FIRST AMERICAN CORP /TN/
S-4, 1998-03-11
NATIONAL COMMERCIAL BANKS
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<PAGE>   1
 
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 11, 1998
 
                                                        REGISTRATION NO. 333-
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
 
                                    FORM S-4
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                             ---------------------
 
                           FIRST AMERICAN CORPORATION
             (Exact name of Registrant as specified in its charter)
                             ---------------------
 
<TABLE>
<S>                              <C>                              <C>
           TENNESSEE                          6711                           62-079975
(State or other jurisdiction of   (Primary Standard Industrial           (I.R.S. Employer
incorporation or organization)     Classification Code Number)          Identification No.)
</TABLE>
 
                             FIRST AMERICAN CENTER
                        NASHVILLE, TENNESSEE 37237-0700
                                 (615) 748-2000
 
         (Address, including zip code, and telephone number, including
            area code, of registrant's principal executive offices)
                             ---------------------
                     MARY NEIL PRICE, ESQ., GENERAL COUNSEL
                           FIRST AMERICAN CORPORATION
                             FIRST AMERICAN CENTER
                        NASHVILLE, TENNESSEE 37237-0721
                                 (615) 748-2049
 
           (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)
 
                                   COPIES TO:
 
<TABLE>
<S>                                              <C>       <C>
            EDWARD D. HERLIHY                                        WILLIAM S. RUBENSTEIN
      WACHTELL, LIPTON, ROSEN & KATZ                        SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
           51 WEST 52ND STREET                   AND                    919 THIRD AVENUE
         NEW YORK, NEW YORK 10019                                   NEW YORK, NEW YORK 10022
</TABLE>
 
                             ---------------------
     APPROXIMATE DATE OF COMMENCEMENT OF 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>
===========================================================================================================================
     TITLE OF EACH CLASS                                PROPOSED MAXIMUM        PROPOSED MAXIMUM           AMOUNT OF
       OF SECURITIES TO            AMOUNT TO BE        OFFERING PRICE PER      AGGREGATE OFFERING         REGISTRATION
        BE REGISTERED              REGISTERED(2)            SHARE(3)                PRICE(3)                 FEE(4)
- ---------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                  <C>                     <C>                     <C>
Common Stock(1)...............      50,310,000               $46.37              $2,332,750,000             $222,165
===========================================================================================================================
</TABLE>
 
(1) Also includes associated Rights to purchase shares of the Registrant's
    Series A Junior preferred stock, which Rights are not currently separable
    from shares of Common Stock and are not currently exercisable. See
    "COMPARATIVE RIGHTS OF SHAREHOLDERS OF FIRST AMERICAN AND DEPOSIT
    GUARANTY -- Shareholder Rights Plan."
(2) Based upon the maximum number of shares that may be issued upon consummation
    of the merger described herein, and upon exercise of securities exercisable
    for shares of common stock of First American.
(3) Pursuant to Rule 457(f) of the Securities Act of 1933, as amended, the
    registration fee is calculated based upon the market value (determined by
    averaging the high and low sales prices) of the common stock, no par value,
    of Deposit Guaranty Corp. on the New York Stock Exchange on March, 9, 1998.
(4) In accordance with Rule 457(b), the filing fee of $465,997 paid pursuant to
    Section 14(g) of the Securities Exchange Act of 1934, as amended, and Rule
    0-11 thereunder at the time of the filing of the Joint Proxy
    Statement-Prospectus contained in this Registration Statement as preliminary
    proxy materials of First American Corporation and Deposit Guaranty Corp. has
    been credited to offset the $688,162 registration fee that would otherwise
    be payable.
                             ---------------------
    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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
 
================================================================================
<PAGE>   2
 
[FIRST AMERICAN CORPORATION LOGO]                   [DEPOSIT GUARANTY CORP LOGO]
 
                 MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
 
The Boards of Directors of First American Corporation and Deposit Guaranty Corp.
have agreed on a merger of First American and Deposit Guaranty. This merger
would create the fourth largest financial services institution, measured by
total assets, in the mid-south region of the United States. The combined company
will be named "First American Corporation" and will be headquartered in
Nashville, Tennessee. It will have banking operations in Tennessee, Mississippi,
Louisiana, Arkansas, Virginia and Kentucky. The combined company will also have
assets of about $17.6 billion, deposits of about $13 billion and shareholders'
equity of about $1.5 billion.
 
If the merger is completed, Deposit Guaranty shareholders will receive 1.17
shares of First American common stock for each share of Deposit Guaranty common
stock that they own. First American shareholders will continue to own their
existing shares of First American common stock after the merger. We estimate
that, on completion of the merger, about 45% of the outstanding stock of First
American will be owned by former Deposit Guaranty shareholders, and that about
55% will be owned by those persons who are First American shareholders just
before the merger is completed.
 
We can't complete the merger unless the shareholders of both companies approve
it. In addition, First American shareholders must approve an increase in the
maximum number of shares of common stock First American can issue from 100
million to 200 million. The increase is required, in part, because First
American currently does not have enough unissued shares of its common stock
available to issue the number of shares First American is required to issue in
the merger. Completion of the merger is conditioned on approval of this increase
by First American shareholders. These items will be on the agenda of First
American's 1998 annual meeting. Deposit Guaranty has scheduled a special meeting
for its shareholders to vote on the merger.
 
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend your shareholder
meeting, please take the time to vote by completing and mailing the enclosed
proxy card to us. If you sign, date and mail your proxy card without indicating
how you want to vote, your proxy will be counted as a vote in favor of the
merger. If you don't return your card, the effect will be a vote against the
merger.
 
The dates, times and places of the meetings are as follows:
 
                          FOR FIRST AMERICAN SHAREHOLDERS:
                             April 16, 1998, 10:30 a.m.
                               Fifth Floor Auditorium
                                First American Center
                                Nashville, Tennessee
 
                         FOR DEPOSIT GUARANTY SHAREHOLDERS:
                              April 14, 1998, 1:30 p.m.
                        Deposit Guaranty National Bank Lobby
                        Deposit Guaranty Plaza, Second Floor
                                Jackson, Mississippi
 
This Joint Proxy Statement-Prospectus provides you with detailed information
about the proposed merger. You can also get information about our companies from
documents we have filed with the Securities and Exchange Commission. We
encourage you to read this entire document carefully.
 
We strongly support this strategic combination between First American and
Deposit Guaranty and join with the other members of our Boards of Directors in
enthusiastically recommending that you vote in favor of the merger.
 
<TABLE>
<S>                                        <C>
/s/ DENNIS C. BOTTORFF                     /s/ E.B. ROBINSON, JR.
  Dennis C. Bottorff                       E.B. Robinson, Jr.
  Chairman and Chief Executive Officer     Chairman and Chief Executive Officer
  First American Corporation               Deposit Guaranty Corp.
</TABLE>
 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE FIRST AMERICAN COMMON STOCK TO BE ISSUED UNDER THIS
JOINT PROXY STATEMENT-PROSPECTUS OR DETERMINED IF THIS JOINT PROXY
STATEMENT-PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
 
Joint Proxy Statement-Prospectus dated March 11, 1998, and first mailed to
shareholders on March 16, 1998.
<PAGE>   3
 
                           FIRST AMERICAN CORPORATION
                             FIRST AMERICAN CENTER
                           NASHVILLE, TENNESSEE 37237
                                 (615) 748-2000
                             ---------------------
 
                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
 
TO THE SHAREHOLDERS OF FIRST AMERICAN CORPORATION:
 
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of First American
Corporation will be held in the fifth-floor auditorium of the First American
Center in the City of Nashville, Tennessee, at 10:30 a.m., local time, on April
16, 1998, to consider and act upon:
 
1. Approval and adoption of the Agreement and Plan of Merger, dated as of
   December 7, 1997, by and between First American and Deposit Guaranty Corp., a
   Mississippi corporation, and the transactions contemplated thereby, including
   the merger of Deposit Guaranty and First American.
 
2. The amendment of the Restated Charter of First American to increase the
   number of authorized shares of common stock of First American from 100
   million to 200 million.
 
3. The election of one director to serve until the Annual Meeting of
   shareholders of First American in 1999, and six directors to serve until the
   Annual Meeting of shareholders of First American in 2001.
 
4. The transaction of such other business as may properly come before the 1998
   Annual Meeting or any adjournments or postponements of the 1998 Annual
   Meeting.
 
Only shareholders of record at the close of business on February 5, 1998, are
entitled to notice of and to vote at the 1998 Annual Meeting or any adjournments
or postponements of the 1998 Annual Meeting.
 
All shareholders are cordially invited to attend the 1998 Annual Meeting. TO
ENSURE YOUR REPRESENTATION AT THE 1998 ANNUAL MEETING, PLEASE COMPLETE AND
PROMPTLY MAIL YOUR PROXY IN THE RETURN ENVELOPE ENCLOSED. This will not prevent
you from voting in person, but will help to secure a quorum and avoid added
solicitation costs. Your proxy may be revoked at any time before it is voted.
Please review the Joint Proxy Statement-Prospectus accompanying this notice for
more complete information regarding the matters proposed for your consideration
at the 1998 Annual Meeting.
 
                                          BY ORDER OF THE BOARD OF DIRECTORS
 
                                          /s/ Mary Neil Price
 
                                          Mary Neil Price
                                          Executive Vice President,
                                          General Counsel and Corporate
                                          Secretary
 
March 11, 1998
 
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR NOT YOU PLAN
                       TO ATTEND THE 1998 ANNUAL MEETING.
 
      THE BOARD OF DIRECTORS OF FIRST AMERICAN UNANIMOUSLY RECOMMENDS THAT
   SHAREHOLDERS VOTE FOR APPROVAL OF THE MATTERS TO BE VOTED UPON AT THE 1998
                                ANNUAL MEETING.
<PAGE>   4
 
                             DEPOSIT GUARANTY CORP.
                            210 EAST CAPITAL STREET
                           JACKSON, MISSISSIPPI 39201
                                 (601) 354-8564
                             ---------------------
 
                    NOTICE OF SPECIAL SHAREHOLDERS' MEETING
                          TO BE HELD ON APRIL 14, 1998
                             ---------------------
 
TO THE SHAREHOLDERS OF
DEPOSIT GUARANTY CORP.:
 
NOTICE IS HEREBY GIVEN that a Special Meeting of shareholders of Deposit
Guaranty Corp. will be held in the lobby of Deposit Guaranty National Bank,
Second Floor, Deposit Guaranty Plaza, Jackson, Mississippi, on April 14, 1998 at
1:30 p.m., local time, for the purpose of considering and voting upon the
following matters:
 
1. Approval and adoption of the Agreement and Plan of Merger, dated as of
   December 7, 1997, by and between Deposit Guaranty and First American
   Corporation, a Tennessee corporation, and the transactions contemplated in
   that agreement, including the merger of Deposit Guaranty and First American.
 
2. To transact such other business as may properly come before the Special
   Meeting or any adjournments or postponements of the Special Meeting.
 
Only holders of record of Deposit Guaranty common stock at the close of business
on February 20, 1998, are entitled to notice of and to vote at the Special
Meeting or any adjournments or postponements of the Special Meeting.
 
All shareholders 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. Please review
the Joint Proxy Statement-Prospectus accompanying this notice for more complete
information regarding the merger and the Special Meeting.
 
A list of Deposit Guaranty shareholders entitled to vote at the Special Meeting
will be available for examination at Deposit Guaranty National Bank, Second
Floor, Deposit Guaranty Plaza, Jackson, Mississippi, during ordinary business
hours beginning two business days after notice of the Special Meeting is given
and continuing through the Special Meeting.
 
Under Article 13 of the Mississippi Business Corporation Act (the "MBCA"),
holders of Deposit Guaranty common stock who comply with Article 13 of the MBCA
will have the right to dissent from the merger and to obtain payment of the fair
value of their shares. A copy of Article 13 of the MBCA is attached as Appendix
F to the accompanying Joint Proxy Statement-Prospectus. Please see the section
entitled "ADDITIONAL INFORMATION -- Dissenters' Appraisal Rights" in the
attached Joint Proxy Statement-Prospectus for a discussion of the procedures to
be followed in asserting these dissenters' rights.
 
                                          BY ORDER OF THE BOARD OF DIRECTORS
 
                                          /s/ E.B. ROBINSON, JR.
                                          E.B. Robinson, Jr.
                                          Chairman and Chief Executive Officer
 
March 11, 1998
 
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR NOT YOU PLAN
                         TO ATTEND THE SPECIAL MEETING.
 
     THE BOARD OF DIRECTORS OF DEPOSIT GUARANTY UNANIMOUSLY RECOMMENDS THAT
            SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
<PAGE>   5
 
                             QUESTIONS AND ANSWERS
                ABOUT THE FIRST AMERICAN/DEPOSIT GUARANTY MERGER
 
Q: WHY ARE THE TWO COMPANIES PROPOSING TO MERGE?
 
A: Our companies are proposing to merge because we believe that by combining
   them we will be able to provide our shareholders with substantial benefits
   and better serve our customers and markets. We also think that by combining
   our two companies we can create a company with enhanced financial performance
   which will be the fourth largest financial services institution, measured by
   total assets, in the mid-south region of the United States. We believe that
   the combined company will be better positioned to be a strong competitor in
   the rapidly-changing financial services business.
 
Q: AS A DEPOSIT GUARANTY SHAREHOLDER, WHAT WILL I RECEIVE IN THE MERGER?
 
A: You will have the right to receive 1.17 shares of First American common stock
   in exchange for each share of Deposit Guaranty common stock you own. However,
   First American won't issue any fractional shares. Instead, you will receive
   an amount of cash for any fraction of a share based on the market value of
   First American's common stock over a period close to the date the merger is
   completed.
 
   Example: If you own ten shares of Deposit Guaranty common stock, upon
   completion of the merger you'll have the right to receive eleven shares of
   First American common stock and a check for the market value of 0.7 of a
   share of First American common stock.
 
Q: WHAT HAPPENS AS THE MARKET PRICE OF FIRST AMERICAN COMMON STOCK FLUCTUATES?
 
A:The exchange ratio is fixed at 1.17. Since the market value of First American
  common stock will fluctuate before and after the closing of the merger, the
  value of the stock Deposit Guaranty shareholders will receive in the merger
  will fluctuate as well and could decrease. However, if the value of First
  American common stock decreases substantially prior to the approval of the
  Federal Reserve Board that we need to complete the merger, Deposit Guaranty
  may decide not to go through with the merger. However, Deposit Guaranty will
  have to complete the merger if First American chooses to increase the exchange
  ratio to compensate for the decrease.
 
Q: AS A FIRST AMERICAN SHAREHOLDER, HOW WILL THE MERGER AFFECT ME?
 
A: The merger will not affect your shares of common stock. Following the merger,
   you and the other First American shareholders will own approximately 55% of
   the common stock of First American.
 
Q: WHY WILL DEPOSIT GUARANTY SHAREHOLDERS RECEIVE SHARES OF FIRST AMERICAN
   STOCK, BUT FIRST AMERICAN SHAREHOLDERS WILL NOT RECEIVE DEPOSIT GUARANTY
   SHARES?
 
A: Deposit Guaranty will merge with and into First American and will no longer
   be a separate company. First American will be the surviving company in the
   merger and will continue to exist after the merger is completed. The
   businesses and operations of Deposit Guaranty and First American will be
   combined into a single, larger company. Accordingly, the ownership of Deposit
   Guaranty shareholders in Deposit Guaranty will entitle them to own a portion
   of the combined company, which is represented by the shares of First American
   stock that they will receive in the merger.
 
Q: WHAT HAPPENS TO MY DIVIDENDS IN THE FUTURE?
 
A: After the merger, First American expects to pay quarterly dividends on its
   common stock in the amount of $.20 per share, the amount First American has
   recently paid as a regular quarterly cash dividend to its shareholders. While
   we currently expect to pay those dividends, we can't assure these payments.
   The combined company's board of directors will use its discretion to decide
   whether and when to declare dividends and in what amount, and it will
   consider all relevant factors in doing so.
 
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
 
A: We hope to complete the merger by the end of April, 1998. In addition to
   approvals of First American shareholders and Deposit Guaranty
 
                                                           QUESTIONS AND ANSWERS
<PAGE>   6
 
   shareholders, we must also obtain regulatory approvals, which include
   approval of the Federal Reserve Board and may include approval of or notice
   to certain state authorities.
 
Q: AS A DEPOSIT GUARANTY SHAREHOLDER, WHAT ARE THE U.S. FEDERAL INCOME TAX
   CONSEQUENCES TO ME?
 
A: We expect that for U.S. federal income tax purposes, your exchange of shares
   of Deposit Guaranty common stock for shares of First American common stock in
   the merger generally will not cause you to recognize any gain or loss. You
   will, however, have to recognize gain in connection with any cash received
   instead of fractional shares. This tax treatment won't apply to you if you
   dissent from the merger under Mississippi law.
 
  We provide a more detailed review of the U.S. federal income tax consequences
  of the merger at page 46 of this document.
 
Q: AS A DEPOSIT GUARANTY SHAREHOLDER, DO I HAVE TO ACCEPT FIRST AMERICAN COMMON
   STOCK IN EXCHANGE FOR MY DEPOSIT GUARANTY SHARES IF THE MERGER IS APPROVED?
 
A: No. If you are a Deposit Guaranty shareholder and you follow the procedures
   prescribed by Mississippi law, you may dissent from the merger and have the
   fair value of your stock appraised by a court and paid in cash. If you follow
   those procedures, you won't receive First American common stock. The fair
   value of your Deposit Guaranty stock, determined in the manner prescribed by
   Mississippi law, will be paid to you in cash. First American shareholders
   aren't entitled to dissenters' appraisal rights in the merger. For a more
   complete description of these dissenters' rights, see page 77 of this
   document.
 
Q: WHAT DO I NEED TO DO NOW?
 
A: Just indicate on your proxy card how you want to vote, and sign and mail the
   proxy card in the enclosed return envelope as soon as possible so that your
   shares may be represented at your shareholders' meeting. If you sign and send
   in your proxy but don't indicate how you want to vote, your proxy will be
   counted as a vote in favor of the merger and, if you are a First American
   shareholder, in favor of increasing First American's authorized common stock.
   If you don't vote on the merger or if you abstain, the effect will be a vote
   against the merger.
 
  The First American annual meeting will take place on April 16, 1998 and the
  Deposit Guaranty special meeting will take place on April 14, 1998. You are
  invited to your shareholders' meeting to vote your shares in person, rather
  than signing and mailing your proxy card. If you do sign your proxy card, you
  can take back your proxy up to and including the date of your shareholders'
  meeting and either change your vote or attend your shareholders' meeting and
  vote in person. We provide more detailed instructions about voting on page 16,
  for First American shareholders, and on page 18, for Deposit Guaranty
  shareholders.
 
   THE BOARDS OF DIRECTORS OF BOTH FIRST AMERICAN AND DEPOSIT GUARANTY
   UNANIMOUSLY RECOMMEND VOTING IN FAVOR OF THE PROPOSED MERGER.
 
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
   SHARES FOR ME?
 
A: Only if you provide instructions on how your broker should vote. You should
   instruct your broker how to vote your shares, following the directions your
   broker provides. Without instructions from you to your broker, your shares
   will not be voted and this will effectively be a vote against the merger.
 
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
 
A: No. No one should send their stock certificates in now.
 
   Deposit Guaranty Shareholders: After the merger is completed, we'll send you
   written instructions on how to exchange your Deposit Guaranty common stock
   for First American common stock.
 
   First American Shareholders: You will keep your shares of common stock and so
   you should not send in your First American certificates at all.
 
QUESTIONS AND ANSWERS
<PAGE>   7
 
                       WHO CAN HELP ANSWER YOUR QUESTIONS
 
        If you have more questions about the merger, you should contact:
 
                          FIRST AMERICAN SHAREHOLDERS:
                           First American Corporation
                             First American Center
                           Nashville, Tennessee 37237
         Attention: Ms. Carroll Kimball, Director of Investor Relations
                          Phone Number: (615) 748-2455
 
                         DEPOSIT GUARANTY SHAREHOLDERS:
                             Deposit Guaranty Corp.
                            210 East Capitol Street
                           Jackson, Mississippi 39201
              Attention: Joe J. Powell, III, Senior Vice President
                          Phone Number: (601) 354-8564
 
If you would like additional copies of this Joint Proxy Statement-Prospectus, or
          if you have questions about the merger, you should contact:
 
                               Corporate Investor
                              Communications, Inc.
                                111 Commerce Rd.
                            Carlstadt, NJ 07072-2586
                                 (201) 896-1900
 
                                                           QUESTIONS AND ANSWERS
<PAGE>   8
 
To find any one of the principal sections identified below, simply bend the
document slightly to expose the black tabs and open the document to the tab
which corresponds to the title of the section you wish to read. For your
convenience, we have included an index of frequently used capitalized terms in
this Joint Proxy Statement-Prospectus in an Index of Defined Terms, which is
printed on gold paper following the summary section of this Joint Proxy
Statement-Prospectus.
 
                                                         TABLE OF CONTENTS
                                                                   SUMMARY
                                                              THE MEETINGS
                                                                THE MERGER
                                           INFORMATION ABOUT OUR COMPANIES
                                                    ADDITIONAL INFORMATION
                                        FINANCIAL AND BUSINESS INFORMATION
                                       AMENDMENT TO FIRST AMERICAN CHARTER
                   OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
                                                                APPENDICES
<PAGE>   9
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
                             SUMMARY
 
The Companies...............................................     1
     First American Corporation.............................     1
     Deposit Guaranty Corp..................................     1
Our Reasons for the Merger..................................     1
The Shareholders' Meetings..................................     1
Our Recommendations to Shareholders.........................     2
Record Date; Voting Power...................................     2
Votes Required..............................................     2
The Merger..................................................     2
     Conditions to Completion of the Merger.................     3
     Termination of the Merger Agreement....................     3
     Federal Income Tax Consequences........................     4
     Accounting Treatment...................................     4
     Opinions of Financial Advisors.........................     4
     Board of Directors and Management of First American
       Following the Merger.................................     4
     Interests of Other Persons in the Merger That are
       Different from Yours.................................     5
     Dissenters' Appraisal Rights...........................     5
     Regulatory Approvals...................................     5
     Amendment to First American's Charter..................     5
     First American's Option to Purchase Deposit Guaranty
       Common Stock.........................................     6
     Comparative Per Share Market Price Information.........     6
     Forward-Looking Statements May Prove Inaccurate........     6
Recent Developments.........................................     7
Comparative Unaudited Per Share Data........................     8
Selected Financial Data.....................................    10
     Selected Historical Financial Data of First American...    11
     Selected Historical Financial Data of Deposit
       Guaranty.............................................    12
     Selected Pro Forma Financial Data of First American and
       Deposit Guaranty Combined............................    13
     Index of Defined Terms.................................    14
 
                           THE MEETINGS
First American Annual Meeting...............................    16
     General................................................    16
     Matters to be Considered...............................    16
     Proxies................................................    16
     Solicitation of Proxies................................    17
     Record Date and Voting Rights..........................    17
     Recommendation of the First American Board.............    18
Deposit Guaranty Special Meeting............................    18
     General................................................    18
     Proxies................................................    18
     Solicitation of Proxies................................    19
</TABLE>
 
                                                               TABLE OF CONTENTS
<PAGE>   10
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
     Record Date and Voting Rights..........................    19
     Dissenters' Rights.....................................    20
     Recommendation of the Deposit Guaranty Board...........    20
 
                            THE MERGER
 
Description of the Merger...................................    21
Background of the Merger....................................    22
Reasons of First American for the Merger....................    25
Reasons of Deposit Guaranty for the Merger..................    26
Opinion of First American's Financial Advisor...............    28
Opinion of Deposit Guaranty's Financial Advisor.............    33
The Effective Time..........................................    36
Exchange of Certificates....................................    37
Conduct of Business Prior to the Merger and Other
  Covenants.................................................    38
Conditions to the Merger....................................    41
Termination of the Merger Agreement.........................    42
Waiver; Amendment; Expenses.................................    45
Certain Federal Income Tax Consequences.....................    46
Interests of Certain Persons in the Merger..................    47
Stock Option Agreement......................................    51
Accounting Treatment........................................    55
Regulatory Matters..........................................    55
Restrictions on Resales by Affiliates.......................    56
 
                 INFORMATION ABOUT OUR COMPANIES
 
Management and Operations After the Merger..................    57
Price Range of Common Stock and Dividends...................    58
     Market Prices..........................................    58
     Dividends..............................................    59
Information About First American............................    60
     General................................................    60
     "Year 2000" Information System Issues..................    60
     Management and Additional Information..................    61
Information About Deposit Guaranty..........................    61
     General................................................    61
     Management and Additional Information..................    61
Supervision and Regulation of First American and Deposit
  Guaranty..................................................    61
     General................................................    61
     Capital and Operational Requirements...................    63
     Enforcement Powers of the Banking Agencies.............    65
First American Capital Stock................................    65
     First American Common Stock............................    65
     First American Preferred Stock.........................    66
</TABLE>
 
TABLE OF CONTENTS
 
                                       ii
<PAGE>   11
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Comparative Rights of Shareholders of First American and
  Deposit Guaranty..........................................    66
     Board of Directors.....................................    66
     Business Combination Provisions........................    68
     Shareholder Rights Plan................................    68
     Shareholder Meetings...................................    70
     Dissenters' Appraisal Rights...........................    71
     Takeover Statutes......................................    71
     Consideration of Non-Shareholder Interests by Board of
       Directors............................................    72
     Certain Purchases of the Corporation's Securities......    73
     Indemnification........................................    73
     Amendments to Articles of Incorporation and Bylaws.....    75
 
                      ADDITIONAL INFORMATION
 
Dissenters' Appraisal Rights................................    77
Legal Opinion...............................................    79
Experts.....................................................    79
Shareholder Proposals.......................................    80
Other Matters...............................................    80
Where You Can Find More Information.........................    80
Cautionary Statement Concerning Forward-Looking
  Information...............................................    83
 
                FINANCIAL AND BUSINESS INFORMATION
 
Unaudited Pro Forma Combined Condensed Financial
  Information...............................................    85
Notes to Pro Forma Combined Condensed Financial
  Information...............................................    92
 
               AMENDMENT TO FIRST AMERICAN CHARTER
 
Amendment to First American Charter to Increase Number of
  Authorized Shares of First American Common Stock..........    95
 
     OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
Election of First American Directors........................    97
Nominees for Election to the Board..........................    97
Continuing Directors until 1999 Meeting.....................    98
Continuing Directors until 2000 Meeting.....................    99
Description of the Board and Committees.....................   100
Section 16(a) Beneficial Ownership Reporting Compliance.....   102
Security Ownership of Certain Beneficial Owners.............   102
Security Ownership of Management............................   103
</TABLE>
 
                                                               TABLE OF CONTENTS
 
                                       iii
<PAGE>   12
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Executive Compensation......................................   105
     Summary Compensation Table.............................   105
     Option Grants..........................................   106
     Option Exercises and Fiscal Year-End Values............   106
Retirement Plans............................................   107
Compensation of Directors...................................   108
Human Resources Committee Interlocks and Insider
  Participation.............................................   108
Human Resources Committee Report on Executive
  Compensation..............................................   108
     Overall Policy.........................................   108
     Base Salaries..........................................   109
     Annual Incentive Compensation..........................   110
     Long-Term Incentive Compensation.......................   111
     Stock Ownership Policy.................................   111
     Chief Executive Officer Compensation...................   111
Shareholder Return Performance Graph........................   113
Certain Transactions........................................   114
Independent Certified Public Accountants....................   115
Annual Report on Form 10-K..................................   115
 
                            APPENDICES
 
APPENDIX A  Agreement and Plan of Merger....................   A-1
APPENDIX B  Stock Option Agreement..........................   B-1
APPENDIX C  Opinion of Morgan Stanley.......................   C-1
APPENDIX D  Opinion of Credit Suisse First Boston...........   D-1
APPENDIX E  Consent of Credit Suisse First Boston...........   E-1
APPENDIX F  Mississippi Business Corporation Act............   F-1
</TABLE>
 
                             ---------------------
 
TABLE OF CONTENTS
 
                                       iv
<PAGE>   13
 
                                    SUMMARY
 
This summary highlights selected information from this document. It does not
contain all of the information that is important to you. You should carefully
read this entire document and the documents to which we have referred you in
order to understand fully the merger and to obtain a more complete description
of the legal terms of the merger. See "ADDITIONAL INFORMATION -- Where You Can
Find More Information" (page 80). Each item in this summary includes a page
reference that directs you to a more complete description in this document of
the topic discussed.
 
