their subsidiaries and
provides certain specific information relevant to AmSouth and First American.
This regulatory framework is intended primarily for the protection of
depositors and the federal deposit insurance funds and not for the protection
of security holders. To the extent that the following information describes
statutory and regulatory provisions, it is qualified in its entirety by
reference to those provisions. A change in the statutes, regulations or
regulatory policies applicable to AmSouth and First American or their
respective subsidiaries may have a material effect on the business of AmSouth
and First American, as the case may be. Further information is contained in the
documents incorporated herein by reference. See "Where You Can Find More
Information."
General
As a bank holding company, each of AmSouth and First American is subject to
regulation under the Bank Holding Company Act, and to inspection, examination
and supervision by the Federal Reserve Board. Under the Bank Holding Company
Act, bank holding companies generally may not acquire the ownership or control
of more than 5% of the voting shares or substantially all the assets of any
company, including a bank, without the Federal Reserve Board's prior approval.
In addition, bank holding companies generally may engage, directly or
indirectly, only in banking and those other activities that are determined by
the Federal Reserve Board to be closely related to banking.
First American's national banking association is subject to regulation and
examination primarily by the Office of the Comptroller of the Currency and,
secondarily, by the Federal Deposit Insurance Corporation and the Federal
Reserve Board. AmSouth's state-chartered bank is subject to primary federal
regulation and examination by the Federal Reserve Board and, secondarily by the
Federal Deposit Insurance Corporation and, in addition, is regulated and
examined by its state banking department. AmSouth, First American and their
respective subsidiaries also are affected by the fiscal and monetary policies
of the federal government and the Federal Reserve Board, and by various other
governmental requirements and regulations. First American is also a savings and
loan holding company subject to the supervision of the Office of Thrift
Supervision under the Home Owners Loan Act.
Capital Requirements
Each of AmSouth and First American is subject to risk-based capital
requirements and guidelines imposed by the Federal Reserve Board, which are
substantially similar to the capital requirements and guidelines imposed by the
Federal Reserve Board, the Office of the Comptroller of the Currency and the
Federal Deposit Insurance Corporation on the depository institutions within
their respective jurisdictions. For this purpose, a depository institution's or
holding company's assets and certain specified off-balance-sheet commitments
and obligations are assigned to various risk categories. A depository
institution's or holding company's capital, in turn, is classified in one of
three tiers: core ("Tier 1") capital, which includes common equity, non-
cumulative perpetual preferred stock, a limited amount of cumulative perpetual
preferred stock at the holding company level and minority interests in equity
accounts of consolidated subsidiaries, less goodwill, and most intangible
assets; supplementary ("Tier 2") capital, which includes, among other items,
perpetual preferred stock not meeting the Tier 1 definition, mandatory
convertible securities, subordinated debt and allowances for loan and lease
losses, subject to certain limitations; and market risk ("Tier 3") capital,
which includes qualifying unsecured subordinated debt.
Each of AmSouth and First American, like other bank holding companies,
currently is required to maintain Tier 1 capital and "total capital" (the sum
of Tier 1, Tier 2 and Tier 3 capital) equal, respectively, to at least 4% and
8% of its total risk-weighted assets (including certain off-balance-sheet
items, such as standby letters of credit). In addition, in order for a holding
company or depository institution to be considered "well capitalized" for
regulatory purposes, its Tier 1 and total capital ratios must be 6% and 10% on
a risk-adjusted
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basis, respectively. At June 30, 1999, each of AmSouth and First American met
both requirements, with Tier 1 and total capital equal to 6.62% and 10.90% (in
the case of AmSouth), and 9.91% and 11.65% (in the case of First American) of
its respective total risk-weighted assets.
The Federal Reserve Board, the Federal Deposit Insurance Corporation and the
Office of the Comptroller of the Currency have adopted rules to incorporate
market and interest rate risk components into their risk-based capital
standards. Amendments to the risk-based capital requirements, incorporating
market risk, became effective January 1, 1998. Under these market risk
requirements, capital will be allocated to support the amount of market risk
related to a financial institution's ongoing trading activities.
The Federal Reserve Board also requires bank holding companies to maintain a
minimum "leverage ratio" (Tier 1 capital to adjusted total assets) of 3% if the
holding company has the highest regulatory rating and meets certain other
requirements, or of 3% plus an additional "cushion" of at least 100 to 200
basis points if the holding company does not meet these requirements. At June
30, 1999, AmSouth's leverage ratio was 6.09% and First American's leverage
ratio was 8.03%.
The Federal Reserve Board may set capital requirements higher than the
minimum noted above for holding companies whose circumstances warrant it. For
example, holding companies experiencing or anticipating significant growth may
be expected to maintain 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 AmSouth's and First American's banking subsidiaries is subject to
similar risk-based and leverage capital requirements adopted by its applicable
federal banking agency, and each was in compliance with the applicable capital
requirements as of June 30, 1999.
Failure to meet capital requirements could subject a bank to a variety of
enforcement remedies, including the termination of federal deposit insurance
and to certain restrictions on its business.
Dividend Restrictions
Various federal and state statutory provisions limit the amount of dividends
AmSouth's and First American's affiliate banks can pay to AmSouth or First
American, as the case may be, without regulatory approval. Dividend payments by
national banks are limited to the lesser of (a) the level of undivided profits
and (b) absent regulatory approval, an amount not in excess of net income for
the current year combined with retained net income for the preceding two years.
Likewise, the approval of the Federal Reserve Board is required for any
dividend by a state-chartered bank that is a member of the Federal Reserve
System (a "state member bank") if the total of all dividends declared by the
bank in any calendar year would exceed the total of its net profits (as defined
by regulatory agencies) for that year combined with its retained net profits
for the preceding two years. In addition, a state member bank may not pay a
dividend in an amount greater than its net profits then on hand. State member
banks may also be subject to similar restrictions imposed by the laws of the
states in which they are chartered.
Under Alabama law, a bank may not pay a dividend in excess of 90 percent of
its net earnings until the bank's surplus is equal to at least 20 percent of
its capital. AmSouth Bank is also required by Alabama law to obtain the prior
approval of the Superintendent of the State Banking Department of Alabama for
the payment of dividends if the total of all dividends declared by AmSouth Bank
in any calendar year will exceed the total of (a) AmSouth Bank's net earnings
(as defined by statute) for that year, plus (b) its retained net earnings for
the preceding two years, less any required transfers to surplus. In addition,
no dividends may be paid from AmSouth Bank's surplus without the prior written
approval of the Superintendent.
In addition, federal bank regulatory authorities have authority to prohibit
AmSouth's and First American's affiliate banks from engaging in unsafe or
unsound practices in conducting their business. The payment of
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dividends, depending upon the financial condition of the bank in question,
could be deemed an unsafe or unsound practice. The ability of AmSouth's and
First American's affiliate banks to pay dividends in the future is currently,
and could be further, influenced by bank regulatory policies and capital
guidelines.
COMPARATIVE MARKET PRICES AND DIVIDENDS
AmSouth
AmSouth common stock is traded on the NYSE under the symbol "ASO." The
following table sets forth, for the indicated periods, the high and low closing
sale prices for AmSouth common stock as reported on the NYSE Composite
Transaction Reporting System, and the cash dividends declared per share of
AmSouth common stock.
<TABLE>
<CAPTION>
Price Range of
Common Stock
--------------- Dividends
High Low Declared
------- ------- ---------
<S> <C> <C> <C>
AmSouth
1997
First Quarter.................................... $ 16.19 $ 14.08 $0.12
Second Quarter................................... 17.94 14.30 0.12
Third Quarter.................................... 21.72 17.00 0.12
Fourth Quarter................................... 25.11 20.44 0.13
1998
First Quarter.................................... 27.11 22.00 0.13
Second Quarter................................... 27.92 25.05 0.13
Third Quarter.................................... 27.92 22.50 0.13
Fourth Quarter................................... 30.42 21.42 0.17
1999
First Quarter.................................... 33.92 27.92 0.17
Second Quarter................................... 32.33 21.88 0.17
Third Quarter (through August 12, 1999).......... 23.88 21.50 0.17
</TABLE>
Share data and historical stock prices have been adjusted for three-for-two
stock splits in 1997, 1998 and 1999.
On May 28, 1999, the last trading day before public announcement of the
merger, the closing price per share of AmSouth common stock on the NYSE was
$28.38. Past price performance is not necessarily indicative of likely future
price performance. Holders of AmSouth common stock are urged to obtain current
market quotations for shares of AmSouth common stock.
The holders of AmSouth common stock are entitled to receive dividends when
and if declared by the AmSouth board of directors out of funds legally
available therefor. The AmSouth board of directors periodically considers the
payment of dividends on AmSouth common stock, taking into account AmSouth's
financial condition and level of net income, AmSouth's future prospects,
economic conditions, industry practices and other factors, including
restrictions on the payment of dividends.
First American
First American common stock is quoted on the NYSE under the symbol "FAM."
First American common stock was quoted on the Nasdaq National Market until July
1, 1998. The following table sets forth, for the indicated periods, the high
and low closing sale prices for First American common stock as reported on the
NYSE Composite Transactions Reporting System and the Nasdaq National Market,
and the cash dividends declared per share of First American common stock.
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<TABLE>
<CAPTION>
Price Range of
Common Stock
--------------- Dividends
High Low Declared
------- ------- ---------
<S> <C> <C> <C>
First American
1997
First Quarter.................................... $ 34.38 $ 28.25 $0.16
Second Quarter................................... 39.50 30.22 0.20
Third Quarter.................................... 49.63 38.50 0.20
Fourth Quarter................................... 54.75 45.13 0.20
1998
First Quarter.................................... 49.00 44.00 0.20
Second Quarter................................... 54.31 43.44 0.25
Third Quarter.................................... 50.75 35.69 0.25
Fourth Quarter................................... 44.50 34.38 0.25
1999
First Quarter.................................... 45.31 35.81 0.25
Second Quarter................................... 43.63 36.94 0.28
Third Quarter (through August 12, 1999).......... 43.31 39.63 0.28
</TABLE>
Share data and historical stock prices have been adjusted for a two-for-one
stock split in 1997.
On May 28, 1999, the last trading day before public announcement of the
merger, the closing price per share of First American common stock on the NYSE
was $40.81. Past price performance is not necessarily indicative of likely
future performance. Holders of First American common stock are urged to obtain
current market quotations for shares of First American common stock.
AMENDMENT TO AMSOUTH CERTIFICATE OF INCORPORATION
The AmSouth certificate of incorporation currently authorizes the issuance
of a total of 350 million shares of AmSouth common stock. Of such authorized
shares, 176,440,140 shares were outstanding as of August 9, 1999 and a further
14,070,675 shares are reserved for issuance pursuant to AmSouth's stockholder,
employee and director benefit plans. Giving effect to the foregoing,
159,489,185 shares of AmSouth common stock are available for issuance as of
August 9, 1999. Completion of the merger is expected to require the issuance,
or the reservation for future issuance, of approximately an additional 227.4
million shares of AmSouth common stock. AmSouth does not presently have a
sufficient number of authorized shares of AmSouth common stock not otherwise
reserved for issuance to consummate the merger. Accordingly, AmSouth's board of
directors is proposing an amendment to the AmSouth certificate of
incorporation, pursuant to which the AmSouth certificate of incorporation would
be amended to increase the number of shares of AmSouth common stock authorized
for issuance thereunder from 350 million to 750 million shares. Approval of the
amendment by AmSouth stockholders, together with approval by such AmSouth
stockholders of the issuance of shares of AmSouth common stock in the merger,
is a condition to the parties' obligations to consummate the merger.
The additional shares of AmSouth common stock authorized pursuant to the
amendment to the AmSouth certificate of incorporation (the "additional shares")
and not issued in the merger or otherwise reserved could be issued at the
discretion of the AmSouth board of directors without further action by AmSouth
stockholders, except as required by applicable law, regulation or rule
(including applicable rules of the NYSE or other securities exchange or market
on which the shares of AmSouth common stock may then be listed or authorized
for quotation), in connection with acquisitions, efforts to raise additional
capital for AmSouth and for other corporate purposes. The issuance of shares of
AmSouth common stock, including the additional shares, may, in certain
situations, dilute the present equity ownership position of current AmSouth
stockholders. Shares of AmSouth common stock will be issued only upon a
determination by the AmSouth board of directors that such proposed issuance is
in the best interests of AmSouth.
78
<PAGE>
As of the date of this document, AmSouth has no plans or commitments that
would involve the issuance of the additional shares, other than pursuant to the
merger agreement. The increase in the authorized shares of AmSouth common stock
will allow AmSouth's board of directors to consider and, if in the best
interests of AmSouth stockholders, take advantage of other merger or
acquisition possibilities. As part of its business strategy, AmSouth
continually considers potential strategic business combinations, and it is the
policy of AmSouth not to comment on such matters publicly until a definitive
agreement with respect thereto has been reached. In addition, the discretion
vested in the AmSouth board of directors to authorize the issuance and sale of
authorized but unissued shares of AmSouth common stock could, under some
circumstances, be used to discourage certain potential business combinations
that some AmSouth stockholders may believe to be in the best interests of
AmSouth stockholders and make more difficult management changes that may occur
if a potential business combination were successful, although AmSouth has no
current intention of issuing shares of AmSouth common stock for this purpose.
If the amendment to AmSouth's certificate of incorporation is approved, the
relevant part of section (a) of Article IV of the AmSouth certificate of
incorporation would read in its entirety as follows:
(a) The total number of shares of all classes of capital stock which the
corporation shall have authority to issue is SEVEN HUNDRED AND FIFTY-TWO
MILLION (752,000,000), of which seven hundred and fifty million
(750,000,000) shares of the par value $1.00 per share are to be of a class
designated "Common Stock", and TWO MILLION (2,000,000) shares without par
value are to be a class designated "Preferred Stock."
AmSouth's board of directors recommends stockholders vote "FOR" the
amendment to the certificate of incorporation. The amendment to the certificate
of incorporation will be approved if the number of votes cast at the AmSouth
special meeting favoring such approval is a majority of the outstanding AmSouth
shares entitled to vote.
79
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial information
is presented to show the impact of the merger on the historical financial
position and results of operations of AmSouth under the "pooling of interests"
method of accounting. The unaudited pro forma combined condensed financial
information combines the historical financial information of AmSouth and First
American as of June 30, 1999 and for the six months ended June 30, 1999 and
1998 and for the years ended December 31, 1998, 1997, and 1996, respectively.
The unaudited pro forma combined condensed balance sheet gives effect to the
merger as if it had been completed on June 30, 1999 and the unaudited pro forma
combined condensed statements of income give effect to the merger as if the
merger had been consummated at the beginning of the earliest period presented.
The merger, which is expected to be completed in the fourth quarter of 1999,
provides for the exchange of 1.871 shares of AmSouth common stock for each
outstanding share of First American common stock. The pro forma combined
condensed financial information as of June 30, 1999 and for the six months
ended June 30, 1999 and 1998 and each of the three years ended December 31,
1998, 1997 and 1996 is based on and derived from, and should be read in
conjunction with, the historical consolidated financial statements and the
related notes of First American and AmSouth, which are incorporated by
reference herein. See "Where You Can Find More Information." Pro forma
stockholders' equity at June 30, 1999 includes the effect of estimated
nonrecurring merger and integration and other nonrecurring merger related
charges of $296 million ($205 million after taxes). The pro forma combined
condensed financial information does not give effect to the anticipated cost
savings, potential revenue enhancements or other synergies expected to be
realized in connection with the merger.
The pro forma data are presented for comparative purposes only and are not
necessarily indicative of the future financial position or results of
operations of the combined company or of the combined financial position or the
results of operations that would have been realized had the merger been
consummated during the periods or as of the dates for which the pro forma data
are presented.
80
<PAGE>
AMSOUTH BANCORPORATION AND FIRST AMERICAN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AT JUNE 30, 1999
(In millions)
<TABLE>
<CAPTION>
First Pro Forma
AmSouth American Adjustments Combined
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks.............. $ 557 $ 981 $ $ 1,538
Federal funds sold and securities
purchased under agreement to
resell.............................. 19 48 67
Trading securities................... 6 73 79
Available-for-sale securities........ 3,474 4,243 (17) 7,700
Held-to-maturity securities.......... 2,215 2,575 4,790
Mortgage loans held for sale......... 101 50 151
Other interest-earning assets........ 16 16 32
Loans................................ 13,221 12,272 25,493
Less: Allowance for loan losses...... 177 189 366
Unearned income................... 137 7 144
------- ------- ----- -------
Net loans........................ 12,907 12,076 0 24,983
Premises and equipment, net.......... 335 382 717
Accrued interest receivable and other
assets.............................. 962 1,085 2,047
------- ------- ----- -------
$20,592 $21,529 $ (17) $42,104
======= ======= ===== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing................ $ 2,305 $ 2,677 $ $ 4,982
Interest-bearing................... 10,772 11,809 22,581
------- ------- ----- -------
Total deposits................... 13,077 14,486 0 27,563
Federal funds purchased and
securities sold under agreements to
repurchase.......................... 1,587 2,686 4,273
Other borrowed funds................. 388 578 966
Long-term Federal Home Loan Bank
advances............................ 2,925 1,584 4,509
Other long-term debt................. 789 203 992
------- ------- ----- -------
Total deposits and interest-
bearing liabilities............. 18,766 19,537 0 38,303
Accrued expenses and other
liabilities......................... 402 224 158 784
------- ------- ----- -------
Total liabilities................ 19,168 19,761 158 39,087
Stockholders' equity:
Common stock....................... 202 292 (74) 420
Capital surplus.................... 454 255 74 783
Retained earnings.................. 1,216 1,349 (220) 2,345
Cost of common stock in treasury... (405) 0 0 (405)
Deferred compensation on restricted
stock............................. (12) (34) 46 0
Accumulated other comprehensive
income (loss)..................... (31) (94) (1) (126)
------- ------- ----- -------
Total stockholders' equity....... 1,424 1,768 (175) 3,017
------- ------- ----- -------
$20,592 $21,529 $ (17) $42,104
======= ======= ===== =======
</TABLE>
The accompanying notes are an integral part of the unaudited
pro forma combined condensed financial information.
81
<PAGE>
AMSOUTH BANCORPORATION AND FIRST AMERICAN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
SIX MONTHS ENDED JUNE 30, 1999
(In millions, except per share data)
<TABLE>
<CAPTION>
First Pro Forma
AmSouth American Adjustments Combined
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE FROM INTEREST-EARNING ASSETS
Loans................................... $ 551 $ 473 $ $1,024
Available-for-sale securities........... 102 130 232
Held-to-maturity securities............. 66 70 136
Other interest-earning assets........... 3 10 13
----- ----- ------ ------
Total revenue from interest-earning
assets................................ 722 683 0 1,405
----- ----- ------ ------
INTEREST EXPENSE
Interest-bearing deposits............... 220 217 437
Federal funds purchased and securities
sold under agreements to repurchase.... 37 51 88
Other borrowed funds.................... 4 8 12
Long-term Federal Home Loan Bank
advances............................... 66 27 93
Other long-term debt.................... 25 7 32
----- ----- ------ ------
Total interest expense................. 352 310 0 662
----- ----- ------ ------
NET INTEREST INCOME..................... 370 373 0 743
Provision for loan losses............... 17 20 37
----- ----- ------ ------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES............................ 353 353 0 706
----- ----- ------ ------
NONINTEREST REVENUES
Service charges on deposit accounts..... 53 64 117
Trust income............................ 35 20 55
Consumer investment services income..... 22 87 109
Bank-owned life insurance policies...... 9 1 10
Mortgage income......................... 13 22 35
Gains on sale of available-for-sale
securities............................. 6 5 11
Other noninterest revenues.............. 39 43 82
----- ----- ------ ------
Total noninterest revenues............. 177 242 0 419
----- ----- ------ ------
NONINTEREST EXPENSES
Salaries and employee benefits.......... 158 173 331
Subscribers' commissions................ 0 52 52
Net occupancy expense................... 29 27 56
Equipment expense....................... 32 33 65
Marketing expense....................... 11 11 22
Postage and office supplies............. 12 11 23
Communications expense.................. 12 12 24
Amortization expense.................... 8 9 17
Merger and integration costs............ 0 28 28
Other noninterest expenses.............. 44 46 90
----- ----- ------ ------
Total noninterest expenses............. 306 402 0 708
----- ----- ------ ------
INCOME BEFORE INCOME TAXES.............. 224 193 0 417
Income taxes............................ 79 69 148
----- ----- ------ ------
NET INCOME............................. $ 145 $ 124 $ 0 $ 269
===== ===== ====== ======
Average common shares outstanding....... 176 116 100 392
Earnings per common share............... $0.82 $1.07 $ 0.68
Diluted average common shares
outstanding............................ 178 117 102 397
Diluted earnings per common share....... $0.81 $1.06 $ 0.67
</TABLE>
The accompanying notes are an integral part of the unaudited
pro forma combined condensed financial information.
82
<PAGE>
AMSOUTH BANCORPORATION AND FIRST AMERICAN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
SIX MONTHS ENDED JUNE 30, 1998
(In millions, except per share data)
<TABLE>
<CAPTION>
First Pro Forma
AmSouth American Adjustments Combined
------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
REVENUE FROM INTEREST-EARNING ASSETS
Loans............................... $ 535 $ 504 $ $1,039
Available-for-sale securities....... 103 132 235
Held-to-maturity securities......... 83 25 108
Other interest-earning assets....... 3 13 16
----- ----- ------ ------
Total revenue from interest-earning
assets............................ 724 674 0 1,398
----- ----- ------ ------
INTEREST EXPENSE
Interest-bearing deposits........... 248 237 485
Federal funds purchased and
securities sold under agreements to
repurchase......................... 34 45 79
Other borrowed funds................ 18 10 28
Long-term Federal Home Loan Bank
advances........................... 54 12 66
Other long-term debt................ 24 7 31
----- ----- ------ ------
Total interest expense............. 378 311 0 689
----- ----- ------ ------
NET INTEREST INCOME................. 346 363 0 709
Provision for loan losses........... 38 13 51
----- ----- ------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES.................... 308 350 0 658
----- ----- ------ ------
NONINTEREST REVENUES
Service charges on deposit
accounts........................... 52 62 114
Trust income........................ 35 21 56
Consumer investment services
income............................. 15 78 93
Bank-owned life insurance policies.. 10 0 10
Mortgage income..................... 9 26 35
Gains on sale of available-for-sale
securities......................... 2 3 5
Net gain on sale of businesses...... 28 0 28
Other noninterest revenues.......... 33 44 77
----- ----- ------ ------
Total noninterest revenues......... 184 234 0 418
----- ----- ------ ------
NONINTEREST EXPENSES
Salaries and employee benefits...... 145 179 324
Subscribers' commissions............ 0 47 47
Net occupancy expense............... 28 26 54
Equipment expense................... 32 30 62
Marketing expense................... 10 10 20
Postage and office supplies......... 12 11 23
Communications expense.............. 11 10 21
Amortization expense................ 9 9 18
Merger and integration cost......... 0 72 72
Other noninterest expenses.......... 48 50 98
----- ----- ------ ------
Total noninterest expenses......... 295 444 0 739
----- ----- ------ ------
INCOME BEFORE INCOME TAXES.......... 197 140 0 337
Income taxes........................ 70 54 124
----- ----- ------ ------
NET INCOME......................... $ 127 $ 86 $ 0 $ 213
===== ===== ====== ======
Average common shares outstanding... 180 111 97 388
Earnings per common share........... $0.71 $0.77 $ 0.55
Diluted average common shares
outstanding........................ 183 114 99 396
Diluted earnings per common share... $0.70 $0.76 $ 0.54
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
condensed financial information.
83
<PAGE>
AMSOUTH BANCORPORATION AND FIRST AMERICAN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1998
(In millions, except per share data)
<TABLE>
<CAPTION>
First Pro Forma
AmSouth American Adjustments Combined
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE FROM INTEREST-EARNING ASSETS
Loans................................... $1,086 $ 994 $ $2,080
Available-for-sale securities........... 213 286 499
Held-to-maturity securities............. 158 76 234
Other interest-earning assets........... 6 12 18
------ ----- ---- ------
Total revenue from interest-earning
assets................................ 1,463 1,368 0 2,831
------ ----- ---- ------
INTEREST EXPENSE
Interest-bearing deposits............... 499 471 970
Federal funds purchased and securities
sold under agreements to repurchase.... 72 99 171
Other borrowed funds.................... 26 15 41
Long-term Federal Home Loan Bank
advances............................... 119 34 153
Other long-term debt.................... 48 15 63
------ ----- ---- ------
Total interest expense................. 764 634 0 1,398
------ ----- ---- ------
NET INTEREST INCOME..................... 699 734 0 1,433
Provision for loan losses............... 58 41 99
------ ----- ---- ------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES............................ 641 693 0 1,334
------ ----- ---- ------
NONINTEREST REVENUES
Service charges on deposit accounts..... 105 132 237
Trust income............................ 66 43 109
Consumer investment services income..... 31 151 182
Bank-owned life insurance policies...... 19 0 19
Mortgage income......................... 18 48 66
Gains on sale of available-for-sale
securities............................. 8 8 16
Net gain on sale of businesses.......... 28 7 35
Other noninterest revenues.............. 72 88 160
------ ----- ---- ------
Total noninterest revenues............. 347 477 0 824
------ ----- ---- ------
NONINTEREST EXPENSES
Salaries and employee benefits.......... 290 343 633
Subscribers' commissions................ 0 90 90
Net occupancy expense................... 56 53 109
Equipment expense....................... 62 61 123
Marketing expense....................... 21 21 42
Postage and office supplies............. 24 21 45
Communications expense.................. 23 22 45
Amortization expense.................... 16 17 33
Merger and integration costs............ 0 122 122
Other noninterest expenses.............. 90 87 177
------ ----- ---- ------
Total noninterest expenses............. 582 837 0 1,419
------ ----- ---- ------
INCOME BEFORE INCOME TAXES.............. 406 333 0 739
Income taxes............................ 143 122 265
------ ----- ---- ------
NET INCOME............................. $ 263 $ 211 $ 0 $ 474
====== ===== ==== ======
Average common shares outstanding....... 179 113 98 390
Earnings per common share............... $ 1.47 $1.88 $ 1.22
Diluted average common shares
outstanding............................ 182 115 100 397
Diluted earnings per common share....... $ 1.44 $1.84 $ 1.20
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
condensed financial information.