THE COMPANIES (PAGE 60)
 
FIRST AMERICAN CORPORATION
First American Center
Nashville, Tennessee 37237-0700
(615) 748-2000
 
First American is incorporated in Tennessee and is a federal bank holding
company and a federal savings and loan holding company. We provide banking and
other financial services. Our banking services are provided mainly in Tennessee,
Virginia and Kentucky. First American's principal assets are the stock of its
subsidiaries. As of December 31, 1997, our total assets were about $10.8
billion, our deposits were about $8.0 billion and shareholders' equity was about
$908 million.
 
DEPOSIT GUARANTY CORP.
210 East Capitol Street
Jackson, Mississippi 39201
(601) 354-8564
 
Deposit Guaranty is incorporated in Mississippi and is a bank holding company.
Through our bank subsidiary, Deposit Guaranty National Bank, and our
banking-related subsidiaries, we serve customers primarily in Mississippi,
Louisiana and Arkansas. Deposit Guaranty offers banking, mortgage banking,
discount brokerage and trust services. Through two other subsidiaries, we also
provide mortgage banking services in Texas, Nebraska, Indiana, Iowa and
Oklahoma. As of December 31, 1997, our total assets were about $6.9 billion, our
deposits were about $5.4 billion and shareholders' equity was about $635
million. Also, on September 24, 1997, we agreed to acquire Victory Bancshares,
Inc., which is headquartered in Memphis, Tennessee and which had about $118
million in total assets at September 30, 1997. This acquisition is expected to
close during the first quarter of 1998.
 
OUR REASONS FOR THE MERGER (PAGE 25)
 
The merger will combine the strengths of our individual companies and will
create the fourth largest financial services company, in terms of total assets,
in the mid-south region of the United States. We expect that the combined
company resulting from the merger will be able to achieve superior financial
performance compared to our individual companies on their own. One reason for
this is that we should be able to substantially reduce costs by eliminating
overlap in our companies' operations and by applying First American's
investments in technology to Deposit Guaranty's operations. Another reason is
that we think we will have opportunities to increase revenue by bringing a
larger universe of customers in contact with a broader range of products and
services. We believe that the competitiveness of the financial services industry
is increasing continually, and that the greater strength realized through
combining our companies will enable us to provide superior products and services
to our customers and will provide our shareholders with substantial benefits.
 
To review the background of, and reasons for, the merger in greater detail,
please see pages 22 through 28.
 
THE SHAREHOLDERS' MEETINGS (PAGE 16)
 
First American Shareholders.  The First American annual meeting will be held at
the fifth-floor auditorium of the First American Center, Nashville, Tennessee,
at 10:30 a.m. on April 16, 1998. At the annual meeting, First American
shareholders will be asked:
 
1. to approve the merger agreement;
 
2. to approve an increase in the number of authorized shares of First American
   common stock from 100 million to 200 million; and
 
3. to elect one director to serve until the annual meeting in 1999 and six
   directors to serve until the annual meeting in 2001.
 
Deposit Guaranty Shareholders.  The Deposit Guaranty special meeting will be
held in the lobby of the Deposit Guaranty National Bank, located on the second
floor of Deposit Guaranty Plaza, Jack-
 
                                                                         SUMMARY
<PAGE>   14
 
son, Mississippi, at 1:30 p.m. on April 14, 1998. At the special meeting,
Deposit Guaranty shareholders will be asked to approve the merger agreement.
 
OUR RECOMMENDATIONS TO SHAREHOLDERS (PAGES 26 AND 28)
 
First American Shareholders.  The First American Board of Directors believes
that the merger is fair to you and in your best interests, and unanimously
recommends that you vote "FOR" the proposal to approve the merger agreement and
"FOR" the proposal to increase the authorized shares of common stock from 100
million to 200 million. The First American Board of Directors also unanimously
recommends that you vote "FOR" the First American Board of Directors' nominees
for directors.
 
Deposit Guaranty Shareholders.  The Deposit Guaranty Board of Directors believes
that the merger is fair to you and in your best interests, and unanimously
recommends that you vote "FOR" the proposal to approve the merger agreement.
 
RECORD DATE; VOTING POWER (PAGES 17
AND 19)
 
First American Shareholders.  You can vote at the First American Annual Meeting
if you owned First American Common Stock as of the close of business on February
5, 1998, the record date. On that date, 59,007,497 shares of First American
common stock were outstanding and therefore are allowed to vote at the First
American annual meeting. For each proposal we've described, you will have one
vote at the First American annual meeting for each share of First American
common stock you owned on February 5, 1998.
 
Deposit Guaranty Shareholders.  You can vote at the Deposit Guaranty Special
Meeting if you owned Deposit Guaranty Common Stock as of the close of business
on February 20, 1998, the record date. On that date, 40,831,953 shares of
Deposit Guaranty common stock were outstanding and therefore are allowed to vote
at the Deposit Guaranty special meeting. You will be able to cast one vote for
each share of Deposit Guaranty common stock you owned on February 20, 1998.
 
VOTES REQUIRED (PAGES 17 AND 19)
 
First American Shareholders.  In order for the merger to be approved, First
American shareholders holding a majority of the outstanding shares of the common
stock on the record date must vote in favor of the merger. In order for the
increase in the number of authorized shares of common stock to be approved, the
number of shares voting in favor of the increase must exceed the number of
shares voting against it. The merger is conditioned on your approval of this
increase. In order for a nominee to be elected to the First American Board, the
nominee must receive the vote of a plurality of shares present or represented by
proxy at the First American annual meeting.
 
All together, the directors and officers of First American and Deposit Guaranty
can cast less than 7.3% of the votes entitled to be cast at the First American
annual meeting. We expect that they will vote all of their shares in favor of
the merger and in favor of the increase of First American's authorized shares of
common stock to 200 million.
 
Deposit Guaranty Shareholders.  In order for the merger to be approved, Deposit
Guaranty shareholders holding a majority of the outstanding shares of common
stock on the record date must vote in favor of the merger.
 
All together, the directors and officers of First American and Deposit Guaranty
can cast less than 7.3% of the votes entitled to be cast at the Deposit Guaranty
special meeting. We expect that they will vote all of their shares in favor of
the merger.
 
THE MERGER (PAGE 21)
 
We have attached the merger agreement to this Joint Proxy Statement-Prospectus
as Appendix A. We encourage you to read the merger agreement. It is the legal
document that governs the merger.
 
SUMMARY
                                        2
<PAGE>   15
 
CONDITIONS TO COMPLETION OF THE MERGER (PAGE 41)
 
The completion of the merger depends on a number of conditions being met,
including the following:
 
1. First American shareholders and Deposit Guaranty shareholders approving the
   merger;
 
2. First American shareholders approving the increase in the number of
   authorized shares of First American common stock;
 
3. Nasdaq having authorized for quotation the shares First American will issue
   to Deposit Guaranty shareholders in the merger;
 
4. receipt of all required regulatory approvals and the expiration of any
   regulatory waiting periods;
 
5. the absence of any governmental order blocking completion of the merger, or
   of any proceedings by a government body trying to block it;
 
6. receipt of opinions of each of our counsel that the U.S. federal income tax
   treatment of Deposit Guaranty shareholders, Deposit Guaranty and First
   American in the merger will generally be as we've described it to you in this
   document; and
 
7. receipt of a letter from First American's independent public accountants
   stating that the merger will qualify for "pooling of interests" accounting
   treatment.
 
In cases where the law permits, a party to the Merger Agreement could elect to
waive a condition that has not been satisfied and complete the merger although
it is entitled not to. We can't be certain whether or when any of the conditions
we've listed will be satisfied (or waived, where permissible), or that the
merger will be completed.
 
TERMINATION OF THE MERGER AGREEMENT (PAGE 42)
 
We can agree at any time to terminate the merger agreement without completing
the merger, even if the shareholders of both our companies have already voted to
approve it. Also, First American can terminate the merger agreement if Deposit
Guaranty's Board withdraws, or modifies in any way adverse to First American,
its recommendation that Deposit Guaranty shareholders approve the merger.
 
Moreover, either of us can terminate the merger agreement in the following
circumstances:
1. after a final decision by a governmental authority to prohibit the merger, or
   after the rejection of an application for a governmental approval required to
   complete the merger (but in the latter case, only after waiting 60 days);
 
2. if the merger isn't completed by September 30, 1998;
 
3. if the First American shareholders or the Deposit Guaranty shareholders don't
   approve the merger or if the First American shareholders don't approve the
   increase in First American's authorized shares of common stock; or
 
4. if the other party violates, in a significant way, any of its
   representations, warranties or obligations under the merger agreement.
 
Generally, a party can only terminate the merger agreement in one of the
preceding four situations if that party isn't in violation of the merger
agreement or if its violations of the merger agreement aren't the cause of the
event permitting termination.
 
In addition, Deposit Guaranty could decide to terminate the merger agreement in
either of two situations, based on the market price of First American's common
stock during a period before the receipt of Federal Reserve Approval of the
merger. The first situation would happen if First American's average stock price
during that period is less than $41.0625. The second situation would happen if
the average price during the period is less than $43.80 and underperforms a
group of bank holding company stocks by an agreed amount during the period
following our entering into the merger agreement.
 
                                                                         SUMMARY
 
                                        3
<PAGE>   16
 
However, Deposit Guaranty will not be able to terminate the merger agreement if
First American elects to make a compensating adjustment to the exchange ratio
that would provide Deposit Guaranty shareholders more shares of First American
common stock in exchange for each share of Deposit Guaranty common stock.
 
FEDERAL INCOME TAX CONSEQUENCES (PAGE 46)
 
We have structured the merger with the intent that First American, Deposit
Guaranty and our shareholders won't recognize any gain or loss for U.S. federal
income tax purposes in the merger, except in connection with cash received
instead of fractional shares by Deposit Guaranty shareholders. We have
conditioned the merger on our receipt of legal opinions that this will be the
case, but these opinions won't bind the Internal Revenue Service, which could
take a different view.
 
THIS TAX TREATMENT MAY NOT APPLY TO CERTAIN DEPOSIT GUARANTY SHAREHOLDERS,
INCLUDING THE TYPES OF DEPOSIT GUARANTY SHAREHOLDERS DISCUSSED ON PAGE 46, AND
WILL NOT APPLY TO ANY DEPOSIT GUARANTY SHAREHOLDER WHO DISSENTS FROM THE MERGER
UNDER MISSISSIPPI LAW. DETERMINING THE ACTUAL TAX CONSEQUENCES OF THE MERGER TO
YOU CAN BE COMPLICATED. THEY WILL DEPEND ON YOUR SPECIFIC SITUATION AND MANY
VARIABLES NOT WITHIN OUR CONTROL. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A
FULL UNDERSTANDING OF THE MERGER'S TAX CONSEQUENCES.
 
ACCOUNTING TREATMENT (PAGE 55)
 
We expect the merger to qualify as a pooling of interests, which means that, for
accounting and financial reporting purposes, we will treat our companies as if
they had always been one company. We have conditioned the merger on our receipt
of a letter from First American's independent public accountants that the merger
will qualify as a pooling of interests.
 
OPINIONS OF FINANCIAL ADVISORS (PAGES 28 AND 33)
 
To First American Shareholders: In deciding to approve the merger, our Board
considered the opinion of its financial advisor, Morgan Stanley & Co.,
Incorporated, that the exchange ratio was fair from a financial point of view to
First American. We have attached this opinion as Appendix C to this document.
You should read it carefully.
 
To Deposit Guaranty Shareholders: In deciding to approve the merger, our Board
considered the opinion of its financial advisor, Credit Suisse First Boston
Corporation, that as of the date of the opinion the exchange ratio was fair from
a financial point of view to Deposit Guaranty's shareholders. We have attached
this opinion as Appendix D to this document. You should read it carefully.
 
BOARD OF DIRECTORS AND MANAGEMENT OF FIRST AMERICAN FOLLOWING THE MERGER (PAGE
57)
 
First American Board of Directors:  If the merger is completed, five of Deposit
Guaranty's directors will be appointed to First American's Board. These
directors will be mutually selected by us from among the existing members of
Deposit Guaranty's Board.
 
Community Advisory Board:  We've also agreed that the remaining Deposit Guaranty
directors, as well as the members of the Board of Deposit Guaranty National
Bank, a subsidiary of Deposit Guaranty, will serve on a community advisory board
of First American National Bank for at least 36 months after the Merger. Current
members of Deposit Guaranty's community advisory boards will also continue to
serve on those boards for that period. Members of First American's Board and its
advisory boards receive fees for their services.
 
Management:  Mr. E.B. Robinson, Jr., who is Deposit Guaranty's Chairman and
Chief Executive Officer, will become Vice Chairman and Chief Operating Officer
of First American after the merger. Mr. Howard L. McMillan, Jr., who is Deposit
Guaranty's President and Chief Operating Officer, will become Chairman of
Deposit Guaranty's operations within First American after the merger.
 
Both Messrs. Robinson and McMillan entered into employment agreements with First
American that will become effective upon completion of the merger. During the
term of his agreement, Mr. Robinson will receive an annual base salary of no
less than $600,000 and will be eligible for an annual bonus of up to 100% of his
base salary. Upon completion of the merger, Mr. Robinson will also receive
45,000 shares of restricted stock from First American and an option to acquire
an additional 90,000 shares of First American common stock. During the term of
his agreement, Mr. McMillan will receive an annual base salary of
 
SUMMARY
                                        4
<PAGE>   17
 
no less than $350,000 and will be eligible for an annual bonus of up to 100% of
his base salary. Upon completion of the merger, Mr. McMillan will also receive
15,000 shares of restricted stock from First American and an option to acquire
an additional 30,000 shares of First American common stock.
 
Please refer to pages 47 to 49 for more information concerning the employment
agreements between First American and Messrs. Robinson and McMillan.
 
INTERESTS OF OTHER PERSONS IN THE MERGER THAT ARE DIFFERENT FROM YOURS (PAGE 47)
 
In addition to the agreements described in the preceding paragraphs, certain
officers of Deposit Guaranty have change-of-control agreements, retention
incentives or benefit and compensation plans that provide them with interests in
the merger that are different from, or in addition to, their interests as
shareholders of Deposit Guaranty. In particular, existing change of control
agreements between Deposit Guaranty and some of its officers will provide them
with certain severance benefits if their employment with Deposit Guaranty is
terminated following the merger, including severance payments of either two or
three times salary plus average bonus and continuation of medical insurance
benefits for two or three years following termination of employment. If all of
the officers with change-of-control agreements were terminated immediately after
the merger, as a group they would receive severance benefits worth about $7.6
million. Members of Deposit Guaranty's Board and its officers also are entitled
to indemnification and liability insurance under the merger agreement.
 
Please refer to pages 47 through 51 for more information concerning employment
arrangements, retention incentives and other interests of Deposit Guaranty
directors and officers in the Merger.
 
DISSENTERS' APPRAISAL RIGHTS (PAGE 77)
 
Deposit Guaranty Shareholders.  Mississippi law permits you to dissent from the
merger and to have the fair value of your stock appraised by a court and paid to
you in cash. To do this, you must follow certain procedures, including the
filing of certain notices with us and refraining from voting your shares in
favor of the merger. If you dissent from the merger, your shares of Deposit
Guaranty common stock will not be exchanged for shares of First American common
stock in the merger, and your only right will be to receive the appraised value
of your shares in cash.
 
First American Shareholders.  Tennessee law does not provide you with
dissenter's appraisal rights in connection with the merger.
 
REGULATORY APPROVALS (PAGE 55)
 
We can't complete the merger unless we obtain the approval of the Board of
Governors of the Federal Reserve System. The U.S. Department of Justice has
input into the Federal Reserve Board's approval process. Federal law requires us
to wait for up to 30 days before completing the merger after the Federal Reserve
Board has approved it. As of the date of this document, the Federal Reserve
Board has approved the merger and the required waiting period has expired. First
American has applied separately to the Federal Reserve Board for approval to
acquire Victory Bank and Trust Co. (which will become a subsidiary of Deposit
Guaranty after the completion of its merger with Victory Bancshares, Inc.) as a
separate subsidiary of First American, and this application is still pending.
 
In addition, the merger is subject to the approval of or notice to the
Commissioner of Banking and Consumer Finance and the Commissioner of Insurance
of the State of Mississippi. A separate notice to the Commissioner of Financial
Institutions of the State of Tennessee is required in connection with First
American's acquisition of Victory Bank and Trust Co. as a separate subsidiary.
We have filed (or shortly will file) all of the required notices with these
state regulatory authorities.
 
While we don't know of any reason why we shouldn't obtain the remaining
regulatory approvals in a timely manner, we can't be certain when we'll obtain
them or that we will obtain them.
 
AMENDMENT TO FIRST AMERICAN'S CHARTER
(PAGE 95)
 
First American shareholders are also being asked to approve an amendment to
First American's Restated Charter to increase the number of authorized shares of
First American common stock from 100 million to 200 million. The increase is
required, in part, because First American currently does not have enough
unissued shares of its common stock available to issue the requisite number of
shares to Deposit Guaranty shareholders in the merger. We
 
                                                                         SUMMARY
 
                                        5
<PAGE>   18
 
have conditioned the merger on the approval of this increase by First American
shareholders.
 
FIRST AMERICAN'S OPTION TO PURCHASE DEPOSIT GUARANTY COMMON STOCK (PAGE 51)
 
As an inducement to First American to enter into the merger agreement, Deposit
Guaranty granted a stock option to First American to purchase up to 19.9% of
Deposit Guaranty's common stock. The exercise price of the option is $52.375,
Deposit Guaranty's closing stock price on the last trading day before we entered
into the merger agreement.
 
First American can't exercise the option unless certain specific events take
place. These events are generally related to a competing transaction involving a
merger, business combination or other acquisition of Deposit Guaranty or its
stock or assets. As of the date of this Joint Proxy Statement-Prospectus, we
don't believe any event of that kind has occurred. The option could have the
effect of discouraging other companies that might want to combine with or
acquire Deposit Guaranty from doing so. The option agreement is attached as
Appendix B to this Joint Proxy Statement-Prospectus.
 
COMPARATIVE PER SHARE MARKET PRICE
INFORMATION
 
Shares of First American are quoted on the Nasdaq National Market. Shares of
Deposit Guaranty are listed on the New York Stock Exchange. On December 5, 1997,
the last full trading day prior to the public announcement of the merger, First
American stock closed at $54.75 per share and Deposit Guaranty stock closed at
$52.375 per share. On March 10, 1998, First American stock closed at $47.69 per
share and Deposit Guaranty stock closed at $55.19 per share.
 
Based on the exchange ratio in the merger, which is 1.17, the market value of
the consideration that Deposit Guaranty shareholders will receive in the merger
for each share of Deposit Guaranty common stock would be $64.06 based on First
American's December 5, 1997 closing price and $55.79 based on First American's
March 10, 1998 closing price. Of course, the market price of First American
common stock will fluctuate prior to and after completion of the merger, while
the exchange ratio is fixed. You should obtain current stock price quotations
for First American common stock and Deposit Guaranty common stock.
 
FORWARD-LOOKING STATEMENTS MAY PROVE
INACCURATE (PAGE 83)
 
We have each made forward-looking statements in this document (and in documents
to which we refer you in this document) that are subject to risks and
uncertainties. These forward-looking statements include information about
possible or assumed future results of our operations or the performance of the
combined company after the merger. Also, when we use any of the words
"believes," "expects," "anticipates" or similar expressions, we are making
forward-looking statements. Many possible events or factors could affect the
future financial results and performance of each of our companies and the
combined company after the merger and could cause those results or performance
to differ materially from those expressed in our forward-looking statements.
These possible events or factors include the following:
 
1. we encounter problems or delays in bringing together our two companies,
   either before or after the merger is consummated;
 
2. legal and regulatory risks and uncertainties;
 
3. economic, political and competitive forces affecting our businesses, markets,
   constituencies or securities;
 
4. the risk that our analyses of these risks and forces could be incorrect, or
   that the strategies we've developed to deal with them may not succeed.
 
SUMMARY
                                        6
<PAGE>   19
 
RECENT DEVELOPMENTS
 
The following table shows summarized unaudited financial data for our companies
at or for the year ended December 31, 1997. We expect to incur restructuring and
merger-related expenses as a result of combining our companies. We also
anticipate that the merger will provide the combined company with financial
benefits, including reduced operating expenses and greater opportunities to earn
revenue. However, none of these anticipated expenses or benefits have been
factored into the selected financial data presented below, nor has the data been
audited.
 
         SELECTED FINANCIAL DATA OF FIRST AMERICAN AND DEPOSIT GUARANTY
 
<TABLE>
<CAPTION>
                                                                       AS OF OR FOR THE YEAR ENDED
                                                                            DECEMBER 31, 1997
                                                           ----------------------------------------------------
                                                                    FIRST                       DEPOSIT
                                                                   AMERICAN                     GUARANTY
                                                                   --------                     --------
                                                                               (UNAUDITED)
<S>                                                        <C>                           <C>
Income Data (thousands)
     Net interest income.................................    $            383,410          $          284,596
     Provision for loan losses...........................                   5,000                       7,500
     Non-interest income.................................                 259,594                     133,603
     Non-interest expense................................                 402,002                     271,047
     Income tax expense..................................                  90,530                      47,372
                                                             --------------------          ------------------
     Net income..........................................    $            145,472          $           92,280
                                                             ====================          ==================
End of Period Balance Sheet Items (thousands)
     Assets..............................................    $         10,871,820          $        6,939,727
     Total net loans.....................................               7,101,178                   4,367,032
     Deposits............................................               8,007,679                   5,373,962
     Borrowed funds......................................               1,736,648                     930,527
     Shareholders' equity................................                 908,739                     635,238
 
Per Share Data
     Basic earnings per share............................                  $ 2.48                      $ 2.25
     Diluted earnings per share..........................                  $ 2.40                      $ 2.23
     Cash dividends declared.............................                  $0.755                      $ 0.83
     Book value, end of period...........................                  $15.60                      $15.56
 
Shares Outstanding (thousands)
     Average.............................................                  58,679                      41,082
</TABLE>
 
                                                                         SUMMARY
 
                                        7
<PAGE>   20
 
COMPARATIVE UNAUDITED PER SHARE DATA
 
The following table shows information about our companies' income per share,
dividends per share and book value per share, and similar information reflecting
the merger of our two companies (which is referred to as "pro forma"
information). In presenting the comparative pro forma information for certain
time periods, we assumed that our companies had been merged throughout those
periods.
 
In presenting the comparative pro forma information, we also assumed that we
will treat our companies as if they had always been combined for accounting and
financial reporting purposes (a method which is referred to as the "pooling of
interests" method of accounting).
 
The information listed as "equivalent pro forma" was obtained by multiplying the
pro forma amounts by the exchange ratio of 1.17. It is intended to reflect the
fact that Deposit Guaranty shareholders will be receiving more than one share of
First American common stock for each share of Deposit Guaranty common stock
exchanged in the merger.
 
We expect that we will incur restructuring and merger-related expenses as a
result of combining our companies. We also anticipate that the merger will
provide the combined company with financial benefits such as reduced operating
expenses and the opportunity to earn more revenue. However, none of these
anticipated expenses or benefits has been factored into the pro forma
information, except for the pro forma combined condensed balance sheet. For that
reason, the pro forma information, while helpful in illustrating the financial
attributes of the combined company under one set of assumptions, doesn't attempt
to predict or suggest future results. Also, the information we've set forth for
the nine-month period ended September 30, 1997 doesn't indicate what the results
will be for the full 1997 fiscal year.
 
The information in the following table is based on the historical financial
information of our companies that has been presented in our prior Securities and
Exchange Commission filings. This information has been incorporated into this
Joint Proxy Statement-Prospectus by reference. See "ADDITIONAL
INFORMATION -- Where You Can Find More Information" on page 80.
 
<TABLE>
<CAPTION>
                                                           AT OR FOR THE
                                                            NINE MONTHS     AT OR FOR THE YEARS ENDED
                                                               ENDED              DECEMBER 31,
                                                           SEPTEMBER 30,   ---------------------------
                                                               1997        1996(a)   1995(a)   1994(a)
                                                           -------------   -------   -------   -------
<S>                                                        <C>             <C>       <C>       <C>
FIRST AMERICAN COMMON STOCK
Income from continuing operations per common share,
  primary:(d)
  Historical.............................................     $ 1.81       $ 2.05     $1.82     $1.70
  Pro Forma(b)...........................................       1.63         1.96      1.73      1.67
Cash dividends declared per common share:(e)
  Historical.............................................     $  .56       $  .61     $ .53     $ .44
  Pro Forma(b)...........................................        .53          .61       .50       .42
Book value per common share as of end of period:(f)
  Historical.............................................     $15.23       $14.66
  Pro Forma(b)...........................................      13.59        13.79
</TABLE>
 
SUMMARY
                                        8
<PAGE>   21
 
<TABLE>
<CAPTION>
                                                             AT OR FOR THE
                                                              NINE MONTHS    AT OR FOR THE YEARS ENDED
                                                                 ENDED             DECEMBER 31,
                                                             SEPTEMBER 30,   -------------------------
                                                                 1997         1996      1995     1994
                                                             -------------   -------   ------   ------
<S>                                                          <C>             <C>       <C>      <C>
DEPOSIT GUARANTY COMMON STOCK
Income from continuing operations per common share,
  primary:(d)
  Historical...............................................     $ 1.65       $ 2.16    $1.89    $1.90
  Equivalent Pro Forma(c)..................................       1.91         2.30     2.02     1.95
Cash dividends declared per common share:
  Historical...............................................     $  .60       $  .72    $ .61    $ .53
  Equivalent Pro Forma(c)..................................        .62          .71      .59      .49
Book value per common share as of end of period:(f)
  Historical...............................................     $15.29       $14.83
  Equivalent Pro Forma(c)..................................      15.90        16.14
</TABLE>
 
- ---------------
(a)  Adjusted for a 2-for-1 stock split on May 9, 1997.
(b)  First American will account for the Merger using the "pooling of interests"
     method of accounting. Amounts do not include the effect of the Victory
     Bancshares, Inc. merger, which Deposit Guaranty expects to complete at or
     prior to completion of the Merger using the "pooling of interests" method.
(c)  Deposit Guaranty pro forma equivalent amounts are computed by multiplying
     the pro forma combined amounts by an assumed exchange ratio of 1.17.
(d)  Net income per common share is based on weighted average common shares
     outstanding.
(e)  Pro forma cash dividends represent historical cash dividends of First
     American Corporation and Deposit Guaranty Corporation, divided by pro forma
     weighted average common shares.
(f)  Book value per common share is based on total period-end shareholders'
     equity.
 
                                                                         SUMMARY
 
                                        9
<PAGE>   22
 
                            SELECTED FINANCIAL DATA
 
     The following tables show summarized unaudited historical financial data
for each of our companies and also show similar pro forma information reflecting
the merger of our two companies. The pro forma information reflects the "pooling
of interests" method of accounting for the merger.
 
     We expect that we will incur restructuring and merger-related expenses as a
result of combining our companies. We also anticipate that the merger will
provide the combined company with financial benefits such as reduced operating
expenses and the opportunity to earn more revenue. However, none of these
anticipated expenses or benefits has been factored into the pro forma income
statement information. For that reason, the pro forma information, while helpful
in illustrating the financial attributes of the combined company under one set
of assumptions, doesn't attempt to predict or suggest future results. Also, the
information we've set forth for the nine-month period ended September 30, 1997
doesn't indicate what the results will be for the full 1997 fiscal year.
 
     The information in the following tables is based on the historical
financial information of our companies that has been presented in our prior
filings with the Securities and Exchange Commission. All of the summary
financial information provided in the following tables should be read in
connection with this historical financial information and with the more detailed
financial information we have provided in this Joint Proxy Statement-Prospectus,
which you can find beginning at page 85. This historical financial information
has also been incorporated into this Joint Proxy Statement-Prospectus by
reference -- see "ADDITIONAL INFORMATION -- Where You Can Find More Information"
on page 80. Both First American's and Deposit Guaranty's audited historical
financial statements were audited by KPMG Peat Marwick LLP, independent
certified public accountants to each of our companies. The financial information
as of or for the interim periods ended September 30, 1997 and 1996 has not been
audited and in the respective opinions of management reflects all adjustments
(consisting only of normal recurring adjustments) necessary to a fair
presentation of such data.
 
SUMMARY
                                       10
<PAGE>   23
 
              SELECTED HISTORICAL FINANCIAL DATA OF FIRST AMERICAN
 
<TABLE>
<CAPTION>
                             AS OF OR FOR THE
                             NINE MONTHS ENDED
                               SEPTEMBER 30,                    AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                         -------------------------   ---------------------------------------------------------------
                            1997         1996(a)       1996(a)      1995(a)      1994(a)      1993(a)      1992(a)
                         -----------   -----------   -----------   ----------   ----------   ----------   ----------
<S>                      <C>           <C>           <C>           <C>          <C>          <C>          <C>
CONDENSED INCOME
  DATA(THOUSANDS):
Net interest income....  $   282,379   $   258,336   $   349,698   $  312,310   $  298,242   $  287,200   $  268,197
Provision for loan
  losses...............           --            --            --           83       (9,919)     (41,405)      39,249
Noninterest income.....      188,840       121,184       180,533      108,487       85,715       88,379       77,325
Noninterest expense....      298,509       237,286       334,455      252,448      239,270      248,227      240,099
Income taxes...........       66,106        54,126        74,204       65,186       57,404       61,348       20,021
                         -----------   -----------   -----------   ----------   ----------   ----------   ----------
Income before
  cumulative effect of
  changes in accounting
  principles, net of
  tax..................      106,604        88,108       121,572      103,080       97,202      107,409       46,153
Cumulative effect of
  changes in accounting
  principles, net of
  tax..................           --            --            --           --           --          (84)          --
                         -----------   -----------   -----------   ----------   ----------   ----------   ----------
Net income.............  $   106,604   $    88,108   $   121,572   $  103,080   $   97,202   $  107,325   $   46,153
                         ===========   ===========   ===========   ==========   ==========   ==========   ==========
END OF PERIOD BALANCE SHEET
  ITEMS (THOUSANDS):
Assets.................  $10,561,982   $10,028,365   $10,399,468   $9,681,629   $8,278,727   $7,707,781   $7,256,798
Total net loans........    7,036,428     6,452,544     6,535,332    6,293,561    5,042,530    4,533,059    3,876,108
Deposits...............    7,701,405     7,551,665     7,792,977    7,382,294    6,307,779    6,150,551    6,018,768
Long-term debt.........      210,056       340,497       331,157      421,791      271,473       77,053       18,477
Shareholders' equity...      889,270       837,991       868,707      795,532      667,673      623,562      503,899
PER SHARE DATA:(b)
Net income.............  $      1.81   $      1.49   $      2.05   $     1.82   $     1.70   $     1.89   $     0.88
Cash dividends
  declared.............         0.56          0.45          0.61         0.53         0.44         0.28         0.10
Book value, end of
  period...............        15.23         14.18         14.66        13.47        11.62        11.17         8.93
SHARES
  OUTSTANDING(THOUSANDS):(b)
Average................       58,776        59,178        59,184       56,630       57,340       56,710       53,018
End of period..........       58,379        59,113        59,263       59,080       57,450       55,830       56,426
</TABLE>
 
- ---------------
(a) Per share data and shares outstanding have been adjusted for a two-for-one
stock split on May 9, 1997.
 
(b) Per share data and shares outstanding are presented in accordance with APB
    Opinion No. 15.
 
                                                                         SUMMARY
 
                                       11
<PAGE>   24
 
             SELECTED HISTORICAL FINANCIAL DATA OF DEPOSIT GUARANTY
 
<TABLE>
<CAPTION>
                               AS OF OR FOR THE
                               NINE MONTHS ENDED
                                 SEPTEMBER 30,                   AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                            -----------------------   --------------------------------------------------------------
                               1997         1996         1996         1995         1994         1993         1992
                            ----------   ----------   ----------   ----------   ----------   ----------   ----------
<S>                         <C>          <C>          <C>          <C>          <C>          <C>          <C>
CONDENSED INCOME
  DATA(THOUSANDS):
Net interest income.......  $  213,175   $  183,897   $  249,534   $  229,272   $  181,391   $  174,640   $  166,655
Provision for loan
  losses..................       5,625        4,005        5,340        2,160       (4,750)     (16,000)      10,378
Noninterest income........      97,469       86,932      117,245       91,989       93,499       74,781       67,977
Noninterest expense.......     202,377      171,727      237,208      211,452      180,047      171,567      164,470
Income taxes..............      34,837       30,972       40,621       35,029       32,463       27,302       14,270
                            ----------   ----------   ----------   ----------   ----------   ----------   ----------
Net income................  $   67,805   $   64,125   $   83,610   $   72,620   $   67,130   $   66,552   $   45,514
                            ==========   ==========   ==========   ==========   ==========   ==========   ==========
END OF PERIOD BALANCE
  SHEET ITEMS (THOUSANDS):
Assets....................  $6,839,432   $6,182,399   $6,382,897   $6,026,199   $5,130,897   $4,898,080   $4,994,431
Total net loans...........   4,288,366    3,831,998    3,917,672    3,520,583    2,803,525    2,356,553    2,190,627
Deposits..................   5,283,351    4,833,080    5,025,749    4,780,659    4,038,550    3,921,141    4,001,969
Long-term debt............     176,444       99,392       99,405           --           --           --           --
Shareholders' equity......     624,086      562,017      581,266      539,053      443,549      395,888      344,324
PER SHARE DATA:(a)
Net income................  $     1.65   $     1.66   $     2.16   $     1.89   $     1.90   $     1.89   $     1.34
Cash dividends declared...        0.60         0.52         0.72         0.61         0.53         0.47         0.40
Book value, end of
  period..................       15.29        14.46        14.83        13.91        12.57        11.20         9.78
SHARES
OUTSTANDING(THOUSANDS):(a)
Average...................      41,171       38,620       38,760       38,431       35,336       35,300       34,067
End of period.............      40,814       38,864       39,185       38,759       35,296       35,336       35,205
</TABLE>
 
- ---------------
(a) Per share data and shares outstanding are presented in accordance with APB
    Opinion No. 15.
 
SUMMARY
                                       12
<PAGE>   25
 
                       SELECTED PRO FORMA FINANCIAL DATA
                                       OF
                  FIRST AMERICAN AND DEPOSIT GUARANTY COMBINED
 
<TABLE>
<CAPTION>
                                                     AS OF OR FOR THE NINE
                                                         MONTHS ENDED
                                                         SEPTEMBER 30,        AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                                     ---------------------   ------------------------------------------
                                                             1997                1996           1995           1994
                                                             ----                ----           ----           ----
<S>                                                  <C>                     <C>            <C>            <C>
INCOME DATA (THOUSANDS):
  Net interest income..............................       $   495,554        $   599,232    $   541,582    $   479,633
  Provision for loan losses........................             5,625              5,340          2,243        (14,669)
  Noninterest income...............................           286,309            297,778        200,476        179,214
  Noninterest expense..............................           500,886            571,663        463,900        419,317
  Income taxes.....................................           100,943            114,825        100,215         89,867
                                                          -----------        -----------    -----------    -----------
  Net income.......................................       $   174,409        $   205,182    $   175,700    $   164,332
                                                          ===========        ===========    ===========    ===========
 
END OF PERIOD BALANCE SHEET ITEMS (THOUSANDS):
  Assets...........................................       $17,432,414        $16,782,365    $15,707,828    $13,409,624
  Total net loans..................................        11,324,794         10,453,004      9,814,144      7,846,055
  Deposits.........................................        12,984,756         12,818,726     12,162,953     10,346,329
  Long-term debt...................................           386,500            430,562        421,791        271,473
  Shareholders' equity.............................         1,442,356          1,449,973      1,334,585      1,111,222
 
PER SHARE DATA:
  Net income.......................................             $1.63              $1.96          $1.73          $1.67
  Cash dividends declared..........................              0.53               0.61           0.50           0.42
  Book value, end of period........................             13.59              13.79          12.78          11.25
 
SHARES OUTSTANDING (THOUSANDS):
  Average..........................................           106,946            104,533        101,594         98,683
  End of period....................................           106,131            105,109        104,428         98,746
</TABLE>
 
                                                                         SUMMARY
 
                                       13
<PAGE>   26
 
                             INDEX OF DEFINED TERMS
 
<TABLE>
<S>                                       <C>
1991 Plan...............................  103
1993 Plan...............................  103
1996 Transactions.......................   31
1997-A Transactions.....................   31
1997-B Transactions.....................   31
Absolute Termination Event..............   43
Acquisition Transaction.................   52
Additional Shares.......................   95
Advisory Boards.........................   41
Articles of Merger......................   21
ATMs....................................  114
Average Closing Price...................   44
BHCA....................................   55
Bonus Plans.............................   39
broker non-votes........................   17
Chancery Court..........................   78
Change of Control Agreements............   49
Charter Amendment.......................   16
Charter Federal Agreement...............   65
Closing Date............................   36
Code....................................   22
Commision...............................   33
Comparable Transactions.................   31
Comptroller.............................   62
Continuing Director.....................   68
Control Shares..........................   71
Control Share Acquisition...............   71
Control Share Acquisition Statement.....   71
Control Share Dissenting Right..........   72
Covered Executive.......................   49
CSFB....................................   22
Defendant...............................   73
Deferred Income Plans...................   50
Deposit Guaranty........................   16
Deposit Guaranty Articles...............   38
Deposit Guaranty Board..................   18
Deposit Guaranty Bylaws.................   38
Deposit Guaranty Certificates...........   37
Deposit Guaranty Common Stock...........   18
Deposit Guaranty Employee Stock
  Option................................   22
Deposit Guaranty Employee Stock Option
  Plans.................................   22
Deposit Guaranty Interested
  Shareholder...........................   68
Deposit Guaranty Record Date............   19
Deposit Guaranty Shareholders...........   18
Deposit Guaranty Special Meeting........   18
Deposit Guaranty Voting Stock...........   68
Determination Date......................   44
Dissenters' Notice......................   77
Dissenting Shares.......................   21
Distribution Date.......................   69
DPC Shares..............................   21
DRIP....................................   38
Effective Date..........................   37
Effective Time..........................   21
EPS.....................................   29
ESPP....................................   38
Exchange Act............................   53
Exchange Agent..........................   36
Exchange Fund...........................   37
Exchange Ratio..........................   21
Exercise Termination Event..............   53
FANB....................................   60
FDIC....................................   62
FDICIA..................................   63
Federal Reserve Board...................   21
Final Expiration Date...................   69
First American..........................   16
First American Annual Meeting...........   16
First American Board....................   16
First American By-Laws..................   17
First American Certificates.............   37
First American Charter..................   16
First American Common Stock.............   16
First American Matters..................   16
First American Ratio....................   43
First American Record Date..............   17
First American Rights...................   16
First American Rights Agreement.........   16
First American Shareholders.............   16
First Manhattan.........................   23
GAAP....................................   38
HOLA....................................   60
Holder..................................   52
IBES....................................   25
IBM.....................................   60
Index Group.............................   44
Index Price.............................   45
</TABLE>
 
SUMMARY
                                       14
<PAGE>   27
 
<TABLE>
<S>                                                <C>
Index Ratio......................................         43
Index Termination Event..........................         43
Indicated Aggregate Consideration................         30
Indicated Value..................................         30
Initial Bidder...................................         22
Initial Triggering Event.........................         52
Injunction.......................................         41
Insurance Amount.................................         51
Interested Shareholder...........................         68
Interstate Banking and Branching Act.............         62
IRS..............................................         47
market/offer price...............................         53
MBCA.............................................         19
MBTOL............................................         71
MCSA.............................................         72
Meetings.........................................         18
Merger...........................................         16
Merger Agreement.................................         16
Merger Consideration.............................         21
Morgan Stanley...................................         24
Morgan Stanley Bank Index........................         30
MSPA.............................................         68
Named Executive Officers.........................        103
Nasdaq...........................................         32
NYSE.............................................         19
Option...........................................         51
Option Repurchase Price..........................         53
Option Share Repurchase Price....................         53
Option Shares....................................         51
OREO.............................................         31
OTS..............................................         61
Owner............................................         53
Payment Demand...................................         77
Peer Group.......................................        108
Performance Goals................................        109
Preferred Stock..................................         69
Proceeding.......................................         73
Redemption Price.................................         69
Regional Peer Group..............................         30
Registration Statement...........................         80
Repurchase Event.................................         54
Requisite Regulatory Approvals...................         39
Rights Record Date...............................         69
SARs.............................................        106
Securities Act...................................         22
Selected Companies...............................         35
Selected Transactions............................         35
SMHS.............................................        114
Soundness Threshold..............................        109
SSI..............................................        114
State Authorities................................         55
Stock Acquisition Date...........................         69
Stock Option Agreement...........................         38
Subsequent Triggering Event......................         53
Substitute Option................................         54
Surviving Corporation............................         21
TACPA............................................         66
Takeover Proposal................................         40
TBCA.............................................         16
TCSAA............................................         66
Tennessee Law....................................         66
Termination Event................................         43
TGA..............................................         66
Trust Account Shares.............................         21
UCB..............................................         31
Unit.............................................         69
Victory Bancshares...............................         38
Victory Merger...................................         38
</TABLE>
 
                                                                         SUMMARY
 
                                       15
<PAGE>   28
 
                                  THE MEETINGS
 
                         FIRST AMERICAN ANNUAL MEETING
 
GENERAL
 
     This Joint Proxy Statement-Prospectus is first being mailed by First
American Corporation, a Tennessee corporation ("FIRST AMERICAN"), to the holders
("FIRST AMERICAN SHAREHOLDERS") of the common stock, par value $2.50 per share,
of First American (together with the preferred stock purchase rights (the "FIRST
AMERICAN RIGHTS") associated therewith pursuant to the Rights Agreement, dated
as of December 14, 1988, between First American and First American Bank, as
Rights Agent (the "FIRST AMERICAN RIGHTS AGREEMENT"), the "FIRST AMERICAN COMMON
STOCK") on or about March 17, 1998, and is accompanied by the Notice of Annual
Meeting and a form of proxy that is solicited by the Board of Directors of First
American (the "FIRST AMERICAN BOARD") for use at the Annual Meeting of First
American Shareholders to be held on April 16, 1998, at 10:30 a.m., local time,
in the fifth floor auditorium of the First American Center, Nashville,
Tennessee, and at any adjournments or postponements thereof (the "FIRST AMERICAN
ANNUAL MEETING").
 
MATTERS TO BE CONSIDERED
 
     At the First American Annual Meeting, First American Shareholders will be
asked, in accordance with the requirements of the Tennessee Business Corporation
Act (the "TBCA"), to consider and vote upon (i) a proposal to approve and adopt
the Agreement and Plan of Merger, dated as of December 7, 1997 (the "MERGER
AGREEMENT"), by and between First American and Deposit Guaranty Corp., a
Mississippi corporation ("DEPOSIT GUARANTY"), and the transactions contemplated
thereby, including the merger of Deposit Guaranty with and into First American
(the "MERGER"); (ii) a proposal to approve and adopt an amendment to the
Restated Charter of First American (the "FIRST AMERICAN CHARTER") to increase
the number of authorized shares of First American Common Stock from 100 million
to 200 million (the "CHARTER AMENDMENT"); and (iii) a proposal to elect one
director of First American to serve until the Annual Meeting of First American
Shareholders in 1999 and six directors of First American to serve until the
Annual Meeting of First American Shareholders in 2001 (collectively, the "FIRST
AMERICAN MATTERS"). Approval of First American Shareholders of both the Merger
Agreement and the Charter Amendment is a condition to the parties' obligations
to consummate the Merger. First American Shareholders may also be asked to vote
upon a proposal to adjourn or postpone the First American Annual Meeting, which
adjournment or postponement could be used for the purpose, among others, of
allowing additional time for the soliciting of additional votes to approve the
First American Matters.
 
PROXIES
 
     The accompanying form of proxy is for use at the First American Annual
Meeting if a First American Shareholder is unable to attend in person. The proxy
may be revoked by the First American Shareholder at any time before it is
exercised, either by submitting to the Shareholder Services Department of First
American written notice of revocation or a properly executed proxy of a later
date or by attending the First American Annual Meeting and electing to vote in
person. Written notices of revocation and other communications with respect to
the revocation of First American proxies should be addressed to First American
Corporation, First American Center, Nashville, Tennessee 37237-0721, Attention:
Shareholder Services Department. All shares represented by valid proxies
received pursuant to this solicitation, and not revoked before they are
exercised, will be voted in the manner specified therein. If no specification is
made, the proxies will be voted in favor of the approval of the First American
Matters, except that no proxy that is voted against any of the First American
Matters will be voted in favor of any adjournment or postponement of the First
American Annual Meeting for the purpose of soliciting additional proxies. The
First American Board does not know of any other matters to be presented for
action at the First American Annual Meeting, but the persons named in the proxy
(who are directors of First American) intend to vote or act with respect to any
other proposal which may be presented for action according to their best
judgment.
 
THE MEETINGS
 
                                       16
<PAGE>   29
 
SOLICITATION OF PROXIES
 
     The entire cost of soliciting the proxies from the First American
Shareholders will be borne by First American. In addition to the 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 the stock
and secure their voting instructions, if necessary. First American will
reimburse such record holders for their reasonable expenses in so doing. First
American has also made arrangements with Corporate Investor Communications, Inc.
to assist it in soliciting proxies from banks, brokers and nominees, and has
agreed to pay $5,500, plus expenses, for such services. If necessary, First
American may also use several of its regular employees, who will not be
specially compensated, to solicit proxies from First American Shareholders,
either personally or by telephone, telegram, facsimile or special delivery
letter.
 
RECORD DATE AND VOTING RIGHTS
 
     Pursuant to the provisions of the TBCA, February 5, 1998 has been fixed as
the record date for determination of First American Shareholders entitled to
notice of and to vote at the First American Annual Meeting (the "FIRST AMERICAN
RECORD DATE"). Accordingly, only holders of shares of record of First American
Common Stock at the close of business on the First American Record Date will be
entitled to notice of and to vote at the First American Annual Meeting. The
number of shares of First American Common Stock entitled to vote at the First
American Annual Meeting is 59,007,497. Under Tennessee law, the First American
Charter and the By-Laws of First American (the "FIRST AMERICAN BY-LAWS"), the
aggregate number of votes entitled to be cast by all First American Shareholders
present in person or represented by proxy at the First American Annual Meeting,
whether those shareholders vote or abstain from voting, will be counted for
purposes of determining whether a quorum exists. In addition, shares represented
by proxies returned by a broker holding such shares in nominee or "street" name
will be counted for purposes of determining whether a quorum exists, even if
such shares are not voted in matters where discretionary voting by the broker is
not allowed ("BROKER NON-VOTES"). ABSTENTIONS FROM VOTING AND BROKER NON-VOTES
WILL NOT BE DEEMED TO HAVE BEEN CAST EITHER "FOR" OR "AGAINST" THE PROPOSALS
CONSIDERED AT THE FIRST AMERICAN ANNUAL MEETING, AND, SINCE APPROVAL OF THE
MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF
THE SHARES OF FIRST AMERICAN COMMON STOCK OUTSTANDING ON THE FIRST AMERICAN
RECORD DATE, SUCH ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS
A VOTE "AGAINST" SUCH PROPOSAL. ACCORDINGLY, THE FIRST AMERICAN BOARD URGES
FIRST AMERICAN SHAREHOLDERS TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
 
     Each share of First American Common Stock entitles its holder to one vote.
The affirmative vote of the holders of a majority of the shares of First
American Common Stock outstanding on the First American Record Date is required
to approve the Merger Agreement and the transactions contemplated thereby,
including the Merger. The Charter Amendment will be approved if the number of
votes cast at the First American Annual Meeting favoring such approval exceeds
the votes cast opposing such approval, provided a quorum is present thereat. As
of the First American Record Date, 3,689,232 shares of First American Common
Stock, equivalent to approximately 6.3% of the votes entitled to be cast at the
First American Annual Meeting, were beneficially owned by directors and
executive officers of First American. It is currently expected that each such
director and executive officer of First American will vote the shares of First
American Common Stock beneficially owned by him or her for approval of the First
American Matters. As of the First American Record Date, directors and executive
officers of Deposit Guaranty beneficially owned less than 1% of the outstanding
shares of First American Common Stock. As of the First American Record Date,
banking and trust subsidiaries of First American held 3,709,441 shares of First
American Common Stock in a fiduciary capacity and exercised shared or sole
voting power with respect to 1,459,947 such shares.
 
     Additional information with respect to beneficial ownership of First
American Common Stock by individuals and entities owning more than 5% of First
American Common Stock and more detailed information with respect to beneficial
ownership of First American Common Stock by directors and executive
 
                                                                    THE MEETINGS
 
                                       17
<PAGE>   30
 
officers of First American can be found under the caption "OTHER INFORMATION FOR
THE FIRST AMERICAN MEETING -- Security Ownership of Certain Beneficial Owners"
and "-- Security Ownership of Management."
 
RECOMMENDATION OF THE FIRST AMERICAN BOARD
 
     The First American Board has unanimously approved the Merger Agreement and
the transactions contemplated thereby, including the Merger, and the other First
American Matters. The First American Board believes that the Merger Agreement
and the transactions contemplated thereby, including the Merger, and the other
First American Matters are fair to and in the best interests of First American
and the First American Shareholders and recommends that the First American
Shareholders vote "FOR" approval and adoption of the Merger Agreement and
approval of the other First American Matters. See "THE MERGER -- Reasons of
First American for the Merger," "AMENDMENT TO THE FIRST AMERICAN
CHARTER -- Amendment to the First American Charter to Increase Number of
Authorized Shares of Common Stock" and "OTHER INFORMATION FOR THE FIRST AMERICAN
ANNUAL MEETING -- Election of First American Directors."
 
                        DEPOSIT GUARANTY SPECIAL MEETING
 
GENERAL
 
     This Joint Proxy Statement-Prospectus is first being mailed to the holders
(the "DEPOSIT GUARANTY SHAREHOLDERS") of shares of common stock, no par value
("DEPOSIT GUARANTY COMMON STOCK"), of Deposit Guaranty on or about March 17,
1998, and is accompanied by the Notice of Special Meeting and a form of proxy
that is solicited by the Board of Directors of Deposit Guaranty (the "DEPOSIT
GUARANTY BOARD") for use at the special meeting of Deposit Guaranty Shareholders
to be held on April 14, 1998, at 1:30 p.m., local time, in the lobby of Deposit
Guaranty National Bank, second floor, Deposit Guaranty Plaza, Jackson,
Mississippi, and at any adjournments or postponements thereof (the "DEPOSIT
GUARANTY SPECIAL MEETING" and, together with the First American Annual Meeting,
the "MEETINGS"). At the Deposit Guaranty Special Meeting, Deposit Guaranty
Shareholders will consider and vote upon a proposal to approve and adopt the
Merger Agreement and the transactions contemplated thereby, including the
Merger. The Deposit Guaranty Shareholders may also be asked to vote upon a
proposal to adjourn or postpone the Deposit Guaranty Special Meeting, which
adjournment or postponement could be used for the purpose, among others, of
allowing additional time for the soliciting of additional votes to approve the
Merger Agreement.
 
PROXIES
 
     A Deposit Guaranty Shareholder may use the accompanying proxy if such
Deposit Guaranty Shareholder is unable to attend the Deposit Guaranty Special
Meeting in person or wishes to have his or her shares voted by proxy even if
such shareholder does attend the meeting. A shareholder may revoke any proxy
given pursuant to this solicitation by delivering to the Secretary of Deposit
Guaranty, prior to the taking of the vote at the Deposit Guaranty Special
Meeting, a written notice revoking the proxy or a duly executed proxy relating
to the same shares bearing a later date or by attending the meeting and electing
to vote in person; however, attendance at the Deposit Guaranty Special Meeting
will not in and of itself constitute a revocation of a proxy. All written
notices of revocation and other communications with respect to the revocation of
Deposit Guaranty proxies should be addressed to Deposit Guaranty Corp., P.O. Box
730, Jackson, Mississippi 39205-0730, Attention: Secretary. For such notice of
revocation or later proxy to be valid, however, it must actually be received by
Deposit Guaranty prior to the vote of the Deposit Guaranty Shareholders at the
Deposit Guaranty Special Meeting. All shares represented by valid proxies
received pursuant to this solicitation, and not revoked before they are
exercised, will be voted in the manner specified therein. If no specification is
made, the proxies will be voted in favor of approval of the Merger Agreement.
The Deposit Guaranty Board is unaware of any other matters that may be presented
for action at the Deposit Guaranty Special Meeting. If other matters do properly
come before the Deposit Guaranty Special Meeting, however, it is intended that
shares represented
 
THE MEETINGS
 
                                       18
<PAGE>   31
 
by proxies in the accompanying form will be voted (or not voted) by the persons
named in the proxies in their discretion, provided that no proxy that is voted
against approval and adoption of the Merger Agreement will be voted in favor of
any adjournment or postponement of the Deposit Guaranty Special Meeting for the
purpose of soliciting additional proxies to approve the Merger Agreement.
 
SOLICITATION OF PROXIES
 
     The entire cost of soliciting proxies from the Deposit Guaranty
Shareholders will be borne by Deposit Guaranty. In addition to the solicitation
of proxies by mail, Deposit Guaranty will request banks, brokers and other
record holders to send proxies and proxy material to the beneficial owners of
the stock and secure their voting instructions, if necessary. Deposit Guaranty
will reimburse such record holders for their reasonable expenses in so doing.
Deposit Guaranty has also made arrangements with Corporate Investor
Communications, Inc. to assist it in soliciting proxies from banks, brokers and
nominees, and has agreed to pay approximately $4,500, plus expenses, for such
services. If necessary, Deposit Guaranty may also use several of its regular
employees, who will not be specially compensated, to solicit proxies from
Deposit Guaranty Shareholders, either personally or by telephone, telegram,
facsimile or special delivery letter.
 
RECORD DATE AND VOTING RIGHTS
 
     The Deposit Guaranty Board has fixed February 20, 1998 as the record date
(the "DEPOSIT GUARANTY RECORD DATE") for the determination of the Deposit
Guaranty Shareholders entitled to receive notice of and to vote at the Deposit
Guaranty Special Meeting. Accordingly, only Deposit Guaranty Shareholders of
record at the close of business on the Deposit Guaranty Record Date will be
entitled to notice of and to vote at the Deposit Guaranty Special Meeting. At
the close of business on the Deposit Guaranty Record Date, there were 40,831,953
shares of Deposit Guaranty Common Stock entitled to vote at the Deposit Guaranty
Special Meeting held by approximately 7,118 holders of record. The presence, in
person or by proxy, of shares of Deposit Guaranty Common Stock representing a
majority of the votes entitled to be cast on the Merger Agreement and the
transactions contemplated thereby on the Deposit Guaranty Record Date is
necessary to constitute a quorum at the Deposit Guaranty Special Meeting. Each
share of Deposit Guaranty Common Stock outstanding on the Deposit Guaranty
Record Date entitles its holder to one vote as to the approval of the Merger
Agreement and the transactions contemplated thereby and any other proposal that
may properly come before the Deposit Guaranty Special Meeting.
 
     Deposit Guaranty will count shares of Deposit Guaranty Common Stock present
in person at the Deposit Guaranty Special Meeting but not voting, and shares of
Deposit Guaranty Common Stock for which it has received proxies but with respect
to which holders of such shares have abstained, as present at the Deposit
Guaranty Special Meeting for purposes of determining the presence or absence of
a quorum for the transaction of business. In addition, broker non-votes will be
counted as present for purposes of determining whether a quorum exists. Under
applicable rules of the New York Stock Exchange, Inc. (the "NYSE"), brokers who
hold shares of Deposit Guaranty Common Stock in "street" name for customers who
are the beneficial owners of such shares are prohibited from giving a proxy to
vote shares held for such customers with respect to the matters to be considered
and voted upon at the Deposit Guaranty Special Meeting without specific
instructions from such customers.
 