84
<PAGE>
AMSOUTH BANCORPORATION AND FIRST AMERICAN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1997
(In millions, except per share data)
<TABLE>
<CAPTION>
First Pro Forma
AmSouth American Adjustments Combined
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE FROM INTEREST-EARNING ASSETS
Loans................................... $1,052 $1,003 $ $2,055
Available-for-sale securities........... 156 223 379
Held-to-maturity securities............. 167 62 229
Other interest-earning assets........... 3 11 14
------ ------ ---- ------
Total revenue from interest-earning
assets................................ 1,378 1,299 0 2,677
------ ------ ---- ------
INTEREST EXPENSE
Interest-bearing deposits............... 484 478 962
Federal funds purchased and securities
sold under agreements to repurchase.... 79 75 154
Other borrowed funds.................... 53 19 72
Long-term Federal Home Loan Bank
advances............................... 54 15 69
Other long-term debt.................... 32 13 45
------ ------ ---- ------
Total interest expense................. 702 600 0 1,302
------ ------ ---- ------
NET INTEREST INCOME..................... 676 699 0 1,375
Provision for loan losses............... 67 16 83
------ ------ ---- ------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES............................ 609 683 0 1,292
------ ------ ---- ------
NONINTEREST REVENUES
Service charges on deposit accounts..... 99 118 217
Trust income............................ 62 40 102
Consumer investment services income..... 24 124 148
Bank-owned life insurance policies...... 11 0 11
Mortgage income......................... 7 37 44
Gains on sale of available-for-sale
securities............................. 8 5 13
Net gain on sale of businesses.......... 0 6 6
Other noninterest revenues.............. 55 76 131
------ ------ ---- ------
Total noninterest revenues............. 266 406 0 672
------ ------ ---- ------
NONINTEREST EXPENSES
Salaries and employee benefits.......... 250 346 596
Subscribers' commissions................ 0 71 71
Net occupancy expense................... 56 50 106
Equipment expense....................... 57 57 114
Marketing expense....................... 18 22 40
Postage and office supplies............. 22 25 47
Communications expense.................. 21 18 39
Amortization expense.................... 17 17 34
Other noninterest expenses.............. 85 93 178
------ ------ ---- ------
Total noninterest expenses............. 526 699 0 1,225
------ ------ ---- ------
INCOME BEFORE INCOME TAXES.............. 349 390 0 739
Income taxes............................ 123 142 265
------ ------ ---- ------
NET INCOME............................. $ 226 $ 248 $ 0 $ 474
====== ====== ==== ======
Average common shares outstanding....... 185 113 98 396
Earnings per common share............... $ 1.23 $ 2.19 $1.20
Diluted average common shares
outstanding............................ 186 115 100 401
Diluted earnings per common share....... $ 1.21 $ 2.15 $ 1.18
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
condensed financial information.
85
<PAGE>
AMSOUTH BANCORPORATION AND FIRST AMERICAN CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
YEAR ENDED DECEMBER 31, 1996
(In millions, except per share data)
<TABLE>
<CAPTION>
First Pro Forma
AmSouth American Adjustments Combined
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE FROM INTEREST-EARNING ASSETS
Loans................................... $1,004 $ 909 $ $1,913
Available-for-sale securities........... 164 191 355
Held-to-maturity securities............. 178 68 246
Other interest-earning assets........... 8 22 30
------ ----- ---- ------
Total revenue from interest-earning
assets................................ 1,354 1,190 0 2,544
------ ----- ---- ------
INTEREST EXPENSE
Interest-bearing deposits............... 511 458 969
Federal funds purchased and securities
sold under agreements to repurchase.... 92 70 162
Other borrowed funds.................... 40 9 49
Long-term Federal Home Loan Bank
advances............................... 27 19 46
Other long-term debt.................... 32 10 42
------ ----- ---- ------
Total interest expense................. 702 566 0 1,268
------ ----- ---- ------
NET INTEREST INCOME..................... 652 624 0 1,276
Provision for loan losses............... 65 6 71
------ ----- ---- ------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES............................ 587 618 0 1,205
------ ----- ---- ------
NONINTEREST REVENUES
Service charges on deposit accounts..... 95 97 192
Trust income............................ 57 36 93
Consumer investment services income..... 17 69 86
Mortgage income......................... 3 29 32
Gains on sale of available-for-sale
securities............................. 8 3 11
Other noninterest revenues.............. 55 78 133
------ ----- ---- ------
Total noninterest revenues............. 235 312 0 547
------ ----- ---- ------
NONINTEREST EXPENSES
Salaries and employee benefits.......... 232 311 543
Subscribers' commissions................ 0 35 35
Net occupancy expense................... 54 44 98
Equipment expense....................... 55 48 103
Marketing expense....................... 17 21 38
Postage and office supplies............. 23 23 46
Communications expense.................. 16 12 28
Amortization expense.................... 17 12 29
Other noninterest expenses.............. 120 92 212
------ ----- ---- ------
Total noninterest expenses............. 534 598 0 1,132
------ ----- ---- ------
INCOME BEFORE INCOME TAXES.............. 288 332 0 620
Income taxes............................ 105 118 223
------ ----- ---- ------
NET INCOME............................. $ 183 $ 214 $ 0 $ 397
====== ===== ==== ======
Average common shares outstanding....... 191 111 96 398
Earnings per common share............... $ 0.96 $1.93 $ 1.00
Diluted average common shares
outstanding............................ 193 112 98 403
Diluted earnings per common share....... $ 0.95 $1.91 $ 0.98
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
condensed financial information.
86
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL INFORMATION
(1) The Unaudited Pro Forma Combined Condensed Financial Information presented
herein is not necessarily indicative of the results of operations or the
combined financial position that would have resulted had the merger been
consummated at the beginning of the earliest period presented, nor is it
necessarily indicative of the results of operations in future periods or
the future financial position of the combined entities. The Unaudited Pro
Forma Combined Condensed Financial Information should be read together with
the historical consolidated financial statements and the related notes
thereto of each of AmSouth and First American incorporated by reference
herein.
(2) It is assumed that the merger will be accounted for on a pooling of
interests accounting basis, and accordingly, the related pro forma amounts
are included using the exchange ratio of 1.871 shares of AmSouth common
stock for each share of First American common stock. In addition, common
stock and capital surplus include a reclassification adjustment to reflect
the change in par value of outstanding shares of First American to the
$1.00 par value of AmSouth common stock.
(3) Earnings per share data has been computed based on the combined historical
net income applicable to AmSouth stockholders and First American
stockholders using the historical weighted average shares outstanding of
AmSouth common stock and the weighted average outstanding shares of First
American common stock, adjusted to equivalent shares of AmSouth common
stock for each of the periods presented.
(4) Certain insignificant reclassifications have been included to ensure
consistent presentation.
(5) The Unaudited Pro Forma Combined Condensed Financial Information, with the
exception of the Unaudited Pro Forma Combined Condensed Balance Sheet, does
not include any material expenses related to the Merger. AmSouth currently
estimates pre-tax merger and integration and other nonrecurring merger
related charges of approximately $296 million ($205 million net of taxes)
will be recorded.
(6) AmSouth expects to realize significant revenue enhancements and cost
savings from the merger, primarily through the realization of certain
operating efficiencies and reductions in fixed, labor and other costs. The
Unaudited Pro Forma Combined Condensed Financial Information, which does
not reflect any revenue enhancements, direct costs or potential savings, is
therefore not indicative of the results of future operations. There can be
no assurance that anticipated revenue enhancements or cost savings will be
achieved in the expected amounts or at the times anticipated.
87
<PAGE>
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements with respect to
the financial condition, results of operations and business of AmSouth. These
statements may be made directly in this document or may be incorporated in this
document by reference to other documents and may include statements for the
period following the consummation of the merger. You can find many of these
statements by looking for words such as "believes," "expects," "anticipates,"
"estimates" or similar expressions. These forward-looking statements involve
substantial risks and uncertainties. Some of the factors that may cause actual
results to differ materially from those contemplated by the forward-looking
statements include the following possibilities:
. combining the businesses of AmSouth and First American may cost more
than we expect;
. integrating the businesses of AmSouth and First American and retaining
key personnel may be more difficult than we expect;
. our revenues after the merger may be lower than we expect, or our
operating costs may be higher than we expect;
. expected cost savings from the merger may not be fully realized or may
not be realized within the expected time frame;
. we may lose more business or customers after the merger than we expect;
. there may be increases in competitive pressure among financial
institutions;
. changes in the interest rate environment may reduce interest margins;
. general economic conditions, either nationally or in some or all of the
states in which the combined company will be doing business, or
conditions in securities markets, may be less favorable than we
currently anticipate;
. legislation or regulatory changes may adversely affect our business; or
. technological changes (including "Year 2000" data system compliance
issues) may be more difficult or expensive than anticipated.
EXPERTS
The consolidated financial statements of AmSouth and its subsidiaries
incorporated by reference in AmSouth's annual report (Form 10-K) for the year
ended December 31, 1998, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report incorporated by reference in the annual
report and incorporated by reference in this proxy statement/prospectus. Such
consolidated financial statements are incorporated by reference in this proxy
statement/prospectus in reliance upon such report given on the authority of
such firm as experts in accounting and auditing.
With respect to the unaudited consolidated interim financial information for
the three-month and six-month periods ended March 31, 1999 and June 30, 1999,
incorporated by reference in this registration statement on Form S-4 and the
related proxy statement/prospectus, Ernst & Young LLP have reported that they
have applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports, included in
AmSouth's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999
and June 30, 1999, and incorporated by reference in this proxy
statement/prospectus, state that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted considering
the limited nature of the review procedures applied. The independent auditors
are not subject to the liability provisions of Section 11 of the Securities Act
for their reports on the unaudited interim financial information because that
report is not a "report" or a "part" of the registration statement prepared or
certified by the auditors within the meaning of Sections 7 and 11 of the Act.
88
<PAGE>
The consolidated financial statements of First American and subsidiaries as
of December 31, 1998 and 1997, and for each of the years in the three-year
period ended December 31, 1998 included in First American's 1998 Annual Report
on Form 10-K have been incorporated by reference in this document in reliance
upon the report of KPMG LLP, independent certified public accountants, in First
American's 1998 Annual Report on Form 10-K which is incorporated by reference
in this document, and upon the authority of KPMG LLP as experts in accounting
and auditing.
With respect to the unaudited interim financial information for the three-
and six-month periods ended March 31 and June 30, 1999 and 1998, incorporated
by reference herein, KPMG LLP has reported that it applied limited procedures
in accordance with professional standards for review of such information.
However, KPMG LLP's separate reports included in First American's quarterly
reports on Form 10-Q for the quarters ended March 31 and June 30, 1999, and
incorporated by reference herein, state that KPMG LLP did not audit and it does
not express an opinion on that interim financial information. Accordingly, the
degree of reliance on KPMG LLP's reports on such information should be
restricted in light of the limited nature of the review procedures applied. The
accountants are not subject to the liability provisions of Section 11 of the
Securities Act for their reports on the unaudited interim financial information
because those reports are not "reports" or a "part" of the registration
statement prepared or certified by the accountants within the meaning of
Sections 7 and 11 of the Securities Act.
AmSouth expects representatives of Ernst & Young LLP to attend AmSouth's
special meeting, and First American expects representatives of KPMG LLP to
attend First American's special meeting. These representatives will have an
opportunity to make a statement if they desire to do so, and we expect that
they will be available to respond to any appropriate questions you may have.
VALIDITY OF AMSOUTH COMMON STOCK
The validity of the shares of AmSouth common stock to be issued in the
merger will be passed upon for AmSouth by Sullivan & Cromwell, New York, New
York.
OTHER MATTERS
As of the date of this document, the AmSouth board of directors and the
First American board of directors know of no matters that will be presented for
consideration at the special meeting other than as described in this document.
However, if any other matter shall come before the special meeting or any
adjournments or postponements thereof and shall be voted upon, the proposed
proxy will be deemed to confer authority to the individuals named as authorized
therein to vote the shares represented by the proxy as to any matters that may
properly come before the special meeting; provided, however, that no proxy that
is voted against the proposal to approve the merger agreement or the increase
in, and issuance of, AmSouth authorized common stock will be voted in favor of
any adjournment or postponement.
WHERE YOU CAN FIND MORE INFORMATION
AmSouth has filed with the SEC a registration statement under the Securities
Act that registers the distribution to First American stockholders of the
shares of AmSouth common stock to be issued in connection with the merger. The
registration statement, including the attached exhibits and schedules, contains
additional relevant information about AmSouth and AmSouth common stock. The
rules and regulations of the SEC allow us to omit certain information included
in the registration statement from this document.
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<PAGE>
In addition, AmSouth and First American file reports, proxy statements and
other information with the SEC under the Securities Exchange Act. You may read
and copy this information at the following locations of the SEC:
Public Reference Room New York Regional Chicago Regional Office
450 Fifth Street, N.W. Office Citicorp Center
Room 1024 7 World Trade Center 500 West Madison Street
Washington, D.C. 20549 Suite 1300 Suite 1400
New York, New York Chicago, Illinois 60661-
10048 2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The SEC also maintains an Internet world wide
web site that contains reports, proxy statements and other information about
issuers, like AmSouth and First American, who file electronically with the SEC.
The address of the site is http://www.sec.gov.
You should also be able to inspect reports, proxy statements and other
information about AmSouth and First American at the offices of the NYSE, 20
Broad Street, New York, New York 10005. Also, AmSouth maintains a website at
www.amsouth.com and First American maintains a website at www.fanb.com.
The SEC allows AmSouth and First American to "incorporate by reference"
information into this document. This means that AmSouth and First American can
disclose important information to you by referring you to another document
filed separately with the SEC. The information incorporated by reference is
considered to be a part of this document, except for any information that is
superseded by information that is included directly in this document.
This document incorporates by reference the documents listed below that
AmSouth and First American previously filed with the SEC. They contain
important information about the companies and their financial condition.
<TABLE>
<CAPTION>
AmSouth Commission Filings Period or Date Filed
-------------------------- --------------------------------------
<S> <C>
Annual Report on Form 10-K........... Year ended December 31, 1998
Quarterly Report on Form 10-Q........ Quarter ended March 31, 1999
Quarterly Report on Form 10-Q........ Quarter ended June 30, 1999
Current Report on Form 8-K........... February 23, 1999
Current Report on Form 8-K........... March 1, 1999
Proxy Statement on Schedule 14A...... March 11, 1999
Current Report on Form 8-K........... April 23, 1999
Current Report on Form 8-K........... June 2, 1999
Current Report on Form 8-K........... June 8, 1999
Current Report on Form 8-K........... July 28, 1999
The description of AmSouth common
stock and Rights Agreement set forth
in the registration statement on Filed pursuant to Section 12 of the
Form 8-A............................ Securities Exchange Act of 1934 on
March 12, 1998, including any
amendment or report filed with the SEC
for the purpose of updating the
description.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
First American Commission Filings Period or Date Filed
--------------------------------- --------------------------------------
<S> <C>
Annual Report on Form 10-K........... Year ended December 31, 1998
Quarterly Report on Form 10-Q........ Quarter ended March 31, 1999
Quarterly Report on Form 10-Q........ Quarter ended June 30, 1999
Current Report on Form 8-K........... June 3, 1999
The description of First American
Rights Agreement set forth in the Filed pursuant to Section 12 of the
registration statement on Form 8-A.. Securities Exchange Act of 1934 on
November 10, 1998, including any
amendment or report filed with the SEC
for the purpose of updating the
description.
The description of First American
common stock as set forth in the Filed pursuant to Section 12 of the
registration statement on Form 8-A.. Securities Exchange Act of 1934 on
June 19, 1998, including any amendment
or report filed with the SEC for the
purpose of updating the description.
</TABLE>
AmSouth and First American also incorporate by reference additional
documents that either company may file with the SEC between the date of this
document and the date of the AmSouth or First American special meetings. These
documents include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as
proxy statements.
AmSouth has supplied all information contained or incorporated by reference
in this document relating to AmSouth, as well as all pro forma financial
information, and First American has supplied all information relating to First
American.
Documents incorporated by reference are available from AmSouth and First
American without charge, excluding any exhibits to those documents unless the
exhibit is specifically incorporated by reference as an exhibit in this
document. You can obtain documents incorporated by reference in this document
by requesting them in writing or by telephone from the appropriate company at
the following addresses:
AmSouth Bancorporation First American
Corporation
M. List Underwood, Jr.
Investor Relations Department Carroll E. Kimball
P.O. Box 11007 Director of Investor
Birmingham, Alabama 35288 Relations
First American Center
Phone: (205) 801-0265 Nashville, Tennessee
37237-0700
Phone: (615) 736-6267
If you would like to request documents, please do so by September 9, 1999 to
receive them before the special meeting. If you request any incorporated
documents from AmSouth or First American, AmSouth or First American will mail
them to you by first class mail, or another equally prompt means, within one
business day after it receives your request.
Neither AmSouth nor First American has authorized anyone to give any
information or make any representation about the merger or our companies that
is different from, or in addition to, that contained in this document or in any
of the materials that have been incorporated into this document. Therefore, if
anyone does give you information of this sort, you should not rely on it. If
you are in a jurisdiction where offers to exchange or sell, or solicitations of
offers to exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
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<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
dated May 31, 1999
among
AMSOUTH BANCORPORATION,
FIRST AMERICAN CORPORATION
and
ALPHA/FOXTROT ACQUISITION CORP.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C> <C>
ARTICLE I
Definitions; Interpretations
1.01 Certain Definitions......................................... 1
1.02 Interpretation.............................................. 6
ARTICLE II
The Merger
2.01 The Merger.................................................. 6
2.02 Closing..................................................... 6
2.03 Effective Time.............................................. 6
2.04 Effects of the Merger....................................... 7
2.05 Certificate of Incorporation and By-laws.................... 7
2.06 Board of Directors.......................................... 7
ARTICLE III
Consideration; Exchange Procedures
3.01 Effect on Capital Stock..................................... 7
3.02 Rights as Stockholders; Stock Transfers..................... 7
3.03 Exchange Procedures......................................... 7
3.04 Anti-Dilution Provisions.................................... 8
3.05 Stock Options............................................... 8
ARTICLE IV
Conduct of Business Pending Merger
4.01 Forebearances............................................... 9
4.02 Coordination of Dividends................................... 11
ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules........................................ 11
5.02 Standard.................................................... 11
5.03 Representations and Warranties.............................. 11
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts..................................... 19
6.02 Stockholder Approvals....................................... 19
6.03 Registration Statement and Joint Proxy Statement............ 19
6.04 Press Releases.............................................. 20
6.05 Access; Information......................................... 20
6.06 Acquisition Proposals....................................... 21
6.07 Affiliate Agreements........................................ 21
6.08 Takeover Laws and Provisions................................ 21
6.09 NYSE Listing................................................ 21
6.10 Regulatory Applications..................................... 21
6.11 Indemnification............................................. 22
6.12 Benefit Plans............................................... 23
6.13 Share Repurchase Programs................................... 23
6.14 Notification of Certain Matters............................. 23
6.15 Rights Agreements........................................... 23
6.16 Foundation.................................................. 24
6.17 Exemption from Liability Under Section 16(b)................ 24
6.18 Amendment to the AmSouth Certificate........................ 24
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE VII
Conditions to the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger...... 24
7.02 Conditions to Obligation of First American...................... 25
7.03 Conditions to Obligation of AmSouth............................. 25
ARTICLE VIII
Termination
8.01 Termination..................................................... 26
8.02 Effect of Termination and Abandonment........................... 26
ARTICLE IX
Miscellaneous
9.01 Survival........................................................ 26
9.02 Waiver; Amendment............................................... 26
9.03 Counterparts.................................................... 27
9.04 Governing Law................................................... 27
9.05 Expenses........................................................ 27
9.06 Notices......................................................... 27
9.07 Entire Understanding; No Third Party Beneficiaries.............. 27
9.08 Severability.................................................... 28
9.09 Alternative Structure........................................... 28
9.10 Enforcement of this Agreement................................... 28
</TABLE>
<TABLE>
<C> <S> <C>
EXHIBIT A Form of AmSouth Stock Option Agreement
EXHIBIT B Form of First American Stock Option Agreement
EXHIBIT C Form of AmSouth Affiliate Letter
EXHIBIT D Form of First American Affiliate Letter
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER, dated May 31, 1999 (this "Agreement"), among
AmSouth Bancorporation, a Delaware corporation ("AmSouth"), Alpha/Foxtrot
Acquisition Corp., a Delaware Corporation and a newly formed wholly owned
subsidiary of AmSouth ("Merger Sub"), and First American Corporation, a
Tennessee corporation ("First American").
RECITALS
A. The Proposed Transaction. This Agreement provides for a business
combination to be effected through the merger of Merger Sub with and into First
American (the "Merger"), with First American as the surviving corporation (the
"Surviving Corporation"), whereby each outstanding share of common stock, par
value $2.50 per share, of First American ("First American Common Stock"), other
than certain excluded shares, will be converted into shares of common stock,
par value $1.00 per share, of AmSouth ("AmSouth Common Stock").
B. Board Approvals. The respective boards of directors of AmSouth, Merger
Sub and First American, including a majority of the disinterested directors of
First American, have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their
respective business strategies and goals, and have approved of the merger and
believe that the Merger is in the best interests of their respective
shareholders.
C. Intended Tax Treatment. The parties intend the Merger to be treated as a
reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder
(the "Code").
D. Intended Accounting Treatment. The parties intend the Merger to be
accounted for under the pooling-of-interests method.
E. Stock Option Agreements. In connection with this Agreement and as an
inducement to enter into this Agreement, on the date after the date of this
Agreement, First American and AmSouth expect to enter into (1) a stock option
agreement (the "First American Stock Option Agreement"), pursuant to which
First American will grant AmSouth an option (the "First American Option") to
purchase shares of First American Common Stock, upon the terms and subject to
the conditions set forth therein and (2) a stock option agreement (the "AmSouth
Stock Option Agreement" and, together with the First American Stock Option
Agreement, the "Option Agreements"), pursuant to which AmSouth will grant First
American an option (the "AmSouth Option") to purchase shares of AmSouth Common
Stock, upon the terms and subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
Definitions; Interpretations
1.01 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquisition Proposal", with respect to either AmSouth or First
American, means any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving AmSouth or First
American, as the case may be, or any of their respective Subsidiaries or
any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets or deposits of, AmSouth
or First American, as the case may be, or any of their respective
Significant Subsidiaries, other than the transactions contemplated by this
Agreement.
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<PAGE>
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"AmSouth Affiliate" has the meaning set forth in Section 6.07(a).
"AmSouth Benefit Plans" has the meaning set forth in Section 6.12.
"AmSouth Board" means the Board of Directors of AmSouth.
"AmSouth By-Laws" means the By-laws of AmSouth, as amended.
"AmSouth Certificate" means the Restated Certificate of Incorporation of
AmSouth.
"AmSouth Common Stock" has the meaning set forth in the Recitals.
"AmSouth Meeting" has the meaning set forth in Section 6.02.
"AmSouth Option" has the meaning set forth in the Recitals.
"AmSouth Preferred Stock" means the Series A Preferred Stock of AmSouth
issuable under the AmSouth Rights Agreement.
"AmSouth Rights" means the rights to purchase shares of AmSouth
Preferred Stock issued pursuant to the AmSouth Rights Agreement.
"AmSouth Rights Agreement" means the Stockholder Protection Rights
Agreement, dated as of December 18, 1997, as amended, between AmSouth and
Bank of New York (as successor to AmSouth Bank), as Rights Agent.
"AmSouth Stock" means the AmSouth Common Stock and the AmSouth Preferred
Stock.
"AmSouth Stock Option" has the meaning set forth in Section 3.05.
"AmSouth Stock Option Agreement" has the meaning set forth in the
Recitals.
"AmSouth Stock Plans" means the 1989 Long Term Incentive Compensation
Plan, the 1996 Long Term Incentive Compensation Plan, The Deferred
Compensation Plan, The Amended and Restated Deferred Compensation Plan for
Directors, The Director Restricted Stock Plan, The Stock Option Plan for
Outside Directors, The Dividend Reinvestment and Common Stock Purchase
Plan, The Employee Stock Purchase Plan, The FloridaBank Stock Option Plan,
The FloridaBank Stock Option Plan-1993, and the AmSouth Rights Agreement.
"AmSouth" has the meaning set forth in the preamble to this Agreement.
"Articles of Merger" has the meaning set forth in Section 2.03.
"Benefits Plans" has the meaning set forth in Section 5.03(n).
"Certificate of Merger" has the meaning set forth in Section 2.03.
"Closing" has the meaning set forth in Section 2.02.
"Closing Date" has the meaning set forth in Section 2.02.
"Code" has the meaning set forth in the Recitals.
"Constituent Documents" means the certificate or articles of
incorporation and by-laws of a corporation or banking organization, the
certificate of limited partnership and partnership agreement of a limited
partnership, the certificate of formation and limited liability company
agreement of a limited liability company, the trust agreement of a trust
and the comparable documents of other entities.
"Costs" has the meaning set forth in Section 6.11(a).
"Delaware Secretary" means the Secretary of the State of Delaware.
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<PAGE>
"DGCL" means the Delaware General Corporation Law.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" has the meaning set forth in Section 2.03.
"Employees" has the meaning set forth in Section 5.03(n).
"Environmental Laws" means any federal, state or local law, regulation,
order, decree, permit, authorization, opinion, common law or agency
requirement relating to: (1) the protection or restoration of the
environment, health, safety, or natural resources, (2) the handling, use,
presence, disposal, release or threatened release of any Hazardous
Substance or (3) noise, odor, wetlands, indoor air, pollution,
contamination or any injury or threat of injury to persons or property in
connection with any Hazardous Substance including, without limitation, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation, and Liability Act, the Clean Water Act, the Federal
Clean Air Act, and the Occupational Safety and Health Act, each as amended,
regulations promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(n).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.03(a).
"Exchange Ratio" has the meaning set forth in Section 3.01(a).
"First American" has the meaning set forth in the preamble to this
Agreement.
"First American Affiliate" has the meaning set forth in Section 6.07(a).
"First American Benefit Plans" has the meaning set forth in Section
6.12.
"First American Board" means the Board of Directors of First American.
"First American By-Laws" means the Restated By-laws of First American,
as amended.
"First American Charter" means the Restated Charter of First American.
"First American Common Stock" has the meaning set forth in the Recitals.
"First American Insiders" means those officers and directors of First
American subject to the reporting requirements of Section 16(a) of the
Exchange Act and who are listed in the Section 16 Information.
"First American Meeting" has the meaning set forth in Section 6.02(a).
"First American Option" has the meaning set forth in the Recitals.
"First American Preferred Stock" means the preferred stock, no par
value, of First American.
"First American Rights" has the meaning set forth in Section 5.03(b).
"First American Rights Agreement" has the meaning set forth in Section
5.03(b).
"First American Series A Preferred Stock" means the Junior Preferred
Stock, Series A, issuable pursuant to the First American Rights Agreement.
"First American Stock" means, collectively, the First American Common
Stock and the First American Preferred Stock.
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<PAGE>
"First American Stock Option" has the meaning set forth in Section 3.05.
"First American Stock Option Agreement" has the meaning set forth in the
Recitals.
"First American Stock Plans" means the First American Bancorp 1987 Long
Term Incentive Plan, the First American Corporation 1991 Employee Stock
Incentive Plan, the First American Corporation 1993 Non-employee Director
Stock Option Plan, the DG Corp. Stock-Based Long-Term Incentive Plan, the
DG Corp. Stock-Based Long-Term Incentive Plan II, the PN Bancshares, Inc.
1994 Long-Term Incentive Plan, the Heritage Federal Bancshares, Inc.
Employee Plan and the Broad-based Employee Stock Option Plan.
"GAAP" means United States generally accepted accounting principles
applied on a consistent basis.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" means any substance in any concentration that is:
(i) listed, classified or regulated pursuant to any Environmental Law; (ii)
any petroleum product or by-product, asbestos-containing material, lead-
containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (iii) any other substance which is or may be the
subject of regulatory action by any Governmental Authority in connection
with any Environmental Law.
"Indemnified Party" has the meaning set forth in Section 6.11(a).
"Insurance Amount" has the meaning set forth in Section 6.11(b).
"Insurance Policies" has the meaning set forth in Section 5.03(t).
"Joint Proxy Statement" has the meaning set forth in Section 6.03(a).
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to AmSouth or First
American, any effect that (a) is material and adverse to the financial
condition, results of operations or business of AmSouth and its
Subsidiaries, taken as a whole, or First American and its Subsidiaries,
taken as a whole, respectively, excluding (with respect to each of clause
(1), (2) or (3), to the extent that a change does not materially affect it
in a way that materially differs from other banking organizations) the
impact of (1) changes in banking and other laws of general applicability or
interpretations thereof by Governmental Authorities, (2) changes in GAAP or
regulatory accounting requirements applicable to banks and their holding
companies generally, (3) changes in general economic conditions affecting
banks and their holding companies generally, (4) actions or omissions of a
party to this Agreement taken with the prior written consent of the other
party to this Agreement, in contemplation of the transactions contemplated
hereby and (5) any modifications or changes to valuation policies and
practices in connection with the Merger or restructuring charges, in each
case taken with the prior approval of AmSouth or First American, as the
case may be, in connection with the Merger, in each case in accordance with
GAAP; or (b) would materially impair the ability of AmSouth or First
American, respectively, to perform its obligations under this Agreement or
to consummate the transactions contemplated hereby.
"Merger" has the meaning set forth in the Recitals.
"Merger Sub" has the meaning set forth in the preamble to this
Agreement.
"Merger Sub Stock" has the meaning set forth in Section 3.0(b).
"New Certificate" has the meaning set forth in Section 3.03(a).
"NYSE" means the New York Stock Exchange, Inc.
"Old Certificate" has the meaning set forth in Section 3.03(a).
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<PAGE>
"Option Agreements" has the meaning set forth in the Recitals.
"Pension Plan" has the meaning set forth in Section 5.03(n).
"Person" means any individual, savings association, bank, corporation,
limited liability company, partnership, association, joint-stock company,
business trust or unincorporated organization.
"Plan" has the meaning set forth in Section 5.03(n).
"Previously Disclosed" by a party means information set forth in the
applicable paragraph of its Disclosure Schedule, or any other paragraph of
its Disclosure Schedule so long as it is reasonably clear from the context
of the disclosure that the disclosure in such other paragraph of its
Disclosure Schedule is also applicable to the section of this Agreement in
question.
"Registration Statement" has the meaning set forth in Section 6.03(a).
"Regulatory Authorities" has the meaning set forth in Section 5.03(j).
"Regulatory Filings" has the meaning set forth in Section 5.03(h).
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any other
Person any right to subscribe for or acquire, or any options, calls or
commitments relating to, or any stock appreciation right or other
instrument the value of which is determined in whole or in part by
reference to the market price or value of, shares of capital stock of such
first Person.
"SEC" means the Securities and Exchange Commission.
"Section 16 Information" means accurate information regarding the First
American Insiders, the number of shares of First American Common Stock held
or to be held by each such First American Insider expected to be exchanged
for AmSouth Common Stock in the Merger, and the number and description of
the options to purchase shares of First American Common Stock held by each
such First American Insider and expected to be converted into options to
purchase shares of AmSouth Common Stock in connection with the Merger.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Share Increase" means (i) the amendment to the AmSouth Certificate to
increase in the authorized number of shares of AmSouth Common Stock to
750,000,000 and (ii) the issuance of shares of AmSouth Common Stock
pursuant to this Agreement.
"Subsidiary" and "Significant Subsidiary" have the meaning ascribed to
those terms in Rule 1-02 of Regulation S-X promulgated by the SEC.
"Surviving Corporation" has the meaning set forth in the Recitals.
"Takeover Laws" has the meaning set forth in Section 5.03(v).
"Takeover Provisions" has the meaning set forth in Section 5.03(v).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Effective Date.
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"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"TBCA" means the Tennessee Business Corporation Act.
"Tennessee Secretary" means the Secretary of State of the State of
Tennessee.
1.02 Interpretation. (a) In this Agreement, unless the context otherwise
requires, references:
(1) to the Recitals, Sections, Exhibits or Schedules are to a Recital or
Section of, or Exhibit or Schedule to, this Agreement;
(2) to any agreement (including this Agreement), contract, statute or
regulation are to the agreement, contract, statute or regulation as
amended, modified, supplemented or replaced from time to time, and to any
section of any statute or regulation are to any successor to the section;
(3) to any Governmental Authority include any successor to that
Governmental Authority; and
(4) to this Agreement are to this Agreement, the Exhibits and Schedules
to it, taken as a whole.
(b) The table of contents and headings contained herein are for reference
purposes only and do not limit or otherwise affect any of the provisions of
this Agreement.
(c) Whenever the words "include," "includes" or "including" are used in this
Agreement, they will be deemed to be followed by the words "without
limitation."
(d) Whenever the words "herein" or "hereunder" are used in this Agreement,
they will be deemed to refer to this Agreement as a whole and not to any
specific Section.
(e) This Agreement is the product of negotiation by the parties, having the
assistance of counsel and other advisers. It is the intention of the parties
that this Agreement not be construed more strictly with regard to one party
than with regard to the other party.
(f) No provision of this Agreement shall be construed to require AmSouth,
First American or any of their respective Subsidiaries, affiliates or directors
to take any action or omit to take any action which action or omission would
violate applicable law (whether statutory or common law), rule or regulation.
ARTICLE II
The Merger
2.01 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL and the TBCA, Merger Sub shall
merge with and into First American at the Effective Time. First American shall
be the surviving corporation in the Merger, and shall continue its corporate
existence under the laws of the state of Tennessee. Upon consummation of the
Merger, the separate corporate existence of Merger Sub shall terminate.
2.02 Closing. The closing of the Merger (the "Closing") will take place at
10:00 a.m. on the third business day after satisfaction or waiver of the
conditions set forth in Article VII (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions), unless another time or date is agreed to by the
parties hereto (the "Closing Date").
2.03 Effective Time. Subject to the provisions of this Agreement, as soon as
practicable following the Closing, the parties shall acknowledge and file a
certificate of merger or other appropriate documents (in any such case, the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and articles of merger or other appropriate documents (in any such
case, the "Articles of Merger") executed in
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accordance with the relevant provisions of the TBCA. The parties shall make
all other filings or recordings required under the DGCL and the TBCA and the
Merger shall become effective at such time as the later to occur of (i) the
Certificate of Merger is duly filed with the Delaware Secretary and (ii) the
Articles of Merger are filed in the office of the Tennessee Secretary, or at
such subsequent date or time as AmSouth and First American shall agree and
specify in the Certificate of Merger and the Articles of Merger (the time the
Merger becomes effective being hereinafter referred to as the "Effective
Time").
2.04 Effects of the Merger. The Merger shall have the effects set forth in
the DGCL and the TBCA.
2.05 Certificate of Incorporation and By-laws. (a) The First American By-
Laws, as in effect immediately prior to the Effective Time, shall be the by-
laws of the Surviving Corporation until thereafter amended as provided therein
or by applicable law.
(b) The First American Certificate of Incorporation shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided therein or by applicable law.
2.06 Board of Directors. At the Effective Time, the board of directors of
AmSouth shall be comprised of the directors of AmSouth in office immediately
prior to the Effective Time together with five additional members designated
by First American, until their respective successors are duly elected and
qualified.
ARTICLE III
Consideration; Exchange Procedures
3.01 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of First
American Stock or AmSouth Stock:
(a) Conversion of First American Common Stock. Except as set forth in
this Section 3.01(a), each share of First American Common Stock outstanding
immediately prior to the Effective Time shall be converted into 1.871 (the
"Exchange Ratio") fully paid and nonassessable shares of AmSouth Common
Stock. As of the Effective Time, all shares of First American Common Stock
shall no longer be outstanding and shall automatically be canceled and
shall cease to exist, and from and after the Effective Time, certificates
representing First American Common Stock immediately prior to the Effective
Time shall be deemed for all purposes to represent the number of shares of
AmSouth Common Stock into which they were converted pursuant to this
Section 3.01(a).
(b) AmSouth Common Stock. Each share of AmSouth Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding.
(c) Conversion of Merger Sub Stock. The shares of stock of any class or
series of Merger Sub Stock (the "Merger Sub Stock") issued and outstanding
immediately prior to the Effective Time shall become shares of stock of the
Surviving Corporation at the Effective Time having the same terms, rights
and preferences.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of First American Common Stock shall cease to be, and shall have no
rights as, shareholders of First American, other than to receive any dividend
or other distribution with respect to such First American Common Stock with a
record date occurring prior to the Effective Date and the conversion rights
provided under this Article III. After the Effective Time, there shall be no
transfers on the stock transfer books of AmSouth or the Surviving Corporation
of shares of First American Common Stock.
3.03 Exchange Procedures. (a) At or prior to the Effective Time, AmSouth
shall deposit, or shall cause to be deposited, with AmSouth's transfer agent
or a depository or trust institution of recognized standing selected by First
American and reasonably satisfactory to AmSouth (in such capacity, the
"Exchange Agent"),
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for the benefit of the holders of certificates formerly representing shares of
First American Common Stock ("Old Certificates") to be exchanged in accordance
with this Article III, certificates representing the shares of AmSouth Common
Stock ("New Certificates") to which the holders of the Old Certificates are
entitled pursuant to this Agreement.
(b) Promptly after the Effective Date, AmSouth shall send or cause to be
sent to each former holder of record of shares of First American Common Stock
immediately prior to the Effective Time transmittal materials for use in
exchanging such shareholder's Old Certificates for the New Certificates
provided for in this Article III. AmSouth shall cause the New Certificates
and/or any check in respect of dividends or distributions which such Person
shall be entitled to receive to be delivered to such shareholder upon delivery
to the Exchange Agent of Old Certificates representing such shares of AmSouth
Common Stock (or indemnity reasonably satisfactory to AmSouth and the Exchange
Agent, if any of such certificates are lost, stolen or destroyed) owned by such
shareholder. No interest will be paid on any such cash to be paid in respect of
dividends or distributions which any such Person shall be entitled to receive
pursuant to this Article III upon such delivery.
(c) Neither the Exchange Agent nor any party hereto shall be liable to any
former holder of First American Common Stock for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(d) From and after the 30th day following the Effective Date, no dividends
or other distributions with respect to AmSouth Common Stock with a record date
occurring after the Effective Date shall be paid in respect of any
unsurrendered Old Certificate representing shares of AmSouth Common Stock
converted in the Merger into the right to receive shares of AmSouth Common
Stock. Upon surrender of Old Certificates (or indemnity reasonably satisfactory
to AmSouth and the Exchange Agent, if any of such certificates are lost, stolen
or destroyed) in accordance with this Section 3.03, the record holder thereof
shall be entitled to receive any such dividends or other distributions, without
any interest thereon, which theretofore had become payable with respect to
shares of AmSouth Common Stock such holder had the right to receive upon
surrender of Old Certificates (or delivery of such indemnity).
(e) Notwithstanding any other provision hereof, no fractional shares of
AmSouth Common Stock and no certificates or scrip therefor, or other evidence
of ownership thereof, will be issued in the Merger; instead, AmSouth shall pay
to each holder of First American Common Stock who would otherwise be entitled
to a fractional share of AmSouth Common Stock (after taking into account all
Old Certificates delivered by such holder) an amount in cash (without interest)
determined by multiplying such fraction by the average of the last reported
sale prices of AmSouth Common Stock, as reported by the NYSE Composite
Transactions Reporting System (as reported in The Wall Street Journal or, if
not reported therein, in another authoritative source), for the five NYSE
trading days immediately preceding the Effective Date.
3.04 Anti-Dilution Provisions. If AmSouth changes (or establishes a record
date for changing) the number or kind of shares of AmSouth Common Stock issued
and outstanding prior to the Effective Date as a result of a stock split, stock
dividend, recapitalization, reclassification, reorganization or similar
transaction with respect to the outstanding AmSouth Common Stock and the record
date therefor shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted.
3.05 Stock Options. At the Effective Time, all employee and director stock
options to purchase shares of First American Common Stock (each, a "First
American Stock Option"), which are then outstanding and unexercised, shall
cease to represent a right to acquire shares of First American Common Stock and
shall be converted automatically into options to purchase shares of AmSouth
Common Stock, (each, an "AmSouth Stock Option") and AmSouth shall assume each
such First American Stock Option subject to the terms thereof, including but
not limited to the accelerated vesting of such options which shall occur in
connection with and by virtue of the transactions contemplated hereby as and to
the extent required by the plans and agreements governing such First American
Stock Options; provided, however, that from and after the Effective Time,
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(1) the number of shares of AmSouth Common Stock purchasable upon exercise of
such First American Stock Option shall be equal to the number of shares of
First American Common Stock that were purchasable under such First American
Stock Option immediately prior to the Effective Time multiplied by the Exchange
Ratio, and rounding to the nearest whole share, and (2) the per share exercise
price under each such First American Stock Option shall be adjusted by dividing
the per share exercise price of each such First American Stock Option by the
Exchange Ratio, and rounding down to the nearest cent. The terms of each First
American Stock Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction with respect to AmSouth Common
Stock on or subsequent to the Effective Date. Notwithstanding the foregoing,
each First American Stock Option which is intended to be an "incentive stock
option" (as defined in Section 422 of the Code) shall be adjusted in accordance
with the requirements of Section 424 of the Code. Accordingly, with respect to
any incentive stock options, fractional shares shall be rounded down to the
nearest whole number of shares and where necessary the per share exercise price
shall be rounded down to the nearest cent. At or prior to the Effective Time,
AmSouth shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of AmSouth Common Stock for delivery upon exercise
of First American Stock Options assumed by it in accordance with this Section
3.05. As soon as practicable after the Effective Time, AmSouth shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms) with respect to the AmSouth Common Stock
subject to First American Stock Options converted hereunder.
ARTICLE IV
Conduct of Business Pending Merger
4.01 Forebearances. Each of AmSouth and First American agrees that from the
date hereof until the Effective Time, except as expressly contemplated by this
Agreement or as Previously Disclosed, without the prior written consent of the
other party hereto (which consent shall not be unreasonably withheld), it will
not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct its business and the business of its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or take any action
reasonably likely to materially impair its ability to perform its
obligations under this Agreement or the Option Agreements or to consummate
the transactions contemplated hereby and thereby.
(b) Capital Stock. Other than pursuant to the Share Increase or to
Rights Previously Disclosed and outstanding on the date hereof, (1) issue,
sell or otherwise permit to become outstanding, or dispose of or encumber
or pledge or authorize or propose the creation of, any additional shares of
its stock or any Rights (except in connection with acquisitions permitted
under Section 4.01(g)), (2) enter into any agreement with respect to the
foregoing or (3) permit any additional shares of its stock to become
subject to new grants, except in the ordinary course of business, of
employee or director stock options, other Rights or similar stock-based
employee rights.
(c) Dividends, Etc. (1) Make, declare, pay or set aside for payment any
dividend (other than (A) dividends from its wholly owned Subsidiaries to it
or another of its wholly owned Subsidiaries and (B) regular quarterly
dividends on its common stock at a rate equal to the rate paid by it during
the fiscal quarter immediately preceding the date hereof (but including any
increases in such dividends as are consistent with past practice in the
ordinary course of business) on or in respect of, or declare or make any
distribution on any shares of its stock or (2) directly or indirectly
adjust, split, combine, redeem, reclassify, purchase or otherwise acquire,
any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any of its directors, officers or
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employees or those of its Subsidiaries, or release or otherwise terminate
the employment of any employee, except in the ordinary course of business,
or terminate the employment of any employee who is covered by a change in
control agreement except for cause as defined in such agreement, or hire
any new employees above the rank of vice president, or grant any salary or
wage increase or increase any employee benefit (including incentive or
bonus payments), except (1) for normal individual increases in compensation
to employees in the ordinary course of business consistent with past
practice, (2) for other changes that are required by applicable law and (3)
to satisfy Previously Disclosed contractual obligations existing as of the
date hereof.
(e) Benefit Plans. Enter into, establish, adopt or materially amend
(except (1) as may be required by applicable law or (2) to satisfy
Previously Disclosed contractual obligations existing as of the date
hereof) 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 (or similar arrangement) related
thereto, in respect of any of its directors, officers or employees or those
of its Subsidiaries, or take any action to accelerate the vesting or
exercisability of stock options, restricted stock or other compensation or
benefits payable thereunder.
(f) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or
properties except for sales, transfers, mortgages, encumbrances or other
dispositions or discontinuances in the ordinary course of business
consistent with past practice and in a transaction that, together with
other such transactions, is not material to it and its Subsidiaries, taken
as a whole.
(g) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a fiduciary or similar capacity or in
satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice)
all or any portion of the assets, business, deposits or properties of any
other entity except in the ordinary course of business consistent with past
practice and in a transaction that, together with other such transactions,
is not material to it and its Subsidiaries, taken as a whole.
(h) Constituent Documents. Amend its Constituent Documents or the
Constituent Documents (or similar governing documents) of any of its
Subsidiaries, except that AmSouth will amend the AmSouth Certificate to
permit the Share Increase.
(i) Accounting Methods. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by GAAP or
applicable regulatory accounting requirements.
(j) Contracts. (i) Enter into, renew or terminate, or make any payment
not then required under, any contract or agreement, other than loans and
other transactions made in the ordinary course of the banking business,
that calls for aggregate annual payments of $2,000,000 or more and which is
not terminable on 60 days or less notice without payment of a premium
penalty and (ii) enter into any contract or agreement pertaining to the use
of the name "First American" or any derivative thereof unless such contract
or agreement provides that the name "AmSouth" can be substituted therefor
or that such contract or agreement can be canceled by First American or its
successor without any appreciable penalty.
(k) Claims. Other than in the ordinary course of business, settle any
claim, action or proceeding against it, except for any claim, action or
proceeding in an amount or for such consideration, individually or in the
aggregate for all such settlements, that is not material to it and its
Subsidiaries, taken as a whole, and would not impose any material
restriction on the business of the Surviving Corporation or create
precedent for claims that are reasonably likely to be material to it and
its Subsidiaries, taken as a whole.
(l) Adverse Actions. Notwithstanding anything herein to the contrary,
(1) take, or knowingly omit to take, any action that would, or is
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or
qualifying for pooling-of-interests accounting treatment or (2) take any
action that is reasonably likely to result in (A) any of the conditions
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to the Merger set forth in Article VII not being satisfied or (B) a
material violation of any provision of this Agreement except, in each case,
as may be required by applicable law or regulation.
(m) Capital Expenditures. Other than in the ordinary course of business,
make any capital expenditures in excess of (A) $2,000,000 per project or
related series of projects or (B) $8,000,000 in the aggregate.
(n) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(o) Commitments. Agree or commit to do any of the foregoing.
4.02 Coordination of Dividends. Until the Effective Time, each of AmSouth
and First American shall coordinate with the other the declaration of any
dividends or other distributions with respect to the AmSouth Common Stock and
the First American Common Stock and the record dates and payment dates relating
thereto, it being the intention of the parties that holders of shares of
AmSouth Common Stock or First American Common Stock shall not receive more than
one dividend, or fail to receive one dividend, for any single calendar quarter
on their shares of AmSouth Common Stock or First American Common Stock
(including any shares of AmSouth Common Stock received in exchange therefor in
the Merger), as the case may be.
ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules. On or prior to the date hereof, AmSouth has
delivered to First American a schedule and First American has delivered to
AmSouth a schedule (respectively, each schedule a "Disclosure Schedule")
setting forth, among other things, items the disclosure of which is necessary
or appropriate either in response to an express disclosure requirement
contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 5.03 or to one or more of
its covenants contained in Article IV; provided, that the mere inclusion of an
item in a Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by a party that such item was required to be
disclosed therein.
5.02 Standard. For all purposes of this Agreement, no representation or
warranty of First American or AmSouth contained in Section 5.03 (other than the
representations and warranties contained in Section 5.03(b) and 5.03(c)) shall
be deemed untrue and no party hereto shall be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact,
event or circumstance unless such fact, circumstance or event, individually or
taken together with all other facts, events or circumstances inconsistent with
any representation or warranty contained in Section 5.03 (read for this purpose
without regard to any individual reference to "materiality" or "material
adverse effect" set forth therein) has had or is reasonably likely to have a
Material Adverse Effect with respect to First American or AmSouth, as the case
may be.
5.03 Representations and Warranties. Except as Previously Disclosed, First
American hereby represents and warrants to AmSouth, and AmSouth hereby
represents and warrants to First American, to the extent applicable, in each
case with respect to itself and its Subsidiaries, as follows:
(a) Organization, Standing and Authority. It is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. It is duly qualified to do business and is
in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) First American Stock. In the case of First American:
The authorized capital stock of First American consists of 200,000,000
shares of First American Common Stock and 2,500,000 shares of First
American Preferred Stock. As of the date hereof, no more than 116,835,000
shares of First American Common Stock were issued and outstanding. As of
the date
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hereof, 1,250,000 shares of Preferred Stock were reserved for issuance in
connection with the rights (the "First American Rights") to purchase shares
of First American Series A Preferred Stock, issued pursuant to the Rights
Agreement, dated as of July 16, 1998, by and between First American and
First Chicago Trust Company of New York, as Rights Agent (the "First
American Rights Agreement"). As of the date hereof, 5,741,852 shares of
First American Common Stock were subject to First American Stock Options
under the First American Stock Plans. As of the date hereof, there were
16,833,822 shares of First American Common Stock reserved for issuance
under the First American Stock Plans. The outstanding shares of First
American Common Stock have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive
rights (and were not issued in violation of any preemptive rights). Except
as set forth above, as of the date hereof, there are no shares of First
American Stock authorized and reserved for issuance, First American does
not have any Rights outstanding with respect to First American Stock, and
First American does not have any commitment to authorize, issue or sell any
First American Stock or Rights, except pursuant to this Agreement,
outstanding First American Stock Options, the First American Option and the
First American Stock Plans.