     UNDER THE MISSISSIPPI BUSINESS CORPORATION ACT (THE "MBCA"), APPROVAL OF
THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY
OF ALL VOTES ENTITLED TO BE CAST ON THE MERGER AGREEMENT AT THE DEPOSIT GUARANTY
SPECIAL MEETING. BECAUSE APPROVAL OF THE MERGER AGREEMENT REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF OUTSTANDING SHARES OF DEPOSIT
GUARANTY COMMON STOCK, ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME
EFFECT AS NEGATIVE VOTES. ACCORDINGLY, THE DEPOSIT GUARANTY BOARD URGES DEPOSIT
GUARANTY SHAREHOLDERS TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
 
     As of the Deposit Guaranty Record Date, approximately 2,972,485 shares of
Deposit Guaranty Common Stock, or approximately 7.3% of the shares entitled to
vote at the Deposit Guaranty Special Meeting, were beneficially owned by
directors and executive officers of Deposit Guaranty. It is currently expected
that each
 
                                                                    THE MEETINGS
 
                                       19
<PAGE>   32
 
such director and executive officer of Deposit Guaranty will vote the shares of
Deposit Guaranty Common Stock beneficially owned by him or her for approval of
the Merger Agreement and the transactions contemplated thereby. In addition, as
of the Deposit Guaranty Record Date, the banking and trust subsidiaries of First
American held 1,700 shares of Deposit Guaranty Common Stock but did not exercise
shared or sole voting power with respect to any such shares, and the bank and
trust subsidiaries of Deposit Guaranty held approximately 2,772,168 shares of
Deposit Guaranty Common Stock and exercised shared or sole voting power with
respect to all such shares.
 
     Additional information with respect to beneficial ownership of Deposit
Guaranty Common Stock by individuals and entities owning more than 5% of such
stock and more detailed information with respect to beneficial ownership of
Deposit Guaranty Common Stock by directors and executive officers of Deposit
Guaranty is incorporated by reference to the 1996 Annual Report on Form 10-K of
Deposit Guaranty. See "ADDITIONAL INFORMATION -- Where You Can Find More
Information."
 
DISSENTERS' RIGHTS
 
     Under Article 13 of the MBCA, each Deposit Guaranty Shareholder who
dissents from the Merger has the right to have the fair value of such Deposit
Guaranty Shareholder's shares appraised and paid to such Deposit Guaranty
Shareholder in cash. See "ADDITIONAL INFORMATION -- Dissenters' Appraisal
Rights."
 
RECOMMENDATION OF THE DEPOSIT GUARANTY BOARD
 
     The Deposit Guaranty Board has unanimously approved the Merger Agreement
and the transactions contemplated thereby. The Deposit Guaranty Board believes
that the Merger is fair to and in the best interests of Deposit Guaranty and the
Deposit Guaranty Shareholders and unanimously recommends that the Deposit
Guaranty Shareholders vote "FOR" approval and adoption of the Merger Agreement
and the transactions contemplated thereby. See "THE MERGER -- Reasons of Deposit
Guaranty for the Merger."
 
THE MEETINGS
 
                                       20
<PAGE>   33
 
                                   THE MERGER
 
     THE FOLLOWING SUMMARY OF CERTAIN TERMS AND PROVISIONS OF THE AGREEMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT, WHICH IS
INCORPORATED HEREIN BY REFERENCE, AND, WITH THE EXCEPTION OF CERTAIN EXHIBITS
THERETO, IS ATTACHED AS APPENDIX A TO THIS JOINT PROXY STATEMENT-PROSPECTUS.
 
                           DESCRIPTION OF THE MERGER
 
     At the effective time of the Merger (the "EFFECTIVE TIME"), Deposit
Guaranty will merge with and into First American, the separate corporate
existence of Deposit Guaranty will cease, and First American will be the
surviving corporation (the "SURVIVING CORPORATION") and will continue to exist
as a Tennessee corporation. Subject to the satisfaction or waiver of certain
conditions set forth in the Merger Agreement and described more fully in
"-- Conditions to the Merger," the Merger will become effective upon the filing
of articles of merger (the "ARTICLES OF MERGER") in the offices of the Secretary
of State of the State of Tennessee and the Secretary of State of the State of
Mississippi in accordance with the TBCA and the MBCA, respectively. The Merger
will have the effects set forth in Section 21-108 of the TBCA and Section 11.06
of the MBCA, and the First American Charter and the First American By-Laws as in
effect at the Effective Time will be those of the Surviving Corporation.
 
     First American may at any time change the method of effecting the
combination with Deposit Guaranty if and to the extent it deems such change to
be desirable, including, without limitation, to provide for a merger of Deposit
Guaranty into a wholly owned subsidiary of First American, provided that no such
change (i) alters or changes the amount or kind of the consideration to be
issued to Deposit Guaranty Shareholders in the Merger (the "MERGER
CONSIDERATION"), (ii) adversely affects the tax treatment of the Deposit
Guaranty Shareholders as a result of receiving the Merger Consideration, or
(iii) materially impedes or delays consummation of the transactions contemplated
by the Merger Agreement.
 
     At the Effective Time, automatically by virtue of the Merger and without
any action on the part of any party or Deposit Guaranty Shareholder, each share
of Deposit Guaranty Common Stock (excluding shares of Deposit Guaranty Common
Stock with respect to which dissenters' rights have been properly demanded in
accordance with Article 13 of the MBCA ("DISSENTING SHARES"), or held by Deposit
Guaranty or any of its subsidiaries or by First American or any of its
subsidiaries, in each case, other than shares held in a fiduciary capacity
("TRUST ACCOUNT SHARES") or in respect of a debt previously contracted ("DPC
SHARES")) issued and outstanding immediately prior to the Effective Time will
become and be converted into the right to receive 1.17 (the "EXCHANGE RATIO")
shares of First American Common Stock (which Exchange Ratio is subject to
potential adjustment as described under "-- Termination of the Merger
Agreement"), provided that if, before the Effective Time, the shares of First
American Common Stock are changed into a different number or class of shares due
to any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or if a stock dividend is declared on the shares of
First American Common Stock with a record date prior to the Effective Time, the
Exchange Ratio will be adjusted accordingly.
 
     It is expected that the market price of First American Common Stock will
fluctuate between the date of this Joint Proxy Statement-Prospectus and the date
on which the Merger is consummated and thereafter. Because the Exchange Ratio is
fixed (subject to possible adjustment in the circumstances described under "--
Termination of the Merger Agreement") and because the market price of First
American Common Stock is subject to fluctuation, the value of the shares of
First American Common Stock that holders of Deposit Guaranty Common Stock will
receive in the Merger may increase or decrease prior to the Merger. For further
information concerning the historical market prices of First American Common
Stock and Deposit Guaranty Common Stock, see "INFORMATION ABOUT OUR
COMPANIES -- Price Range of Common Stock and Dividends -- Market Prices." No
assurance can be given concerning the market price of First American Common
Stock before or after the Effective Time. Under certain circumstances and
depending in part upon the price of First American Common Stock during a
specified period prior to approval of the Board of Governors of the Federal
Reserve System (the "FEDERAL RESERVE BOARD") of the Merger, Deposit Guaranty
 
                                                                      THE MERGER
 
                                       21
<PAGE>   34
 
may elect to terminate the Merger Agreement, subject to First American's right
to elect to increase the Exchange Ratio pursuant to the provisions of the Merger
Agreement. See "-- Termination of the Merger Agreement."
 
     In addition, at the Effective Time, all employee stock options to purchase
shares of Deposit Guaranty Common Stock (each, a "DEPOSIT GUARANTY EMPLOYEE
STOCK OPTION") that are then outstanding and unexercised will cease to represent
rights to acquire shares of Deposit Guaranty Common Stock and will be converted
automatically into stock options to purchase shares of First American Common
Stock, but such Deposit Guaranty Employee Stock Option will otherwise remain
subject to the terms of the Deposit Guaranty Stock-Based, Long-Term Incentive
Plan and the Deposit Guaranty Stock-Based, Long-Term Incentive Plan II
(collectively, the "DEPOSIT GUARANTY EMPLOYEE STOCK OPTION PLANS") and the
agreements evidencing grants thereunder and any other agreements between Deposit
Guaranty and an optionee, except that, from and after the Effective Time, (i)
the number of shares of First American Common Stock purchasable upon exercise of
such a Deposit Guaranty Employee Stock Option will be equal to the number of
shares of Deposit Guaranty Common Stock purchasable under such Deposit Guaranty
Employee Stock Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, and rounding down to the nearest whole share, and (ii) the per
share exercise price under each such Deposit Guaranty Employee Stock Option will
be adjusted by dividing such exercise price by the Exchange Ratio, and rounding
up to the nearest cent. Notwithstanding the foregoing, any Deposit Guaranty
Employee Stock Options that are "incentive stock options" under Section 422 of
the Internal Revenue Code of 1986, as amended (the "CODE") will be adjusted in a
manner consistent with Section 422(a) of the Code. In connection with the
conversion of the Deposit Guaranty Employee Stock Options in the Merger, First
American will (i) reserve for issuance a sufficient number of shares of First
American Common Stock necessary to satisfy First American's obligations with
respect to the Deposit Guaranty Employee Stock Options, and (ii) promptly after
the Effective Time (but in no event later than five business days thereafter)
file a registration statement with respect to the sale of such First American
Common Stock under the Securities Act of 1933, as amended (the "SECURITIES ACT")
and use its best efforts to maintain the current status of the prospectus
contained in the registration statement filed for such purpose and to comply
with applicable state securities or "blue sky" laws for so long as such options
remain outstanding.
 
     At the Effective Time, all shares of Deposit Guaranty Common Stock held by
Deposit Guaranty, First American or by any of their subsidiaries, other than
Trust Account Shares or DPC Shares, will be canceled and will cease to exist,
and no First American Common Stock or other consideration will be delivered in
exchange for such shares. Also at the Effective Time, all shares of First
American Common Stock held by Deposit Guaranty or its subsidiaries, other than
Trust Account Shares or DPC Shares, will become authorized but unissued shares
of First American Common Stock and all other shares of First American capital
stock outstanding as of the Effective Time will remain outstanding. Further,
Dissenting Shares will not be converted into the right to receive, or be
exchangeable for, the Merger Consideration; instead, the holders of Dissenting
Shares will be entitled to payment of the appraised value of the Dissenting
Shares in accordance with Article 13 of the MBCA. Notwithstanding the foregoing,
if any holder of Dissenting Shares subsequently delivers a written withdrawal of
such holder's demand for appraisal thereof, or if any such holder fails to
establish such holder's entitlement to dissenters' rights under Article 13 of
the MBCA, such holder will forfeit the right to appraisal and such shares will
be deemed to have been converted into the right to receive, and to have become
exchangeable for, the Merger Consideration. See "ADDITIONAL INFORMATION --
Dissenters' Appraisal Rights."
 
                            BACKGROUND OF THE MERGER
 
     On October 10, 1997, Deposit Guaranty received an unsolicited proposal from
a third party (the "INITIAL BIDDER") to engage in a business combination
transaction. At meetings held on October 21 and November 17, 1997, the Deposit
Guaranty Board reviewed the proposal made by the Initial Bidder with the
assistance of Credit Suisse First Boston Corporation ("CSFB"), Deposit
Guaranty's financial advisor, and Deposit Guaranty's outside legal advisors. The
Deposit Guaranty Board also reviewed other strategic alternatives available to
Deposit Guaranty, including the possibility of remaining independent. In this
regard, First
 
THE MERGER
 
                                       22
<PAGE>   35
 
Manhattan Consulting Group ("FIRST MANHATTAN"), a business consulting firm
specializing in the financial services industry, made a presentation to the
Deposit Guaranty Board at its November 17 meeting with respect to the expense
reduction and revenue enhancement opportunities that First Manhattan believed
were available to Deposit Guaranty if it determined to remain independent.
Deposit Guaranty's management indicated to the Deposit Guaranty Board that it
believed that the expense reductions and revenue enhancements described by First
Manhattan in its presentation were achievable. CSFB made a presentation to the
Deposit Guaranty Board at its November 17 meeting which included a review and
analysis of Deposit Guaranty's strategic alternatives (including the
alternatives of remaining independent while implementing strategies aimed at
achieving increased efficiency and earning, or engaging in a business
combination transaction with the Initial Bidder or with another bank holding
company, either at the present time or after first implementing such stand-alone
strategies in order to increase the value that might be realized by Deposit
Guaranty's Shareholders in a business combination transaction), an overview of
the competitive environment in the financial institutions industry, an analysis
of the current financial institutions merger and acquisition market, financial
data and information from selected recent financial institution merger and
acquisition transactions, and valuations of Deposit Guaranty both on a
stand-alone basis and as a strategic merger partner based on recent financial
institution merger and acquisition multiples. CSFB also reviewed selected
financial data with respect to several bank holding companies (including the
Initial Bidder) believed to be interested in and financially and otherwise
capable of engaging in a strategic business combination with Deposit Guaranty.
 
     At the November 17, 1997 meeting, the Deposit Guaranty Board determined,
based in part on its review of the information presented by CSFB and First
Manhattan and the values that the Deposit Guaranty Board believed might be
obtainable in a business combination transaction, that it was likely that a
business combination transaction in the current merger and acquisition
environment would provide Deposit Guaranty Shareholders with equal or greater
value than that obtainable through Deposit Guaranty's other strategic
alternatives taking into account the risks and uncertainties associated with
achieving the results anticipated from such alternatives. The Deposit Guaranty
Board therefore determined that Deposit Guaranty should seek indications of
interest from selected bank holding companies that Deposit Guaranty and CSFB
believed would most be interested in and financially and otherwise capable of
engaging in a business combination transaction with Deposit Guaranty, and the
Deposit Guaranty Board then directed CSFB to seek such indications of interest.
Following the November 17, 1997 Deposit Guaranty Board meeting, First Manhattan
continued to provide services to Deposit Guaranty by assisting in Deposit
Guaranty's due diligence investigation of certain of the bank holding companies
that had submitted indications of interest to CSFB (including the Initial
Bidder).
 
     CSFB contacted 12 bank holding companies (including the Initial Bidder)
regarding their interest in engaging in such a transaction with Deposit
Guaranty. Deposit Guaranty and CSFB jointly selected the original 12 bank
holding companies based on a number of factors, including a review of bank
holding companies with existing franchises having the most logical complementary
fit with Deposit Guaranty's existing franchise, an affordability analysis
conducted by CSFB, and the belief of Deposit Guaranty's management that certain
other bank holding companies might be interested in a potential business
combination transaction with Deposit Guaranty based on past informal expressions
of interest from such bank holding companies. Eleven of the companies (including
the Initial Bidder) requested information about Deposit Guaranty. Each of these
11 companies received from CSFB a package containing publicly available
financial information on Deposit Guaranty and a confidentiality and standstill
agreement. Each of such companies was requested to execute the confidentiality
and standstill agreement as soon as possible and to deliver to CSFB on or before
December 3, 1997, a written proposal containing the per share price and other
proposed terms upon which such party would be willing to enter into a business
combination transaction with Deposit Guaranty. Each of such companies executed
confidentiality and standstill agreements, and seven of these companies
(including the Initial Bidder) submitted proposals to engage in a business
combination transaction. These proposals were received on December 3, 1997. On
December 3 and 4, 1997, representatives of CSFB offered each company that had
submitted a proposal an opportunity to improve the terms of its proposal prior
to the review of all proposals by the Deposit Guaranty Board. Three companies
submitted revised proposals. Each proposal received contemplated an acquisition
of Deposit Guaranty in a stock-for-
 
                                                                      THE MERGER
 
                                       23
<PAGE>   36
 
stock merger. All but two of the proposals offered a fixed exchange ratio at
which shares of Deposit Guaranty Common Stock would be exchanged for shares of
the other party's common stock.
 
     At a meeting held on December 5, 1997, the Deposit Guaranty Board reviewed
the terms of the final proposals received by CSFB. Of the seven proposals, First
American's proposal, in which each share of Deposit Guaranty Common Stock would
be exchanged for 1.17 shares of First American Common Stock (having an indicated
value of $63.18 based on the then-current trading price of First American Common
Stock on December 4, 1997), offered the highest per share consideration to the
holders of Deposit Guaranty Common Stock (based on the then-current trading
prices of each of the companies' common stocks on December 4, 1997).
 
     The Deposit Guaranty Board authorized management and Deposit Guaranty's
legal and financial advisors to enter into discussions with First American with
a view to negotiating a definitive merger agreement relating to First American's
proposal. Following the December 5th meeting of the Deposit Guaranty Board,
senior management of Deposit Guaranty and First American and their respective
legal and financial advisors held discussions concerning the terms of a
definitive agreement and representatives of each company conducted a due
diligence examination of the other company. On December 7, 1997, the terms of
the merger agreement and the stock option agreement to be presented to the
Deposit Guaranty Board and the First American Board were finalized.
 
     On December 7, 1997, the Deposit Guaranty Board held a meeting to discuss
and review, with the assistance of its legal and financial advisors, the merger
agreement, the stock option agreement and related matters, including the
employment agreements to be entered into between First American and each of
Messrs. Robinson and McMillan. See "-- Interests of Certain Persons in the
Merger." Deposit Guaranty's legal advisor reviewed with the Deposit Guaranty
Board the proposed terms of such employment agreements, and Deposit Guaranty's
financial advisor reviewed with the Deposit Guaranty Board the general terms of
compensation arrangements entered into in connection with selected merger and
acquisition transactions involving large regional bank holding companies.
Management and Deposit Guaranty's legal and financial advisors also reviewed
with the Deposit Guaranty Board their due diligence findings concerning First
American. Representatives of CSFB reviewed financial information concerning
First American, Deposit Guaranty and the proposed transaction, and delivered to
the Deposit Guaranty Board CSFB's oral opinion (which was subsequently confirmed
in writing) that, as of such date, the Exchange Ratio was fair, from a financial
point of view, to Deposit Guaranty Shareholders. See "-- Opinion of Deposit
Guaranty's Financial Advisor." Based upon the Deposit Guaranty Board's review of
the definitive terms of the transaction, the opinion of CSFB and other relevant
factors, the Deposit Guaranty Board, by unanimous vote (with one director
absent) of all directors, authorized and approved the execution of the Merger
Agreement and the Stock Option Agreement (as defined herein). The absent
director subsequently concurred in the Deposit Guaranty Board's authorization
and approval of the execution of the Merger Agreement and the Stock Option
Agreement.
 
     At a meeting of the First American Board on December 7, 1997, senior
management of First American, together with First American's legal and financial
advisors, reviewed for the First American Board the discussions and contacts
with Deposit Guaranty to date, the financial terms of the proposed merger with
Deposit Guaranty and the other terms of the Merger Agreement. First American
management and First American's financial advisor, Morgan Stanley & Co.
Incorporated ("MORGAN STANLEY"), reviewed the results of First American's due
diligence investigations of Deposit Guaranty. First American's legal advisors
reviewed the terms of the merger agreement, the stock option agreement and the
new employment agreements with Messrs. Robinson and McMillan, and the legal
standards applicable to the First American Board's consideration of the proposed
transaction with Deposit Guaranty. Representatives of Morgan Stanley rendered
Morgan Stanley's opinion that, as of such date, the Exchange Ratio was fair to
First American from a financial point of view. Following discussion and
questions by the First American Board to First American senior management and
its financial and legal advisors, the members of the First American Board voted
unanimously to approve the merger agreement, the stock option agreement, the new
employment agreements with Messrs. Robinson and McMillan and related matters.
 
     Shortly following the conclusion of the respective board meetings of
Deposit Guaranty and First American, the parties entered into the Merger
Agreement and the Stock Option Agreement, and First
 
THE MERGER
 
                                       24
<PAGE>   37
 
American entered into the employment agreements with Messrs. Robinson and
McMillan (to become effective at the Effective Time).
 
                    REASONS OF FIRST AMERICAN FOR THE MERGER
 
     In reaching its determination to approve the Merger Agreement and recommend
approval of the Merger Agreement to First American Shareholders, the First
American Board considered a number of factors. The following include all of the
material factors considered thereby:
 
          (i) its familiarity with and review of First American's business,
     operations, financial condition and earnings on an historical and a
     prospective basis;
 
          (ii) (a) its knowledge and analysis of the financial services industry
     environment, including rapid consolidation and increasing nationwide
     competition in the financial services industry and the need to anticipate,
     and the best position of First American in light of, industry trends, (b)
     its belief that a combination of First American and Deposit Guaranty would
     enhance First American's ability to compete effectively with other bank
     holding companies and other financial service providers and expand the
     combined companies' banking franchise to serve a significantly greater
     number of customers, and (c) Deposit Guaranty's unique franchise,
     especially its banking franchise in Mississippi, Louisiana and Arkansas and
     its mortgage servicing business;
 
          (iii) its knowledge and review of the financial condition, results of
     operations and business operations and prospects of Deposit Guaranty, as
     well as the results of First American's due diligence review of Deposit
     Guaranty, and its belief that Deposit Guaranty is a superior franchise with
     a respected and capable management team with a compatible approach to
     customer service, credit quality, efficiency and shareholder value;
 
          (iv) its evaluation of the financial terms of the Merger (see
     "-- Description of the Merger") and their effect on First American
     (including on First American's return on equity, return on assets,
     efficiency ratio, net interest margin and other financial measures) and on
     First American Shareholders, and the First American Board's belief that
     such terms are fair to and in the best interests of First American and
     First American Shareholders and are consistent with First American's
     long-term strategy of enhancing shareholder value with, among other things,
     expansion through selective acquisitions. In considering the foregoing, the
     First American Board took into account that the Merger is expected to be
     neutral to 1998 earnings per share and is expected to be accretive to
     earnings per share in 1999, and that the value of the consideration per
     share of Deposit Guaranty Common Stock, based on the proposed Exchange
     Ratio and the market price of First American Common Stock on December 5,
     1997, represented price to projected earnings per share and book value
     multiples higher than the mean values of corresponding multiples of certain
     comparable transactions analyzed by Morgan Stanley (see "-- Opinion of
     First American's Financial Advisor"). The foregoing is based on consensus
     "street" earnings per share estimates published by Institutional Brokers
     Estimate System ("IBES") for both First American and Deposit Guaranty. The
     combined company's ability to achieve such earnings per share results is
     dependent upon various factors, a number of which factors will be beyond
     its control, including the regulatory environment, economic conditions,
     unanticipated changes in business conditions and inflation, and there can
     be no assurance in this regard;
 
          (v) its belief that the Merger represents an opportunity to leverage
     First American's infrastructure, technology, products, marketing, and lines
     of business over a large consumer, business and corporate customer base
     through Deposit Guaranty's established distribution network, and the
     possibility of achieving significant expense savings and operating
     efficiencies through, among other things, the elimination of duplicate
     efforts, and that the Merger could provide revenue growth potential based
     on the combined company's ability to leverage technology over an increased
     customer base and cross-selling opportunities in small-business lending,
     asset management and otherwise;
 
          (vi) the nonfinancial terms of the Merger Agreement and related
     agreements, including (a) the fact that five directors of Deposit Guaranty
     would be elected or appointed to the First American Board and the fact that
     the other directors of Deposit Guaranty and the directors of Deposit
     Guaranty National Bank will serve on an Advisory Board (as defined herein)
     for at least three years following the Effective Time, the fact that Mr.
     Robinson would become Vice Chairman and Chief Operating Officer of the
                                                                      THE MERGER
 
                                       25
<PAGE>   38
 
     combined company and that Mr. McMillan would become Chairman of the Deposit
     Guaranty operating units following the Effective Time, the employment
     agreements with Messrs. Robinson and McMillan and other benefits
     potentially realizable by directors and employees of Deposit Guaranty (see
     "-- Interests of Certain Persons in the Merger") and (b) the Stock Option
     Agreement, which the First American Board viewed as customary in connection
     with public financial institution mergers of the type proposed between
     First American and Deposit Guaranty and as increasing the certainty that
     the Merger would be consummated in accordance with the terms of the Merger
     Agreement (by increasing the cost of any competing business combination
     transaction that might be proposed and the difficulty of accounting for
     such a competing transaction as a "pooling of interests" for a substantial
     period of time after exercise or repurchase of the option contemplated
     thereby) (see "-- Stock Option Agreement");
 
          (vii) the likelihood that the Merger would receive the Requisite
     Regulatory Approvals (as defined herein) (see "-- Regulatory Matters");
 
          (viii) the expectation that the Merger would constitute a
     "reorganization" under Section 368(a) of the Code and that it would be
     accounted for as a "pooling of interests" for accounting and financial
     reporting purposes (see "-- Certain Federal Income Tax Consequences" and
     "-- Accounting Treatment"); and
 
          (ix) the integration risk associated with the Merger in view of the
     compatibility of Deposit Guaranty's business strategies and management
     culture with those of First American. In this connection, the First
     American Board of Directors considered the benefits that could be achieved
     by integrating Deposit Guaranty's operations into existing and planned
     First American technology, and in particular considered the relative stage
     of First American's plans with respect to resolving "Year 2000" issues in
     its information systems compared to Deposit Guaranty's, and First American
     management's determination during its due diligence investigations that a
     significant portion of Deposit Guaranty's planned technology expenditures
     were associated with such issues and could be mitigated by integrating
     Deposit Guaranty's systems into First American's existing plan.
 
     In addition, in recommending approval of the Merger Agreement by the First
American Shareholders, the First American Board considered the opinion of Morgan
Stanley as to the fairness of the Exchange Ratio, from a financial point of
view, to First American. See "-- Opinion of First American's Financial Advisor."
 
     The foregoing discussion of the information and factors considered by the
First American Board is not intended to be exhaustive but includes all material
factors considered by the First American Board. In reaching its determination to
approve the Merger, the First American Board did not assign any relative or
specific weights to the foregoing factors, and individual directors may have
given differing weights to differing factors. After deliberating with respect to
the Merger and other transactions contemplated by the Merger Agreement and the
Stock Option Agreement, and considering, among other things, the matters
discussed above, the First American Board unanimously approved the Merger
Agreement and the transactions contemplated thereby as being fair to and in the
best interests of First American and the First American Shareholders.
 
     BASED ON THE FOREGOING, AND THE OPINION OF MORGAN STANLEY DATED AS OF THE
DATE HEREOF, THE FIRST AMERICAN BOARD UNANIMOUSLY RECOMMENDS THAT FIRST AMERICAN
SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE MERGER AGREEMENT AND THE CHARTER
AMENDMENT.
 
                   REASONS OF DEPOSIT GUARANTY FOR THE MERGER
 
     In reaching its determination to approve and adopt the Merger Agreement,
the Deposit Guaranty Board consulted with Deposit Guaranty's management and its
financial and legal advisors, and considered a number of factors. The following
include all of the material factors considered thereby:
 
          (i) the Deposit Guaranty Board's familiarity with and review of
     Deposit Guaranty's business, operations, financial condition and earnings
     on an historical and a prospective basis;
 
          (ii) the Deposit Guaranty Board's review, based in part on
     presentations by its financial advisor and Deposit Guaranty's management,
     of the business, operations, financial condition and earnings of First
 
THE MERGER
 
                                       26
<PAGE>   39
 
     American on an historical and a prospective basis and of the combined
     company on a pro forma basis and the historical stock price performance of
     the First American Common Stock, the resulting relative interests of
     Deposit Guaranty Shareholders and First American Shareholders in the common
     equity of the combined company, and the potential impact on the market
     value of First American Common Stock following the proposed Merger;
 
          (iii) the presentations of CSFB to the Deposit Guaranty Board, the
     financial information reviewed by CSFB at the meetings of the Deposit
     Guaranty Board on December 5 and December 7, 1997, and the opinion of CSFB,
     rendered on December 7, 1997, that, as of such date and based upon and
     subject to the procedures followed, assumptions made, matters considered,
     and limitations on the analyses undertaken, the Exchange Ratio was fair
     from a financial point of view to Deposit Guaranty Shareholders (see
     "-- Opinion of Deposit Guaranty's Financial Advisor");
 
          (iv) the process conducted by Deposit Guaranty's management and its
     financial advisor in exploring and determining the potential value which
     could be realized by Deposit Guaranty Shareholders in a business
     combination transaction, including the contacts between Deposit Guaranty
     and/or its financial advisor and certain bank holding companies determined
     to be the most likely companies to be both interested in and financially
     and otherwise capable of engaging in a business combination transaction
     with Deposit Guaranty, the fact that each of such selected bank holding
     companies which expressed interest in a business combination transaction
     with Deposit Guaranty was afforded an opportunity to submit proposals for
     such a transaction to Deposit Guaranty, the terms of the proposals received
     by Deposit Guaranty from such bank holding companies and the fact that the
     indicated value of the Exchange Ratio in the First American proposal was
     higher as of December 7, 1997 than the indicated values of the per share
     consideration offered in the other proposals submitted to Deposit Guaranty
     (see "-- Background of the Merger");
 
          (v) the terms of the Merger Agreement and the Merger, including the
     Exchange Ratio, noting that it reflected a 22% premium for the holders of
     Deposit Guaranty Common Stock based on the closing prices of First American
     Common Stock and Deposit Guaranty Common Stock on December 5, 1997, the
     last trading day prior to the approval by the Deposit Guaranty Board of the
     Merger, and price-to-1998 consensus earnings and price-to-book value (as of
     September 30, 1997) multiples of approximately 25.1 and 4.2, respectively;
 
          (vi) the current and prospective economic and competitive environment
     facing the financial services industry generally, and Deposit Guaranty in
     particular, including the continued rapid consolidation in the industry and
     the increasing importance of operational scale and financial resources in
     maintaining efficiency and remaining competitive over the long term and in
     being able to capitalize on technological developments which significantly
     impact industry competition;
 
          (vii) the Deposit Guaranty Board's review, based in part on the
     presentations of CSFB to the Deposit Guaranty Board, of alternatives to the
     Merger for enhancing stockholder value, the range of possible values to
     Deposit Guaranty Shareholders obtainable through implementation of such
     alternatives, and the timing and likelihood of actually achieving such
     value, and the Deposit Guaranty Board's belief, based upon such review,
     that such alternatives were not likely to result in greater value for
     Deposit Guaranty Shareholders than the value to be realized in the Merger.
     In this regard, the Deposit Guaranty Board considered, among other things,
     variables relating to Deposit Guaranty's ability to continue to generate
     revenue growth, improved profitability and superior stockholder returns on
     a stand-alone basis, and the availability of attractive acquisition
     opportunities for Deposit Guaranty;
 
          (viii) the general impact that the Merger could be expected to have on
     the constituencies served by Deposit Guaranty, including its customers,
     employees and communities, and First American's agreement to establish a
     charitable foundation for the benefit of the communities served by Deposit
     Guaranty and to contribute $15 million to such foundation;
 
          (ix) the Deposit Guaranty Board's belief that First American possesses
     superior technological capabilities and information systems, and its
     expectation that First American will be able to successfully
 
                                                                      THE MERGER
 
                                       27
<PAGE>   40
 
     leverage those capabilities and systems through the integration of the
     respective operations of First American and Deposit Guaranty in connection
     with the Merger;
 
          (x) the expectation that the Merger would constitute a
     "reorganization" under Section 368(a) of the Code and that it would be
     accounted for as a "pooling of interests" for accounting and financial
     reporting purposes (see "-- Certain Federal Income Tax Consequences" and
     "-- Accounting Treatment");
 
          (xi) the anticipated cost savings, operating efficiencies and
     opportunities for revenue enhancement available to the combined company
     from the Merger, and the likelihood of the foregoing being achieved
     following consummation of the Merger;
 
          (xii) the fact that Mr. Robinson would be appointed as Vice Chairman
     of the Board of First American and would serve as Chief Operating Officer
     thereof following the Effective Time, that Mr. McMillan would serve as
     Chairman of the Deposit Guaranty operations within First American following
     the Effective Time, that five members of the Deposit Guaranty Board would
     become members of the First American Board at the Effective Time and that
     the other members of the Deposit Guaranty Board, the directors of Deposit
     Guaranty National Bank and current members of Deposit Guaranty's community
     advisory boards would serve on an Advisory Board for at least a three-year
     period following the Effective Time. The Deposit Guaranty Board also
     considered that Messrs. Robinson and McMillan would enter into employment
     contracts with First American to be effective as of the Effective Time and
     that the directors and officers of Deposit Guaranty might be deemed to have
     interests in the Merger other than their interests generally as Deposit
     Guaranty Shareholders (see "-- Interests of Certain Persons in the
     Merger"); and
 
          (xiii) the results of the due diligence investigation of First
     American conducted by Deposit Guaranty's management; the Deposit Guaranty
     Board's assessment, with the assistance of counsel, concerning the
     likelihood that First American would obtain all Requisite Regulatory
     Approvals required for the Merger (see "-- Regulatory Matters"); and the
     terms of the Stock Option Agreement, including the risk that the Stock
     Option Agreement might discourage third parties from offering to acquire
     Deposit Guaranty by increasing the cost of such an acquisition, and
     recognizing that the execution of the Stock Option Agreement was a
     condition to First American's willingness to enter into the Merger
     Agreement (see "-- Stock Option Agreement").
 
     The foregoing discussion of the information and factors considered by the
Deposit Guaranty Board is not intended to be exhaustive but includes all of the
material factors considered by the Deposit Guaranty Board. In the course of its
deliberations with respect to the Merger, the Deposit Guaranty Board discussed
the anticipated impact of the Merger on Deposit Guaranty, its shareholders and
its various other constituencies, and no material disadvantages expected to
result from the Merger were identified during these discussions. In reaching its
determination to approve and recommend the Merger, the Deposit Guaranty Board
did not assign any relative or specific weights to the factors considered in
reaching such determination, and individual directors may have given differing
weights to different factors.
 
     THE DEPOSIT GUARANTY BOARD BELIEVES THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, DEPOSIT GUARANTY AND THE DEPOSIT GUARANTY SHAREHOLDERS. THE
DEPOSIT GUARANTY BOARD UNANIMOUSLY RECOMMENDS THAT DEPOSIT GUARANTY SHAREHOLDERS
VOTE FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE CONSUMMATION
OF THE TRANSACTIONS CONTEMPLATED THEREBY.
 
                 OPINION OF FIRST AMERICAN'S FINANCIAL ADVISOR
 
     First American retained Morgan Stanley as its financial advisor in
connection with the Merger based upon Morgan Stanley's qualifications,
expertise, and reputation, as well as Morgan Stanley's prior investment banking
relationship and familiarity with First American. On December 7, 1997, Morgan
Stanley delivered its opinion to the First American Board stating that, as of
the date of such opinion, the Exchange Ratio pursuant to the Merger Agreement
was fair from a financial point of view to First American. Morgan Stanley
 
THE MERGER
 
                                       28
<PAGE>   41
 
subsequently confirmed its December 7, 1997, opinion by delivery to the First
American Board of a substantially identical written opinion dated as of the date
of this Joint Proxy Statement-Prospectus.
 
     THE FULL TEXT OF MORGAN STANLEY'S OPINION, DATED AS OF THE DATE OF THIS
JOINT PROXY STATEMENT-PROSPECTUS, WHICH SETS FORTH, AMONG OTHER THINGS,
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED, AND LIMITATIONS ON
THE REVIEW UNDERTAKEN, IS ATTACHED AS EXHIBIT C TO THIS JOINT PROXY
STATEMENT-PROSPECTUS. FIRST AMERICAN SHAREHOLDERS ARE URGED TO, AND SHOULD, READ
THE MORGAN STANLEY OPINION CAREFULLY AND IN ITS ENTIRETY. MORGAN STANLEY'S
OPINION IS DIRECTED TO THE FIRST AMERICAN BOARD AND TO THE FAIRNESS OF THE
EXCHANGE RATIO IN THE MERGER AGREEMENT FROM A FINANCIAL POINT OF VIEW TO FIRST
AMERICAN, AND IT DOES NOT ADDRESS THE FAIRNESS OF THE EXCHANGE RATIO TO ANY
OTHER PERSON OR ENTITY OR ANY OTHER ASPECT OF THE MERGER NOR DOES IT CONSTITUTE
A RECOMMENDATION TO ANY FIRST AMERICAN SHAREHOLDER AS TO HOW TO VOTE AT THE
FIRST AMERICAN ANNUAL MEETING. THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET
FORTH IN THIS JOINT PROXY STATEMENT-PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF SUCH OPINION, WHICH IS INCORPORATED HEREIN BY
REFERENCE.
 
     In arriving at its opinion, dated as of the date of this Joint Proxy
Statement-Prospectus, Morgan Stanley, among other things: (i) reviewed certain
publicly available financial statements and other information of First American
and Deposit Guaranty; (ii) reviewed certain internal financial statements and
other financial and operating data concerning First American and Deposit
Guaranty prepared by the managements of First American and Deposit Guaranty;
(iii) analyzed certain financial projections prepared by the managements of
First American and Deposit Guaranty; (iv) discussed the past and current
operations and financial conditions and the prospects of First American and
Deposit Guaranty with senior executives of First American and Deposit Guaranty;
(v) reviewed the reported prices and trading activity for the First American
Common Stock and the Deposit Guaranty Common Stock; (vi) compared the financial
performance of First American and Deposit Guaranty and the prices and trading
activity of the First American Common Stock and the Deposit Guaranty Common
Stock with that of certain other comparable publicly traded companies and their
securities; (vii) discussed the results of regulatory examinations of First
American and Deposit Guaranty with senior management of the respective
companies; (viii) discussed with senior managements of First American and
Deposit Guaranty the strategic objectives of the Merger and their estimates of
the synergies and other benefits of the Merger for the combined company; (ix)
analyzed the pro forma impact of the Merger on the combined company's earnings
per share ("EPS"), consolidated capitalization and financial ratios; (x)
reviewed the financial terms, to the extent publicly available, of certain
comparable merger transactions; (xi) participated in discussions and
negotiations among representatives of First American and Deposit Guaranty and
their financial and legal advisors; (xii) reviewed the Merger Agreement and
certain related documents; and (xiii) performed such other analyses and
considered such other factors as it deemed appropriate.
 
     Morgan Stanley assumed and relied upon, without independent verification,
the accuracy and completeness of the information reviewed by it for the purposes
of its opinion. With respect to the financial projections, including the
synergies and other benefits expected to result from the Merger, Morgan Stanley
assumed that they had been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the future financial performance
of First American and Deposit Guaranty. Morgan Stanley did not make any
independent valuation or appraisal of the assets or liabilities of First
American or Deposit Guaranty, nor was it furnished any such appraisals, and
Morgan Stanley did not examine any individual loan credit files of First
American or Deposit Guaranty. In addition, Morgan Stanley assumed that the
Merger will be consummated substantially in accordance with the terms set forth
in the Merger Agreement. Morgan Stanley's opinion is based on economic, market
and other conditions as in effect on, and the information made available to it
as of, the date of such opinion.
 
     The following is a brief summary of each of the material financial analyses
performed by Morgan Stanley in connection with its opinion dated December 7,
1997:
 
                                                                      THE MERGER
 
                                       29
<PAGE>   42
 
     Transaction Overview.  Morgan Stanley reviewed the terms of the Merger,
including the Exchange Ratio, the indicated value per share of Deposit Guaranty
Common Stock (the "INDICATED VALUE") based on the share price of First American
Common Stock as of December 5, 1997, the indicated aggregate consideration (the
"INDICATED AGGREGATE CONSIDERATION") to be paid in the Merger, and the expected
method of accounting. The Indicated Value was $64 per share of Deposit Guaranty
Common Stock, representing a 22% premium to market and multiples of price to
Deposit Guaranty's estimated 1998 EPS and book value of 25.3 and 4.2,
respectively. The Indicated Aggregate Consideration to be paid in the Merger was
approximately $2.7 billion. The proposed method of accounting for the Merger was
a "pooling of interests" in a tax-free exchange.
 
     Valuation Methodologies.  As part of its financial analyses, Morgan Stanley
performed valuation analyses of Deposit Guaranty using various methodologies.
Morgan Stanley evaluated the positions and strengths of Deposit Guaranty on a
stand-alone basis, considered estimates by First American's management of the
cost savings and synergies that could be expected to be realized in an
acquisition of Deposit Guaranty and determined an acquisition value based upon
specified assumptions. The following is a brief summary of the various
methodologies underlying the valuation analyses conducted by Morgan Stanley.
 
     Comparable Company Analysis.  Comparable company analysis analyzes a
company's operating performance relative to a group of publicly traded peers.
Based on relative performance and outlook for a company versus its peers, this
analysis enables an implied unaffected market trading value to be determined.
Morgan Stanley analyzed the operating performance of Deposit Guaranty relative
to (i) seven bank holding companies, consisting of Union Planters Corp.,
Hibernia Corp., National Commerce Bancorp., Trustmark Corp., Whitney Holding
Corp., BancorpSouth Inc., Hancock Holding Co. (the "REGIONAL PEER GROUP"); and
(ii) the 35 bank holding companies comprising the Morgan Stanley Bank Index (the
"MORGAN STANLEY BANK INDEX").
 
     Morgan Stanley analyzed the relative performance and value of Deposit
Guaranty by comparing certain market trading statistics for Deposit Guaranty
with those of companies comprising the Regional Peer Group and the Morgan
Stanley Bank Index. Historical financial information used in calculating the
market price to book value multiples for the comparable company analysis was as
of September 30, 1997, and market information used in calculating the multiples
for the comparable company analysis was as of December 5, 1997. EPS estimates
for Deposit Guaranty and for the companies comprising the Regional Peer Group
and the Morgan Stanley Bank Index were based on IBES mean estimates as of
November 28, 1997.
 
     The market price to estimated 1997 and 1998 EPS multiples for Deposit
Guaranty were 17.0x and 15.3x, respectively, compared to mean multiples of 20.3x
and 18.2x, respectively, for the Regional Peer Group and multiples of 20.1x and
17.7x, respectively, for the Morgan Stanley Bank Index. The market price to book
value multiple for Deposit Guaranty was 2.5x, compared to a mean multiple of
2.9x for the Regional Peer Group and a multiple of 3.5x for the Morgan Stanley
Bank Index. The implied range of values for Deposit Guaranty Common Stock
derived from the comparable company analysis, based on a range of market price
to book value multiples of 2.5x to 2.8x and market price to 1998 EPS multiples
of 15x to 17x, was approximately $38 to approximately $43 per share.
 
     Dividend Discount Analysis.  Morgan Stanley performed a dividend discount
analysis to determine a range of present values per share of Deposit Guaranty
Common Stock assuming Deposit Guaranty continued to operate as a stand-alone
entity. This range was determined by adding (i) the present value of the
estimated future dividend stream that Deposit Guaranty could generate over the
five-year period from 1998 through 2002 and (ii) the present value of the
"terminal value" of Deposit Guaranty Common Stock at the end of 2002. To
determine a projected dividend stream, Morgan Stanley assumed a tangible equity
to assets ratio of 7.0%. Morgan Stanley used IBES mean earnings per share
estimates for Deposit Guaranty for 1998 and assumed an 8% growth rate in
earnings per share thereafter based on IBES median long-term growth rate
estimates for Deposit Guaranty). The "terminal value" of Deposit Guaranty Common
Stock at the end of the five-year period was determined by applying two
price-to-earnings multiples (15x and 17x) to projected net income for Deposit
Guaranty in 2003. The dividend stream and terminal value were discounted to
present values using a discount rate of 10% to 12%, which Morgan Stanley viewed
as the appropriate discount rate for a company with Deposit Guaranty's risk
characteristics. Using this analysis, the implied fully diluted stand-
 
THE MERGER
 
                                       30
<PAGE>   43
 
alone value of Deposit Guaranty Common Stock ranged from approximately $39 per
share to approximately $46 per share.
 
     Value of Potential Cost Savings and Revenue Enhancements.  In order to
estimate an implied acquisition value of the Deposit Guaranty Common Stock (see
"-- Implied Acquisition Value"), the potential value of future synergies was
estimated by Morgan Stanley using the perpetuity method. Based on discussions
with First American management, Morgan Stanley determined the net theoretical
present value of the synergies that could result if Deposit Guaranty were
acquired. The estimates for such synergies ranged from 32% to 40% of Deposit
Guaranty's core non-interest expense base (i.e., excluding expenses for other
real estate owned ("OREO"), amortization of intangibles and any non-recurring
charge) of $278 million estimated for 1998. Such a range would imply annual
pre-tax synergies between approximately $88 million and approximately $111
million. Based on a discount rate of 11%, full phase-in of synergies by 1999, a
perpetual annual synergy growth rate of 5.0%, a marginal tax rate of 40%, and a
restructuring charge equal to 100% of fully-phased in year-one synergies
following an acquisition, the present values for the synergies of 32% to 40% was
$21.00 to approximately $28.00 per share of Deposit Guaranty Common Stock. Using
this analysis, the implied present acquisition value of Deposit Guaranty Common
Stock ranged from $61 per share to $72.00 per share.
 
     Comparable Transaction Analysis.  Using publicly available information,
Morgan Stanley performed an analysis of certain merger and acquisition
transactions involving selected bank holding companies that, in Morgan Stanley's
judgment, were comparable for purposes of this analysis in order to obtain a
valuation range for Deposit Guaranty Common Stock. Morgan Stanley compared the
multiples of projected earnings per share, book value and market value (based on
price one day before announcement) implied by the consideration to be received
by Deposit Guaranty Shareholders in the Merger with corresponding multiples
indicated for six bank holding company merger and acquisition transactions
announced in 1996 (the "1996 TRANSACTIONS"), four bank holding company merger
and acquisition transactions announced in the first half of 1997 (the "1997-A
TRANSACTIONS"), and five bank holding company merger and acquisition
transactions announced in the second half of 1997 (the "1997-B TRANSACTIONS",
and together with the 1996 Transactions and the 1997-A Transactions, the
"COMPARABLE TRANSACTIONS"). The 1996 Transactions consisted of the following
(acquiror/acquiree): Wells Fargo & Co./First Interstate Bank of California,
NationsBank Corp./Boatmen's Bancshares, Inc., Crestar Bank/Citizens Bancorp,
Mercantile Bancorporation, Inc./Mark Twain Bancshares, Inc., Southern National
Corp./United Carolina Bancshares Corp ("UCB"), and Banc One Corporation/Liberty
Bancorp Inc. The 1997-A Transactions consisted of the following
(acquiror/acquiree): Allied Irish Banks PLC/Dauphin Deposit Corp., First Bank
System Inc./US Bancorp, Huntington Bancshares Incorporated/First Michigan Bank
Corporation, and Wachovia Corporation/Central Fidelity Banks, Inc. The 1997-B
Transactions consisted of the following (acquiror/acquiree): First Union
Corp./Signet Banking Corp., NationsBank Corp./Barnett Banks, Inc., Banc One
Corporation/First Commerce Corp., First Union Corp./Core States Financial Corp.,
and National City Corporation/First of America Bank Corp.
 
     The indicated price to projected EPS multiple in the Merger was 25.3x
compared to median price to projected EPS multiples of 16.0x, 17.9x and 22.3x
for the 1996 Transactions, the 1997-A Transactions and the 1997-B Transactions,
respectively. The indicated price to book value multiple in the Merger was 4.2x
compared to median price to book value multiples of 2.8x, 3.0x and 3.8x for the
1996 Transactions, the 1997-A Transactions and the 1997-B Transactions,
respectively. The indicated premium to market price multiple, based on price one
day prior to announcement, in the Merger was approximately 1.2x, compared to
median premium to market price multiples of 1.4x, 1.1x and 1.4x for the 1996
Transactions, the 1997-A Transactions and the 1997-B Transactions, respectively.
Using a range of price to estimated EPS multiples of 20x to 23x, and a range of
price to book value multiples of 3.5x to 4.5x, Morgan Stanley estimated a range
for the implied value of Deposit Guaranty Common Stock of $50.00 to $68.00 per
share.
 
     The price to projected EPS multiples used in the comparable transaction
analysis were computed based on IBES estimates of the acquired company's EPS
prior to announcement of the transaction. The premium to market value multiples
used in the comparable transaction analysis were computed based on the closing
price of the acquired company's common stock one day prior to the announcement
of the transaction. The price to
 
                                                                      THE MERGER
 
                                       31
<PAGE>   44
 
projected earnings per share, price to book value and premium to market value
multiples indicated in the Merger were calculated based on the Exchange Ratio of
1.17, the closing prices of First American Common Stock on the Nasdaq National
Market ("NASDAQ") and Deposit Guaranty Common Stock on the NYSE as of December
5, 1997, of $54.75 and $52.38, respectively, and IBES estimates for Deposit
Guaranty's 1998 EPS.
 
     No company or transaction used in the comparable company or comparable
transaction analyses is identical to Deposit Guaranty or the Merger.
Accordingly, an analysis of the results of the foregoing necessarily involves
complex considerations and judgments concerning differences in financial and
operating characteristics of Deposit Guaranty and other factors that could
affect the public trading value of the companies to which it is being compared.
Mathematical analysis (such as determining the average or median) is not in
itself a meaningful method of using comparable company or comparable transaction
data.
 
     Other Analysis.  Morgan Stanley also performed various other analyses,
including, but not limited to: analysis of the potential pro forma impact of the
Merger on a variety of measures, including market position, loan portfolio,
deposit mix, and profitability; and review of information concerning the stock
price performance of Deposit Guaranty over the last five years relative to the
stock price performance of First American and corresponding mean data for the
Morgan Stanley Bank Index.
 
     In connection with its opinion dated as of the date of this Joint Proxy
Statement-Prospectus, Morgan Stanley confirmed the appropriateness of its
reliance on the analyses used to render its December 7, 1997 opinion by
performing procedures to update certain of such analyses and by reviewing the
assumptions upon which such analyses were based and the factors considered in
connection therewith.
 
     The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all its
analysis as a whole and did not attribute any particular weight to any
particular analysis or factor considered by it. Morgan Stanley believes that
selecting any portion of its analyses, without considering all analyses, would
create an incomplete view of the process underlying its opinion. In addition,
Morgan Stanley may have deemed various assumptions more or less probable than
other assumptions, so that the ranges of valuations resulting from any
particular analysis described above should not be taken to be Morgan Stanley's
view of the actual value of Deposit Guaranty.
 
     In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions, and
other matters, many of which are beyond the control of First American or Deposit
Guaranty. The analyses performed by Morgan Stanley are not necessarily
indicative of actual values, which may be significantly more or less favorable
than suggested by such analyses. Such analyses were prepared solely as part of
Morgan Stanley's analysis of the fairness from a financial point of view of the
Exchange Ratio pursuant to the Merger Agreement to First American and were
conducted in connection with the delivery of Morgan Stanley's opinions. The
analyses do not purport to be appraisals or to reflect the prices at which
Deposit Guaranty might actually be sold.
 
     As described above, Morgan Stanley's opinions and the information provided
by Morgan Stanley to the First American Board were among a number of factors
taken into consideration by the First American Board in making its determination
to recommend approval of the Merger Agreement and the transactions contemplated
thereby. Consequently, the Morgan Stanley analyses described above should not be
viewed as determinative of the opinion of the entire First American Board or the
view of the management with respect to the value of Deposit Guaranty. The
Exchange Ratio pursuant to the Merger Agreement was determined through
negotiations between First American and Deposit Guaranty, and was unanimously
approved by the First American Board.
 
     The First American Board retained Morgan Stanley based upon its experience
and expertise. Morgan Stanley is an internationally recognized investment
banking and advisory firm. As part of its investment banking business, Morgan
Stanley 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 valuation for estate, corporate and other purposes. Morgan
Stanley makes a market in First American Common Stock. In the course of its
business, Morgan Stanley and its affiliates may actively trade the debt and
equity securities of Deposit Guaranty and
 
THE MERGER
 
                                       32
<PAGE>   45
 
First American for their own account and for the accounts of customers and,
accordingly, may at times hold a long or short position in such securities. In
the past, Morgan Stanley has provided financial advisory and financial services
to First American, for which services Morgan Stanley received customary fees.
 
     Pursuant to a letter dated December 3, 1997, First American agreed to pay
Morgan Stanley: (i) an advisory fee estimated to be between $100,000 and
$150,000, which is payable if the Merger is not consummated, and (ii) an opinion
fee of $2.0 million. If the Merger is consummated, First American will pay
Morgan Stanley a transaction fee (against which any advisory or opinion fees
will be credited) equal to between 0.38% and 0.39% of the aggregate transaction
value of the Merger (approximately $8.9 million, based on the closing price of
First American Common Stock on March 9, 1998 of $46.69). In addition, First
American has agreed, among other things, to reimburse Morgan Stanley for all
reasonable out-of-pocket expenses incurred in connection with the services
provided by Morgan Stanley, and to indemnify and hold harmless Morgan Stanley
and certain related parties from and against certain liabilities and expenses,
which may include certain liabilities under the U.S. federal securities laws, in
connection with its engagement.
 
                OPINION OF DEPOSIT GUARANTY'S FINANCIAL ADVISOR
 
     CSFB has acted as financial advisor to Deposit Guaranty in connection with
the Merger. CSFB was selected by Deposit Guaranty based on CSFB's experience,
expertise and familiarity with Deposit Guaranty and its business. CSFB is an
internationally recognized investment banking firm and is regularly engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, leveraged buyouts, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for corporate and other purposes.
 
     In connection with CSFB's engagement, Deposit Guaranty requested that CSFB
evaluate the fairness of the Exchange Ratio from a financial point of view. On
December 7, 1997, at a meeting of the Deposit Guaranty Board held to review and
consider the terms of the Merger, CSFB rendered to the Deposit Guaranty Board an
oral opinion (which was subsequently confirmed by delivery of a written opinion
dated December 7, 1997) to the effect that, as of such date and based upon and
subject to certain matters stated in such opinion, the Exchange Ratio was fair
to the holders of Deposit Guaranty Common Stock from a financial point of view.
CSFB has confirmed its opinion dated December 7, 1997 by delivery of a written
opinion dated the date of this Joint Proxy Statement-Prospectus. In connection
with its opinion dated the date of this Joint Proxy Statement-Prospectus, CSFB
updated certain of the analyses performed in connection with its opinion
delivered on December 7, 1997 and reviewed the assumptions on which such
analyses were based and the factors considered in connection therewith.
 
     THE FULL TEXT OF CSFB'S WRITTEN OPINION TO THE DEPOSIT GUARANTY BOARD DATED
THE DATE OF THIS JOINT PROXY STATEMENT-PROSPECTUS, WHICH SETS FORTH THE
PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX D TO THIS JOINT PROXY
STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. SHAREHOLDERS OF
DEPOSIT GUARANTY ARE URGED TO READ THIS OPINION CAREFULLY IN ITS ENTIRETY. CSFB
HAS CONSENTED TO SUCH INCLUSION OF ITS OPINION AND TO THE REFERENCES TO THAT
OPINION IN THIS AND CERTAIN OTHER SECTIONS OF THE JOINT PROXY
STATEMENT-PROSPECTUS, BUT BY SO DOING, CSFB DOES NOT ADMIT THAT IT COMES WITHIN
THE CATEGORY OF PERSONS WHOSE CONSENT IS REQUIRED UNDER SECTION 7 OF THE
SECURITIES ACT OR THE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE
COMMISSION (the "Commission") THEREUNDER, NOR DOES CSFB THEREBY ADMIT THAT IT IS
AN "EXPERT" AS THAT TERM IS USED IN THE SECURITIES ACT OR THE RULES AND
REGULATIONS OF THE COMMISSION THEREUNDER WITH RESPECT TO ANY PART OF THE
REGISTRATION STATEMENT (AS DEFINED HEREIN) OF WHICH THIS JOINT PROXY
STATEMENT-PROSPECTUS FORMS A PART. CSFB'S OPINION IS DIRECTED TO THE DEPOSIT
GUARANTY BOARD AND RELATES ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO FROM A
FINANCIAL POINT OF VIEW, DOES NOT ADDRESS ANY OTHER ASPECT OF THE PROPOSED
MERGER OR ANY RELATED TRANSACTION AND DOES NOT CONSTITUTE A RECOMMENDATION TO
ANY SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE DEPOSIT GUARANTY
SPECIAL MEETING. THE SUMMARY OF THE OPINION SET FORTH IN THIS JOINT PROXY
STATEMENT-PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION.
 
     In arriving at its opinion, CSFB reviewed the Merger Agreement and certain
publicly available business and financial information relating to Deposit
Guaranty and First American. CSFB also reviewed certain other information
relating to Deposit Guaranty and First American, including financial forecasts
provided to CSFB by Deposit Guaranty and First American, and met with the
managements of Deposit Guaranty and First
 
                                                                      THE MERGER
 
                                       33
<PAGE>   46
 
American to discuss the businesses and prospects of Deposit Guaranty and First
American. CSFB also considered certain financial and stock market data of
Deposit Guaranty and First American and compared that data with similar data for
other publicly held companies in businesses similar to those of Deposit Guaranty
and First American, and considered the financial terms of certain other business
combinations and other transactions which were recently effected. CSFB also
considered such other information, financial studies, analyses and
investigations, and financial, economic and market criteria which CSFB deemed
relevant.
 
     In connection with its review, CSFB did not assume any responsibility for
independent verification of any of the information provided to or otherwise
reviewed by CSFB and relied on such information being complete and accurate in
all material respects. With respect to the financial forecasts (including the
estimates of future cost savings, operating synergies and revenue enhancements
expected to be achieved as a result of the Merger), CSFB assumed that such
forecasts were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the managements of Deposit Guaranty and
First American. In addition, CSFB was not requested to make, and did not make,
an independent evaluation or appraisal of the assets or liabilities (contingent
or otherwise) of Deposit Guaranty and First American, nor was CSFB furnished
with any such evaluations or appraisals. CSFB's opinion was necessarily based
upon financial, economic, market and other conditions as they existed and could
be evaluated on the date of its opinion. CSFB did not express any opinion as to
the actual value of the First American Common Stock when issued pursuant to the
Merger or the prices at which the First American Common Stock will trade
subsequent to the Merger.
 