(c) AmSouth Stock. In the case of AmSouth:
The authorized capital stock of AmSouth consists of 350,000,000 shares
of AmSouth Common Stock and 2,000,000 shares of AmSouth Preferred Stock. As
of the date hereof, no more than 176,006,233 shares of AmSouth Common Stock
and no shares of AmSouth Preferred Stock were outstanding and no more than
26,381,394 shares of AmSouth Common Stock were held by AmSouth in its
treasury. As of the date hereof, 3,629,229 shares of AmSouth Common Stock
were subject to AmSouth Stock Options granted under the AmSouth Stock
Plans. As of the date hereof, there were 15,100,296 shares of AmSouth
Common Stock reserved for issuance under the AmSouth Stock Plans. The
outstanding shares of AmSouth Common Stock have been duly authorized and
are validly issued and outstanding, fully paid and nonassessable, and
subject to no preemptive rights (and were not issued in violation of any
preemptive rights). Except as set forth above, as of the date hereof, there
are no shares of AmSouth Stock authorized and reserved for issuance,
AmSouth does not have any Rights issued or outstanding with respect to
AmSouth Stock, and AmSouth does not have any commitment to authorize, issue
or sell any AmSouth Stock or Rights, except pursuant to this Agreement,
outstanding AmSouth Stock Options, the AmSouth Option and the AmSouth Stock
Plans.
(d) Significant Subsidiaries. (1)(A) It owns, directly or indirectly, all
the issued and outstanding equity securities of each of its Significant
Subsidiaries, (B) no equity securities of any of its Significant Subsidiaries
are or may become required to be issued (other than to it or its wholly owned
Subsidiaries) by reason of any Right or otherwise, (C) there are no contracts,
commitments, understandings or arrangements by which any of such Subsidiaries
is or may be bound to sell or otherwise transfer any equity securities of any
such Subsidiaries (other than to it or its wholly-owned Subsidiaries), (D)
there are no contracts, commitments, understandings, or arrangements relating
to its rights to vote or to dispose of such securities and (E) all the equity
securities of each Significant Subsidiary held by it or its Subsidiaries have
been duly authorized and are validly issued and outstanding, fully paid and
nonassessable (except as provided in 12 U.S.C. (S) 55 or comparable state laws)
and are owned by it or its Subsidiaries free and clear of any Liens.
(2) Each of its Significant Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified. In the case of AmSouth, Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and all of its outstanding capital stock is
owned directly or indirectly by AmSouth. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has conducted its
operations only as contemplated hereby and has engaged in no other business
activities other than as contemplated hereby.
(e) Corporate Power. It and each of its Significant Subsidiaries (and, in
the case of AmSouth, Merger Sub) has the corporate power and authority to carry
on its business as it is now being conducted and to own all
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its properties and assets; and it has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the
Option Agreements and to consummate the transactions contemplated hereby and
thereby.
(f) Corporate Authority. (1) Subject to receipt of the stockholder approval
described in Section 5.03(f)(2), in the case of AmSouth, and in Section
5.03(f)(3), in the case of First American, this Agreement, the Option
Agreements and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action. This Agreement is its valid and
legally binding obligation, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles).
(2) In the case of AmSouth, the affirmative vote of a majority of the
holders of the outstanding shares of AmSouth Stock to approve the Share
Increase is the only vote of the holders of any class or series of AmSouth's
capital stock necessary to approve and adopt this Agreement, the Option
Agreements and the transactions contemplated hereby and thereby.
(3) In the case of First American, the affirmative vote of the holders of a
majority of the outstanding shares of First American Common Stock to adopt this
Agreement is the only vote of the holders of any class or series of First
American's capital stock necessary to approve and adopt this Agreement, the
Option Agreements and the transactions contemplated hereby and thereby.
(g) Regulatory Approvals; No Defaults. (1) No consents or approvals of, or
filings or registrations with, any Governmental Authority or with any third
party are required to be made or obtained by it or any of its Subsidiaries in
connection with the execution, delivery or performance by it of this Agreement
and the Option Agreements or to consummate the Merger except for (A) filings
and approvals of applications with and by federal and state banking
authorities, (B) filings with the SEC and state securities authorities, (C) the
applicable stockholder approval described in Section 5.03(f), (D) the filing of
the Articles of Merger with the Tennessee Secretary pursuant to the TBCA and
the Certificate of Merger with the Delaware Secretary pursuant to the DGCL and
(E) such filings with applicable securities exchanges to obtain the
authorizations for listing contemplated by this Agreement.
(2) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and the expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a breach or
violation of, or a default under, or give rise to any Lien, any acceleration of
remedies or any right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of it or of any of its Subsidiaries or to which it or
any of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, its Constituent Documents or (C)
require any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, agreement, indenture or
instrument.
(h) Financial Reports and Regulatory Documents; Material Adverse Effect. (1)
Its Annual Reports on Form 10-K for the fiscal years ended December 31, 1998,
1997 and 1996, and all other reports, registration statements, definitive proxy
statements or information statements filed by it or any of its Subsidiaries
subsequent to December 31, 1996 under the Securities Act, or under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act or under the securities
regulations of the SEC, in the form filed (collectively, its "Regulatory
Filings") with the SEC as of the date filed, (A) complied in all material
respects as to form with the applicable requirements under the Securities Act
or the Exchange Act, as the case may be, and (B) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such
Regulatory Filing (including the related notes and schedules thereto) fairly
presented in all material respects its financial position and that of
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its Subsidiaries as of its date, and each of the statements of income and
changes in shareholders' equity and cash flows or equivalent statements in such
Regulatory Filings (including any related notes and schedules thereto) fairly
presented in all material respects, the results of operations, changes in
shareholders' equity and changes in cash flows, as the case may be, of it and
its Subsidiaries for the periods to which they relate, in each case in
accordance with GAAP consistently applied during the periods involved, except
in each case as may be noted therein, subject to normal year-end audit
adjustments in the case of unaudited statements.
(2) Since December 31, 1998, it and its Subsidiaries have not incurred any
liability other than in the ordinary course of business consistent with past
practice.
(3) Since December 31, 1998, (A) it and its Subsidiaries have conducted
their respective businesses in the ordinary and usual course consistent with
past practice (excluding the incurrence of expenses related to this Agreement
and the transactions contemplated hereby) and (B) no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.03 or
otherwise), is reasonably likely to have a Material Adverse Effect with respect
to it.
(i) Litigation. Except as Previously Disclosed or set forth in its Annual
Report on Form 10-K for the fiscal year ended December 31, 1998, there is no
suit, action or proceeding pending or, to the knowledge of it, threatened
against or affecting it or any of its Subsidiaries (and it is not aware of any
basis for any such suit, action or proceeding) that, individually or in the
aggregate, is (1) material to it and its Subsidiaries, taken as a whole, or (2)
that is reasonably likely to prevent or delay it in any material respect from
performing its obligations under, or consummating the transactions contemplated
by, this Agreement.
(j) Regulatory Matters. (1) Neither it nor any of its Subsidiaries is a
party to or is subject to any written order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, or extraordinary supervisory letter from, any Governmental
Authority charged with the supervision or regulation of financial institutions
or issuers of securities or engaged in the insurance of deposits or the
supervision or regulation of it or any of its Subsidiaries (collectively, the
"Regulatory Authorities").
(2) Neither it nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such written order, decree, agreement, memorandum of understanding, commitment
letter, supervisory letter or similar submission.
(k) Compliance with Laws. It and each of its Subsidiaries:
(i) conducts its business in compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the
Home Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to its knowledge, no
suspension or cancellation of any of them is threatened; and
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(iii) has received, since December 31, 1998, no written notification
from any Governmental Authority (A) asserting that it or any of its
Subsidiaries is not in compliance with any of the statutes, regulations or
ordinances which such Governmental Authority enforces or (B) threatening to
revoke any license, franchise, permit or governmental authorization.
(l) Material Contracts; Defaults. Except for those agreements and other
documents filed as exhibits to its Regulatory Filings, neither it nor any of
its Subsidiaries is a party to, bound by or subject to any agreement, contract,
arrangement, commitment or understanding (whether written or oral) (i) that is
a "material contract" within the meaning of Item 601(b)(10) of the SEC's
Regulation S-K or (ii) that restricts the conduct of business by it or any of
its Subsidiaries. Neither it nor any of its Subsidiaries is in default under
any material contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it is a party, by which its respective
assets, business, or operations may be bound or affected, or under which it or
its respective assets, business, or operations receives benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default.
(m) No Brokers. No action has been taken by it that would give rise to any
valid claim against any party hereto for a brokerage commission, finder's fee
or other like payment with respect to the transactions contemplated by this
Agreement, excluding a Previously Disclosed fee to be paid to Donaldson, Lufkin
& Jenrette Securities Corporation, in the case of AmSouth, and a Previously
Disclosed fee to be paid to Merrill Lynch, Pierce, Fenner and Smith
Incorporated, in the case of First American.
(n) Employee Benefit Plans.
(1) All material benefit and compensation plans, contracts, policies or
arrangements covering its current employees or former employees and those of
its Subsidiaries (its "Employees") and its current or former directors,
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase,
stock appreciation rights, stock based, incentive and bonus plans (its "Benefit
Plans"), are Previously Disclosed. True and complete copies of all Benefit
Plans, including, but not limited to, any trust instruments and insurance
contracts forming a part of any Benefit Plans, and all amendments thereto, have
been made available to the other party hereto.
(2) All employee benefit plans, other than "multiemployer plans" within the
meaning of Section 3(37) of ERISA, covering its Employees (its "Plans"), to the
extent subject to ERISA, are in substantial compliance with ERISA. Each of its
Plans which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA ("Pension Plan"), and which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service with respect to "TRA" (as defined in Section 1 of
Rev. Proc. 93-39), and it is not aware of any circumstances reasonably likely
to result in revocation of any such favorable determination letter. There is no
material pending or, to the knowledge of First American or AmSouth, as the case
may be, threatened litigation relating to its Plans. Neither it nor any of its
Subsidiaries has engaged in a transaction with respect to any of its Plans
that, assuming the taxable period of such transaction expired as of the date
hereof, could subject it or any of its Subsidiaries to a tax or penalty imposed
by either Section 4975 of the Code or Section 502(i) of ERISA in an amount
which would be material.
(3) No liability under Subtitle C or D of Title IV of ERISA has been or is
reasonably expected to be incurred by it or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with it under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). None of it, any of its Subsidiaries or any of its ERISA
Affiliates has contributed to a "multiemployer plan", within the meaning of
Section 3(37) of ERISA, at any time on or after September 26, 1980. No notice
of a "reportable event", within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any of its Pension Plans or by any of its ERISA Affiliates within the
12-month period ending on the date hereof or will be required to be filed
solely as a result of the transactions contemplated by this Agreement.
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(4) All contributions required to be made under the terms of any of its
Plans have been timely made or have been reflected on its consolidated
financial statements included in its Regulatory Filings. None of its Pension
Plans or any single-employer plan of any of its ERISA Affiliates has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA and none of its ERISA
Affiliates has an outstanding funding waiver. Neither it nor any of its
Subsidiaries has provided, or is required to provide, security to any of its
Pension Plans or to any single-employer plan of any of its ERISA Affiliates
pursuant to Section 401(a)(29) of the Code.
(5) Under each of its Pension Plans which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in its Plan's most recent actuarial valuation),
did not exceed the then current value of the assets of such Plan, and there has
been no material change in the financial condition of such Plan since the last
day of the most recent plan year.
(6) Neither it nor any of its Subsidiaries has any obligations for retiree
health and life benefits under any of its Benefit Plans. It or its Subsidiaries
may amend or terminate any of its Benefit Plans at any time without incurring
any liability thereunder.
(7) Neither its execution of this Agreement, the performance of its
obligations hereunder, the consummation of the transactions contemplated by
this Agreement, the termination of the employment of any of its employees
within a specified time of the Effective Time, nor any other action taken or
failed to be taken by it prior to the execution of this Agreement will (w)
limit its right, in its sole discretion, to administer or amend in any respect
or terminate any of its Benefit Plans or any related trust, (x) entitle any of
its employees or any employees of its Subsidiaries to severance pay, (y)
accelerate the time of payment or vesting or trigger any payment of
compensation or benefits under, increase the amount payable or trigger any
other material obligation pursuant to, any of its Benefit Plans or (z) result
in any breach or violation of, or a default under, any of its Benefit Plans.
Without limiting the foregoing, as a result of the consummation of the
transactions contemplated by this Agreement (including, without limitation, as
a result of the termination of the employment of any of its employees within a
specified time of the Effective Time) neither it nor any of its Subsidiaries
will be obligated to make a payment to an individual that would be a "parachute
payment" to a "disqualified individual" as those terms are defined in Section
280G of the Code, without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
(o) Labor Matters. Neither it nor any of its Subsidiaries is a party to or
is bound by any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it or any of its
Subsidiaries the subject of a proceeding asserting that it or any such
Subsidiary has committed an unfair labor practice (within the meaning of the
National Labor Relations Act) or seeking to compel it or any of its
Subsidiaries to bargain with any labor organization as to wages or conditions
of employment, nor is there any strike or other material labor dispute
involving it or any of its Subsidiaries pending or, to its knowledge,
threatened, nor to its knowledge is there any activity involving its or any of
its Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in other organizational activity.
(p) Environmental Matters. To its knowledge, neither its conduct nor its
operation or the conduct or operation of its Subsidiaries nor any condition of
any property presently or previously owned, leased or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), violates or
violated Environmental Laws and no condition has existed or event has occurred
with respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. To its knowledge, no property on which it or any of its
Subsidiaries holds a Lien, violates or violated Environmental Laws and no
condition has existed or event has occurred with respect to any such property
that, with notice or the passage of time, or both, is reasonably likely to
result in liability under Environmental Laws. Neither it nor any of its
Subsidiaries has received any written notice from any person or
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entity that it or its Subsidiaries or the operation or condition of any
property ever owned, leased, operated, or held as collateral or in a fiduciary
capacity by any of them are or were in violation of or otherwise are alleged to
have liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from, any such
property.
(q) Tax Matters. (1) (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or with
respect to it and its Subsidiaries have been duly and timely filed, and all
such Tax Returns are complete and accurate in all material respects, (B) all
Taxes shown to be due on the Tax Returns referred to in clause (A) have been
paid in full, (C) all Taxes that it or any of its Subsidiaries is obligated to
withhold from amounts owing to any employee, creditor or third party have been
paid over to the proper Governmental Authority in a timely manner, to the
extent due and payable, (D) the Tax Returns referred to in clause (A) have been
examined by the Internal Revenue Service or the appropriate Tax authority or
the period for assessment of the Taxes in respect of which such Tax Returns
were required to be filed has expired, (E) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full, (F)
no issues that have been raised by the relevant taxing authority in connection
with the examination of any of the Tax Returns referred to in clause (A) are
currently pending, and (G) no extensions or waivers of statutes of limitation
have been given by or requested with respect to any of its Taxes or those of
its Subsidiaries. It has made available to the other party hereto true and
correct copies of the U.S. federal income Tax Returns filed by it and its
Subsidiaries for each of the three most recent fiscal years ended on or before
December 31, 1998. It has made provision in accordance with GAAP, in the
financial statements included in the Regulatory Filings filed prior to the date
hereof, for all Taxes that accrued on or before the end of the most recent
period covered by its Regulatory Filings filed prior to the date hereof.
Neither it nor any of its Subsidiaries is a party to any Tax allocation or
sharing agreement, is or has been a member of an affiliated group filing
consolidated or combined Tax returns (other than a group over which it is or
was the common parent) or otherwise has any liability for the Taxes of any
person (other than its own Taxes and those of its Subsidiaries). As of the date
hereof, neither it nor any of its Subsidiaries has any reason to believe that
any conditions exist that could reasonably be expected to prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code. No Liens for Taxes exist with respect to any of its assets or
properties or those of its Subsidiaries, except for statutory Liens for Taxes
not yet due and payable or that are being contested in good faith and reserved
for in accordance with GAAP. Neither it nor any of its Subsidiaries has been a
party to any distribution occurring during the last three years in which the
parties to such distribution treated the distribution as one to which Section
355 of the Code applied.
(2) No Tax is required to be withheld pursuant to Section 1445 of the Code
as a result of the transfer contemplated by this Agreement.
(r) Derivative Instruments. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts and other similar risk management
arrangements, whether entered into for its own account, or for the account of
one or more of its Subsidiaries or their customers, if any, were entered into
(1) in accordance with prudent business practices and all applicable laws,
rules, regulations and regulatory policies and (2) with counterparties believed
to be financially responsible at the time; and each of them constitutes the
valid and legally binding obligation of such party or one of its Subsidiaries,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and are in full
force and effect. Neither it nor its Subsidiaries, nor to its knowledge, any
other party thereto, is in breach of any of its obligations under any such
agreement or arrangement.
(s) Books and Records. Its books and records and those of its Subsidiaries
have been fully, properly and accurately maintained in all material respects,
and there are no material inaccuracies or discrepancies of any kind contained
or reflected therein.
(t) Insurance. It has made available to the other party hereto all of the
insurance policies, binders, or bonds maintained by it or its Subsidiaries (its
"Insurance Policies"). It and its Subsidiaries are insured with
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reputable insurers against such risks and in such amounts as its management
reasonably has determined to be prudent in accordance with industry practices.
All of its Insurance Policies are in full force and effect; it and its
Subsidiaries are not in material default thereunder; and all claims thereunder
for which a basis is known, or reasonably should be known, by it have been
filed in due and timely fashion.
(u) Accounting Treatment. As of the date hereof, to its knowledge, there is
no reason why the Merger will fail to qualify for "pooling-of-interests"
accounting treatment.
(v) Takeover Laws and Provisions. It has taken all action required to be
taken by it in order to exempt this Agreement and the AmSouth Option or the
First American Option, as applicable, and the transactions contemplated hereby
and thereby from, and this Agreement, the AmSouth Option or the First American
Option, as applicable, and the transactions contemplated hereby and thereby are
exempt from, the requirements of any "moratorium", "control share", "fair
price", "affiliate transaction", "business combination" or other antitakeover
laws and regulations of any state (collectively, "Takeover Laws"), including,
without limitation, the State of Delaware, in the case of AmSouth, and the
State of Tennessee, in the case of First American. It has taken all action
required to be taken by it in order to make this Agreement and the AmSouth
Option or the First American Option, as applicable, and the transactions
contemplated hereby and thereby comply with, and this Agreement, the AmSouth
Option or the First American Option, as applicable, and the transactions
contemplated hereby and thereby comply with, the requirements of any Articles,
Sections or provisions of its Constituent Documents concerning "business
combinations", "fair priced", "voting requirements", "constituency
requirements" or other related provisions (collectively, "Takeover
Provisions"), including, without limitation, Articles X, XI and XII of the
First American Charter, in the case of First American, and Section VIII of the
AmSouth Certificate, in the case of AmSouth.
(w) Rights Agreements. It has taken all action necessary such that (1) the
AmSouth Rights or the First American Rights, as the case may be, will not
become separable, distributable, unredeemable or exercisable as a result of the
approval, execution or delivery of this Agreement or the Option Agreements or
the consummation of the transactions contemplated hereby or thereby and (2) in
the case of First American, the First American Rights will no longer be
exercisable, and the First American Rights Agreement will terminate, upon
consummation of the Merger.
(x) Year 2000. To its knowledge, the mission critical computer software
operated by it and/or any of its Subsidiaries is currently capable of
providing, or is being adapted to provide, uninterrupted millennium
functionality to record, store, process and present calendar dates falling on
or after January 1, 2000 in substantially the same manner and with
substantially the same functionality as such mission critical software records,
stores, processes and presents such calendar dates falling on or before
December 31, 1999. To its knowledge, the costs of adaptations referred to in
this clause will not have a Material Adverse Effect with respect to it. Neither
it nor any of its Subsidiaries has received, nor to its knowledge are there
facts that would reasonably be expected to form the basis for the issuance of,
a "Year 2000 Deficiency Notification Letter"(as such term is employed in the
Federal Reserves Supervision and Regulatory Letter No. SR 98-3 (SUP), dated
March 4, 1998) or similar notice from any state banking authority. It has made
available to the other party hereto a complete and accurate copy of its and its
Subsidiaries' plan, including an estimate of anticipated associated costs, for
addressing the issues set forth in the Year 2000 guidance papers issued by the
Federal Financial Institutions Examination Council, including the statements
dated May 5, 1997, entitled "Year 2000 Project Management Awareness," December
17, 1997, entitled "Safety and Soundness Guidelines Concerning the Year 2000
Business Risk," and October 14, 1998, entitled "Interagency Guidelines
Establishing Year 2000 Standards for Safety and Soundness," as such issues
affect any of it or its Subsidiaries. Between the date of this Agreement and
the Effective Time, it shall use commercially reasonable and practicable
efforts to implement such plan.
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ARTICLE VI
Covenants
6.01 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of AmSouth and First American agrees to use its respective
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
6.02 Stockholder Approvals. (a) Each of AmSouth and First American agrees to
take in accordance with applicable law and its respective Constituent Documents
all action necessary to convene a meeting of its respective stockholders
(including any adjournment or postponement, the "AmSouth Meeting" and the
"First American Meeting", respectively), as promptly as practicable, to
consider and vote upon the Share Increase and the adoption and approval of this
Agreement, respectively, as well as any other matters required to be approved
by such entity's stockholders for consummation of the Merger.
(b) The board of directors of First American has adopted resolutions
recommending to the stockholders of First American adoption of this Agreement
and the other matters required to be approved or adopted in order to carry out
the intentions of this Agreement. The board of directors of AmSouth has adopted
resolutions recommending to the shareholders of AmSouth the adoption and the
approval of the Share Increase. Such boards of directors shall at all times
continue such recommendations in effect without qualification and shall use,
and cause AmSouth and First American, respectively, to use reasonable best
efforts to obtain such adoption (it being understood and agreed that the
obligations under this sentence shall not be altered by the commencement,
proposal, disclosure or communication of any Acquisition Proposal).
6.03 Registration Statement and Joint Proxy Statement. (a) The parties agree
jointly to prepare a registration statement on Form S-4 or other applicable
form (the "Registration Statement") to be filed by AmSouth with the SEC in
connection with the issuance of AmSouth Common Stock in the Merger (including
the joint proxy statement and prospectus and other proxy solicitation materials
of AmSouth and First American constituting a part thereof (the "Joint Proxy
Statement") and all related documents). The parties agree to cooperate, and to
cause their Subsidiaries to cooperate, with the other party, its counsel and
its accountants, in the preparation of the Registration Statement and the Joint
Proxy Statement; and provided that both parties and their respective
Subsidiaries have cooperated as required above, AmSouth and First American
agree to file the Joint Proxy Statement in preliminary form with the SEC as
promptly as reasonably practicable, and AmSouth agrees to file the Registration
Statement with the SEC as soon as reasonably practicable after any SEC comments
with respect to the preliminary Joint Proxy Statement are resolved. Each of
AmSouth and First American agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. AmSouth also agrees to
use all reasonable efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. First American agrees to furnish to AmSouth all
information concerning First American, its Subsidiaries, officers, directors
and stockholders as may be reasonably requested in connection with the
foregoing.
(b) Each of AmSouth and First American agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (1) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement
thereto, if any, becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading
and(2) the Joint Proxy Statement and any amendment or supplement thereto will,
at the date of mailing to stockholders and at the time of the AmSouth Meeting
or the First American Meeting, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or
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necessary to make the statements therein, in the light of the circumstances
under which such statement was made, not misleading. Each of AmSouth and First
American further agrees that if it shall become aware prior to the Effective
Date of any information furnished by it that would cause any of the statements
in the Joint Proxy Statement or the Registration Statement to be false or
misleading with respect to any material fact, or to omit to state any material
fact necessary to make the statements therein not false or misleading, to
promptly inform the other party thereof and to take the necessary steps to
correct the Joint Proxy Statement or the Registration Statement.
(c) AmSouth agrees to advise First American, 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 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.
6.04 Press Releases. AmSouth and First American shall consult with each
other before issuing any press release with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement without the prior consent of the other party, which shall not be
unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party (but after prior consultation, to the extent
practicable in the circumstances) issue such press release or make such public
statement as may upon the advice of outside counsel be required by law or the
rules and regulations of the NYSE. AmSouth and First American shall cooperate
to develop all public announcement materials and make appropriate management
available at presentations related to the transactions contemplated by this
Agreement as reasonably requested by the other party.
6.05 Access; Information. (a) Each of AmSouth and First American agrees that
upon reasonable notice and subject to applicable laws relating to the exchange
of information, it shall afford the other party, and the other party's
officers, employees, counsel, accountants and other authorized representatives,
such access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax
returns and work papers of independent auditors), properties, personnel and to
such other information as any party may reasonably request and, during such
period, it shall furnish promptly to such other party (1) a copy of each
material report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, and (2) all other
information concerning the business, properties and personnel of it as the
other may reasonably request.
(b) Each party agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement. Subject to the requirements
of law, each party will keep confidential, and will cause its representatives
to keep confidential, all information and documents obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the date
hereof in connection with the entering into of this Agreement) unless such
information (1) was already known to such party,(2) becomes available to such
party from other sources not known by such party to be bound by a
confidentiality obligation, (3) is disclosed with the prior written approval of
the providing party or (iv) is or becomes readily ascertainable from publicly
available sources. If this Agreement is terminated or the transactions
contemplated by this Agreement shall otherwise fail to be consummated, each
party shall promptly cause all copies of documents or extracts thereof
containing information and data as to the other party to be returned to the
other party.
(c) No investigation by either party of the business and affairs of the
other party, pursuant to this Section 6.05 or otherwise, shall affect or be
deemed to modify or waive any representation, warranty, covenant or agreement
in this Agreement, or the conditions to either party's obligation to consummate
the transactions contemplated by this Agreement.
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6.06 Acquisition Proposals. Each of AmSouth and First American agrees that
it shall not, and shall cause its Subsidiaries and its and its Subsidiaries'
officers, directors, agents, advisors and affiliates not to, solicit or
encourage inquiries or proposals with respect to, or engage in any negotiations
concerning, or provide any confidential information to, or have any discussions
with, any Person relating to, any Acquisition Proposal or waive any provision
of or amend the terms of the AmSouth Rights Agreement or the First American
Rights Agreement, respectively, in respect of an Acquisition Proposal. Each of
AmSouth and First American shall immediately cease and cause to be terminated
any activities, discussions or negotiations conducted prior to the date of this
Agreement with any Persons other than First American or AmSouth, as the case
may be, with respect to any of the foregoing and shall use its reasonable best
efforts to enforce any confidentiality or similar agreement relating to an
Acquisition Proposal. Each of AmSouth and First American shall promptly (within
24 hours) advise the other party following the receipt by AmSouth or First
American, as the case may be, of any Acquisition Proposal and the substance
thereof (including the identity of the person making such Acquisition
Proposal), and shall keep such other party apprised of any developments in
respect thereof on a current basis.
6.07 Affiliate Agreements. (a) Not later than the 15th day prior to the
mailing of the Joint Proxy Statement, (i) AmSouth shall deliver to First
American a schedule of each Person that, to the best of its knowledge, is or is
reasonably likely to be, as of the date of the AmSouth Meeting, deemed to be an
"affiliate" of AmSouth (each, a "AmSouth Affiliate"), as that term is used in
SEC Accounting Series Releases 130 and 135; and (ii) First American shall
deliver to AmSouth a schedule of each person that, to the best of its
knowledge, is or is reasonably likely to be, as of the date of the First
American Meeting, deemed to be an "affiliate" of First American (each, an
"First American Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Each of AmSouth and First American shall use its respective reasonable
best efforts to cause each Person who may be deemed to be a AmSouth Affiliate
or a First American Affiliate to execute and deliver to AmSouth and First
American on or before the date of mailing of the Joint Proxy Statement an
agreement in substantially the form attached hereto as Exhibit C or Exhibit D,
respectively.
(c) AmSouth shall use its best efforts to publish as promptly as reasonably
practicable, but in no event later than 90 days after the end of the first
month after the Effective Time in which there are at least 30 days of post-
Merger combined operations (which month may be the month in which the Effective
Time occurs), combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
6.08 Takeover Laws and Provisions. No party hereto shall take any action
that would cause the transactions contemplated by this Agreement or the Option
Agreements to be subject to requirements imposed by any Takeover Law and each
of them shall take all necessary steps within its control to exempt (or ensure
the continued exemption of) the transactions contemplated by this Agreement
from, or if necessary challenge the validity or applicability of, any
applicable Takeover Law, as now or hereafter in effect. No party hereto shall
take any action that would cause the transactions contemplated by this
Agreement or the Option Agreements not to comply with any Takeover Provisions
and each of them shall take all necessary steps within its control to make the
transactions contemplated by this Agreement or the Options Agreements comply
with (or continue to comply with) the Takeover Provisions.
6.09 NYSE Listing. AmSouth shall use commercially reasonable efforts to
cause the outstanding shares of AmSouth Common Stock to be issued in the Merger
to be approved for listing on the NYSE, subject to official notice of issuance,
as promptly as practicable after the date hereof, and in any event prior to the
Effective Date.
6.10 Regulatory Applications. (a) AmSouth and First American and their
respective Subsidiaries shall cooperate and use their respective reasonable
best efforts to prepare as promptly as possible all documentation, to effect
all filings and to obtain all permits, consents, approvals and authorizations
of all third parties and Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement and First
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American shall make all necessary regulatory filings as soon as practicable.
Each of AmSouth and First American shall have the right to review in advance,
and to the extent practicable each will consult with the other, in each case
subject to applicable laws relating to the exchange of information, with
respect to all material written information submitted to any third party or any
Governmental Authority in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto agrees
to act reasonably and as promptly as practicable. Each party hereto agrees that
it will consult with the other party hereto with respect to the obtaining of
all material permits, consents, approvals and authorizations of all third
parties and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party appraised of the status of material matters relating to completion of the
transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries with or to any third party or
Governmental Authority.
6.11 Indemnification. (a) Following the Effective Date, AmSouth shall
indemnify, defend and hold harmless the present and former directors and
officers of First American and its Subsidiaries (each, an "Indemnified Party")
against all costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively,
"Costs") as incurred, in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of actions or omissions occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement) to the fullest
extent that First American and its Subsidiaries are permitted to indemnify (and
advance expenses to) their respective directors and officers under the laws of
their respective jurisdictions of incorporation and their respective
Constituent Documents.
(b) For a period of six years from the Effective Time, AmSouth shall use its
reasonable best efforts to provide directors' and officers' liability insurance
that serves to reimburse the present and former officers and directors of First
American or any of their respective Subsidiaries (determined as of the
Effective Time) (as opposed to First American or such Subsidiary) with respect
to claims against such directors and officers arising from facts or events
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) which insurance shall contain at
least the same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by First American; provided,
however, that no event shall AmSouth be required to expend more than 200
percent of the current amount expended by First American (the "Insurance
Amount") to maintain or procure such directors' and officers' insurance
coverage; provided, further, that if AmSouth is unable to maintain or obtain
the insurance called for by this Section 6.11(b), AmSouth shall use its
reasonable best efforts to obtain as much comparable insurance as is available
for the Insurance Amount; and provided, further, that officers and directors of
First American or any Subsidiary may be required to make application and
provide customary representations and warranties to AmSouth's insurance carrier
for the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under Section
6.11(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall promptly notify AmSouth thereof; provided that the
failure so to notify shall not affect the obligations of AmSouth under Section
6.11(a) unless and to the extent that AmSouth is actually and materially
prejudiced as a result of such failure.
(d) If AmSouth or any of its successors or assigns shall consolidate with or
merge into any other entity and shall not be the continuing or surviving entity
of such consolidation or merger or shall transfer all or substantially all of
its assets to any other entity, then and in each case, AmSouth shall cause
proper provision to be made so that the successors and assigns of AmSouth shall
assume the obligations set forth in this Section 6.11.
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(e) The provisions of this Section 6.11 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs
and representatives.
6.12 Benefit Plans. (a) The Surviving Company shall, from and after the
Effective Time, (i) comply with the Benefit Plans of First American (the "First
American Benefit Plans") in accordance with their terms, (ii) provide employees
of First American who remain as employees of the Surviving Corporation with
employee benefit plans no less favorable in the aggregate than those provided
to similarly situated employees of AmSouth, (iii) provide employees of First
American who remain as employees of the Surviving Corporation credit for years
of service with First American or any of its Subsidiaries prior to the
Effective Time for the purpose of eligibility, vesting and benefit accruals
(other than benefit accruals under a defined benefit pension plan), (iv) cause
any and all pre-existing condition limitations (to the extent such limitations
did not apply to a pre-existing condition under comparable First American
Benefit Plans) and eligibility waiting periods under group health plans of
AmSouth to be waived with respect to employees of First American who remain as
employees of AmSouth or its Subsidiaries (and their eligible dependents) and
(v) cause to be credited any deductibles or out-of-pocket expenses incurred by
employees of First American and their beneficiaries and dependents during the
portion of the calendar year prior to their participation in AmSouth Benefit
Plans with the objective that there be no double counting during the year in
which the Effective Date occurs of such deductibles or out-of-pocket expenses.
AmSouth, First American and the Surviving Corporation agree to honor, or to
cause to be honored, in accordance with their terms, all vested or accrued
benefit obligations to, and contractual rights of, current and former employees
of First American and its Subsidiaries, including, without limitation, any
benefits or rights arising as a result of the transactions contemplated by this
Agreement (either alone or in combination with any other event); it being
understood and agreed to by the parties hereto that the transactions
contemplated by this Agreement shall constitute a "change in control" for
purposes of all First American Benefit Plans.
(b) AmSouth, First American and the Surviving Corporation agree to take, or
to cause to be taken, the actions necessary to effectuate the items set forth
on Section 6.12 of the First American Disclosure Schedule and further agree
that no such actions shall be considered to be a violation of any other
provision of this Agreement. Section 6.12 of the First American Disclosure
Schedule shall be deemed incorporated into this Agreement.
6.13 Share Repurchase Programs. AmSouth shall rescind and terminate its
share repurchase program currently in effect. After the date hereof, First
American shall purchase no more than 4,000,000 shares of its Common Stock under
any share repurchase program currently in effect or adopted after the date
hereof.
6.14 Notification of Certain Matters. Each of AmSouth and First American
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.15 Rights Agreements. Each of AmSouth and First American agrees that it
shall maintain the AmSouth Rights Agreement and the First American Rights
Agreement, respectively, as amended pursuant to Section 5.03(w), and shall not
redeem the rights issued pursuant to such agreement or modify such agreement,
except as required to consummate the Merger and fulfill its obligations
pursuant to this Agreement, the Option Agreements and the transactions
contemplated hereby and thereby; provided that if AmSouth or First American
redeems the AmSouth Rights or the First American Rights, as the case may be, in
order to consummate the Merger or fulfill its obligations under this Agreement,
the Option Agreements or the transactions contemplated hereby or thereby,
AmSouth or First American shall simultaneously approve and adopt a new rights
plan with terms substantially the same as those of the AmSouth Rights
Agreement. First American agrees that it will not take any action declaring
AmSouth to be, or be treated as, an "adverse person" for purposes of the First
American Rights Agreement.
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6.16 Foundation. At and after the Effective Time, AmSouth shall maintain
First American's charitable commitment to its communities through the First
American charitable foundation. The parties agree that, at and after the
Effective Time, the by-laws of the First American charitable foundation shall
be amended to be substantially in the form that First American has Previously
Disclosed to AmSouth.
6.17 Exemption from Liability Under Section 16(b). Assuming that First
American delivers to AmSouth the Section 16 information in a timely fashion
prior to the Effective Time, the Board of Directors of AmSouth, or a committee
of Non-Employee Directors thereof (as such term is defined for purposes of Rule
16b-3(d) under the Exchange Act), shall reasonably promptly thereafter and in
any event prior to the Effective Time adopt a resolution providing that the
receipt by the First American Insiders of AmSouth Common Stock in exchange for
shares of First American Common Stock, and of options to purchase shares of
AmSouth Common Stock upon conversion of options to purchase shares of First
American Common Stock, in each case pursuant to the transactions contemplated
hereby and to the extent such securities are listed in the Section 16
Information, are approved by such Board of Directors or by such committee
thereof, and are intended to be exempt from liability pursuant to Section 16(b)
under the Exchange Act, such that any such receipt shall be so exempt.
6.18 Amendment to the AmSouth Certificate. AmSouth will file an amendment to
the AmSouth Certificate in accordance with Section 242 of the DGCL effecting
the Share Increase upon the approval of the AmSouth stockholders of the Share
Increase.
ARTICLE VII
Conditions to the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of AmSouth and First American to consummate the
Merger is subject to the fulfillment or written waiver by AmSouth and First
American prior to the Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement shall have been duly approved
by the requisite vote of the stockholders of First American, and the Share
Increase shall have been adopted and approved by the shareholders of
AmSouth.
(b) Regulatory Approvals. Any consents, waivers, clearances, approvals
and authorizations of Governmental Authorities that are necessary to permit
consummation of the Merger (1) shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof
shall have expired and (2) shall not have imposed a condition on such
approval that would, after the Effective Time, have a Material Adverse
Effect on AmSouth and its Subsidiaries or First American and its
Subsidiaries.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the Merger. No statute, rule, regulation, order, injunction
or decree shall have been enacted, entered, promulgated or enforced by any
Governmental Authority which prohibits or makes illegal the consummation of
the Merger.
(d) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and be
in effect and no proceedings for that purpose shall have been initiated by
the SEC and not withdrawn.
(e) Listing. The shares of AmSouth Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(f) Pooling-of-Interests. Each of AmSouth and First American shall have
received a letter from its respective independent public accountants, dated
the Closing Date, in form and substance reasonably satisfactory to AmSouth
and First American, respectively, to the effect that the Merger will
qualify for pooling-of-interests accounting treatment.
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(g) AmSouth Certificate. The amendment to the AmSouth Certificate
effecting the Share Increase shall have become effective.
7.02 Conditions to Obligation of First American. The obligation of First
American to consummate the Merger is also subject to the fulfillment or written
waiver by First American prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of AmSouth and Merger Sub set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. First American
shall have received a certificate signed on behalf of AmSouth by the Chief
Executive Officer and Chief Financial Officer of AmSouth to the foregoing
effect.
(b) Performance of Obligations of AmSouth. AmSouth shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Effective Time, and First American
shall have received a certificate, dated the Effective Date, signed on
behalf of AmSouth by the Chief Executive Officer and the Chief Financial
Officer of AmSouth to such effect.
(c) Opinion of First American's Counsel. First American shall have
received an opinion of Wachtell, Lipton, Rosen & Katz, special counsel to
First American, dated the Closing Date, to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion, (1) the
Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code, (2) AmSouth, First American and Merger Sub will each be
a party to that reorganization within the meaning of Section 368(b) of the
Code and (3) no gain or loss will be recognized by shareholders of First
American who receive solely shares of AmSouth Common Stock in exchange for
all of their First American Common Stock, except with respect to cash
received in lieu of a fractional share interest in AmSouth Common Stock.
7.03 Conditions to Obligation of AmSouth. The obligation of AmSouth to
consummate the Merger is also subject to the fulfillment, or written waiver by
AmSouth, prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of First American set forth in this Agreement shall be true and correct as
of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. AmSouth shall
have received a certificate signed on behalf of First American by the Chief
Executive Officer and Chief Financial Officer of First American to the
foregoing effect.
(b) Performance of Obligations of First American. First American shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time, and
AmSouth shall have received a certificate, dated the Effective Date, signed
on behalf of First American by the Chief Executive Officer and the Chief
Financial Officer of First American to such effect.
(c) Opinion of AmSouth's Counsel. AmSouth shall have received an opinion
of Sullivan & Cromwell, counsel to AmSouth, dated the Closing Date, to the
effect that, on the basis of facts, representations and assumptions set
forth in such opinion, (1) the Merger will be treated as a reorganization
within the meaning of Section 368(a) of the Code and (2) AmSouth, Merger
Sub and First American will each be a party to that reorganization within
the meaning of Section 368(b) of the Code.
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ARTICLE VIII
Termination
8.01 Termination. This Agreement may be terminated, and the Merger may be
abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of AmSouth and First American, if the Board of Directors of
each so determines by vote of a majority of the members of its entire
Board.
(b) Breach. At any time prior to the Effective Time, by AmSouth or First
American, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (1) a breach by
the other party of any representation or warranty contained herein, which
breach cannot be or has not been cured within 30 calendar days after the
giving of written notice to the breaching party of such breach; or (2) a
breach by the other party of any of the covenants or agreements contained
herein, which breach cannot be or has not been cured within 30 calendar
days after the giving of written notice to the breaching party of such
breach, provided that any such breach under clause (1) or (2) would entitle
the non-breaching party not to consummate the Merger under Article VII
hereof.
(c) Delay. At any time prior to the Effective Time, by AmSouth or First
American, 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 February 15, 2000, except to the extent that the failure of
the Merger then to be consummated arises out of or results from the knowing
action or inaction of the party seeking to terminate pursuant to this
Section 8.01(c), which action or inaction is in violation of its
obligations under this Agreement.
(d) No Approval. By First American or AmSouth, if its Board of Directors
so determines by a vote of a majority of the members of its entire Board,
in the event the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority.
(e) Stock Option Agreements. By AmSouth in the event that First American
has not executed and delivered the First American Stock Option Agreement on
the day after the date hereof; and by First American in the event that
AmSouth has not executed and delivered the AmSouth Stock Option Agreement
on the day after the date hereof.
8.02 Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article VIII,
no party to this Agreement shall have any liability or further obligation to
the other party hereto except as set forth below and except that termination
will not relieve a breaching party from liability for any breach of this
Agreement giving rise to such termination and except that Sections 6.05, 8.02
and Section 9.05 shall survive any termination of this Agreement.
ARTICLE IX
Miscellaneous
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Section 6.11 and this Article IX which shall survive the Effective Time).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of this
Agreement may be (a) waived by the party benefitted by the provision, or (b)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that (1) after the
First American Meeting, this Agreement may not be amended if it would violate
Tennessee law and (2) after the AmSouth Meeting, this Agreement may not be
amended if it would violate Delaware law.
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9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of Delaware applicable to contracts made
and to be performed entirely within such State.
9.05 Expenses. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing expenses and SEC fees shall be shared equally between First
American and AmSouth.
9.06 Notices. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) 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 Bank Law Department
1901 Sixth Avenue North
9th Floor AmSouth-Harbert Plaza
Birmingham, Alabama 35203
Attention: Stephen A. Yoder, Esq.
Facsimile: (205) 583-4497
With a copy to:
H. Rodgin Cohen, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3588
If to First American, to:
First American Corporation
First American Center
Attention: Mary Neil Price, Esq.
Facsimile: (615) 736-6735
With a copy to:
Edward D. Herlihy, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Facsimile: (212) 403-2000
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and this Agreement supersedes any
and all other oral or written agreements heretofore made. No representation,
warranty, inducement, promise, understanding or condition not set forth in this
Agreement has been made or relied on by any party in entering into this
Agreement or the Option Agreements. Except for Section 6.11 and as specifically
provided in Schedule 6.12 of the First American Disclosure Schedule, nothing in
this Agreement expressed or implied is intended to confer upon any Person,
other than the parties hereto or their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
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9.08 Severability. Except to the extent that application of this Section
9.08 would have a Material Adverse Effect on any party or the Surviving
Corporation, any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.09 Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, the parties may
mutually agree to revise the structure of the Merger and related transactions
provided that each of the transactions comprising such revised structure shall
(1) not change the amount or form of consideration to be received by the
shareholders of First American and the holders of First American Stock Options,
(2) be capable of consummation in as timely a manner as the structure
contemplated herein and (3) not otherwise be prejudicial to the interests of
the stockholders of either party. This Agreement and any related documents
shall be appropriately amended in order to reflect any such revised structure.
9.10 Enforcement of this Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
AMSOUTH BANCORPORATION
By: /s/ C. Dowd Ritter
_________________________________
Name: C. Dowd Ritter
Title: Chairman, President and
Chief Executive Officer
ALPHA/FOXTROT ACQUISITION CORP.
By: /s/ Stephen A. Yoder
_________________________________
Name: Stephen A. Yoder
Title: Chairman, President and
Secretary
FIRST AMERICAN CORPORATION
By: /s/ Dennis C. Bottorff
_________________________________
Name: Dennis C. Bottorff
Title: Chairman, and Chief
Executive Officer
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Exhibit A
See Appendix C to the Proxy Statement/Prospectus
A-30
<PAGE>
Exhibit B
See Appendix D to the Proxy Statement/Prospectus
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<PAGE>
Exhibit C
, 1999
AmSouth Bancorporation,
AmSouth-Sonat Tower,
1900 Fifth Avenue North,
Birmingham, Alabama 35203.
Dear Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit that I am,
an "affiliate" of AmSouth Bancorporation, a Delaware corporation ("AmSouth") as
that term is defined in the Securities and Exchange Commission's Accounting
Series Releases 130 and 135. I understand that pursuant to the terms of the
Agreement and Plan of Merger, dated as of May 31, 1999 (the "Merger
Agreement"), among First American Corporation, a Tennessee corporation ("First
American"), AmSouth and Alpha/Foxtrot Acquisition Corp., a Delaware corporation
and newly formed wholly owned subsidiary of AmSouth, Alpha/Foxtrot Acquisition
Corp. plans to merge with and into First American (the "Merger") and that the
Merger is intended to be accounted for under the "pooling of interests"
accounting method.
I have carefully read this letter and reviewed the Merger Agreement and
discussed their requirements and other applicable limitations upon my ability
to sell, transfer, or otherwise dispose of common stock of AmSouth and First
American, to the extent I felt necessary, with my counsel or counsel for
AmSouth.
I hereby represent, warrant and covenant with and to AmSouth that:
1. I will not sell, transfer or otherwise dispose of, or reduce my risk
relative to, any shares of common stock of First American or AmSouth
(whether or not acquired by me in the Merger) during the period commencing
30 days prior to the effective date of the Merger and ending at such time
as AmSouth notifies me that results covering at least 30 days of combined
operations of First American and AmSouth after the Merger have been
published by AmSouth. I understand that AmSouth is not obligated to publish
such combined financial results except in accordance with its normal
financial reporting practice.
2. I further understand and agree that this letter agreement shall apply
to all shares of common stock of First American and AmSouth that I am
deemed to beneficially own pursuant to applicable federal securities laws.
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3. If AmSouth advises me in writing that additional restrictions apply
to my ability to sell, transfer, or otherwise dispose of common stock of
First American or AmSouth in order for AmSouth to be entitled to use the
"pooling of interests" accounting method, I will abide by such restriction.
Very truly yours,
By
________________________________
Name:
Accepted this day of , 1999.
AmSouth Bancorporation
By
_________________________________________
Name:
Title:
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Exhibit D
First American Corporation,
First American Center,
Nashville, Tennessee 37237-0700
AmSouth Bancorporation,
AmSouth-Sonat Tower,
1900 Fifth Avenue North,
Birmingham, Alabama 35203.
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit that I am,
an "affiliate" of First American Corporation, a Tennessee corporation ("First
American"), as that term is defined in Rule 145 promulgated by the Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as
amended (the "Securities Act"), and/or SEC Accounting Series Releases 130 and
135. 1 understand that pursuant to the terms of the Agreement and Plan of
Merger, dated as of May 31, 1999 (the "Merger Agreement"), among First
American, AmSouth Bancorporation, a Delaware corporation ("AmSouth"), and
Alpha/Foxtrot Acquisition Corp., a Delaware corporation and newly formed wholly
owned subsidiary of AmSouth, Alpha/Foxtrot Acquisition Corp. plans to merge
with and into First American (the "Merger") and that the Merger is intended to
be accounted for under the "pooling of interests" accounting method.
I further understand that as a result of the Merger, I may receive shares of
common stock, par value $1.00 per share, of AmSouth ("AmSouth Stock") in
exchange for shares of common stock, par value $2.50 per share, of First
American ("First American Stock").
I have carefully read this letter and reviewed the Merger Agreement and
discussed their requirements and other applicable limitations upon my ability
to sell, transfer, or otherwise dispose of AmSouth Stock and First American
Stock, to the extent I felt necessary, with my counsel or counsel for First
American.
I represent, warrant and covenant with and to AmSouth that in the event I
receive any AmSouth Stock as a result of the Merger:
1. I shall not make any sale, transfer, or other disposition of such
AmSouth Stock unless (i) such sale, transfer or other disposition has been
registered under the Securities Act, (ii) such sale, transfer or other
disposition is made in conformity with the provisions of Rule 145 under the
Securities Act (as such rule may be amended from time to time) or (iii) in
the opinion of counsel in form and substance reasonably satisfactory to
AmSouth, or under a "no-action" letter obtained by me from the staff of the
SEC, such sale, transfer or other disposition will not violate or is
otherwise exempt from registration under the Securities Act.
2. I understand that AmSouth is under no obligation to register the
sale, transfer or other disposition of shares of AmSouth Stock by me or on
my behalf under the Securities Act or to take any other action necessary in
order to make compliance with an exemption from such registration
available.
3. I understand that stop transfer instructions will be given to
AmSouth's transfer agent with respect to shares of AmSouth Stock issued to
me as a result of the Merger and that there will be placed on the
certificates for such shares, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 applies. The shares represented by this certificate may be
transferred only in accordance with the terms of a letter agreement,
dated , , between the registered holder
hereof and AmSouth, a copy of which agreement is on file at the
principal offices of AmSouth."