     In preparing its opinion to the Deposit Guaranty Board, CSFB performed a
variety of financial and comparative analyses, including those described below.
The summary of CSFB's analyses set forth below does not purport to be a complete
description of the analyses underlying CSFB's opinion, but, rather, sets forth a
description of the material analyses performed by CSFB for purposes of 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 analyses and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. In arriving at its opinion, CSFB made qualitative judgments
as to the significance and relevance of each analysis and factor considered by
it. Accordingly, CSFB believes that its analyses must be considered as a whole
and that selecting portions of its analyses and factors, without considering all
analyses and factors, could create a misleading or incomplete view of the
processes underlying such analyses and its opinion. In its analyses, CSFB made
numerous assumptions with respect to Deposit Guaranty, First American, industry
performance, regulatory, general business, economic, market and financial
conditions, and other matters, many of which are beyond the control of Deposit
Guaranty and First American. No company, transaction or business used in such
analyses as a comparison is identical to Deposit Guaranty, First American or the
proposed Merger, nor is an evaluation of the results of such analyses entirely
mathematical; rather, such analyses involve complex considerations and judgments
concerning financial and operating characteristics and other factors that could
affect the acquisition, public trading or other values of the companies,
business segments or transactions being analyzed. The estimates contained in
such analyses and the ranges of valuations resulting from any particular
analysis are not necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less favorable than those
suggested by such analyses. In addition, analyses relating to the value of
businesses or securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold. Accordingly, such
analyses and estimates are inherently subject to substantial uncertainty. CSFB's
opinion and financial analyses were only one of many factors considered by the
Deposit Guaranty Board in its evaluation of the proposed Merger and should not
be viewed as determinative of the views of the Deposit Guaranty Board or
management with respect to the Exchange Ratio or the proposed Merger.
 
     The following is a summary of each of the material financial analyses
performed by CSFB in connection with its opinion dated December 7, 1997:
 
          Calculation of Implied Value of Exchange Ratio.  CSFB calculated the
     implied value of the Exchange Ratio based on the closing stock price of
     First American Common Stock on December 5, 1997 (the last full trading day
     prior to execution of the Merger Agreement), which indicated an implied
     equity value for Deposit Guaranty of approximately $64.06 per share. The
     implied equity value of $64.06 per share equated to implied multiples for
     Deposit Guaranty of latest 12 months' EPS, estimated calendar
 
THE MERGER
 
                                       34
<PAGE>   47
 
     1997 EPS, estimated calendar 1998 EPS and most recent book value and
     tangible book value of 29.8x, 28.1x, 25.1x, 4.2x and 5.3x, respectively,
     and an implied premium to the closing price of Deposit Guaranty Common
     Stock on December 5, 1997 of approximately 22%. CSFB then compared these
     results with those derived from the analyses described below.
 
          Selected Transactions Analysis.  Using publicly available information,
     CSFB analyzed the purchase prices and implied transaction multiples paid in
     the following selected transactions in the banking industry, which were
     announced in the second half of 1997 and had a transaction value at
     announcement in excess of $1.0 billion (acquiror/target): First Union
     Corporation/Signet Banking Corporation, NationsBank Corporation/Barnett
     Banks, Inc.; Banc One Corporation/First Commerce Corporation; First Union
     Corporation/CoreStates Financial Corp.; and National City Corporation/First
     of America Bank Corporation (collectively, the "SELECTED TRANSACTIONS").
     All multiples were based on information available at the time of
     announcement of the transaction. This analysis indicated a range of
     multiples for the Selected Transactions of estimated current-year EPS,
     estimated one-year forward EPS and most recent book value and tangible book
     value of 21.3x to 24.3x (with an average of 22.7x for the Selected
     Transactions), 19.3x to 22.9x (with an average of 20.5x for the Selected
     Transactions), 3.5x to 5.3x (with an average of 4.0x for the Selected
     Transactions) and 3.6x to 5.9x (with an average of 4.7x for the Selected
     Transactions), respectively. CSFB then calculated an implied per-share
     equity reference range for Deposit Guaranty by applying the range of
     multiples derived for the Selected Transactions to corresponding financial
     data of Deposit Guaranty, which indicated an implied equity reference range
     for Deposit Guaranty of approximately $52 to $61 per share based on the
     Selected Transactions.
 
          Discounted Cash Flow Analysis.  CSFB estimated the present value of
     the future streams of after-tax free cash flows that Deposit Guaranty could
     produce on a stand-alone basis through fiscal year 2002 based on a
     projection of capital available for distribution to Deposit Guaranty
     Shareholders in the form of dividends. CSFB also estimated the present
     value of the future streams of after-tax cash flows that Deposit Guaranty
     could produce though fiscal year 2002 based on a projection of capital
     available for distribution to the Deposit Guaranty Shareholders in the form
     of dividends after giving effect to, among other things, certain cost
     savings and revenue enhancements anticipated by the management of First
     American to result from the Merger. The range of estimated terminal values
     was calculated by applying multiples ranging from 15x to 17x to the
     projected 2002 net income of Deposit Guaranty. The free cash flow streams
     and estimated terminal values were then discounted to present values using
     discount rates ranging from 11% to 13%. This analysis indicated an implied
     equity reference range for Deposit Guaranty of approximately $40 to $49 per
     share, without giving effect to certain cost savings and revenue
     enhancements anticipated by the management of First American to result from
     the Merger, and approximately $53 to $63 per share after giving effect to
     such anticipated cost savings and revenue enhancements.
 
          Selected Companies Analysis.  CSFB compared certain financial,
     operating and stock market data of Deposit Guaranty to corresponding data
     of selected publicly traded companies in the banking industry, after
     applying an equity control premium of 30%. Such companies included: Bancorp
     South Inc.; Colonial BancGroup Inc.; Compass Bancshares Inc.; First
     Commercial Corp.; Hancock Holding Co.; Hibernia Corp.; National Commerce
     Bancorporation; Trustmark Corp.; and Whitney Holding Corp. (collectively,
     the "SELECTED COMPANIES"). EPS estimates for the Selected Companies and
     Deposit Guaranty were based on estimates of selected investment banking
     firms as compiled by IBES. All multiples were based on closing stock prices
     on December 5, 1997. This analysis indicated a range of multiples for the
     Selected Companies of latest 12 months' EPS, estimated calendar 1997 EPS,
     estimated calendar 1998 EPS and most recent book value and tangible book
     value of 24.0x to 33.5x (with an average of 26.3x), 23.1x to 32.0x (with an
     average of 25.7x), 20.9x to 27.7x (with an average of 23.1x), 3.0x to 6.4x
     (with an average of 3.8x) and 3.0x to 6.5x (with an average of 4.2x),
     respectively. CSFB then calculated an implied equity reference range for
     Deposit Guaranty by applying these multiples to corresponding financial
     data of Deposit Guaranty, which indicated an implied equity reference range
     for Deposit Guaranty of approximately $51 to $59 per share.
 
          Contribution Analysis.  CSFB analyzed the relative contributions of
     Deposit Guaranty and First American to, among other things, the estimated
     net income of the pro forma combined company for the
 
                                                                      THE MERGER
 
                                       35
<PAGE>   48
 
     nine months ended September 30, 1997 (before giving effect to certain cost
     savings and revenue enhancements which the management of First American
     estimated could be achieved in the Merger), the total assets of the pro
     forma combined company as at September 30, 1997 and the total equity of the
     pro forma combined company as at September 30, 1997. This analysis
     indicated that, without giving effect to such cost savings and revenue
     enhancements, Deposit Guaranty would contribute approximately 39% of the
     net income, 39% of the total assets and 41% of the total equity of the
     combined company. Based on the Exchange Ratio, current Deposit Guaranty
     Shareholders and First American Shareholders would own approximately 45%
     and 55%, respectively, of the combined company upon consummation of the
     Merger.
 
          Pro Forma Merger Analysis.  CSFB analyzed the potential pro forma
     effect of the Merger on Deposit Guaranty's EPS during the calendar years
     1998 and 1999 and on Deposit Guaranty's book value, tangible book value and
     dividends per share on a stand-alone basis. This analysis indicated that
     the proposed Merger would be accretive to Deposit Guaranty's EPS in each of
     the years analyzed, accretive to Deposit Guaranty's book value and tangible
     book value per share and accretive to Deposit Guaranty's dividends per
     share, assuming certain cost savings and revenue enhancements anticipated
     by the management of First American to result from the Merger are achieved.
     CSFB also analyzed the potential pro forma effect of the Merger on First
     American's EPS during the calendar years 1998 and 1999 relative to First
     American on a stand-alone basis. This analysis indicated that the Merger
     would be accretive to First American's EPS in calendar years 1998 and 1999,
     assuming the cost savings and revenue enhancements anticipated by the
     management of First American to result from the Merger are achieved and
     before taking into account any one-time charges associated with the merger.
 
     Miscellaneous.  Pursuant to the terms of CSFB's engagement, Deposit
Guaranty has agreed to pay CSFB for its services in connection with the proposed
Merger an aggregate financial advisory fee of 0.40% of the fair market value of
the consideration to be received by the Deposit Guaranty Shareholders (which
would be $10.8 million based on the aggregate transaction value of $2.7 billion
as of the date the Merger was announced, although the actual fee payable will
depend upon the value of the First American Common Stock as of the Effective
Time), of which $1.5 million was payable upon execution of the Merger Agreement
and the balance will be payable upon consummation of the Merger. Deposit
Guaranty also has agreed to reimburse CSFB for all reasonable out-of-pocket
expenses and to indemnify CSFB and certain related individuals and entities
against certain liabilities, including liabilities under the federal securities
laws, arising out of CSFB's engagement.
 
     In the ordinary course of its business, CSFB and its affiliates may
actively trade the debt and equity securities of both Deposit Guaranty and First
American for their own accounts and for the accounts of customers, and,
accordingly, may at any time hold a long or short position in such securities.
 
                               THE EFFECTIVE TIME
 
     The Merger will become effective as set forth in the Articles of Merger
which will be filed with the Secretary of State of the State of Mississippi and
the Secretary of State of the State of Tennessee on the date which is both the
last business day of the month and two business days after the satisfaction or
waiver, subject to applicable law, of each of the conditions described under
"-- Conditions to the Merger," other than those that relate to actions to be
taken at the closing (the "CLOSING DATE").
 
     At the Effective Time, Deposit Guaranty Shareholders (other than those who
perfect dissenters' rights under the MBCA -- see "ADDITIONAL
INFORMATION -- Dissenters' Appraisal Rights") will cease to be, and will have no
rights as, Deposit Guaranty Shareholders, other than to receive (i) any dividend
or other distribution with respect to Deposit Guaranty Common Stock with a
record date occurring prior to the Effective Time and (ii) the Merger
Consideration. After the Effective Time, there will be no transfers on the stock
transfer books of Deposit Guaranty of shares of Deposit Guaranty Common Stock.
If, after the Effective Time, Deposit Guaranty Certificates (as defined herein)
are presented for transfer to First Chicago Trust Company of New York (the
"EXCHANGE AGENT"), they will be cancelled and exchanged for certificates
representing shares of First American Common Stock as provided in the Merger
Agreement.
 
THE MERGER
 
                                       36
<PAGE>   49
 
                            EXCHANGE OF CERTIFICATES
 
     At or prior to the Effective Time, First American will deposit, or will
cause to be deposited, with the Exchange Agent, certificates representing the
shares of First American Common Stock (collectively, "FIRST AMERICAN
CERTIFICATES") and cash to be paid in lieu of fractional shares to which a
holder of certificates formerly representing Deposit Guaranty Common Stock
("DEPOSIT GUARANTY CERTIFICATES") would otherwise be entitled based on the
Exchange Ratio (such cash and First American Certificates, together with any
dividends or distributions with respect thereto, the "EXCHANGE FUND").
 
     As soon as practicable, but in no event more than three business days after
the date on which the Effective Time occurs (the "EFFECTIVE DATE"), the Exchange
Agent will mail to each holder of record of a Depository Guaranty Certificate a
letter of transmittal for use in exchanging such Deposit Guaranty Shareholders'
Deposit Guaranty Certificates for the Merger Consideration. Upon surrender of a
Deposit Guaranty Certificate for exchange and cancellation to the Exchange
Agent, together with a duly executed letter of transmittal, the holder of a
Deposit Guaranty Certificate will be entitled to receive in exchange for such
Deposit Guaranty Certificate a First American Certificate representing the
number of whole shares of First American Common Stock to which such holder has
become entitled pursuant to the Merger Agreement and a check in the amount of
cash in lieu of fractional shares, if any, of First American Common Stock to
which such holder has become entitled pursuant to the Merger Agreement. Deposit
Guaranty Certificates so surrendered will immediately be canceled. No interest
will be paid or accrued on any cash to be paid upon such surrender, whether in
lieu of fractional shares of First American Common Stock or with respect to
unpaid dividends or distributions thereon.
 
     DEPOSIT GUARANTY SHAREHOLDERS SHOULD NOT SEND IN THEIR DEPOSIT GUARANTY
CERTIFICATES UNTIL THEY RECEIVE THE TRANSMITTAL MATERIALS FROM THE EXCHANGE
AGENT.
 
     No fractional shares of First American Common Stock and no First American
Certificates or scrip therefor, or other evidence of ownership thereof, will be
issued in the Merger, nor will any dividend or distribution be payable on or
with respect thereto, nor will any such fractional share entitle the holder
thereof to vote or to any other rights of a First American Shareholder. Instead,
First American will pay to each Deposit Guaranty Shareholder who would otherwise
be entitled to a fractional share of First American Common Stock (after taking
into account all Deposit Guaranty Certificates delivered by such Deposit
Guaranty Shareholder) an amount in cash to be paid in lieu of fractional shares
(without interest) determined by multiplying such fraction by the average of the
closing sale prices of First American Common Stock on the Nasdaq (as reported in
The Wall Street Journal) for the five trading days immediately preceding the
Effective Date.
 
     Any part of the Exchange Fund that remains unclaimed by Deposit Guaranty
Shareholders for 12 months after the Effective Time will be paid to First
American, and after such time Deposit Guaranty Shareholders may look only to
First American for payment of the Merger Consideration and unpaid dividends and
distributions, if any, on First American Common Stock deliverable in respect of
each share of Deposit Guaranty Common Stock held by such holder, in each case,
without interest thereon. None of First American, Deposit Guaranty or the
Exchange Agent, or any other person, will be liable to any former Deposit
Guaranty Shareholder for any amounts properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
 
     In the event that any Deposit Guaranty Certificate is lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the same, and if required by First American, the posting of a bond by such
person in an amount that First American may direct as indemnity against any
claim that may be made against it with respect to such Deposit Guaranty
Certificate, the Exchange Agent will issue in exchange for such Deposit Guaranty
Certificate the shares of First American Common Stock and cash in lieu of
fractional shares deliverable in respect thereof.
 
     No dividends or other distributions with respect to First American Common
Stock declared after the Effective Time and payable to First American
Shareholders of record will be paid to the holder of any
 
                                                                      THE MERGER
 
                                       37
<PAGE>   50
 
unsurrendered Deposit Guaranty Certificate until the holder thereof surrenders
such Deposit Guaranty Certificate in accordance with the Merger Agreement. After
the proper surrender of a Deposit Guaranty Certificate, the record holder
thereof will be entitled to receive any such dividends or other distributions,
without any interest thereon, which theretofore had become payable with respect
to shares of First American Stock represented by such Deposit Guaranty
Certificate.
 
          CONDUCT OF BUSINESS PRIOR TO THE MERGER AND OTHER COVENANTS
 
     In the Merger Agreement, Deposit Guaranty has agreed that, prior to the
Effective Time and except as previously disclosed to First American, expressly
contemplated or permitted by the Merger Agreement, the Stock Option Agreement,
dated as of December 7, 1997, by and between First American and Deposit Guaranty
(the "STOCK OPTION AGREEMENT"), the Agreement and Plan of Merger, dated as of
September 24, 1997, among Deposit Guaranty, Deposit Guaranty National Bank,
Victory Bancshares, Inc. ("VICTORY BANCSHARES") and Victory Bank and Trust
Company, or with the prior written consent of First American, (i) Deposit
Guaranty and its subsidiaries will carry on their businesses in the ordinary
course consistent with past practice, and (ii) without limiting the generality
of clause (i), Deposit Guaranty will not, and will not permit any of its
subsidiaries to: (a) solely in the case of Deposit Guaranty, declare or pay any
dividends on, or make other distributions in respect of, any of its capital
stock, other than normal quarterly dividends not in excess of $0.23 per share of
Deposit Guaranty Common Stock; (b) (1) repurchase, redeem or otherwise acquire
(except for the acquisition of Trust Account Shares and DPC Shares) any shares
of the capital stock of Deposit Guaranty or any subsidiary thereof, or any
securities convertible into or exercisable for any capital stock of Deposit
Guaranty or any subsidiary thereof, except for purchases of Deposit Guaranty
Common Stock pursuant to the Deposit Guaranty's employee stock purchase plan
(the "ESPP") and, subject to the terms and conditions of the Merger Agreement,
pursuant to the Deposit Guaranty's Automatic Dividend Reinvestment Plan (the
"DRIP"), in each case, consistent with past practice, (2) split, combine or
reclassify any shares of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (3) issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock or
any securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with respect to
any of the foregoing, other than pursuant to the ESPP and, subject to the terms
and conditions of the Merger Agreement, pursuant to the DRIP, except, in the
case of subclauses (2) and (3), for the issuance of Deposit Guaranty Common
Stock upon the exercise or fulfillment of rights or options issued or existing
pursuant to employee benefit plans, programs or arrangements, all to the extent
outstanding and in existence on December 7, 1997 and in accordance with their
terms as of such date, upon the consummation of the merger contemplated by the
definitive agreement to acquire Victory Bancshares (the "VICTORY MERGER") or
pursuant to the Stock Option Agreement; (c) amend the articles of incorporation
Deposit Guaranty ("DEPOSIT GUARANTY ARTICLES"), the bylaws of Deposit Guaranty
(the "DEPOSIT GUARANTY BYLAWS") or other similar governing documents; (d) make
any capital expenditures other than those which (1) are made in the ordinary
course of business or are necessary to maintain existing assets in good repair
and (2) in any event are in an amount of no more than $500,000 in the aggregate;
(e) enter into any new line of business; (f) acquire or agree to acquire, by
merging or consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire any assets, which would be material,
individually or in the aggregate, to Deposit Guaranty, or which could reasonably
be expected to impede or delay consummation of the Merger, other than in
connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructurings in the ordinary course of business consistent with
past practices; (g) take any action that is intended or may reasonably be
expected to result in any of Deposit Guaranty's representations and warranties
in the Merger Agreement being or becoming untrue, or in any of the conditions to
the Merger set forth in the Merger Agreement not being satisfied; (h) change its
methods of accounting in effect at September 30, 1997, except as required by
changes in generally accepted accounting principles ("GAAP") or regulatory
accounting principles as concurred to by Deposit Guaranty's independent
auditors; (i) (1) except as otherwise provided in the Merger Agreement, as
required by applicable law or as
 
THE MERGER
 
                                       38
<PAGE>   51
 
required to maintain qualification pursuant to the Code, adopt, amend, or
terminate any employee benefit plan or any agreement, arrangement, plan or
policy between Deposit Guaranty or any of its subsidiaries and one or more of
its current or former directors, officers or employees (except that Deposit
Guaranty may adapt the amendments to its deferred income plans as agreed to by
First American in the Merger Agreement), or (2) except for normal increases in
the ordinary course of business consistent with past practice or except as
required by applicable law, increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required by
any of Deposit Guaranty's benefit, pension or compensation plans or agreements
as in effect as of December 7, 1997 (including, without limitation, the granting
of stock options, stock appreciation rights, restricted stock, restricted stock
units or performance units or shares), provided, however, that nothing contained
in the Merger Agreement will prohibit Deposit Guaranty (A) from paying 1997
bonuses under its incentive bonus plan (the "BONUS PLANS") consistent with past
practice, except that in determining the amounts of such bonuses, Deposit
Guaranty shall be entitled to disregard the effect (including, without
limitation, the cost) of any actions reasonably taken by Deposit Guaranty or any
of its subsidiaries in contemplation of the Merger or at the request of First
American, or (B) on or prior to the Closing Date, from paying pro rata 1998
bonuses under the Bonus Plans in respect of the period from January 1, 1998,
through the Closing Date based on Deposit Guaranty's annualized performance
(without regard to the effect (including, without limitation, the cost) of any
actions reasonably taken by Deposit Guaranty or any of its subsidiaries in
contemplation of the Merger or at the request of First American) from January 1,
1998, through the end of the last full month prior to consummation of the
Merger; (j) take or cause to be taken any action which would disqualify the
Merger as a "pooling of interests" for accounting purposes or a reorganization
under Section 368(a) of the Code; (k) other than activities in the ordinary
course of business consistent with past practice, sell, lease, encumber, assign
or otherwise dispose of, or agree to sell, lease, encumber, assign or otherwise
dispose of, any of its material assets, properties or other rights or
agreements; (l) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity; (m) file any application
to relocate or terminate the operations of any banking office of it or any of
its subsidiaries; (n) create, renew, amend or terminate, or give notice of a
proposed renewal, amendment or termination of, any material contract, agreement
or lease for goods, services or office space to which Deposit Guaranty or any of
its subsidiaries is a party or by which Deposit Guaranty or any of its
subsidiaries or their respective properties is bound, other than the renewal in
the ordinary course of business of any lease the term of which expires prior to
the Closing Date, or amend or waive the provisions of any confidentiality or
standstill agreement to which Deposit Guaranty or any of its affiliates is a
party as of the date hereof; (o) take any action or enter into any agreement
that could reasonably be expected to jeopardize or materially delay the receipt
of any regulatory approvals required to consummate the transactions contemplated
by the Merger Agreement, including the Merger (together with the expiration of
all statutory waiting periods with respect to such transactions, the "REQUISITE
REGULATORY APPROVALS"); or (p) agree or commit to do any of the foregoing.
 
     In the Merger Agreement, Deposit Guaranty has agreed that, prior to the
Effective Time, it will not, and will not permit any of its subsidiaries to,
authorize or permit any of its officers, directors, employees or agents to,
directly or indirectly, solicit, initiate, facilitate or encourage any inquiries
relating to, or the making of any proposal which constitutes, a Takeover
Proposal (as defined herein), or participate in any discussions or negotiations,
or provide third parties with any nonpublic information, relating to any such
inquiry or proposal or otherwise facilitate any effort or attempt to make a
Takeover Proposal, provided that Deposit Guaranty may communicate information
about any such Takeover Proposal to Deposit Guaranty Shareholders if, in the
judgment of the Deposit Guaranty Board, based upon the advice of outside
counsel, such communication is required under applicable law, and, provided
further, that Deposit Guaranty may, and may authorize and permit its officers,
directors, employees or agents to, provide or cause to be provided such
information and participate in such discussions or negotiations if the Deposit
Guaranty Board, after having consulted with and considered the advice of outside
counsel, has determined that the failure to do so could cause the members of the
Deposit Guaranty Board to breach their fiduciary duties under applicable laws.
Deposit Guaranty will immediately cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any parties
other than First American with respect to any of the foregoing. Deposit Guaranty
 
                                                                      THE MERGER
 
                                       39
<PAGE>   52
 
will take all actions necessary or advisable to inform the appropriate
individuals or entities referred to in the first sentence of this paragraph of
its obligations described in this paragraph. Deposit Guaranty will notify First
American immediately if any such inquiries or Takeover Proposals are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, Deposit Guaranty, and
will promptly (within 24 hours) inform First American in writing of all of the
relevant details with respect to the foregoing, including the material terms and
conditions of such request or Takeover Proposal and the identity of the person
or group making such request or proposal. Deposit Guaranty will keep First
American fully informed of the status and details (including amendments or
proposed amendments) of any such request or Takeover Proposal. "TAKEOVER
PROPOSAL" means any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving Deposit Guaranty or any of
its subsidiaries or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets of, Deposit Guaranty
or any of its subsidiaries other than the transactions contemplated or permitted
by the Merger Agreement and the Stock Option Agreement.
 
     In the Merger Agreement, First American has agreed that, prior to the
Effective Time and except as previously disclosed to Deposit Guaranty, as
contemplated by the Merger Agreement or consented to in writing by Deposit
Guaranty, First American will not, and will not permit any of its subsidiaries
to (i) solely in the case of First American, declare or pay any dividends on or
make any other distributions in respect of any of its capital stock other than
its current quarterly dividends, provided that First American may increase the
quarterly cash dividend on First American Common Stock in a manner consistent
with past practice; (ii) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in the
Merger Agreement being or becoming untrue, or in any of the conditions to the
Merger not being satisfied; (iii) take any action or enter into any agreement
that could reasonably be expected to jeopardize or materially delay the receipt
of any Requisite Regulatory Approval; (iv) change its methods of accounting in
effect at September 30, 1997, except in accordance with changes in GAAP or
regulatory accounting principles as concurred with by First American's
independent auditors; (v) take or cause to be taken any action which would
disqualify the Merger as a "pooling of interests" for accounting purposes or a
reorganization under Section 368(a) of the Code; or (vi) agree to do any of the
foregoing. In addition, First American has agreed that, prior to the Effective
Time, except as expressly contemplated or permitted by the Merger Agreement, or
with the prior written consent of Deposit Guaranty, it will, and will cause its
subsidiaries to, carry on their respective businesses in the ordinary course
consistent with past practice.
 
     The Merger Agreement also contains certain other agreements relating to the
conduct of the parties prior to the Effective Time, including, among other
things, those requiring each party (i) to use reasonable best efforts to
promptly apply for and obtain all permits, consents, approvals and
authorizations of all third parties and governmental entities necessary or
advisable to consummate the transactions contemplated by the Merger Agreement;
(ii) subject to certain limitations regarding privileged or confidential
information and otherwise, to afford to the officers, employees, accountants,
counsel and other representatives of the other party to the Merger Agreement
access during normal business hours to all of such party's properties, books,
contracts, commitments, records, officers, employees, accountants, counsel and
make available all information concerning its business, properties and personnel
as such other party may reasonably request; (iii) to call, give notice of,
convene and hold the First American Annual Meeting, in the case of First
American, and the Deposit Guaranty Special Meeting, in the case of Deposit
Guaranty, and each party has agreed to recommend to its shareholders, though its
Board of Directors, the Charter Amendment (in the case of First American only),
the Merger Agreement and the transactions contemplated thereby and related
matters, provided that the Deposit Guaranty Board may withdraw, modify or change
its recommendation if, after having consulted with and considered the advice of
outside counsel, the Deposit Guaranty Board has determined that the failure to
do so could cause the members of the Deposit Guaranty Board to breach their
fiduciary duties under applicable law; (iv) to use and cause its subsidiaries to
use reasonable best efforts to take all actions necessary, proper or advisable
to comply with any legal requirements in connection with the Merger and, subject
to the conditions described under "-- Conditions to the Merger," to consummate
the Merger, and to obtain all required governmental and third party approvals;
(v) in the case of First American, to use reasonable best efforts to cause the
shares of First American Common Stock to be issued in the Merger to be approved
for quotation on Nasdaq, subject to official notice of issuance, as of the
Effective Time; and (vi) to coordinate the payment of
 
THE MERGER
 
                                       40
<PAGE>   53
 
dividends on First American Common Stock and Deposit Guaranty Common Stock such
that First American Shareholders and Deposit Guaranty Shareholders will not
receive more than one dividend, or fail to receive one dividend, for any single
calendar quarter due to the exchange of First American Common Stock for Deposit
Guaranty Common Stock.
 
     In addition, First American has agreed to provide indemnification to the
officers, directors and employees of Deposit Guaranty to the full extent
permitted by law from and after the Effective Time and to provide, for a period
of three years after the Effective Time, directors' and officers' liability
insurance for the directors and officers of Deposit Guaranty to the maximum
extent available at an annual premium not to exceed 200% of the amount expended
by Deposit Guaranty as of the date of the Merger Agreement. See "-- Interests of
Certain Persons in the Merger."
 
     First American has agreed to increase the size of the First American Board
by five members and to cause five directors of Deposit Guaranty mutually agreed
upon by Deposit Guaranty and First American from among those persons currently
serving on the Deposit Guaranty Board to be appointed directors of First
American at the Effective Time. If any of such directors are appointed to a
class of First American directors whose terms expire before December 31, 1999,
First American will include such persons on the list of the First American
Board's nominees at the next annual meeting of First American Shareholders at
which directors of that class are elected. If any such person cannot serve as a
director of First American, First American will elect a member of the Advisory
Boards to substitute for such person. See "INFORMATION ABOUT OUR
COMPANIES -- Management and Operations After the Merger" and "-- Interests of
Certain Persons in the Merger."
 
     First American has also agreed that, promptly after the Effective Time, it
will cause those members of the Deposit Guaranty Board (other than those
appointed to the First American Board) and the members of the Board of Directors
of Deposit Guaranty National Bank to be appointed or elected as members of one
of Deposit Guaranty National Bank's existing community advisory boards (the
"ADVISORY BOARDS"). Such persons will serve in such capacity for a period of not
less than 36 months after the Effective Time, and any persons who are members of
such Advisory Boards as of the Effective Time will continue to be members of
such Advisory Boards for the same period. After the Effective Time, the Advisory
Boards will meet four times per year, and each member will be paid retainer and
meeting fees that are not less on an aggregate annual basis than those paid to
members of Deposit Guaranty's Jackson, Mississippi Advisory Board during
calendar year 1997, assuming all meetings were attended. See "INFORMATION ABOUT
OUR COMPANIES -- Management and Operations After the Merger" and "-- Interests
of Certain Persons in the Merger."
 
     Pursuant to the Merger Agreement, First American has also agreed to
establish, and to contribute $15 million to, a charitable foundation for the
benefit of the communities served by Deposit Guaranty and its subsidiaries. The
foundation will be administered by a board to be appointed before the Effective
Time by the Deposit Guaranty Board in consultation with First American.
 
                            CONDITIONS TO THE MERGER
 
     The obligations of First American and Deposit Guaranty to consummate the
Merger are subject to the satisfaction (or waiver, where legally allowed), at or
prior to the Effective Time, of a number of conditions set forth in the Merger
Agreement, including: (i) approval and adoption of the agreement by First
American Shareholders and Deposit Guaranty Shareholders, and approval of the
Charter Amendment by First American Shareholders; (ii) authorization for
quotation on Nasdaq of the shares of First American Common Stock to be issued in
the Merger, subject to official notice of issuance; (iii) the receipt of the
Requisite Regulatory Approvals, with such Requisite Regulatory Approvals
remaining in full force as of the Effective Time; (iv) the Registration
Statement (as defined herein) shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for the purpose shall have been
initiated or threatened by the Commission; (v) the absence of any order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition (an "INJUNCTION") prevent the consummation
of the Merger, and the absence of any statute, rule, regulation, order,
injunction or decree having been enacted, entered, promulgated or enforced by
any
 
                                                                      THE MERGER
 
                                       41
<PAGE>   54
 
governmental entity prohibiting, restricting or making illegal consummation of
the Merger; (vi) the absence of any proceeding initiated by any governmental
entity seeking an Injunction; (vii) the accuracy of the representations of the
other party to the Merger Agreement as of the Closing Date as though made
thereon and as of the date of the Merger Agreement, subject to the materiality
standards set forth in the Merger Agreement, and the receipt of a certificate to
the foregoing effect signed on behalf of such other party by the Chief Executive
Officer and Chief Financial Officer thereof; (viii) the performance by the other
party to the Merger Agreement in all material respects of all of the obligations
required to be performed by it under the Merger Agreement at or prior to the
Closing Date, and the receipt of a certificate to the foregoing effect signed on
behalf of such other party by the Chief Executive Officer and Chief Financial
Officer thereof; (ix) the receipt of an opinion from Wachtell, Lipton, Rosen &
Katz, counsel to First American (in the case of the obligations of First
American to consummate the Merger) and the receipt of an opinion from Skadden,
Arps, Slate, Meagher and Flom LLP, counsel to Deposit Guaranty (in the case of
the obligations of Deposit Guaranty to consummate the Merger), in form and
substance reasonably satisfactory to the party receiving such opinion, dated as
of the Effective Time, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which 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 Code and
that, accordingly, for federal income tax purposes (a) no gain or loss will be
recognized by First American or Deposit Guaranty as a result of the Merger, (b)
no gain or loss will be recognized by Deposit Guaranty Shareholders who exchange
all of their Deposit Guaranty Common Stock solely for First American Common
Stock pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in First American Common Stock), and (c) the aggregate
tax basis of the First American Common Stock received by Deposit Guaranty
Shareholders who exchange all of their Deposit Guaranty Common Stock solely for
First American Common Stock pursuant to the Merger will be the same as the
aggregate tax basis of the Deposit Guaranty Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share interest for
which cash is received); and, in rendering such opinion, such counsel may
require and rely upon representations and covenants, including those contained
in certificates of officers of First American, Deposit Guaranty and others,
reasonably satisfactory in form and substance to such counsel; and (x) the
receipt of a letter from KPMG Peat Marwick LLP, addressed to First American, to
the effect that the Merger will qualify for "pooling of interests" accounting
treatment.
 
     No assurance can be provided as to if or when the Requisite Regulatory
Approvals will be obtained or whether all of the other conditions precedent to
the Merger will be satisfied or, where legally permitted, waived by the party
permitted to do so.
 
                      TERMINATION OF THE MERGER AGREEMENT
 
     The Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with the
Merger by both the Deposit Guaranty Shareholders and the First American
Shareholders: (i) by mutual consent of Deposit Guaranty and First American in a
written instrument, if the Board of Directors of each so determines by a vote of
a majority of the members of its entire Board of Directors; (ii) by either First
American or Deposit Guaranty upon written notice to the other party (a) 60 days
after the date on which any request or application for a Requisite Regulatory
Approval has been denied or withdrawn at the request or recommendation of the
governmental entity that must grant such Requisite Regulatory Approval, unless,
within the 60-day period following such denial or withdrawal, a petition for
rehearing or an amended application has been filed with the applicable
governmental entity, provided that no party has the right to terminate the
Merger Agreement for such reason if such denial, or request or recommendation
for withdrawal, is due to the failure of the party seeking to terminate the
Merger Agreement to perform or observe the covenants and agreements of such
party set forth therein or (b) if any governmental entity of competent
jurisdiction issues a final nonappealable order enjoining or otherwise
prohibiting the Merger; (iii) by either First American or Deposit Guaranty if
the Merger is not consummated on or before September 30, 1998, unless the
failure of the Merger to be consummated by such date is due to the failure of
the party seeking to terminate the Merger Agreement to perform or observe the
covenants and agreements of such party set forth therein; (iv) by either First
American or Deposit Guaranty (provided that
 
THE MERGER
 
                                       42
<PAGE>   55
 
the terminating party shall not be in material breach of any of its obligations
with respect to obtaining the approval of its shareholders under the Merger
Agreement) if any approval of either of the Deposit Guaranty Shareholders or
First American Shareholders required for the consummation of the Merger is not
obtained by reason of the failure to obtain the required vote at a duly held
meeting of the First American Shareholders or the Deposit Guaranty Shareholders,
as the case may be, or at any adjournment or postponement thereof; (v) by either
First American or Deposit Guaranty (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained in the Merger Agreement) if there is a material breach of
any of the representations or warranties set forth in the Merger Agreement on
the part of the other party and that breach is not cured within 30 days
following written notice to the party committing the breach, or which breach, by
its nature, cannot be cured prior to the Closing Date, provided that neither
party shall have the right to terminate the Merger Agreement for this reason
unless the breach of representation or warranty, together with all other such
breaches, would entitle the party receiving such representation not to
consummate the transactions contemplated hereby under the section of the Merger
Agreement described in clause (vii) under "-- Conditions to the Merger"; (vi) by
either First American or Deposit Guaranty (provided that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained in the Merger Agreement) if there is a material breach
of any of the covenants or agreements set forth in the Merger Agreement on the
part of the other party, which breach shall not have been cured within 30 days
following receipt by the breaching party of written notice of such breach from
the other party hereto, or which breach, by its nature, cannot be cured prior to
the Closing Date; (vii) by the First American Board, if the Deposit Guaranty
Board has withdrawn, modified or changed in a manner adverse to First American
its approval of, or recommendation to Deposit Guaranty Shareholders that the
Deposit Guaranty Shareholders approve, the Merger Agreement and the transactions
contemplated thereby; or (viii) by Deposit Guaranty at any time during the
ten-day period commencing two days after the Determination Date (as defined
herein) if either (a) both (1) the Average Closing Price (as defined herein)
shall be less than $43.80 and (2) the number obtained by dividing the Average
Closing Price by $54.75 (the "FIRST AMERICAN RATIO") shall be less than the
number obtained by dividing the Index Price (as defined herein) on the
Determination Date by the Index Price on the December 5, 1997 and subtracting
0.15 from such quotient (the "INDEX RATIO") (an "INDEX TERMINATION EVENT") or
(b) the Average Closing Price shall be less than $41.0625 (an "ABSOLUTE
TERMINATION EVENT" and, together with an Index Termination Event, a "TERMINATION
EVENT").
 
     The termination right of Deposit Guaranty described in clause (viii) of the
preceding paragraph is subject to the following additional provisions of the
Merger Agreement. If Deposit Guaranty elects to exercise its termination right
in respect of a Termination Event, it must give prompt written notice to First
American specifying whether an Index Termination Event or an Absolute
Termination Event is applicable (or if both would be applicable, which
Termination Event is being invoked). Deposit Guaranty's notice of election to
terminate can be withdrawn at any time within the ten-day period described in
clause (viii) of the preceding paragraph. During the five-day period commencing
with its receipt of Deposit Guaranty's notice of election to terminate, First
American will have the option, in the case of a termination pursuant to an Index
Termination Event, of adjusting the Exchange Ratio to equal the lesser of (i) a
number equal to a quotient (rounded to the nearest one-ten-thousandth), the
numerator of which is the product of 0.80, $54.75 and the Exchange Ratio (as
then in effect) and the denominator of which is the Average Closing Price, and
(ii) a number equal to a quotient (rounded to the nearest one-ten-thousandth),
the numerator of which is the Index Ratio multiplied by the Exchange Ratio (as
then in effect) and the denominator of which is the First American Ratio. During
such five-day period, First American will have the option, in the case of a
termination pursuant to an Absolute Termination Event, to elect to increase the
Exchange Ratio to equal a number equal to a quotient (rounded to the nearest
one-ten-thousandth), the numerator of which is the product of 0.75, $54.75 and
the Exchange Ratio (as then in effect) and the denominator of which is the
Average Closing Price. If First American makes an election contemplated by
either of the two preceding sentences, within such five-day period, it must give
prompt written notice to Deposit Guaranty of such election and the revised
Exchange Ratio, whereupon no Termination Event will have occurred and the Merger
Agreement will remain in effect in accordance with its terms (except as the
Exchange Ratio will have been so modified), and any references in the Merger
Agreement to "Exchange Ratio" will thereafter be deemed to refer to the Exchange
Ratio as so adjusted.
 
                                                                      THE MERGER
 
                                       43
<PAGE>   56
 
     For purposes of describing Deposit Guaranty's termination right, the
following terms have the meaning indicated:
 
          "DETERMINATION DATE" means the fifth business day prior to the date on
     which the approval of the Federal Reserve Board required for consummation
     of the Merger is received, without regard to any requisite waiting periods
     in respect thereof.
 
          "AVERAGE CLOSING PRICE" means the average of the last reported sale
     prices per share of First American Common Stock as reported on Nasdaq (as
     reported in the Wall Street Journal or, if not reported therein, in another
     mutually agreed upon authoritative source) for the 20 consecutive trading
     days ending at the close of trading on the Determination Date.
 
          "INDEX GROUP" means the group of bank holding companies listed below,
     the common stock of all of which is publicly traded and as to which there
     is not, from December 5, 1997 and before the Determination Date, an
     announcement of a proposal for such company to be acquired or for such
     company to acquire another company or companies in transactions with a
     value exceeding 25% of the acquiror's market capitalization as of December
     5, 1997. In the event that the common stock of any such company ceases to
     be publicly traded or any such announcement is made with respect to any
     such company, such company will be removed from the Index Group, and the
     weights (which are based on the number of outstanding shares of common
     stock) redistributed proportionately for purposes of determining the Index
     Price. The bank holding companies and the weights attributed to them are as
     follows:
 
<TABLE>
<CAPTION>
BANK HOLDING COMPANY                                      WEIGHTING(%)
- --------------------                                      ------------
<S>                                                       <C>
AmSouth Bancorporation..................................      1.1
BankAmerica Corporation.................................      9.1
Banc One Corporation....................................      7.7
BB&T Corporation........................................      1.8
The Bank of New York Company, Inc.......................      4.9
BankBoston Corporation..................................      1.9
Comerica, Inc...........................................      1.4
Crestar Financial Corporation...........................      1.4
Fifth Third Bancorp.....................................      2.0
First Chicago NBD Corporation...........................      3.8
Fleet Financial Group...................................      3.3
Firstar Corporation.....................................      1.9
First Union Corporation.................................      7.4
First Virginia Banks, Inc...............................      0.7
Huntington Bancshares, Inc..............................      2.5
Hibernia Corporation....................................      1.7
KeyCorp.................................................      2.9
Mellon Bank Corporation.................................      3.3
Mercantile Bancorporation, Inc..........................      1.7
NationsBank Corporation.................................      9.2
National City Corporation...............................      2.8
Norwest Corporation.....................................      9.8
PNC Bank Corporation....................................      4.0
Regions Financial Corporation...........................      1.8
Star Banc Corporation...................................      1.1
SunTrust Banks, Inc.....................................      2.8
UnionBanCal Corporation.................................      0.7
Union Planters Corporation..............................      0.9
U.S. Bancorp............................................      3.2
Wachovia Corporation....................................      2.1
Wells Fargo & Company...................................      1.1
</TABLE>
 
THE MERGER
 
                                       44
<PAGE>   57
 
          "INDEX PRICE" on a given date means the weighted average (weighted in
     accordance with the factors listed below) of the closing prices of the
     companies comprising the Index Group.
 
     If any company belonging to the Index Group or First American declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between December 5, 1997
and the Determination Date, the prices for the common stock of such company or
First American will be appropriately adjusted for the purposes of determining
whether a Termination Event has occurred.
 
     Whether a Termination Event will occur will not be known until the
Determination Date. If such date were the date of this Joint Proxy
Statement-Prospectus, no such right of termination would exist based on the
prevailing market price of First American Common Stock. The Deposit Guaranty
Board has made no decision as to whether it would exercise its termination right
in the event of a Termination Event and the First American Board has made no
decision as to whether it would exercise its correlative right to increase the
Exchange Ratio. In the event a Termination Event occurs, each of the First
American Board and the Deposit Guaranty Board would, consistent with its
fiduciary duties, take into account all relevant facts and circumstances as they
exist at such time, and would consult with its respective financial advisors and
legal counsel. Approval of the Merger Agreement by the Deposit Guaranty
Shareholders at the Deposit Guaranty Special Meeting, and by the First American
Shareholders at the First American Annual Meeting, will confer on the Deposit
Guaranty Board and the First American Board, respectively, the power, consistent
with the fiduciary duties of such Boards of Directors, to elect to consummate
the Merger notwithstanding the occurrence of a Termination Event (in the case of
the Deposit Guaranty Board) or to elect to increase the Exchange Ratio should
Deposit Guaranty exercise its termination right (in the case of the First
American Board) without any further action by, or resolicitation of the votes
of, Deposit Guaranty Shareholders or First American Shareholders, as the case
may be. The fairness opinions received by each of Deposit Guaranty and First
American are each dated as of the date of this Joint Proxy Statement-Prospectus
and are based on conditions in effect on the date thereof. Accordingly, such
opinions do not address the circumstances that might arise if a Termination
Event were to occur. See "-- Opinion of Deposit Guaranty's Financial Advisor"
and "-- Opinion of First American's Financial Advisor."
 
     In the event of termination of the Merger Agreement pursuant to its terms
the Merger Agreement will become void and have no effect, except with respect to
the parties' obligations with respect to confidential information and expenses
set forth in the Merger Agreement and except that termination will not relieve
or release a breaching party from liability or damages for its willful breach of
the Merger Agreement.
 
                          WAIVER; AMENDMENT; EXPENSES
 
     Subject to compliance with applicable law, the Merger Agreement may be
amended by the parties thereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by either Deposit Guaranty
Shareholders or First American Shareholders; provided, however, that after any
approval of the transactions contemplated by the Merger Agreement by the Deposit
Guaranty Shareholders, there may not be, without further approval of such
shareholders, any amendment of the Merger Agreement which reduces the amount or
changes the form of the Merger Consideration other than as contemplated by the
Merger Agreement. The Merger Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties thereto.
 
     Prior to the Effective Time, each of the parties to the Merger Agreement
may, to the extent legally allowed and only in a written instrument, extend the
time for the performance of any of the obligations or other acts of the other
party to the Merger Agreement, waive any inaccuracies in the representations or
warranties of the other party contained in the Merger Agreement or in any
document delivered pursuant to the Merger Agreement or waive compliance with any
of the agreements or conditions of the other party contained in the Merger
Agreement. In addition, the Merger Agreement permits First American at any time
to change the method of effecting the combination with Deposit Guaranty if and
to the extent that First American deems such change desirable provided that no
such change may alter or change the Merger Consideration,
 
                                                                      THE MERGER
 
                                       45
<PAGE>   58
 
adversely affect the tax treatment of Deposit Guaranty Shareholders as a result
of receiving the Merger Consideration or materially impede or delay consummation
of the transactions contemplated by the Merger Agreement.
 
     Each party to the Merger Agreement will bear all expenses incurred by it in
connection with the Merger Agreement and the transactions contemplated thereby.
 
                    CERTAIN FEDERAL INCOME TAX CONSEQUENCES
 
     The following is a summary of the material anticipated U.S. federal income
tax consequences of the Merger to Deposit Guaranty Shareholders who hold Deposit
Guaranty Common Stock as a capital asset. The summary is based on the Code,
Treasury regulations thereunder, and administrative rulings and court decisions
in effect as of the date hereof, all of which are subject to change at any time,
possibly with retroactive effect. This summary is not a complete description of
all of the consequences of the Merger and, in particular, may not address U.S.
federal income tax considerations applicable to stockholders subject to special
treatment under U.S. federal income tax law (including, for example, non-U.S.
persons, financial institutions, dealers in securities, insurance companies,
tax-exempt entities, holders who acquired Deposit Guaranty Common Stock pursuant
to the exercise of an employee stock option or right or otherwise as
compensation, and holders who hold Deposit Guaranty Common Stock as part of a
hedge, straddle or conversion transaction). In addition, no information is
provided herein with respect to the tax consequences of the Merger under
applicable foreign, state or local laws. DEPOSIT GUARANTY SHAREHOLDERS ARE URGED
TO CONSULT WITH THEIR TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF THE MERGER
TO THEM, INCLUDING THE EFFECTS OF U.S. FEDERAL, STATE AND LOCAL, FOREIGN, AND
OTHER TAX LAWS.
 
     In connection with the filing of the Registration Statement, First American
has received an opinion of Wachtell, Lipton, Rosen & Katz, counsel to First
American, dated the date hereof, addressing the U.S. federal income tax
consequences of the Merger described below. Such opinion has been rendered on
the basis of facts, representations and assumptions set forth or referred to in
such opinion which are consistent with the expected state of facts existing at
the Effective Time. In rendering this opinion, Wachtell, Lipton, Rosen & Katz
has required and relied upon representations and covenants, including those
contained in certificates of officers of First American and Deposit Guaranty.
The opinion is to the effect that, for U.S. federal income tax purposes:
 
          (i) The Merger will be treated as a reorganization within the meaning
     of Section 368(a) of the Code;
 
          (ii) No gain or loss will be recognized by First American or Deposit
     Guaranty as a result of the Merger;
 
          (iii) No gain or loss will be recognized by the Deposit Guaranty
     Shareholders who exchange all of their Deposit Guaranty Common Stock solely
     for First American Common Stock pursuant to the Merger (except with respect
     to cash received in lieu of a fractional share interest in First American
     Common Stock); and
 
          (iv) The aggregate tax basis of the First American Common Stock
     received by Deposit Guaranty Shareholders who exchange all of their Deposit
     Guaranty Common Stock solely for First American Common Stock pursuant to
     the Merger will be the same as the aggregate tax basis of the Deposit
     Guaranty Common Stock surrendered in exchange therefor (reduced by any
     amount allocable to a fractional share interest for which cash is
     received).
 
     First American's obligation to consummate the Merger is conditioned upon
the receipt of a further opinion of Wachtell, Lipton, Rosen & Katz, and Deposit
Guaranty's obligation to consummate the Merger is conditioned upon the receipt
of an opinion of Skadden, Arps, Slate, Meagher and Flom LLP, in each case dated
as of the Effective Time, opining as to the same U.S. federal income tax
consequences discussed in the immediately preceding paragraph and as further
described under the caption "-- Conditions to the Merger." None of the tax
opinions to be delivered to the parties in connection with the Merger as
described herein are
 
THE MERGER
 
                                       46
<PAGE>   59
 
binding on the Internal Revenue Service (the "IRS") or the courts, and the
parties do not intend to request a ruling from the IRS with respect to the
Merger. Accordingly, there can be no assurance that the IRS will not challenge
the conclusions reflected in such opinions or that a court will not sustain such
challenge.
 
     In the event that (i) Deposit Guaranty fails to receive its tax opinion
from Skadden, Arps, Slate, Meagher & Flom LLP as discussed in the immediately
preceding paragraph, (ii) Deposit Guaranty determines to waive the condition to
its obligation to consummate the Merger relating thereto, and (iii) the material
U.S. federal income tax consequences to Deposit Guaranty Shareholders are
different from those described above, Deposit Guaranty will resolicit the
approval of the Deposit Guaranty Shareholders prior to proceeding with
consummation of the Merger.
 
     Based upon the current ruling position of the IRS, cash received by a
Deposit Guaranty Shareholder in lieu of a fractional share interest in First
American Common Stock will be treated as received in redemption of such
fractional share interest, and a Deposit Guaranty Shareholder should generally
recognize capital gain or loss for federal income tax purposes measured by the
difference between the amount of cash received and the portion of the tax basis
of the share of Deposit Guaranty Common Stock allocable to such fractional share
interest. Such gain or loss should be a long-term capital gain or loss if the
holding period for such share of Deposit Guaranty Common Stock is greater than
one year at the Effective Time. In the case of individual Deposit Guaranty
Shareholders, such capital gain will be taxed at a maximum rate of 28% if such
Deposit Guaranty Shareholder's holding period is more than one year but not more
than 18 months and at a maximum rate of 20% if such holding period is more than
18 months. The holding period of a share of First American Common Stock received
in the Merger (including a fractional share interest deemed received and
redeemed as described above) will include the holder's holding period in the
Deposit Guaranty Common Stock surrendered in exchange therefor.
 
                   INTERESTS OF CERTAIN PERSONS IN THE MERGER
 
     Certain members of Deposit Guaranty's management and the Deposit Guaranty
Board may be deemed to have certain interests in the Merger that are in addition
to their interests as Deposit Guaranty Shareholders generally. The Deposit
Guaranty Board was aware of these interests and considered them, among other
matters, in approving the Merger Agreement and the transactions contemplated
thereby.
 
     Employment Agreements.  In connection with the execution of the Merger
Agreement, Mr. Robinson has entered into an employment agreement with First
American. Pursuant to the agreement, Mr. Robinson will be employed by First
American as Vice Chairman and Chief Operating Officer, President of First
American National Bank, and as a member of First American's Policy Team. Mr.
Robinson will also serve on the First American Board and on the First American
Board's executive committee during the term of the agreement. The term of the
agreement commences on the Effective Time and continues until the last day of
the calendar month in which Mr. Robinson's 62nd birthday occurs.
 
     Mr. Robinson's salary will be no less than $600,000 per year during the
term of the agreement, or, if greater, 80% of the base salary paid to the chief
executive officer of First American. Mr. Robinson will also be eligible to
receive an annual incentive bonus, targeted at 50% of his base salary, with a
maximum potential bonus award equal to 100% of base salary. In no event will the
base salary and bonus paid to Mr. Robinson be less than 80% of the sum of the
annual base salary and bonus paid to the chief executive officer of First
American with respect to the same year. As of the Effective Time, Mr. Robinson
will also be granted 45,000 restricted shares of First American Common Stock,
and an option to acquire 90,000 shares of First American Common Stock, which
option will have an exercise price equal to the fair market value of the First
American Common Stock as of the date of grant. The restrictions on the
restricted stock will lapse, and the options will vest and become exercisable,
in each case, in three equal installments, on each of the first three
anniversaries of the date of grant (subject to acceleration upon a change of
control of First American). The options generally have a ten-year term from the
date of grant. In addition, Mr. Robinson will receive an annual stock incentive
grant during the term of the agreement with a value equal to 166% of his base
salary.
 
                                                                      THE MERGER
 
                                       47
<PAGE>   60
 
     Mr. Robinson will also be paid an annual retirement benefit commencing at
age 62, which benefit will be equal to 60% of Mr. Robinsons's final average pay
(as defined in the agreement), less benefits payable under certain other
retirement plans and arrangements of Deposit Guaranty. The agreement also
provides for a retirement benefit to be paid to Mr. Robinson's spouse, should
she survive him.
 
     The agreement further provides that, upon any termination of Mr. Robinson's
employment with First American other than for cause or by reason of death or
disability, or if Mr. Robinson terminates his employment for good reason (as
defined in the agreement) he is generally entitled to payment of any unpaid
salary, a pro rata bonus, immediate vesting of the option and restricted stock
granted pursuant to the agreement, continuation of medical and welfare benefits
through the date on which the term of the agreement otherwise would have ended,
and additional service credit for purposes of the calculation of retirement
benefits. In addition, Mr. Robinson will be entitled to a lump sum payment equal
to the product of (i) the number of months from the date of termination until
the end of the calendar month in which Mr. Robinson's 62nd birthday occurs
divided by 12, and (ii) the sum of Mr. Robinson's existing base salary and
highest bonus earned in the three years prior to the Effective Time. If payments
received by Mr. Robinson are subject to an excise tax under Section 4999 of the
Code, Mr. Robinson will be entitled to receive an additional amount necessary to
make him whole with respect to such excise tax, unless such payments (excluding
additional amounts payable due to the excise tax) do not exceed 110% of the
greatest amount which could be paid without giving rise to the excise tax, in
which case no additional payments will be made with respect to the excise tax,
and the payments otherwise due Mr. Robinson will be reduced in an amount
necessary to prevent the application of the excise tax.
 
     The agreement also provides that Mr. Robinson is entitled to participate in
the employee benefit plans, practices and policies which are applicable to peer
executives of First American, including change in control severance arrangements
which are to be entered into prior to or as of the Effective Time. The
agreement, once effective, supersedes any other employment, severance or change
in control agreement between Mr. Robinson and Deposit Guaranty.
 
     In connection with the execution of the Merger Agreement, Mr. McMillan has
also entered into an employment agreement with First American. Pursuant to the
agreement, Mr. McMillan will be employed by First American as Chairman of
Deposit Guaranty's operations within First American. The term of the agreement
commences on the Effective Time and continues until the third anniversary
thereof.
 
     Mr. McMillan's salary will be no less than $350,000 per year during the
term of the agreement. Mr. McMillan will also be eligible to receive an annual
incentive bonus, targeted at 50% of his base salary, with a maximum potential
bonus award equal to 100% of base salary. As of the Effective Time, Mr. McMillan
will also be granted 15,000 restricted shares of First American Common Stock,
and an option to acquire 30,000 shares of First American Common Stock, which
option shall have an exercise price equal to the fair market value of the First
American Common Stock as of the date of grant. The restrictions on the
restricted stock will lapse, and the options shall vest and become exercisable,
in each case, in three equal installments, on each of the first three
anniversaries of the date of grant (subject to acceleration upon a change of
control of First American). The options generally have a ten-year term from the
date of grant. In addition, Mr. McMillan will receive an annual stock incentive
grant during the term of the agreement with a value equal to 100% of his base
salary.
 
     Mr. McMillan will also be paid an annual retirement benefit commencing at
age 62, which benefit shall be equal to 50% of Mr. McMillan's final average pay
(as defined in the agreement), less benefits payable under certain other
retirement plans and arrangements of Deposit Guaranty. The agreement also
provides for a retirement benefit to be paid to Mr. McMillan's spouse, should
she survive him.
 