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4. I understand that, unless transfer by me of the AmSouth Stock issued
to me as a result of the Merger has been registered under the Securities
Act or such transfer is made in conformity with the provisions of Rule
145(d) under the Securities Act, AmSouth reserves the right, in its sole
discretion, to place the following legend on the certificates issued to my
transferee:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who
received such shares in a transaction to which Rule 145 under the
Securities Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of 1933
and may not be offered, sold, pledged or otherwise transferred except
in accordance with an exemption from the registration requirements of
the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraph (3) and
(4) above shall be removed by delivery of substitute certificates without such
legends if I shall have delivered to AmSouth (i) a copy of a "no-action" letter
from the staff of the SEC, or an opinion of counsel in form and substance
reasonably satisfactory to AmSouth, to the effect that such legend is not
required for purposes of the Securities Act, or (ii) evidence or
representations satisfactory to AmSouth that AmSouth Stock represented by such
certificates is being or has been sold in conformity with the provisions of
Rule 145(d).
I further represent, warrant and covenant with and to AmSouth that I will
not sell, transfer or otherwise dispose of, or reduce my risk relative to, any
shares of First American Stock or AmSouth Stock (whether or not acquired by me
in the Merger) during the period commencing 30 days prior to effective date of
the Merger and ending at such time as AmSouth notifies me that results covering
at least 30 days of combined operations of First American and AmSouth after the
Merger have been published by AmSouth. I understand that AmSouth is not
obligated to publish such combined financial results except in accordance with
its normal financial reporting practice.
I further understand and agree that this letter agreement shall apply to all
shares of First American Stock and AmSouth Stock that I am deemed to
beneficially own pursuant to applicable federal securities law, and I further
represent, warrant and covenant with and to AmSouth that I will have, and will
cause each of the other parties whose shares are deemed to be beneficially
owned by me to have, all shares of First American Stock or AmSouth Stock owned
by me or such parties registered in my name or the name of such parties, as
applicable, prior to the effective date of the Merger and not the name of any
bank, broker or dealer, nominee or clearing house.
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I also understand that the Merger is intended to be treated as a "pooling of
interests" for accounting purposes, and I agree that if First American or
AmSouth advises me in writing that additional restrictions apply to my ability
to sell, transfer, or otherwise dispose of First American Stock or AmSouth
Stock in order for AmSouth to be entitled to use the pooling of interests
accounting method, I will abide by such restrictions.
Very truly yours,
By _________________________________
Name:
Accepted this day of , .
First American Corporation
By _________________________________
Name:
Title:
AmSouth Bancorporation
By _________________________________
Name:
Title:
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APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 1, 1999 (this "Agreement"), between
First American Corporation, a Tennessee corporation ("Grantee"), and AmSouth
Bancorporation, a Delaware corporation ("Issuer").
RECITALS
A. Merger Agreement. Grantee and Issuer have entered into an Agreement and
Plan of Merger, dated as of May 31, 1999 (the "Merger Agreement"), which
agreement was executed and delivered on the day preceding the date of this
Stock Option Agreement; and
B. Option. As a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option
(as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to an aggregate of
35,025,240 fully paid and nonassessable shares of the common stock, par value
$1.00 per share, of Issuer ("Common Stock") at a price per share equal to
$28.5983; provided, however, that in no event shall the number of shares for
which this Option is exercisable exceed 19.9% of the issued and outstanding
shares of Common Stock. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the
Option shall be increased so that, after such issuance, such number together
with any shares of Common Stock previously issued pursuant hereto, equals 19.9%
of the number of shares of Common Stock then issued and outstanding without
giving effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section l(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer to issue shares in breach of any provision of the Merger
Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in whole
or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2)
within six (6) months following such Subsequent Triggering Event (or such later
period as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Merger; (ii) termination of
the Merger Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Grantee pursuant to Section 8.01(b) of the Merger
Agreement (unless the breach by Issuer giving rise to such right of termination
is non-volitional) (a "Listed Termination"); or (iii) the passage of eighteen
(18) months (or such longer period as provided in Section 10) after termination
of the Merger Agreement if such termination follows the occurrence of an
Initial Triggering Event or is a Listed Termination. The term "Holder" shall
mean the holder or holders of the Option. Notwithstanding anything to the
contrary contained herein, the Option may not be exercised at any time when
Grantee shall be in material breach of any of its covenants or agreements
contained in the Merger Agreement such that Issuer shall be entitled to
terminate the Merger Agreement pursuant to Section 8.01(b) thereof.
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(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Significant Subsidiaries (as defined in Rule 1-
02 of Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC")) (the "Issuer Subsidiaries"), without having received Grantee's
prior written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the term
"person" for purposes of this Agreement having the meaning assigned thereto
in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or
the Board of Directors of Issuer (the "Issuer Board") shall have
recommended that the stockholders of Issuer approve or accept any
Acquisition Transaction other than as contemplated by the Merger Agreement.
For purposes of this Agreement, (a) "Acquisition Transaction" shall mean
(x) a merger or consolidation, or any similar transaction, involving Issuer
or any Issuer Subsidiary (other than mergers, consolidations or similar
transactions involving solely Issuer and/or one or more wholly-owned
Subsidiaries of the Issuer, provided, any such transaction is not entered
into in violation of the terms of the Merger Agreement), (y) a purchase,
lease or other acquisition of all or any substantial part of the assets or
deposits of Issuer or any Issuer Subsidiary, or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of
Issuer or any Issuer Subsidiary and (b) "Subsidiary" shall have the meaning
set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Common Stock (the
term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules
and regulations thereunder);
(iii) The stockholders of Issuer shall have voted and failed to approve
the Merger Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Merger Agreement or shall have
been canceled prior to termination of the Merger Agreement if, prior to
such meeting (or if such meeting shall not have been held or shall have
been canceled, prior to such termination), it shall have been publicly
announced that any person (other than Grantee or any of its Subsidiaries)
shall have made, or disclosed an intention to make, a proposal to engage in
an Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn, modified or qualified (or
publicly announced its intention to withdraw, modify or qualify) in any
manner adverse in any respect to Grantee its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement in anticipation of engaging in an Acquisition Transaction, or
Issuer or any Issuer Subsidiary shall have authorized, recommended,
proposed (or publicly announced its intention to authorize, recommend or
propose) an agreement to engage in an Acquisition Transaction with any
person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall have
filed with the SEC a registration statement or tender offer materials with
respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction (or filed a preliminary proxy statement with the
SEC with respect to a potential vote by its stockholders to approve the
issuance of shares to be offered in such an exchange offer);
(vi) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement after an overture is made by a third
party to Issuer or its stockholders to engage in an Acquisition
Transaction, and (a) following such breach Grantee would be entitled to
terminate the Merger Agreement (whether immediately or after the giving of
notice or passage of time or both) and (b) such breach shall not have been
cured prior to the Notice Date (as defined in Section 2(e)); or
(vii) Any person other than Grantee or any Grantee Subsidiary, without
Grantee's prior written consent, shall have filed an application or notice
with the Board of Governors of the Federal Reserve
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System (the "Federal Reserve Board") or other federal or state bank
regulatory or antitrust authority, which application or notice has been
accepted for processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in clause
(i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the Option
(or any portion thereof), 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 shares it will purchase pursuant to such exercise and (ii) a place
and date not earlier than three business days nor later than 60 business days
from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of the Federal Reserve
Board or any other regulatory or antitrust agency is required in connection
with such purchase, the Holder shall promptly file the required notice or
application for approval, shall promptly notify Issuer of such filing and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have
been obtained and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and
(ii) present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the
Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder hereof
and Issuer and to resale restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof without charge
upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an
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opinion of counsel, in form and substance reasonably satisfactory to Issuer, to
the effect that such legend is not required for purposes of the 1933 Act; (ii)
the reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference in the opinion of counsel to the Holder, in form and substance
reasonably satisfactory to the Issuer; and (iii) the legend shall be removed in
its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, 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, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any 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 an additional 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.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise
of the Option and the Option Price shall be subject to adjustment from time to
time as provided in this Section 5. In the event of any change in Common Stock
by reason of a stock dividend, stock split, split-up, recapitalization, stock
combination, exchange of shares or similar transaction, the type and
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number of shares or securities subject to the Option, and the Option 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 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 Common Stock are issued
after the date of this Agreement (other than pursuant to an event described in
the first sentence of this Section 5), the number of shares of Common Stock
subject to the Option shall be adjusted so that, after such issuance, it,
together with any shares of Common Stock previously issued pursuant hereto,
equals 19.9% of the number of shares of Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior to
an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six (6) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep
current a registration statement under the 1933 Act covering any shares issued
and issuable pursuant to this Option and shall use its reasonable best efforts
to cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations.
The Issuer shall bear the costs of such registrations (including, but not
limited to, Issuer's attorneys' fees, printing costs and filing fees, except
for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or,
if none, the sole underwriter or underwriters, of such offering the offer and
sale of the Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 33 1/3% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter
be entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to twenty-
four (24) months. Each such Holder shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating
itself in respect of representations, warranties, indemnities and other
agreements customarily included in such underwriting agreements for Issuer.
Upon receiving any request under this Section 6 from any Holder, Issuer agrees
to send a copy thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall the number of registrations that Issuer is obligated to
effect be increased by reason of the fact that there shall be more than one
Holder as a result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase
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Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which this Option may then be exercised and (ii) at the request of the owner of
Option Shares from time to time (the "Owner"), delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase such number of the Option Shares from
the Owner as the Owner shall designate at a price (the "Option Share Repurchase
Price") equal to the market/offer price multiplied by the number of Option
Shares so designated. The term "market/offer price" shall mean the highest of
(i) the price per share of Common Stock at which a tender or exchange offer
therefor has been made, (ii) the price per share of Common Stock to be paid by
any third party pursuant to an agreement with Issuer, (iii) the highest closing
price for shares of Common Stock within the six-month period immediately
preceding the date the Holder gives notice of the required repurchase of this
Option or the Owner gives notice of the required repurchase of Option Shares,
as the case may be, or (iv) in the event of a sale of all or any substantial
part of Issuer's assets or deposits, the sum of the net price paid in such sale
for such assets or deposits and the current market value of the remaining net
assets of Issuer as determined by a nationally recognized investment banking
firm selected by the Holder or the Owner, as the case may be, and reasonably
acceptable to Issuer, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the market/offer price,
the value of consideration other than cash shall be determined by a nationally
recognized investment banking firm selected by the Holder or Owner, as the case
may be, and reasonably acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office,
a copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the
Owner, as the case may be, elects to require Issuer to repurchase this Option
and/or the Option Shares in accordance with the provisions of this Section 7.
The Holder shall also represent and warrant that it has sole record and
beneficial ownership of such Option Shares and that such Option Shares are then
free and clear of all liens. As promptly as practicable, and in any event
within five (5) business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto, Issuer shall deliver or cause to be delivered to the
Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of
the Option Repurchase Price and the Option Share Repurchase Price,
respectively, that it is no longer prohibited from delivering, within five (5)
business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 7 is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from delivering to the Holder and/or the Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price, respectively, in full
(and Issuer hereby undertakes to use its reasonable best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), the Holder or
Owner may revoke its notice of repurchase of the Option and/or the Option
Shares whether in whole or to the extent of the prohibition, whereupon, in the
latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner,
as appropriate, that portion of the Option Repurchase Price and/or the Option
Share Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Agreement evidencing
the right of the Holder to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the
denominator of which is the Option Repurchase Price, and/or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from repurchasing.
If an Exercise Termination Event shall have occurred prior to the date of the
notice by Issuer described in the first sentence of this subsection (c), or
shall be scheduled to occur at any time
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before the expiration of a period ending on the thirtieth day after such date,
the Holder shall nonetheless have the right to exercise the Option until the
expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of (A) beneficial ownership of 50% or more of the then
outstanding Common Stock or (B) beneficial ownership of 20% or more of the
then outstanding Common Stock if Issuer shall have violated Section 6.15 of
the Merger Agreement; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 25%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange
with any person, other than Grantee or a Grantee Subsidiary and Issuer shall
not be the continuing or surviving corporation of such consolidation or merger
or the acquirer in such plan of exchange, (ii) to permit any person, other than
Grantee or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer
in a plan of exchange and Issuer shall be the continuing or surviving or
acquiring corporation, but, in connection with such merger or plan of exchange,
the then outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other person or cash or any other property
or the then outstanding shares of Common Stock shall after such merger or plan
of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or any Issuer Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, 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
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
person of a consolidation or merger with Issuer (if other than Issuer),
(ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer
is the continuing or surviving or acquiring person and (iv) the transferee
of all or a substantial part of Issuer's assets or deposits (or the assets
or deposits of any Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the market/offer price, as defined in
Section 7.
(iv) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for one (1) year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of 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 the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(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 the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect
for such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
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(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "Substitute
Option Issuer") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied
by the number of shares of Substitute Common Stock for which the Substitute
Option may then be exercised, and at the request of the owner (the "Substitute
Share Owner") of shares of Substitute Common Stock (the "Substitute Shares"),
the Substitute Option Issuer shall repurchase the Substitute Shares at a price
(the "Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the case
may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant
to this Section 9 by surrendering for such purpose to the Substitute Option
Issuer, at its principal office, the agreement for such Substitute Option (or,
in the absence of such an agreement, a copy of this Agreement) and/or
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable and in any event
within five (5) business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from repurchasing the Substitute Option and/or the Substitute Shares in part or
in full, the Substitute Option Issuer shall immediately so notify the
Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute
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Option Holder and/or the Substitute Share Owner, as appropriate, the portion of
the Substitute Option Repurchase Price and/or the Substitute Share Repurchase
Price, respectively, which it is no longer prohibited from delivering, within
five (5) business days after the date on which the Substitute Option Issuer is
no longer so prohibited; provided, however, that if the Substitute Option
Issuer is at any time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable law or regulation,
or as a consequence of administrative policy, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price,
respectively, in full (and the Substitute Option Issuer shall use its
reasonable best efforts to receive all required regulatory and legal approvals
as promptly as practicable in order to accomplish such repurchase), the
Substitute Option Holder and/or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either in whole or
to the extent of prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly (i) deliver to the Substitute Option Holder or
Substitute Share Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that the Substitute
Option Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Substitute Option Holder, a new Substitute
Option evidencing the right of the Substitute Option Holder to purchase that
number of shares of the Substitute Common Stock obtained by multiplying the
number of shares of the Substitute Common Stock for which the surrendered
Substitute Option was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Substitute Option
Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the
expiration of a period ending on the thirtieth day after such date, the
Substitute Option Holder shall nevertheless have the right to exercise the
Substitute Option until the expiration of such 30-day period.
10. The periods for exercise of certain rights under Sections 2, 6, 7, 9 and
14 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights (for so long as the Holder, Owner,
Substitute Option Holder or Substitute Share Owner, as the case may be, is
using commercially reasonable efforts to obtain such regulatory approvals), and
for the expiration of all statutory waiting periods; (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason of
such exercise; and (iii) when there exists an injunction, order or judgment
that prohibits or delays exercise of such right.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Issuer Board prior to the date hereof and no other
corporate proceedings on the part of Issuer are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by Issuer.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant thereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrance and security interests and not subject to
any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer as follows: Grantee has
the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Grantee and the performance of its obligations
hereunder by the Grantee
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have been duly and validly authorized by the Board of Directors of Grantee and
no other corporate proceedings on the part of the Grantee are necessary to
authorize this Agreement or for Grantee to perform its obligations hereunder.
This Agreement has been duly and validly executed and delivered by Grantee.
(c) 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 or except in a transaction registered or exempt from
registration under the 1933 Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may
assign in whole or in part its rights and obligations hereunder; provided,
however, that until the date fifteen (15) days following the date on which the
Federal Reserve Board has approved an application by Grantee to acquire the
shares of Common Stock subject to the Option, Grantee may not assign its rights
under the Option except in (i) a widely dispersed public distribution, (ii) a
private placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of Issuer, (iii) an assignment to a single
party (e.g., a broker or investment banker) for the purpose of conducting a
widely dispersed public distribution on Grantee's behalf or (iv) any other
manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use its reasonable best efforts to make
all filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the Federal Reserve
Board under the BHCA for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder until such
time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price. The "Surrender Price" shall be equal to $225 million
(i) plus, if applicable, Grantee's purchase price with respect to any Option
Shares and (ii) minus, if applicable, the excess of (A) the net price, if any,
received by Grantee or a Grantee Subsidiary pursuant to the sale of Option
Shares (or any other securities into which such Option Shares were converted or
exchanged) to any unaffiliated party, over (B) Grantee's purchase price of such
Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second
business day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five (5) business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall
(A) use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five (5) days of the submission or receipt of
any documents relating to any such regulatory and legal approvals, provide
Grantee with copies of
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the same and (c) keep Grantee advised of both the status of any such request
for regulatory and legal approvals, as well as any discussions with any
relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the
Exercise Termination Date shall be extended to a date six (6) months from the
date on which the Exercise Termination Date would have occurred if not for the
provisions of this Section 14(c) (during which period Grantee may exercise any
of its rights hereunder, including any and all rights pursuant to this Section
14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith, both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in 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 Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section l(a) hereof (as adjusted pursuant to Section
l(b) or Section 5 hereof), it is the express intention of Issuer to allow the
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, 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.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assignees. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assignees, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
AMSOUTH BANCORPORATION
By: /s/ Stephen A. Yoder
_________________________________
Name: Stephen A. Yoder
Title: Executive Vice President
and General Counsel
FIRST AMERICAN CORPORATION
By: /s/ Dennis C. Bottorff
_________________________________
Name: Dennis C. Bottorff
Title: Chairman and Chief
Executive Officer
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APPENDIX C
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 1, 1999 (this "Agreement"), between
AmSouth Bancorporation, a Delaware corporation ("Grantee"), and First American
Corporation, a Tennessee corporation ("Issuer").
RECITALS
A. Merger Agreement. Grantee and Issuer have entered into an Agreement and
Plan of Merger, dated as of May 31, 1999 (the "Merger Agreement"), which
agreement was executed and delivered on the day preceding the date of this
Stock Option Agreement; and
B. Option. As a condition to Grantee's entering into the Merger Agreement and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to an aggregate of
23,250,165 fully paid and nonassessable shares of the common stock, par value
$2.50 per share, of Issuer ("Common Stock") at a price per share equal to
$40.1625; provided, however, that in no event shall the number of shares for
which this Option is exercisable exceed 19.9% of the issued and outstanding
shares of Common Stock. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the
Option shall be increased so that, after such issuance, such number together
with any shares of Common Stock previously issued pursuant hereto, equals 19.9%
of the number of shares of Common Stock then issued and outstanding without
giving effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section l(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer to issue shares in breach of any provision of the Merger
Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in whole
or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2)
within six (6) months following such Subsequent Triggering Event (or such later
period as provided in Section 10). Each of the following shall be an Exercise
Termination Event: (i) the Effective Time of the Merger; (ii) termination of
the Merger Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Grantee pursuant to Section 8.01(b) of the Merger
Agreement (unless the breach by Issuer giving rise to such right of termination
is non-volitional) (a "Listed Termination"); or (iii) the passage of eighteen
(18) months (or such longer period as provided in Section 10) after termination
of the Merger Agreement if such termination follows the occurrence of an
Initial Triggering Event or is a Listed Termination. The term "Holder" shall
mean the holder or holders of the Option. Notwithstanding anything to the
contrary contained herein, the Option may not be exercised at any time when
Grantee shall be in material breach of any of its covenants or agreements
contained in the Merger Agreement such that Issuer shall be entitled to
terminate the Merger Agreement pursuant to Section 8.01(b) thereof.
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(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC")) (the "Issuer Subsidiaries"), without having received Grantee's
prior written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as hereinafter defined) with any person (the term
"person" for purposes of this Agreement having the meaning assigned thereto
in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or
the Board of Directors of Issuer (the "Issuer Board") shall have
recommended that the stockholders of Issuer approve or accept any
Acquisition Transaction other than as contemplated by the Merger Agreement.
For purposes of this Agreement, (a) "Acquisition Transaction" shall mean
(x) a merger or consolidation, or any similar transaction, involving Issuer
or any Issuer Subsidiary (other than mergers, consolidations or similar
transactions involving solely Issuer and/or one or more wholly-owned
Subsidiaries of the Issuer, provided, any such transaction is not entered
into in violation of the terms of the Merger Agreement), (y) a purchase,
lease or other acquisition of all or any substantial part of the assets or
deposits of Issuer or any Issuer Subsidiary, or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of
Issuer or any Issuer Subsidiary and (b) "Subsidiary" shall have the meaning
set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person other than the Grantee or any Grantee Subsidiary shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Common Stock (the
term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules
and regulations thereunder);
(iii) The stockholders of Issuer shall have voted and failed to approve
the Merger Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Merger Agreement or shall have
been canceled prior to termination of the Merger Agreement if, prior to
such meeting (or if such meeting shall not have been held or shall have
been canceled, prior to such termination), it shall have been publicly
announced that any person (other than Grantee or any of its Subsidiaries)
shall have made, or disclosed an intention to make, a proposal to engage in
an Acquisition Transaction;
(iv) The Issuer Board shall have withdrawn, modified or qualified (or
publicly announced its intention to withdraw, modify or qualify) in any
manner adverse in any respect to Grantee its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement in anticipation of engaging in an Acquisition Transaction, or
Issuer or any Issuer Subsidiary shall have authorized, recommended,
proposed (or publicly announced its intention to authorize, recommend or
propose) an agreement to engage in an Acquisition Transaction with any
person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or any Grantee Subsidiary shall have
filed with the SEC a registration statement or tender offer materials with
respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction (or filed a preliminary proxy statement with the
SEC with respect to a potential vote by its stockholders to approve the
issuance of shares to be offered in such an exchange offer);
(vi) Issuer shall have willfully breached any covenant or obligation
contained in the Merger Agreement after an overture is made by a third
party to Issuer or its stockholders to engage in an Acquisition
Transaction, and (a) following such breach Grantee would be entitled to
terminate the Merger Agreement (whether immediately or after the giving of
notice or passage of time or both) and (b) such breach shall not have been
cured prior to the Notice Date (as defined in Section 2(e)); or
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(vii) Any person other than Grantee or any Grantee Subsidiary, without
Grantee's prior written consent, shall have filed an application or notice
with the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other federal or state bank regulatory or antitrust
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in clause
(i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the Option
(or any portion thereof), 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 shares it will purchase pursuant to such exercise and (ii) a place
and date not earlier than three business days nor later than 60 business days
from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of the Federal Reserve
Board or any other regulatory or antitrust agency is required in connection
with such purchase, the Holder shall promptly file the required notice or
application for approval, shall promptly notify Issuer of such filing and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have
been obtained and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and
(ii) present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the
Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder hereof
and Issuer and to resale restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof without charge
upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without
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such reference if the Holder 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, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions of
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the
opinion of counsel to the Holder, in form and substance reasonably satisfactory
to the Issuer; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, 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, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any 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 an additional 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.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise
of the Option and the Option Price shall be subject to adjustment from time to
time as provided in this Section 5. In the event of any change in Common Stock
by reason of a stock dividend,
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stock split, split-up, recapitalization, stock combination, exchange of shares
or similar transaction, the type and number of shares or securities subject to
the Option, and the Option 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 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 Common Stock are issued after the date of this Agreement (other than
pursuant to an event described in the first sentence of this Section 5), the
number of shares of Common Stock subject to the Option shall be adjusted so
that, after such issuance, it, together with any shares of Common Stock
previously issued pursuant hereto, equals 19.9% of the number of shares of
Common Stock then issued and outstanding, without giving effect to any shares
subject to or issued pursuant to the Option.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior to
an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six (6) months (or such later period as provided in Section
10) of such Subsequent Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep
current a registration statement under the 1933 Act covering any shares issued
and issuable pursuant to this Option and shall use its reasonable best efforts
to cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of any shares of Common Stock
issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations.
The Issuer shall bear the costs of such registrations (including, but not
limited to, Issuer's attorneys' fees, printing costs and filing fees, except
for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or,
if none, the sole underwriter or underwriters, of such offering the offer and
sale of the Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 33 1/3% of the total number of shares to be sold by the
Holder and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter
be entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to twenty-
four (24) months. Each such Holder shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating
itself in respect of representations, warranties, indemnities and other
agreements customarily included in such underwriting agreements for Issuer.
Upon receiving any request under this Section 6 from any Holder, Issuer agrees
to send a copy thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall the number of registrations that Issuer is obligated to
effect be increased by reason of the fact that there shall be more than one
Holder as a result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer
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(or any successor thereto) shall repurchase the Option from the Holder at a
price (the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase
such number of the Option Shares from the Owner as the Owner shall designate at
a price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term "market/offer
price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an agreement
with Issuer, (iii) the highest closing price for shares of Common Stock within
the six-month period immediately preceding the date the Holder gives notice of
the required repurchase of this Option or the Owner gives notice of the
required repurchase of Option Shares, as the case may be, or (iv) in the event
of a sale of all or any substantial part of Issuer's assets or deposits, the
sum of the net price paid in such sale for such assets or deposits and the
current market value of the remaining net assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to Issuer, divided by the
number of shares of Common Stock of Issuer outstanding at the time of such
sale. In determining the market/offer price, the value of consideration other
than cash shall be determined by a nationally recognized investment banking
firm selected by the Holder or Owner, as the case may be, and reasonably
acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office,
a copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the
Owner, as the case may be, elects to require Issuer to repurchase this Option
and/or the Option Shares in accordance with the provisions of this Section 7.
The Holder shall also represent and warrant that it has sole record and
beneficial ownership of such Option Shares and that such Option Shares are then
free and clear of all liens. As promptly as practicable, and in any event
within five (5) business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto, Issuer shall deliver or cause to be delivered to the
Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of
the Option Repurchase Price and the Option Share Repurchase Price,
respectively, that it is no longer prohibited from delivering, within five (5)
business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 7 is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from delivering to the Holder and/or the Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price, respectively, in full
(and Issuer hereby undertakes to use its reasonable best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish such repurchase), the Holder or
Owner may revoke its notice of repurchase of the Option and/or the Option
Shares whether in whole or to the extent of the prohibition, whereupon, in the
latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner,
as appropriate, that portion of the Option Repurchase Price and/or the Option
Share Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Agreement evidencing
the right of the Holder to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the
denominator of which is the Option Repurchase Price, and/or (B) to the Owner, a
certificate for the Option Shares it is then so
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prohibited from repurchasing. If an Exercise Termination Event shall have
occurred prior to the date of the notice by Issuer described in the first
sentence of this subsection (c), or shall be scheduled to occur at any time
before the expiration of a period ending on the thirtieth day after such date,
the Holder shall nonetheless have the right to exercise the Option until the
expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed to
have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of (A) beneficial ownership of 50% or more of the then
outstanding Common Stock or (B) beneficial ownership of 20% or more of the
then outstanding Common Stock if Issuer shall have violated Section 6.15 of
the Merger Agreement; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause
(z) shall be 25%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange
with any person, other than Grantee or a Grantee Subsidiary and Issuer shall
not be the continuing or surviving corporation of such consolidation or merger
or the acquirer in such plan of exchange, (ii) to permit any person, other than
Grantee or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer
in a plan of exchange and Issuer shall be the continuing or surviving or
acquiring corporation, but, in connection with such merger or plan of exchange,
the then outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other person or cash or any other property
or the then outstanding shares of Common Stock shall after such merger or plan
of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or any Issuer Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, 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
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or surviving
person of a consolidation or merger with Issuer (if other than Issuer),
(ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer
is the continuing or surviving or acquiring person and (iv) the transferee
of all or a substantial part of Issuer's assets or deposits (or the assets
or deposits of any Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for one (1) year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of 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 the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(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 the Holder. The issuer of the Substitute Option shall also
enter
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into an agreement with the then Holder or Holders of the Substitute Option in
substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "Substitute
Option Issuer") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied
by the number of shares of Substitute Common Stock for which the Substitute
Option may then be exercised, and at the request of the owner (the "Substitute
Share Owner") of shares of Substitute Common Stock (the "Substitute Shares"),
the Substitute Option Issuer shall repurchase the Substitute Shares at a price
(the "Substitute Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the case
may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant
to this Section 9 by surrendering for such purpose to the Substitute Option
Issuer, at its principal office, the agreement for such Substitute Option (or,
in the absence of such an agreement, a copy of this Agreement) and/or
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable and in any event
within five (5) business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
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(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy,
from repurchasing the Substitute Option and/or the Substitute Shares in part or
in full, the Substitute Option Issuer shall immediately so notify the
Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Option Repurchase Price and/or the Substitute Share Repurchase
Price, respectively, which it is no longer prohibited from delivering, within
five (5) business days after the date on which the Substitute Option Issuer is
no longer so prohibited; provided, however, that if the Substitute Option
Issuer is at any time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable law or regulation,
or as a consequence of administrative policy, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price,
respectively, in full (and the Substitute Option Issuer shall use its
reasonable best efforts to receive all required regulatory and legal approvals
as promptly as practicable in order to accomplish such repurchase), the
Substitute Option Holder and/or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either in whole or
to the extent of prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly (i) deliver to the Substitute Option Holder or
Substitute Share Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that the Substitute
Option Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Substitute Option Holder, a new Substitute
Option evidencing the right of the Substitute Option Holder to purchase that
number of shares of the Substitute Common Stock obtained by multiplying the
number of shares of the Substitute Common Stock for which the surrendered
Substitute Option was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Substitute Option
Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the
expiration of a period ending on the thirtieth day after such date, the
Substitute Option Holder shall nevertheless have the right to exercise the
Substitute Option until the expiration of such 30-day period.
10. The periods for exercise of certain rights under Sections 2, 6, 7, 9 and
14 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights (for so long as the Holder, Owner,
Substitute Option Holder or Substitute Share Owner, as the case may be, is
using commercially reasonable efforts to obtain such regulatory approvals), and
for the expiration of all statutory waiting periods; (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason of
such exercise; and (iii) when there exists an injunction, order or judgment
that prohibits or delays exercise of such right.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Issuer Board prior to the date hereof and no other
corporate proceedings on the part of Issuer are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by Issuer.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant thereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrance and security interests and not subject to
any preemptive rights.
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(b) Grantee hereby represents and warrants to Issuer as follows: Grantee has
the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Grantee and the performance of its obligations
hereunder by the Grantee have been duly and validly authorized by the Board of
Directors of Grantee and no other corporate proceedings on the part of the
Grantee are necessary to authorize this Agreement or for Grantee to perform its
obligations hereunder. This Agreement has been duly and validly executed and
delivered by Grantee.
(c) 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 or except in a transaction registered or exempt from
registration under the 1933 Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may
assign in whole or in part its rights and obligations hereunder; provided,
however, that until the date fifteen (15) days following the date on which the
Federal Reserve Board has approved an application by Grantee to acquire the
shares of Common Stock subject to the Option, Grantee may not assign its rights
under the Option except in (i) a widely dispersed public distribution, (ii) a
private placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of Issuer, (iii) an assignment to a single
party (e.g., a broker or investment banker) for the purpose of conducting a
widely dispersed public distribution on Grantee's behalf or (iv) any other
manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use its reasonable best efforts to make
all filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the Federal Reserve
Board under the BHCA for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder until such
time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the Surrender Price. The "Surrender Price" shall be equal to $225 million
(i) plus, if applicable, Grantee's purchase price with respect to any Option
Shares and (ii) minus, if applicable, the excess of (A) the net price, if any,
received by Grantee or a Grantee Subsidiary pursuant to the sale of Option
Shares (or any other securities into which such Option Shares were converted or
exchanged) to any unaffiliated party, over (B) Grantee's purchase price of such
Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second
business day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five (5) business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall
(A)
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use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five (5) days of the submission or receipt of
any documents relating to any such regulatory and legal approvals, provide
Grantee with copies of the same and (c) keep Grantee advised of both the status
of any such request for regulatory and legal approvals, as well as any
discussions with any relevant regulatory or other third party reasonably
related to the same and (ii) Grantee may revoke such notice of surrender by
delivery of a notice of revocation to Issuer and, upon delivery of such notice
of revocation, the Exercise Termination Date shall be extended to a date six
(6) months from the date on which the Exercise Termination Date would have
occurred if not for the provisions of this Section 14(c) (during which period
Grantee may exercise any of its rights hereunder, including any and all rights
pursuant to this Section 14).
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith, both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in 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 Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section l(a) hereof (as adjusted pursuant to Section
l(b) or Section 5 hereof), it is the express intention of Issuer to allow the
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, 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.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assignees. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assignees, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
C-11
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
AMSOUTH BANCORPORATION
By /s/ Stephen A. Yoder
_______________________________
Name: Stephen A. Yoder
Title: Executive Vice President
and General Counsel
FIRST AMERICAN CORPORATION
By /s/ Dennis C. Bottorff
_______________________________
Name: Dennis C. Bottorff
Title: Chairman and Chief
Executive Officer
C-12
<PAGE>
APPENDIX D
[MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED LETTERHEAD]
August 13, 1999
Board of Directors
First American Corporation
300 Union Street
Nashville, TN 37237
Members of the Board:
We understand that First American Corporation ("First American") and AmSouth
Bancorporation ("AmSouth") have entered into an Agreement and Plan of Merger,
dated as of May 31, 1999 (the "Agreement"), pursuant to which First American is
to be merged with and into AmSouth, with AmSouth being the surviving
corporation in the transaction (the "Merger"). Pursuant to the Merger, and as
set forth more fully in the Agreement, upon the merger of First American and
AmSouth, each outstanding share of First American common stock, par value $2.50
per share (the "First American Shares"), other than certain excluded shares,
will be converted into the right to receive 1.871 shares (the "Exchange Ratio")
of the common stock, par value $1.00 per share, of AmSouth (the "AmSouth
Shares").
You have asked us whether, in our opinion, the Exchange Ratio is fair from a
financial point of view to the shareholders of First American.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial
information relating to First American and AmSouth that we deemed to be
relevant;
(2) Reviewed certain information, including financial forecasts,
relating to the respective businesses, earnings, assets, liabilities and
prospects of First American and AmSouth furnished to us by senior
management of First American and AmSouth, as well as the amount and timing
of the cost savings, revenue enhancements and related expenses expected to
result from the Merger (the "Expected Synergies") furnished to us by senior
management of AmSouth;
(3) Conducted discussions with members of senior management and
representatives of First American and AmSouth concerning the matters
described in clauses (1) and (2) above, as well as their respective
businesses and prospects before and after giving effect to the Merger and
the Expected Synergies;
(4) Reviewed the market prices and valuation multiples for the First
American Shares and the AmSouth Shares and compared them with those of
certain publicly traded companies that we deemed to be relevant;
D-1
<PAGE>
(5) Reviewed the respective publicly reported financial conditions and
results of operations of First American and AmSouth and compared them with
those of certain publicly traded companies that we deemed to be relevant;
(6) Compared the proposed financial terms of the Merger with the
financial terms of certain other transactions that we deemed to be
relevant;
(7) Participated in certain discussions and negotiations among
representatives of First American and AmSouth and their financial and legal
advisors with respect to the Merger;
(8) Reviewed the potential pro forma impact of the Merger;
(9) Reviewed the Agreement and the related stock option agreements; and
(10) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our assessment
of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of the assets or liabilities
of First American or AmSouth or been furnished with any such evaluation or
appraisal. We are not experts in the evaluation of allowances for loan losses,
and we have neither made an independent evaluation of the adequacy of the
allowances for loan losses of First American or AmSouth, nor have we reviewed
any individual credit files of First American or AmSouth or been requested to
conduct such a review, and, as a result, we have assumed that the respective
allowances for loan losses for First American and AmSouth are adequate to cover
such losses and will be adequate on a pro forma basis for the combined entity.
In addition, we have not assumed any obligation to conduct, nor have we
conducted, any physical inspection of the properties or facilities of First
American or AmSouth. With respect to the financial and operating forecast
information and the Expected Synergies furnished to or discussed with us by
First American and AmSouth, we have assumed that they have been reasonably
prepared and reflect the best currently available estimates and judgments of
the senior management of First American and AmSouth as to the future financial
and operating performance of First American, AmSouth or the combined entity, as
the case may be, and the Expected Synergies. We have further assumed that the
Merger will be accounted for as a pooling-of-interests under generally
accounting principles and that it will qualify as a tax-free reorganization for
U.S. federal income tax purposes.
Our opinion is necessarily based upon market, economic and other conditions
as in effect, and on the information made available to us as of the date
hereof. For the purposes of rendering this opinion, we have assumed that the
Merger will be consummated substantially in accordance with the terms set forth
in the Agreement, including in all respects material to our analysis, that the
representations and warranties of each party in the Agreement and in all
related documents and instruments (collectively, the "Documents") that are
referred to therein are true and correct, that each party to the Documents will
perform all of the covenants and agreements required to be performed by such
party under such Documents, and that all conditions to the consummation of the
Merger will be satisfied without waiver thereof, and that the Merger is in fact
consummated pursuant to the terms of the Agreement. We have also assumed that,
in the course of obtaining the necessary regulatory or other consents or
approvals (contractual or otherwise) for the Merger, no restrictions, including
any divestiture requirements or amendment or modifications, will be imposed
that will have a material adverse effect on the future results of operations or
financial condition of the combined entity or on the contemplated benefits of
the Merger, including the Expected Synergies.
We have been retained by the Board of Directors of First American to act as
financial advisor to First American in connection with the Merger and will
receive a fee for our services, a significant portion of which is contingent
upon the consummation of the Merger. In addition, First American has agreed to
indemnify us for certain liabilities arising out of our engagement. We have in
the past two years provided financial advisory,
D-2
<PAGE>
investment banking and other services to First American and AmSouth and have
received fees for the rendering of such services and may continue to provide
such services in the future. In addition, in the ordinary course of our
business, we may actively trade the First American Shares and other securities
of First American and its affiliates and the AmSouth Shares and other
securities of AmSouth and its affiliates for our own account and for the
accounts of our customers, and, accordingly, may at any time hold a long or
short position in such securities.
This opinion is for the sole and exclusive use and benefit of the Board of
Directors of First American. It is further understood that this opinion will
not be reproduced, summarized, described or referred to or given to any person
without Merrill Lynch's prior written consent. Our opinion does not address the
merits of the underlying decision by First American to engage in the Merger and
does not constitute a recommendation to any shareholder of First American as to
how such shareholder should vote on the proposed Merger or any other matter
related thereto.
We have not considered, nor are we expressing any opinion herein with
respect to, the prices at which First American Shares or AmSouth Shares will
trade following the announcement of the Merger or the price at which AmSouth
Shares will trade following the consummation of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that, as
of the date hereof, the Exchange Ratio is fair, from a financial point of view,
to the shareholders of First American.
Very truly yours,
/s/ Merrill Lynch, Pierce, Fenner &
Smith Incorporated
_____________________________________
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
D-3
<PAGE>
APPENDIX E
[DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION LETTERHEAD]
August 13, 1999
Board of Directors
AmSouth Bancorporation
AmSouth-Sonat Tower
1900 Fifth Avenue North
Birmingham, AL 35203
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to AmSouth Bancorporation ("AmSouth" or the "Company") and the holders of
common stock, $1.00 par value per share ("Company Common Stock") of AmSouth of
the exchange ratio (as defined below) pursuant to the terms of the Agreement
and Plan of Merger, dated as of May 31, 1999 (the "Agreement"), between First
American Corporation ("First American"), the Company and a wholly-owned
subsidiary of the Company ("Merger Sub") pursuant to which Merger Sub will be
merged (the "Merger") with and into First American.
Pursuant to the Agreement, each share of common stock of First American will
be converted into the right to receive 1.871 shares (the "Exchange Ratio") of
common stock, $1.00 par value per share of the Company.
In arriving at our opinion, we have reviewed the Agreement. We also have
reviewed financial and other information that was publicly available or
furnished to us by the Company and First American including First Call earnings
estimates and information provided during discussions with their respective
managements. Included in the information provided during discussions with the
respective managements were certain assumptions with respect to financial
projections of the Company and First American, including certain cost savings
and operating synergies, and the impact of certain business divestitures,
anticipated by the management of the Company and First American to result from
the merger. In addition, we have compared certain financial and securities data
of the Company and First American with various other companies whose securities
are traded in public markets, reviewed the historical stock prices and trading
volumes of the common stock of the Company and First American, reviewed prices
and premiums paid in certain other business combinations and conducted such
other financial studies, analyses and investigations as we deemed appropriate
for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to us from public sources, that was provided to us by the Company and First
American or their respective representatives, or that was otherwise reviewed by
us in connection with this opinion and have assumed that the Company is not
aware of any information prepared by it or its other representatives that might
be material to our opinion that has not been made available to us. In
particular, we have relied upon the estimates of the management of the Company
of the cost savings and operating synergies achievable as a result of the
Merger and the impact of anticipated business divestitures and upon our
discussion of such cost savings, operating synergies and divestitures with the
management of First American. With respect to the financial projections
(including cost savings and operating synergies and the impact of divestitures)
reviewed by us, we have assumed that they have been reasonably prepared and do
not materially differ from the best currently available estimates and judgments
of the management of the Company and First American as to the future operating
and financial performance of AmSouth, First American and the combined company,
respectively. We are not experts in the evaluation of loan and lease portfolios
for purposes of assessing the adequacy of the allowances for losses with
respect thereto and have assumed, with your consent, that such allowances for
each of the Company and First American are in the aggregate adequate to cover
all 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 (including any hedge or derivative positions) of the Company or
First American or any of their subsidiaries and we have not been furnished with
any such evaluation or appraisal. We have not assumed any responsibility for
making any independent evaluation of any
E-1
<PAGE>
assets or liabilities or for making any independent verification of any of the
information reviewed by us. We have assumed that the Merger will qualify as a
pooling of interests transaction under generally accepted
accounting principles. We have also assumed that the transaction will qualify
as a tax-free reorganization for United States federal income tax purposes and
that all material governmental, regulatory or other consents and approvals
necessary for the consummation of the Merger will be obtained without any
material adverse effect, other than the impact of the anticipated divestitures,
on the anticipated benefits of the Merger. We have relied as to certain legal
matters on advice of counsel to the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
prices at which the Company Common Stock or the First American Common Stock
will actually trade at any time. Our opinion does not address the relative
merits of the Merger and the other business strategies being considered by the
Company's Board of Directors, nor does it address the Board's decision to
proceed with the Merger. Our opinion does not constitute a recommendation to
any stockholder as to how such stockholder should vote on the proposed
transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. In the
ordinary course of our business, we and our affiliates actively trade the
securities of the Company and First American for our own account and for
accounts of our customers, and, accordingly, may at any time hold a long or
short position in such securities. DLJ has performed investment banking and
other services for the Company in the past and has been compensated for such
services.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Exchange Ratio is fair from a financial point of view
to the Company and the holders of Common Stock.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
/s/ Gerard L. Smith
By: ______________________________
Gerard L. Smith
Managing Director
E-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
Item 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent not more than a 20 percent change in the maximum offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered here, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The registrant undertakes that every prospectus: (i) that is filed pursuant
to paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 145, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the proxy statement pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt
II-1
<PAGE>
means. This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
AmSouth Bancorporation, certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-4 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Birmingham, State of
Alabama, on August 13, 1999.
AmSouth Bancorporation
By: /s/ C. Dowd Ritter
____________________________________
Name: C. Dowd Ritter
Title: Chairman of the Board,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated as of August 13, 1999.
Signatures Title
/s/ C. Dowd Ritter Chairman of the Board, President and
_____________________________________ Chief Executive Officer
(C. Dowd Ritter)
/s/ Sloan D. Gibson Senior Executive Vice President and
_____________________________________ Chief Financial Officer (Principal
(Sloan D. Gibson) Financial Officer)
/s/ Robert R. Windelspecht Executive Vice President and
_____________________________________ Controller (Principal Accounting
(Robert R. Windelspecht) Officer)
/s/ J. Harold Chandler* A Director
_____________________________________
(J. Harold Chandler)
/s/ James E. Dalton, Jr.* A Director
_____________________________________
(James E. Dalton, Jr.)
/s/ Rodney C. Gilbert* A Director
_____________________________________
(Rodney C. Gilbert)
/s/ Elmer B. Harris* A Director
_____________________________________
(Elmer B. Harris)
<PAGE>
Signatures Title
/s/ Victoria B. Jackson* A Director
- -------------------------------------
(Victoria B. Jackson)
/s/ Ronald L. Kuehn, Jr.* A Director
- -------------------------------------
(Ronald L. Kuehn, Jr.)
/s/ James R. Malone* A Director
- -------------------------------------
(James R. Malone)
/s/ Francis A. Newman* A Director
- -------------------------------------
(Francis A. Newman)
/s/ Claude B. Nielsen* A Director
- -------------------------------------
(Claude B. Nielsen)
/s/ Benjamin F. Payton* A Director
- -------------------------------------
(Benjamin F. Payton)
/s/ Herbert A. Sklenar* A Director
- -------------------------------------
(Herbert A. Sklenar)
/s/ Carl L. Gorday
* By: _______________________________
(Carl L. Gorday)
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of May 31, 1999, among AmSouth
Bancorporation, First American Corporation and Alpha/Foxtrot
Acquisition Corp, included as Appendix A to the accompanying Proxy
Statement/Prospectus.
2.2 AmSouth Stock Option Agreement, dated as of June 1, 1999, between
AmSouth Bancorporation and First American Corporation, included as
Appendix B to the accompanying Proxy Statement/Prospectus.
2.3 First American Stock Option Agreement, dated as of June 1, 1999,
between AmSouth Bancorporation and First American Corporation, included
as Appendix C to the Proxy Statement/Prospectus.
3 Form of Amendment to the AmSouth certificate of incorporation with
respect to authorized capital stock.
5 Opinion of Sullivan & Cromwell, dated as of August 13, 1999, regarding
the legality of shares of AmSouth Common Stock.
8.1 Opinion of Sullivan & Cromwell, dated as of August 13, 1999, regarding
certain federal income tax matters.
8.2 Opinion of Wachtell, Lipton, Rosen & Katz, dated as of August 13, 1999,
regarding certain federal income tax matters.
10.1 Employment Agreement between AmSouth and Dennis C. Bottorff, dated as
of May 31, 1999.
15.1 Letter of Ernst & Young LLP regarding unaudited interim financial
information of AmSouth.
15.2 Letter of KPMG regarding unaudited interim financial information of
First American.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG.
23.3 Consent of Dennis C. Bottorff.
23.4 Consent of Sullivan & Cromwell (included in Exhibit 8.1).
23.5 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.2).
24 Powers of Attorney.
99.1 Consent of Donaldson, Lufkin & Jenrette Securities Corporation.
99.2 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
99.3 Form of Proxy of AmSouth.
99.4 Form of Proxy of First American.
</TABLE>
<PAGE>
Exhibit 3
FORM OF
AMSOUTH BANCORPORATION
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Pursuant to Sectiom 242 of the
General Corporation Law of the State of Delaware
We, Stephen A. Yoder, Executive Vice President and General Counsel, and Diane S.
Masters, Secretary of AmSouth Bancorporation, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Company"), do hereby certify:
FIRST: That at a meeting of the Board of Directors of the Company duly held on
, 1999, resolutions were adopted proposing an amendment, as
hereinafter set forth, of the Restated Certificate of Incorporation of the
Company, declaring the advisability of such amendment, and directing that the
amendment be presented for the consideration of the stockholders of the Company
at a special meeting of such stockholders.
SECOND: That at the special meeting of all such stockholders entitled to vote
on the amendment hereinafter set forth, held on , 1999, and called in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware, the holders of a majority of the outstanding shares of common
stock of the Company voted in favor of such amendment, as hereinafter set forth,
to the Restated Certificate of Incorporation of the Company.
THIRD: That there has been duly adopted, in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware, an
amendment of the Restated Certificate of Incorporation of the Company, as
follows:
The relevant part of section (a) of Article IV of the AmSouth
certificate of incorporation would read in its entirety as follows:
(a) The total number of shares of all classes of capital stock
which the corporation shall have authority to issue is SEVEN HUNDRED AND
FIFTY-TWO MILLION (752,000,000), of which seven hundred and fifty
million (750,000,000) shares of the par value $1.00 per share are to be
of a class designated "Common Stock", and TWO MILLION (2,000,000) shares
without par value are to be a class designated "Preferred Stock."
IN WITNESS WHEREOF, NORWEST CORPORATION has caused its corporate seal to be
hereunto affixed and this Certificate to be signed by Stephen A. Yoder, its
Executive Vice President and General Counsel, and attested by Diane S. Masters,
its Secretary, this day of , 1999.
AMSOUTH BANCORPORATION
(Corporate Seal)
<PAGE>
[LETTERHEAD OF SULLIVAN & CROMWELL]
EXHIBIT 5
August 13, 1998
AmSouth Bancorporation,
AmSouth - Sonat Tower,
1900 Fifth Avenue North,
Birmingham, Alabama 35203.
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933,
as amended (the "Act"), of 230,000,000 shares (the "Securities") of Common
Stock, par value $1.00 per share, of AmSouth Bancorporation, a Delaware
corporation (the "Company"), issuable in connection with the Agreement and Plan
of Merger, dated as of May 31, 1999 (the "Merger Agreement"), among the Company,
First American Corporation, a Tennessee corporation ("First American"), and
Alpha/Foxtrot Acquisition Corp., and the related preferred stock purchase rights
(the "Rights") to be issued pursuant to the Rights Agreement, dated as of
December 18, 1997, (the "Rights Agreement"), between the Company and AmSouth
Bank, we, as your counsel, have examined such corporate records,
<PAGE>
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion. Upon the
basis of such examination, we advise you that, in our opinion:
(1) When the registration statement relating to the Securities and the
Rights (the "Registration Statement") has become effective under the Act
and the Securities to be issued in connection with the Agreement have been
duly issued and delivered as contemplated by the Merger Agreement, such
Securities will be duly authorized, validly issued, fully paid and
nonassessable.
(2) Assuming that the Board of Directors of the Company, after fully
informing itself with respect to the Rights Agreement and the Rights and
after giving due consideration to all relevant matters, determined that the
execution and delivery of the Rights Agreement and the issuance of the
Rights thereunder would be in the best interest of the Company and its
stockholders, and assuming further that the Rights Agreement has been
2
<PAGE>
duly authorized, executed and delivered by the Rights Agent, then when the
Registration Statement has become effective under the Act and the
Securities to be issued pursuant to the Agreement have been validly issued
as contemplated by the Agreement, the Rights attributable to such
Securities will be validly issued.
In connection with our opinion set forth in paragraph (2) above, we
note that the question whether the Board of Directors of the Company might be
required to redeem the Rights at some future time will depend upon the facts and
circumstances existing at that time and, accordingly, is beyond the scope of
such opinion.
The foregoing opinion is limited to the Federal laws of the United
States and the General Corporation Law of the State of Delaware, and we are
expressing no opinion as to the effect of the laws of any other jurisdiction.
We have relied as to certain matters on information obtained from
public officials, officers of the Company and other sources believed by us to be
responsible.
3
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity of
AmSouth Common Stock" in the Proxy Statement/Prospectus. In giving such consent,
we do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act.
Very truly yours,
/s/ Sullivan & Cromwell
4
<PAGE>
EXHIBIT 8.1
[LETTERHEAD OF SULLIVAN & CROMWELL]
August 13, 1999
AmSouth Bancorporation,
1901 Sixth Avenue North,
Birmingham, Alabama 35203.
Ladies and Gentlemen:
We have acted as counsel to AmSouth Bancorporation, a Delaware corporation
("AmSouth"), in connection with the merger (the "Merger") of Alpha/Foxtrot
Acquisition Corp. ("Merger Sub"), a Delaware corporation and a wholly owned
subsidiary of AmSouth, with and into First American Corporation, a Tennessee
corporation ("First American"), pursuant to the Agreement and Plan of Merger,
dated as of May 31, 1999 (the "Agreement"), by and among AmSouth, Merger Sub and
First American. Capitalized terms used but not defined herein shall have the
meanings specified in the Agreement.
We have assumed, with your consent, that (1) the Merger will be effected in
accordance with the Agreement, (2) after the Merger, AmSouth will merge First
American with and into AmSouth as part of the same plan of reorganization, (3)
the representations contained in the letters of representation from AmSouth,
Merger Sub and First American to us, each dated August 13, 1999, are true and
correct and (4) the Merger will qualify as a merger under Delaware law.
<PAGE>
AmSouth Bancorporation -2-
On the basis of the foregoing and on the basis of our consideration of such
other matters of fact and law as we have deemed necessary or appropriate, it is
our opinion, under presently applicable federal income tax law, that:
(1) the Merger will qualify as a reorganization under Section 368(a) of the
Code; and
(2) each of AmSouth, Merger Sub and First American will be a party to the
reorganization within the meaning of Section 368(b) of the Code.
We hereby consent to the filing of this letter as an exhibit to the proxy
statement/prospectus. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
/s/ Sullivan & Cromwell
<PAGE>
EXHIBIT 8.2
[LETTERHEAD OF WACHTELL, LIPTON, ROSEN & KATZ]
August 13, 1999
First American Corporation
First American Center
Nashville, Tennessee 37237-0700
Ladies/Gentlemen:
We have acted as counsel to First American Corporation, a Tennessee
corporation ("First American"), in connection with the proposed merger (the
"Merger") of Alpha/Foxtrot Acquisition Corp. ("Merger Sub"), a Delaware
corporation and a wholly owned subsidiary of AmSouth Bancorporation, a Delaware
corporation ("AmSouth"), with and into First American upon the terms and
conditions set forth in the Agreement and Plan of Merger dated May 31, 1999, by
and among First American, AmSouth, and Merger Sub (the "Agreement"). At your
request, in connection with the filing of the Registration Statement on Form S-4
filed with the Securities and Exchange Commission in connection with the Merger
(the "Registration Statement"), we are rendering our opinion concerning federal
income tax consequences of the Merger. Any capitalized term used and not
defined herein has the meaning given to it in the Joint Proxy Statement-
Prospectus contained within the Registration Statement (the "Joint Proxy
Statement"), or the appendices thereto (including the Agreement).
For purposes of the opinion set forth below, we have relied, with the
consent of First American and the consent of AmSouth, upon the accuracy and
completeness of the statements and representations (which statements and
representations we have neither investigated nor verified) contained,
respectively, in the certificates of the officers of First American and AmSouth
dated the date hereof, and have assumed that such certificates will remain
complete and accurate through the date of the Effective Time and that all
representations made to the knowledge of any person or entity or with similar
qualification are and will be true and correct as if made without such
qualification. We have also relied upon the accuracy of the Registration
Statement and the Joint Proxy Statement.
We have also assumed that (i) the transactions contemplated by the Agreement
will be consummated in accordance therewith and as described in the Registration
Statement and the Joint Proxy Statement (and no terms or conditions therein
material to this opinion will be waived), (ii) the Merger will be reported by
AmSouth, Merger Sub and First American on their respective federal income tax
returns in a manner consistent with the opinion set forth below, and (iii) the
Merger will qualify as a statutory merger under the applicable laws of the
States of Delaware and Tennessee.
<PAGE>
First American Corporation
August , 1999
Page 2
Based upon and subject to the foregoing, under currently applicable
United States federal income tax law, it is our opinion that, for United States
federal income tax purposes:
(i) The Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code");
(ii) AmSouth, First American, and Merger Sub will each be a party
to the reorganization under Section 368(b) of the Code; and
(iii) No gain or loss will be recognized by First American
stockholders who receive solely shares of AmSouth Common Stock in exchange
for all of their First American Common Stock, except with respect to cash
received instead of a fractional share interest in AmSouth Common Stock.
We express no opinion as to the United States federal income tax
consequences of the Merger to stockholders subject to special treatment under
United States federal income tax law (including, for example, foreign persons,
financial institutions, dealers in securities, traders in securities who elect
to apply a mark-to-market method of accounting, insurance companies, tax-exempt
entities, holders who do not hold their shares as capital assets, holders who
acquired their shares pursuant to the exercise of an employee stock option or
right or otherwise as compensation, and holders who hold AmSouth Common Stock or
First American Common Stock as part of a "hedge," "straddle" or "conversion
transaction"). In addition, no opinion is expressed with respect to the tax
consequences of the Merger under applicable foreign, state or local laws or
under any federal tax laws other than those pertaining to the income tax.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement, and to the
references to us under the caption "The Merger Agreement--Federal Income Tax
Consequences of the Merger" and elsewhere in the Joint Proxy Statement. In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
We are furnishing this opinion to you solely in connection with the
filing of the Registration Statement and this opinion is not to be relied upon,
circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT by and between AmSouth Bancorporation, a Delaware corporation
(the "Company") and Dennis C. Bottorff (the "Executive") dated as of the 31st
day of May, 1999.
The Company has determined that it is in the best interests of the Company
and its respective shareholders to assure that First American Corporation, a
Tennessee corporation ("FAM") will have the continued dedication of the
Executive pending the merger of the Company and FAM (the "Merger") pursuant to
the Agreement and Plan of Merger dated as of May 31, 1999 and to provide the
surviving corporation after the Merger with continuity of management. Therefore,
in order to accomplish these objectives, the Board of Directors of the Company
has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean the effective date of
the Merger.
2. Employment Period. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to enter into the employ of the Company subject
to the terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on January 1, 2001 (the "Employment Period").
3. Terms of Employment. (a) Position and Duties. (i) (A) During the
Employment Period, the Executive shall serve as Chairman of the Board of
Directors of the Company with such authority, duties and responsibilities as are
commensurate with such position and as may be consistent with such position and
(B) the Executive's services shall be performed in Nashville, Tennessee. Without
limiting the foregoing, the Executive shall perform such other duties as may be
reasonably requested from time to time by the Chief Executive Officer of the
Company, including community, government and employee relations projects. The
Executive shall serve on the Company's Board of Directors during the Employment
Period.
(ii) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote substantially all of his attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have
<PAGE>
been conducted by the Executive prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Effective Date shall not thereafter be deemed
to interfere with the performance of the Executive's responsibilities to the
Company.
(b) Compensation. (i) Initial Payment. On the Effective Date, the Company
shall make a lump sum payment to the Executive equal to the amounts set forth in
Section 2 of the Key Employee Change of Control Agreement between FAM and the
Executive dated as of January 1, 1997 (the "Prior Agreement").
(ii) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary") of no less than the annual
base salary paid to the Chief Executive Officer of the Company.
(iii) Annual Bonus. During the Employment Period, the Executive shall
receive an annual cash bonus ("Annual Bonus") in an amount such that the sum of
his Annual Base Salary and the Annual Bonus is equal to the greater of (x) the
sum of the annual base salary and annual bonus paid to the Chief Executive
Officer of the Company with respect to the year in question, and (y) $1,300,000.
In respect of calendar year 1999, the Annual Bonus shall be offset by any annual
bonus paid by FAM prior to the Effective Date in respect of 1999.
(iv) Incentive Awards. On the Effective Date, the Company shall grant
the Executive 187,500 shares of restricted stock of the Company (the "Restricted
Stock") pursuant to the terms of the Company's stock incentive plan. Except as
otherwise provided herein, the Restricted Stock shall vest on January 1, 2001
or, if earlier, upon a change of control of the Company (as defined in the
Company's stock incentive plan).
(v) Retirement Benefits. Notwithstanding any other provision of this
Agreement, commencing in January 2001, the Executive shall be paid an annual
retirement benefit of $1,250,000 for his life less any benefit payable pursuant
to FAM's or the Company's qualified or nonqualified retirement plans (the
"Retirement Benefit"). Upon the Executive's death, his current spouse, should
she survive the Executive, shall be paid an annual benefit of 50% of the
Retirement Benefit for her life.
(vi) Other Employee Benefit Plans. During the Employment Period,
except as otherwise expressly provided herein, the Executive shall be entitled
to participate in all employee benefit, welfare and other plans, practices,
policies and programs generally applicable to senior executives of the Company
on a basis no less favorable than that provided to such senior executives,
provided that upon the Executive's termination of employment for any reason, the
Company shall continue to provide him and his current spouse with medical and
dental benefits for the remainder of their lives on a basis no less favorable
than those benefits were provided to them immediately prior to such termination.
The Executive shall not be entitled to the grant of any stock options,
restricted stock or other long-term incentives except as specifically provided
herein.
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<PAGE>
(vii) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the Company's policies.
(viii) Office and Support Staff. During the Employment Period and
until December 31, 2003, the Executive shall be entitled to an office or offices
of a size and with furnishings and other appointments as provided generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies and shall be provided with secretarial assistance on the
same basis as provided to him immediately prior to the Effective Date. The
provisions of this Section 3(b)(viii) shall survive the termination of this
Agreement and the Executive's termination of employment.
(ix) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the plans, policies, programs and
practices of the Company and its affiliated companies as in effect with respect
to the senior executives of the Company.
4. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 11(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the continued failure of the Executive to perform substantially
the Executive's duties with the Company or one of its affiliates (other than any
such failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the Executive by
the Board or the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer believes
that the Executive has not substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company, or
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<PAGE>
(iii) conviction of a felony or guilty or nolo contendere plea by the
Executive with respect thereto.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than two-thirds of the entire
membership of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to the Executive and the Executive
is given an opportunity, together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, the Executive is guilty of
the conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean in the absence of a written consent of the Executive:
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 3(a) of this Agreement, or any other action by the Company which, in
the Executive's reasonable judgment, results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to comply with any of the provisions
of Section 3(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office
or location more than 35 miles from that provided in Section 3(a)(i)(B) hereof;
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
10(c) of this Agreement.
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<PAGE>
For purposes of this Section 4(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 11(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
5. Obligations of the Company upon Termination. (a) Good Reason; Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:
A. the sum of (1) the Executive's Annual Base Salary through the Date
of Termination to the extent not theretofore paid, and (2) the product of
(x) the highest annual bonus paid to the Executive for any of the three
years prior to the Date of Termination (the "Recent Annual Bonus") and (y)
a fraction, the numerator of which is the number of days in the fiscal
year in which the Date of Termination occurs through the Date of
Termination, and the denominator of which is 365, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses
(1) and (2), shall be hereinafter referred to as the "Accrued
Obligations"); and
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<PAGE>
B. the amount equal to the product of (1) the number of months and
portions thereof from the Date of Termination until the end of the
Employment Period of the Effective Date, divided by twelve and (2) the sum
of (x) the Executive's Annual Base Salary and (y) the Recent Annual Bonus;
and
(ii) the Restricted Stock shall vest immediately; and
(iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies through the Date of Termination (such other
amounts and benefits shall be hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. In addition, the Restricted Stock shall vest
immediately. Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(b) shall include death benefits as in
effect on the date of the Executive's death with respect to senior executives of
the Company and their beneficiaries.
(c) Disability. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits. In
addition, the Restricted Stock shall vest immediately. Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(c) shall include, and the Executive shall
be entitled after the Disability Effective Date to receive, disability and other
benefits as in effect at any time thereafter generally with respect to senior
executives of the Company.
(d) Cause; Other than for Good Reason. If the Executive's employment shall
be terminated for Cause or the Executive terminates his employment without Good
Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive (w) his Annual Base Salary through the Date of Termination, (x)
payment of the Retirement Benefit, and (y) Other Benefits, in each case to the
extent theretofore unpaid.
6. Non-exclusivity of Rights. Except as specifically provided, nothing in
this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 11(f), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits or
which the
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<PAGE>
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
7. Full Settlement. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, such amounts shall
not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 8) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 8(a), if it shall be determined that the Executive is
entitled to a Gross-Up Payment, but that the Payments do not exceed 110% of the
greatest amount (the "Reduced Amount") that could be paid to the Executive such
that the receipt of Payments would not give rise to any Excise Tax, then no
Gross-Up Payment shall be made to the Executive and the Payments, in the
aggregate, shall be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 8(c), all determinations required
to be made under this Section 8, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the Company's
independent certified public accounting firm or such
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<PAGE>
other certified public accounting firm reasonably acceptable to the Company as
may be designated by the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the
Company to the Executive within five days of (i) the later of the due date for
the payment of any Excise Tax, and (ii) the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income
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<PAGE>
tax (including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Section 8(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 8(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 8(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
9. Confidential Information. (a) The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it.
-9-
<PAGE>
(b) In the event of a breach or threatened breach of this Section 9, the
Executive agrees that the Company shall be entitled to injunctive relief in a
court of appropriate jurisdiction to remedy any such breach or threatened
breach, the Executive acknowledges that damages would be inadequate and
insufficient.
(c) Any termination of the Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 9. In no event
shall an asserted violation of the provisions of this Section 9 constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
10. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
11. Miscellaneous (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
If to the Company:
Attention: General Counsel
-10-
<PAGE>
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) From and after the Effective Date this Agreement shall supersede
any other employment, severance or change of control agreement between the
parties with respect to the subject matter hereof, except as expressly provided
herein.
-11-
<PAGE>
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Dennis C. Bottorff
_______________________
DENNIS C. BOTTORFF
AMSOUTH BANCORPORATION
By: /s/ C. Dowd Ritter
___________________
C. Dowd Ritter
Chairman, President and
Chief Executive Officer
-12-
<PAGE>
EXHIBIT 15.1
[LETTERHEAD OF ERNST & YOUNG LLP]
Board of Directors
AmSouth Bancorporation
We are aware of the incorporation by reference in the Registration Statement on
Form S-4 and related Proxy Statement and Prospectus of AmSouth Bancorporation
for the registration of up to 230,000,000 shares of its common stock of our
reports dated May 10, 1999 and August 10, 1999 relating to the unaudited
consolidated interim financial statements of AmSouth Bancorporation and
subsidiaries that are included in its Form 10-Q for the quarters ended March 31,
1999 and June 30, 1999.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
/s Ernst & Young LLP
Birmingham, Alabama
August 10, 1999
<PAGE>
EXHIBIT 15.2
[LETTERHEAD OF KPMG LLP]
The Board of Directors
First American Corporation:
Ladies and Gentlemen:
Re: Registration Statement S-4
With respect to the subject registration statement, we acknowledge our awareness
of the use therein of our reports dated April 15, 1999 and July 15, 1999 related
to our reviews of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such reports are not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
Very truly yours,
/s/ KPMG LLP
Nashville, Tennessee
August 13, 1999
<PAGE>
EXHIBIT 23.1
[LETTERHEAD OF ERNST & YOUNG LLP]
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 and related Proxy Statement and Prospectus of
AmSouth Bancorporation for the registration of up to 230,000,000 shares of its
common stock and to the incorporation by reference therein of our report dated
January 29, 1999, except for Note 22 as to which the date is March 1, 1999, with
respect to the consolidated financial statements of AmSouth Bancorporation
incorporated by reference in its Annual Report on Form 10-K for the year ended
December 31, 1998 filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Birmingham, Alabama
August 11, 1999
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF KPMG LLP]
Accountants' Consent
The Board of Directors
First American Corporation:
We consent to the use of our audit report dated January 21, 1999, on the
consolidated financial statements of First American Corporation and subsidiaries
as of December 31, 1998 and 1997, and for each of the years in the three-year
period ended December 31, 1998, contained in First American Corporation's Form
10-K incorporated herein by reference and to the reference to our firm under the
heading "Experts" in the Proxy Statement - Prospectus.
/s/ KPMG LLP
Nashville, Tennessee
August 13, 1999
<PAGE>
EXHIBIT 23.3
August 13, 1999
AMSOUTH BANCORPORATION
AmSouth Sonat Tower
1900 Fifth Avenue North
Birmingham, Alabama 35209
To the Board of Directors:
I hereby consent to being named as a person about to become a director
of AmSouth Bancorporation, a Delaware corporation ("AmSouth"), in connection
with the consummation of the merger (the "Merger") of First American
Corporation, a Tennessee corporation ("First American"), with and into
Alpha/Foxtrot Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of AmSouth ("Merger Sub"), pursuant to the Agreement and Plan of
Merger, dated as of May 31, 1999, by and among AmSouth, First American and
Merger Sub, in the Registration Statement on Form S-4 filed by AmSouth with he
Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"), and to the filing of this consent as an exhibit to
the Registration Statement.
Sincerely,
/s/ Dennis C. Bortorff
________________________
Dennis C. Bortorff
<PAGE>
EXHIBIT 24
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by his execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, his
true and lawful attorney-in-fact and agent, for him and in his name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
12th day of July, 1999.
/s/ J. HAROLD CHANDLER
_______________________
J. HAROLD CHANDLER
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by his execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, his
true and lawful attorney-in-fact and agent, for him and in his name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 11th
day of July, 1999.
/s/ JAMES E. DALTON, JR.
________________________
JAMES E. DALTON, JR.
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by his execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, his
true and lawful attorney-in-fact and agent, for him and in his name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 12th
day of July, 1999.
/s/ RODNEY C. GILBERT
_____________________
RODNEY C. GILBERT
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by his execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, his
true and lawful attorney-in-fact and agent, for him and in his name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 13th
day of July, 1999.
/s/ ELMER B. HARRIS
___________________
ELMER B. HARRIS
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by her execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, her
true and lawful attorney-in-fact and agent, for her and in her name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 12th
day of July, 1999.
/s/ VICTORIA B. JACKSON
_______________________
VICTORIA B. JACKSON
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by his execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, his
true and lawful attorney-in-fact and agent, for him and in his name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 9th
day of July, 1999.
/s/ RONALD L. KUEHN, JR.
_________________________
RONALD L. KUEHN, JR.
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by his execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, his
true and lawful attorney-in-fact and agent, for him and in his name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 12th
day of July, 1999.
/s/ JAMES R. MALONE
____________________
JAMES R. MALONE
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by his execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, his
true and lawful attorney-in-fact and agent, for him and in his name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 12th
day of July, 1999.
/s/ FRANCIS A. NEWMAN
_____________________
FRANCIS A. NEWMAN
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by his execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, his
true and lawful attorney-in-fact and agent, for him and in his name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 14th
day of July, 1999.
/s/ CLAUDE B. NIELSEN
______________________
CLAUDE B. NIELSEN
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by his execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, his
true and lawful attorney-in-fact and agent, for him and in his name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 12th
day of July, 1999.
/s/ BENJAMIN F. PAYTON
_______________________
BENJAMIN F. PAYTON
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of
AmSouth Bancorporation, a Delaware corporation ("Company"), by his execution
hereof or upon an identical counterpart hereof, does hereby constitute and
appoint Stephen A. Yoder, John W. Hopper or Carl L. Gorday and any of them, his
true and lawful attorney-in-fact and agent, for him and in his name, place and
stead, to execute and sign the Registration Statement on Form S-4 to be filed by
the Company with respect to its securities with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933 in
connection with the acquisition of First American Corporation, and, further, to
execute and sign any and all pre-effective and post-effective amendments to such
Registration Statement and any and all other documents in connection therewith,
and to cause any and all such documents to be filed with the Securities and
Exchange Commission and any state securities commissions, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all the acts of said
attorney-in-fact and agent which he may lawfully do in the premises or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 12th
day of July, 1999.
/s/ HERBERT A. SKLENAR
_______________________
HERBERT A. SKLENAR
<PAGE>
EXHIBIT 99.1
[LETTERHEAD OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION]
CONSENT OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
We hereby consent to (i) the inclusion of our opinion letter, dated August
13, 1999, to the Board of Directors of AmSouth Bancorporation (the "Company") as
Appendix E to the Joint Proxy Statement/Prospectus (the "Prospectus") of the
Company and First American Corporation ("First American") relating to the merger
between the Company and First American and (ii) all references to DLJ and our
Opinion letter in the Prospectus which forms a part of this Registration
Statement on Form S-4. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under, and we do not
admit that we are "experts" for purposes of, the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereafter.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Gerard L. Smith
____________________________
Name: Gerard L. Smith
Title: Managing Director
New York, New York
August 13, 1999
<PAGE>
EXHIBIT 99.2
[LETTERHEAD OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED]
CONSENT OF MERRILL LYNCH
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of First American Corporation ("First American"), to be dated the date
of the Joint Proxy Statement/Prospectus which forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of First American with
AmSouth Bancorporation, as Appendix D to the Joint Proxy Statement/Prospectus,
and to the references to such opinion in such Joint Proxy Statement/Prospectus
under the captions "SUMMARY -- Investment Bank Says the Merger Consideration Is
Fair to First American Stockholders," and "THE MERGER -- Background of the
Merger," "-- First American's Reasons for the Merger; Recommendation of the
First American Board of Directors," and " -- Opinion of First American's
Financial Advisor." In giving such consent, we do not admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder, nor do we thereby admit that we
are experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Eric Heaton
_______________
August 13, 1999
<PAGE>
EXHIBIT 99.3
Please Detach Proxy Card Here
- --------------------------------------------------------------------------------
\/ \/
The board of directors recommends a vote "FOR" Items 1 and 2
---
Proposal 1. Directors' Proposal -- Approve the amendment to the certificate of
incorporation to increase authorized
common stock
FOR [X] AGAINST [X] ABSTAIN [X]
Proposal 2. Directors' Proposal -- Approve the issuance of common stock
FOR [X] AGAINST [X] ABSTAIN [X]
Change of Address and [X]
or Comments Mark Here
Please sign exactly as name or names appear on this proxy.
When signing as attorney, executor, administrator, trustee, custodian,
guardian or corporate officer, give full title.
If more than one trustee, all should sign.
Dated: ______________________, 1999
-------------------------------------
Signature of Stockholder
Mark, Sign, Date and Return the Proxy Card
Promptly Using the Enclosed Envelope.
--------------------------- [X]
Votes must be indicated
(x) in Black or Blue ink
PLEASE DETACH HERE
You Must Detach This Portion of the Proxy Card
<PAGE>
Please Detach Proxy Card Here
\/ \/
AMSOUTH BANCORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stephen A. Yoder, John W. Hopper and Carl
L. Gorday, and each of them, proxies with full power of substitution to vote all
of the shares of common stock of AmSouth Bancorporation held of record by the
undersigned at the special meeting of stockholders to be held on September 16,
1999, and at any adjournments thereof. This card also provides voting
instructions for shares held in the AmSouth Bancorporation Dividend Reinvestment
and Common Stock Purchase Plan, and held of record by the agent for such plan.
If no directions are given, the proxies will vote for the amendment of the
certificate of incorporation and for the issuance of common stock. The proxies,
in their discretion, are further authorized to vote on any other matter that may
properly come before the meeting.
(Continued and to be dated and signed on the reverse side.)
AMSOUTH BANCORPORATION
P.O . Box 11087
New York, N.Y. 10203-0087
<PAGE>
EXHIBIT 99.4
FIRST AMERICAN CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE SPECIAL MEETING OF
STOCKHOLDERS CALLED FOR SEPTEMBER 16, 1999
The undersigned hereby appoints Dennis C. Bottorff and Dale W. Polley, or
either of them, as proxies, with full power of substitution, to vote all shares
of the undersigned as shown on the reverse side of this proxy at the 1999
special meeting of stockholders of FIRST AMERICAN CORPORATION and any
adjournments thereof.
The board of directors recommends a vote FOR the approval of Proposals 1
and 2.
(1) [ ] FOR [ ] AGAINST [ ] ABSTAIN Approval and adoption of the Agreement and
Plan of Merger by and among First American Corporation, AmSouth
Bancorporation and Alpha/Foxtrot Acquisition Corp.
(2) [ ] AUTHORITY GRANTED for the proxies to vote in their discretion on any
other matter which may come before the special meeting or any
adjournment thereof.
Your shares will be voted in accordance with your instructions. If no
choice is specified, shares will be voted FOR approval and adoption of the
Agreement and Plan of Merger and by the proxies in their discretion on any other
matters which may properly come before the special meeting or any adjournment
thereof.
______________________ (number of persons) PLEASE SIGN AND RETURN PROMPTLY
WILL ATTEND THE SPECIAL MEETING
_________________________________
_________________________________
DATE
____________________________, 1999
Please sign exactly as your name
appears at left. If registered in
the names of two or more persons,
each must sign. Executors,
administrators, trustees,
guardians, attorneys and corporate
officers must show their full
titles.
________________________________________________________________________________
If you have changed your address, please PRINT
new address on the line above.