     The agreement further provides that, upon any termination of Mr. McMillan's
employment with First American other than for cause or by reason of death or
disability, or if Mr. McMillan terminates his employment for good reason (as
defined in the agreement) he is generally entitled to a lump sum payment of any
unpaid salary, a pro rata bonus, immediate vesting of the option and restricted
stock granted pursuant to the agreement, continuation of medical and welfare
benefits through the date on which the term of the agreement otherwise would
have ended, and additional service credits for purposes of the calculation of
 
THE MERGER
 
                                       48
<PAGE>   61
 
retirement benefits. In addition, Mr. McMillan will be entitled to a payment
equal to the product of (i) the number of months from the date of termination
until the end of the term divided by 12, and (ii) the sum of Mr. McMillan's
existing base salary and highest bonus earned in the three years prior to the
Effective Time. If payments received by Mr. McMillan are subject to an excise
tax under Section 4999 of the Code, Mr. McMillan will be entitled to receive an
additional amount necessary to make him whole with respect to such excise tax,
unless such payments (excluding additional amounts payable due to the excise
tax) do not exceed 110% of the greatest amount which could be paid without
giving rise to the excise tax, in which case no additional payments will be made
with respect to the excise tax, and the payments otherwise due Mr. McMillan will
be reduced in an amount necessary to prevent the application of the excise tax.
 
     The agreement also provides that Mr. McMillan is entitled to participate in
the employee benefit plans, practices and policies which are applicable to peer
executives of First American, including change in control severance arrangements
which are to be entered into prior to or as of the Effective Time. The
agreement, once effective, supersedes any other employment, severance or change
in control agreement between Mr. McMillan and Deposit Guaranty.
 
     Change of Control Termination Agreements.  In May and June of 1996, Deposit
Guaranty entered into Change of Control Termination Agreements (the "CHANGE OF
CONTROL AGREEMENTS") with Messrs. Robinson and McMillan, Steven C. Walker, Arlen
L. McDonald, Thomas M. Hontzas, James S. Lenoir, W. Stan Pratt and W. Parks
Johnson (each a "COVERED EXECUTIVE"), each with an original term commencing on
January 1, 1997 through December 31, 1997. The term of each of the Change of
Control Agreements was automatically extended pursuant to its terms on November
1, 1997 for an additional one-year period. In addition, each Change of Control
Agreement provides that, upon a change of control of Deposit Guaranty (which
occurred upon the signing of the Merger Agreement), each such agreement will
continue in effect for a period of 36 months following the month in which the
change of control occurs.
 
     The Change of Control Agreements provide that, if, during the term of the
agreement, the employment of a Covered Executive is terminated by Deposit
Guaranty without cause following a change of control, or if the Covered
Executive terminates his employment with Deposit Guaranty for good reason (as
defined in the Change of Control Agreement) following a change of control, the
Covered Executive will be entitled to receive a severance payment generally
equal to two times (three times for Messrs. Robinson, McMillan and Walker) the
Covered Executive's base salary, two times (three times for Messrs. Robinson,
McMillan and Walker) his average annual bonus for the last three years,
immediate payment of deferred compensation (other than compensation deferred
pursuant to the Deposit Guaranty's Executive Deferred Income Plan), and to the
continuation of medical insurance benefits for two years (three years for
Messrs. Robinson, McMillan and Walker) following termination of employment (or
until the Covered Executive otherwise secures equivalent coverage). Pursuant to
the Change of Control Agreements, all Deposit Guaranty Employee Stock Options
held by the Covered Executive will become exercisable in accordance with the
terms of the Deposit Guaranty Stock Based Long-Term Incentive Plan II, in the
event of such a termination. Payments made to each Covered Executive (other than
Mr. Robinson) pursuant to a Change of Control Agreement (and other payments made
to a Covered Executive) are subject to reduction in order to prevent the
application of the excise tax under Section 4999 of the Code to such payments.
Under Mr. Robinson's Change of Control Agreement, Mr. Robinson is entitled to
receive an additional payment in an amount sufficient for Mr. Robinson to be
made whole notwithstanding the imposition of the excise tax. Pursuant to the
Merger Agreement, as of the Effective Time, First American has agreed to assume
and honor, or to cause an appropriate subsidiary to assume and honor, the Change
of Control Agreements, among other employment, severance and other compensation
agreements entered into between Deposit Guaranty and directors, officers and
employees thereof. Following the Effective Time, Messrs. Robinson and McMillan
will not be entitled to receive benefits under their respective Change of
Control Agreements.
 
     Directorships; Advisory Boards.  Pursuant to the Merger Agreement, the
First American Board will be expanded by five members, and the First American
Board will fill the vacancies created by such expansion with such current
members of the Deposit Guaranty Board as will be mutually agreed upon by First
American and Deposit Guaranty. As of the date of this Joint Proxy
Statement-Prospectus, other than Mr. Robinson, the First American Board has not
selected any of such individuals for such positions. The Merger Agreement also
 
                                                                      THE MERGER
 
                                       49
<PAGE>   62
 
provides that, following the Effective Time, First American will cause each
member of the Deposit Guaranty Board who is not selected to serve on the First
American Board (as described above), and each member of the Board of Directors
of Deposit Guaranty National Bank to be appointed to or elected to serve on (or
to continue to serve on) one of the Advisory Boards. All members of the Advisory
Boards will be entitled to serve on the Advisory Boards for minimum of
thirty-six months following the Effective Time, and will be paid specified
retainers and meeting fees in respect of their service on the Advisory Boards.
 
     Deferred Income Plans.  Certain Deposit Guaranty employees, members of
Deposit Guaranty's management and the Deposit Guaranty Board participate in
deferred income plans maintained for executives and directors (the "DEFERRED
INCOME PLANS"). Amounts deferred by participants in the Deferred Income Plans
may be credited with favorable interest rates upon the attainment by
participants of certain age and years of service requirements. Eligible
participants may also elect to receive deferred amounts over a period of either
ten or 15 years (executives may defer payment over 15 years, directors over ten
years), during which time unpaid amounts continue to be credited with interest
at the favorable rates. The Deferred Income Plans generally provide that, upon a
change in control of Deposit Guaranty (and for two years following such event),
participants whose service with Deposit Guaranty terminates for any reason will
be entitled to accrue interest at the favorable rates, without regard to the age
and service status of such participant.
 
     First American has agreed to assume and to perform all of Deposit
Guaranty's obligations under the Deferred Income Plans, and has further agreed
not to terminate or amend the Deferred Income Plans in any manner adverse to the
interests of Deferred Income Plan participants. The Merger Agreement further
contemplates that the Deferred Income Plans may be amended prior to the
Effective Time to provide that there may be no amendment of the Deferred Income
Plans in any way which would impair the right of the Deferred Income Plan
participants to accrue interest at favorable rates or to elect to receive early
retirement benefits pursuant to the existing provisions of the Deferred Income
Plans.
 
     Notice of Termination; Severance Plan; Additional Payments.  First American
has also agreed that during the one-year period following the Effective Time, no
employee of Deposit Guaranty who is an affiliate (as defined in the Merger
Agreement) will be involuntarily terminated (other than for cause) without 60
days' notice.
 
     Prior to the Effective Time, Deposit Guaranty will establish a severance
plan which will provide separation payments to current employees of Deposit
Guaranty (other than employees covered by Change of Control Agreements) whose
employment is terminated within one year of the Effective Time. The amount of
such payments will be based upon the employee's years of service with Deposit
Guaranty, and will generally not exceed nine months salary continuation.
Officers and participants in Deposit Guaranty's Management Incentive
Compensation Plan are eligible for additional severance payments, depending upon
such officer's grade level, certain minimum severance payments, ranging from six
to 15 months of salary continuation. First American has agreed to maintain the
severance plan (and to cause its subsidiaries to maintain such plan) without
modification.
 
     Pursuant to the Merger Agreement, a committee will be established,
consisting of Messrs. Bottorff and Robinson, which will direct that retention
payments, severance payments, or other compensatory payments be made to
employees of Deposit Guaranty from and after the Effective Time, in amounts not
to exceed, in the aggregate, $10 million. The amounts payable pursuant to the
direction of such committee will be reduced (but not below $8.5 million) on a
dollar-for-dollar basis by amounts paid pursuant to the severance plan described
in the preceding paragraph, but only to the extent that amounts paid pursuant to
such severance plan exceed $13.5 million.
 
     Indemnification; Insurance.  The Merger Agreement generally provides that,
in the event of any threatened or actual claim, action, suit, proceeding or
investigation in which any person who is, has been or becomes a director,
officer or employee of Deposit Guaranty or its subsidiaries prior to the
Effective Time, is or is threatened to be made a party based in whole or in part
on (i) such person's status as a director, officer or employee of Deposit
Guaranty or (ii) the Merger Agreement or any of the transactions contemplated
thereby, First American will, after the Effective Time, indemnify each such
person to the fullest extent permitted by
 
THE MERGER
 
                                       50
<PAGE>   63
 
law against any liability or expense incurred in connection with any such claim
or proceeding, subject to certain conditions.
 
     First American has also agreed, for a period of three years following the
Effective Time, to cause the officers and directors of Deposit Guaranty (as such
group is comprised immediately prior to the Effective Time) to be covered by the
directors' and officers' liability insurance policy maintained by Deposit
Guaranty (or an equivalent policy) with respect to acts or omissions by such
persons occurring prior to the Effective Time, provided, however, that First
American will not be required to expend on an annual basis more than 200% of the
current amount expended by Deposit Guaranty to maintain such a policy (the
"INSURANCE AMOUNT"). If First American is unable to obtain the coverage called
for in the Merger Agreement, it is required to use all reasonable efforts to
obtain as much comparable insurance as is available for the Insurance Amount.
 
                             STOCK OPTION AGREEMENT
 
     Concurrently with the execution of the Merger Agreement, Deposit Guaranty
and First American executed and delivered the Stock Option Agreement, pursuant
to which Deposit Guaranty granted to First American an option (the "OPTION") to
purchase from Deposit Guaranty up to 8,122,730 shares of Deposit Guaranty Common
Stock (the "OPTION SHARES") (subject to adjustment in certain circumstances, but
in no event to exceed 19.9% of the shares of Deposit Guaranty Common immediately
prior to exercise thereof), at a price of $52.375 per share. Deposit Guaranty
approved and entered into the Stock Option Agreement as an inducement to First
American to enter into the Merger Agreement. The Stock Option Agreement is
included as Appendix B to this Joint Proxy Statement -- Prospectus and this
description is qualified in its entirety by reference to the full text of such
Agreement.
 
     The Stock Option Agreement is intended to increase the likelihood that the
Merger will be consummated in accordance with the terms of the Merger Agreement.
Consequently, certain aspects of the Stock Option Agreement may have the effect
of discouraging persons who might now or at any other time prior to the
Effective Time be interested in acquiring all of or a significant interest in
Deposit Guaranty from considering or proposing such an acquisition, even if such
persons were prepared to offer to pay consideration to the Deposit Guaranty
Shareholders which had a higher current market price than the shares of First
American Common Stock to be received per share of Deposit Guaranty Common Stock
pursuant to the Merger Agreement. The acquisition of Deposit Guaranty could
cause the Option to become exercisable. The existence of the Option could
significantly increase the cost to a potential acquiror of acquiring Deposit
Guaranty compared to its cost had the Stock Option Agreement and the Merger
Agreement not been entered into. Such increased cost might discourage a
potential acquiror from considering or proposing an acquisition or might result
in a potential acquiror proposing to pay a lower per share price to acquire
Deposit Guaranty than it might otherwise have proposed to pay. Deposit Guaranty
and First American believe that the exercise or repurchase of the Option is
likely to prohibit any other acquiror of Deposit Guaranty from accounting for an
acquisition thereof using the "pooling of interests" accounting method for a
period of two years.
 
     The Deposit Guaranty Stock Option Agreement provides for the purchase by
First American of the Option Shares at an exercise price of $52.375 per share
(the closing price of Deposit Guaranty Common Stock on the NYSE on the last
trading day preceding the execution of the Merger Agreement), payable in cash.
The Option Shares, if issued pursuant to the Stock Option Agreement, will in no
event exceed 19.9% of the Deposit Guaranty Common Stock issued and outstanding
without giving effect to the issuance of any Deposit Guaranty Common Stock
subject to the Option.
 
     The number of shares of Deposit Guaranty Common Stock subject to the Option
will be increased or decreased, as appropriate, to the extent that additional
shares of Deposit Guaranty Common Stock are either (i) issued or otherwise
become outstanding (other than pursuant to the Stock Option Agreement) or (ii)
redeemed, repurchased, retired or otherwise cease to be outstanding after
December 7, 1997, such that, after such issuance, the number of Option Shares
will continue to equal 19.9% of shares of Deposit Guaranty Common Stock then
issued and outstanding without giving effect to the issuance of any Deposit
Guaranty Common Stock subject to the Option. In the event of any change in, or
distributions in respect of, the number of shares of Deposit Guaranty Common
Stock by reason of a stock dividend, split-up, merger, recapitalization,
 
                                                                      THE MERGER
 
                                       51
<PAGE>   64
 
combination, subdivision, conversion, exchange of shares, distribution on or in
respect of such Deposit Guaranty Common Stock that would be prohibited by the
Merger Agreement, or similar transaction, the type and number of Option Shares
purchasable upon exercise of the Option, and the option price, will also be
adjusted in such a manner as will fully preserve the economic benefits of the
Option.
 
     The Stock Option Agreement provides that First American or any other holder
or holders of the Option (as used in this section, collectively, the "HOLDER")
may exercise the Option, in whole or in part, subject to regulatory approval, if
both an Initial Triggering Event (as defined herein) and a Subsequent Triggering
Event (as defined herein) have occurred prior to the occurrence of an Exercise
Termination Event (as defined herein), provided that the Holder has sent to
Deposit Guaranty written notice of such exercise within 90 days following such
Subsequent Triggering Event (subject to extension as provided in the Stock
Option Agreement). The terms "Initial Triggering Event" and "Subsequent
Triggering Event" generally relate to attempts by one or more third parties to
acquire a significant interest in Deposit Guaranty. Any exercise of the Option
will be deemed to occur on the date such notice of exercise is sent.
 
     For purposes of each Stock Option Agreement:
 
          (i) The term "INITIAL TRIGGERING EVENT" means the occurrence of any of
     the following events or transactions after December 7, 1997: (a) Deposit
     Guaranty or any subsidiary of Deposit Guaranty, without the First
     American's prior written consent, enters into an agreement to engage in, or
     the Deposit Guaranty Board recommends that Deposit Guaranty Shareholders
     approve or accept, an Acquisition Transaction (as defined herein) with any
     person or group (other than as contemplated by the Merger Agreement); (b)
     Deposit Guaranty or any subsidiary of Deposit Guaranty, without First
     American's prior written consent, authorizes, recommends, proposes or
     publicly announces its intention to authorize, recommend or propose to
     engage in an Acquisition Transaction, or the Deposit Guaranty Board
     publicly withdraws or modifies, or publicly announces its intention to
     withdraw or modify, in any manner adverse to First American, its
     recommendation that Deposit Guaranty Shareholders approve the Merger
     Agreement in anticipation of engaging in an Acquisition Transaction; (c)
     any person, other than First American, any subsidiary of First American or
     any subsidiary of Deposit Guaranty acting in a fiduciary capacity in the
     ordinary course of business acquires beneficial ownership, or the right to
     acquire beneficial ownership, of 10% or more of the outstanding shares of
     Deposit Guaranty Common Stock; (d) any person other than First American or
     any subsidiary of First American makes a bona fide proposal to Deposit
     Guaranty or Deposit Guaranty Shareholders by public announcement or written
     communication that becomes the subject of public disclosure to engage in an
     Acquisition Transaction; (e) Deposit Guaranty breaches any covenant or
     obligation in the Merger Agreement after any person, other than First
     American or any subsidiaries of First American, has proposed an Acquisition
     Transaction, and such breach (1) would entitle First American to terminate
     the Merger Agreement and (2) is not remedied prior to the date of First
     American's notice to Deposit Guaranty of the exercise of the Option; or (f)
     any person other than First American or any subsidiary of First American,
     other than in connection with a transaction to which First American has
     given its prior written consent, files an application or notice with the
     Federal Reserve Board, or other U.S. federal or state bank regulatory
     authority, which application or notice has been accepted for processing,
     for approval to engage in an Acquisition Transaction.
 
          (ii) The term "ACQUISITION TRANSACTION" means (a) a merger or
     consolidation, or any similar transaction with Deposit Guaranty or any of
     its Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of
     the Commission); (b) a purchase, lease or other acquisition or assumption
     of all or substantially all of the assets or deposits of Deposit Guaranty
     or any of its Significant Subsidiaries; (c) a purchase or other acquisition
     of securities representing 10% or more of the voting power of Deposit
     Guaranty; or (d) any substantially similar transaction, provided, however,
     that in no event will (1) any merger, consolidation, purchase or similar
     transaction involving only Deposit Guaranty and one or more of its
     subsidiaries or involving only any two or more of such subsidiaries, or (2)
     any merger, consolidation or similar transaction as to which the Deposit
     Guaranty Shareholders immediately prior thereto own in the aggregate at
     least 60% of the common stock of the surviving corporation or its publicly
     held parent corporation immediately following consummation thereof, be
     deemed to be an Acquisition Transaction, provided that any such transaction
     is not entered into in violation of the terms of the Merger Agreement.
 
THE MERGER
 
                                       52
<PAGE>   65
 
          (iii) The term "SUBSEQUENT TRIGGERING EVENT" means the occurrence of
     either of the following events or transactions after December 7, 1997: (a)
     the acquisition by any person of beneficial ownership of 25% or more of the
     then-outstanding shares of Deposit Guaranty Common Stock; or (b) the
     occurrence of the Initial Triggering Event described above in clause
     (i)(a), except that the percentage referred to in clause (ii)(c) of the
     definition of "Acquisition Transaction" set forth above will be 25%.
 
     The Option will expire upon the occurrence of an "EXERCISE TERMINATION
EVENT," which includes: (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 in the case of a termination of the Merger Agreement by First American as
a result of an uncured material breach by Deposit Guaranty of any of its
covenants or agreements contained in the Merger Agreement, unless the breach by
Deposit Guaranty is non-volitional; or (iii) the date that is 12 months after
termination of the Merger Agreement if such termination occurs after the
occurrence of an Initial Triggering Event or is a termination by First American
as a result of an uncured material breach by Deposit Guaranty of any of its
covenants or agreements contained in the Merger Agreement, unless the breach by
Deposit Guaranty is non-volitional.
 
     As of the date of this Joint Proxy Statement-Prospectus, to the best
knowledge of First American and Deposit Guaranty, no Initial Triggering Event or
Subsequent Triggering Event has occurred.
 
     Immediately prior to the occurrence of a Repurchase Event (as defined
herein), (i) following a request of a Holder, delivered prior to an Exercise
Termination Event, Deposit Guaranty (or any successor thereto) will 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 herein) exceeds (b)
the option exercise price, multiplied by the number of shares for which the
Option may then be exercised and (ii) at the request of the owner of Option
Shares from time to time (the "OWNER"), delivered within 90 days of such
occurrence (or such longer period as necessary to obtain any required regulatory
approvals or to avoid liability under Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT")), Deposit Guaranty will repurchase
such number of the Option Shares from the Owner as the Owner will 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" means the highest of (i) the price per share
of Deposit Guaranty Common Stock at which a tender offer or exchange offer
therefor has been made, (ii) the price per share of Deposit Guaranty Common
Stock to be paid by any third party pursuant to an agreement with Deposit
Guaranty, (iii) the highest closing price for shares of Deposit Guaranty Common
Stock within the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of the 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 a substantial portion of Deposit Guaranty's assets,
the sum of the price paid in such sale for such assets and the current market
value of the remaining assets of Deposit Guaranty 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 Deposit Guaranty, divided by the
number of shares of Deposit Guaranty Common Stock outstanding at the time of
such sale. In determining the market/offer price, the value of consideration
other than cash will be determined by a nationally recognized investment banking
firm selected by the Holder or Owner, as the case may be, and reasonably
acceptable to Deposit Guaranty. However, if Deposit Guaranty at any time after
delivery of a notice of repurchase as described in this paragraph is prohibited
under applicable law or regulation from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full, the Holder or Owner may revoke its
notice of repurchase of the Option or the Option Shares, either in whole or to
the extent of the prohibition, whereupon, in the latter case, Deposit Guaranty
will promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price or the Option Share Repurchase Price that
Deposit Guaranty is not prohibited from delivering and (ii) deliver, as
appropriate, (a) to the Holder, a new stock option agreement evidencing the
right of the Holder to purchase that number of shares of Deposit Guaranty Common
Stock obtained by multiplying the number of shares of Deposit Guaranty Common
Stock for which the surrendered Stock Option 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 (b) to the Owner,
 
                                                                      THE MERGER
 
                                       53
<PAGE>   66
 
a certificate for the Option Shares it is then so prohibited from repurchasing.
A "REPURCHASE EVENT" is deemed to have occurred (i) upon the consummation of an
Acquisition Transaction or (ii) upon the acquisition by any person of the
beneficial ownership of 50% or more of the then-outstanding shares of Deposit
Guaranty Common Stock, provided that a Subsequent Triggering Event has occurred
prior to an Exercise Termination Event.
 
     In the event that, prior to an Exercise Termination Event, Deposit Guaranty
enters into any agreement (i) to consolidate with or merge into any person,
other than First American or one of its subsidiaries, such that Deposit Guaranty
is not the continuing or surviving corporation of such consolidation or merger;
(ii) to permit any person, other than First American or one of its subsidiaries,
to merge into Deposit Guaranty and Deposit Guaranty is the continuing or
surviving corporation, but, in connection with such consolidation or merger, the
outstanding shares of Deposit Guaranty Common Stock are 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 Deposit Guaranty Common Stock after
such merger will represent less than 50% of the outstanding voting shares and
voting share equivalents of the merged corporation; or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than First American or any of its subsidiaries, then, and in each such case, the
agreement governing such transaction must provide that, upon consummation of
such transaction and upon terms and conditions set forth in the Stock Option
Agreement, the Option will be converted into, or exchanged for, an option having
substantially the same terms as the Option (the "SUBSTITUTE OPTION") to purchase
securities, at the election of the Holder, of either the acquiring person or any
person that controls the acquiring person. At the request of the Holder of the
Substitute Option, Deposit Guaranty will repurchase it at a price, and subject
to such other terms and conditions, as set forth in the Stock Option Agreement.
 
     Within 90 days after the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Date (subject to extension as provided
in the Stock Option Agreement), First American may request Deposit Guaranty to
prepare, file and keep current with respect to the Option Shares, a registration
statement with the Commission. Deposit Guaranty is required to use its
reasonable best efforts to cause such registration statement to become effective
and then to remain effective for 180 days or such shorter time as may be
reasonably necessary to effect such sales or other disposition of Option Shares.
First American has the right to demand two such registrations.
 
     Neither Deposit Guaranty nor First American may assign any of its rights
and obligations under the Stock Option Agreements or the Option to any other
person without the express written consent of the other party, except that if a
Subsequent Triggering Event occurs prior to an Exercise Termination Event, First
American, subject to the terms of the Stock Option Agreement, may assign, in
whole or in part, its rights and obligations thereunder, within 90 days (subject
to extension to obtain necessary regulatory approvals or to avoid liability
under Section 16(b) of the Exchange Act) of such Subsequent Triggering Event;
provided that until the date 15 days after the date on which the Federal Reserve
Board approves an application by First American to acquire the Option Shares,
First American 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 Deposit
Guaranty, (iii) an assignment to a single party for the purpose of conducting a
widely dispersed public distribution on First American's behalf, or (iv) any
other manner approved by the Federal Reserve Board.
 
     Certain rights and obligations of First American under the Stock Option
Agreement are subject to receipt of required regulatory approvals. The approval
of the Federal Reserve Board is required for the acquisition by First American
of more than 5% of the outstanding shares of Deposit Guaranty Common Stock.
Accordingly, First American has included or will include in its applications
with the Federal Reserve Board a request for approval of the right of First
American to exercise its rights under the Stock Option Agreement, including its
right to purchase more than 5% of the outstanding shares of Deposit Guaranty
Common Stock. See "-- Regulatory Matters."
 
THE MERGER
 
                                       54
<PAGE>   67
 
                              ACCOUNTING TREATMENT
 
     It is intended that the Merger will be accounted for as a "pooling of
interests" under GAAP, and the receipt of a letter from First American's
independent accountants to the effect that the Merger will qualify for such
accounting treatment is a condition to the parties' obligations to consummate
the Merger. To conform to the provisions of Staff Accounting Bulletin 96,
"Treasury Stock Acquisitions Following Consummation of a Business Combination
Accounted for as a Pooling of Interests," each of First American and Deposit
Guaranty has terminated or will have terminated prior to the date of
consummation of the Merger its respective share repurchase program. The
unaudited pro forma financial information included in this Joint Proxy
Statement-Prospectus reflects the Merger using the "pooling of interests" method
of accounting. See "SUMMARY -- Comparative Unaudited Per Share Data" and
"-- Selected Financial Data," and "FINANCIAL AND BUSINESS
INFORMATION -- Unaudited Pro Forma Combined Condensed Financial Information."
 
                               REGULATORY MATTERS
 
     Federal Reserve Board.  The Merger is subject to prior approval by the
Federal Reserve Board under the Bank Holding Company Act of 1956, as amended
(the "BHCA"). The BHCA requires the Federal Reserve Board, when approving a
transaction such as the Merger, to take into consideration the financial and
managerial resources (including the competence, experience and integrity of
officers, directors and principal shareholders) and future prospects of the
existing and proposed institutions and the convenience and needs of the
communities to be served. In considering financial resources and future
prospects, the Federal Reserve Board will, among other things, evaluate the
adequacy of the capital levels of the parties to a proposed transaction.
 
     The BHCA prohibits the Federal Reserve Board from approving a merger if it
would result in a monopoly or be in furtherance of any combination or conspiracy
to monopolize or to attempt to monopolize the business of banking in any part of
the United States, or if its effect in any section of the country would be
substantially to lessen competition or to tend to create a monopoly, or if it
would in any other manner result in a restraint of trade, unless the Federal
Reserve Board finds that the anti-competitive effects of a merger 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,
under the Community Reinvestment Act of 1977, as amended, the Federal Reserve
Board must take into account the record of performance of the existing
institutions in meeting the credit needs of the entire community, including low-
and moderate-income neighborhoods, served by such institutions.
 
     Applicable U.S. federal law provides for the publication of notice and
public comment on applications or notices filed with the Federal Reserve Board
and authorizes such agency to permit interested parties to intervene in the
proceedings. If an interested party is permitted to intervene, such intervention
could delay the regulatory approvals required for consummation of the Merger.
 
     The Merger generally may not be consummated until 30 days (which may be
shortened to 15 days with the consent of the U.S. Department of Justice)
following the date of applicable United States federal regulatory approval,
during which time the U.S. Department of Justice may challenge the Merger on
antitrust grounds. The commencement of an antitrust action by the U.S.
Department of Justice, if it occurred, would stay the effectiveness of the
regulatory agency's approval unless a court specifically ordered otherwise.
 
     State Authorities.  In connection with the Merger, a notice filing with the
Commissioner of Banking and Consumer Finance of the State of Mississippi is
required, approval of the Mississippi Commissioner of Insurance is required in
connection with the acquisition of G&W Life Insurance Company, Deposit
Guaranty's credit life subsidiary, and a separate notice to the Commissioner of
Financial Institutions of the State of Tennessee is required in connection with
First American's acquisition of Victory Bank and Trust Co. (which will become a
subsidiary of Deposit Guaranty after the completion of the Victory Merger) as a
separate subsidiary (such state regulatory authorities, collectively, the "STATE
AUTHORITIES").
 
     Status of Regulatory Approvals and Other Information.  As of the date of
this document, the Federal Reserve Board has approved the Merger and the
required waiting period has expired. First American has applied separately to
the Federal Reserve Board for approval to acquire Victory Bank and Trust Co. as
a
 
                                                                      THE MERGER
 
                                       55
<PAGE>   68
 
separate subsidiary of First American, which application remains pending.
Applications or notices with each of the State Authorities have been, or
promptly will be, filed. The Merger Agreement provides that the obligation of
each of First American and Deposit Guaranty to consummate the Merger is
conditioned upon the receipt of all Requisite Regulatory Approvals. There can be
no assurance that any governmental agency that has not already done so will
approve or take any other required action with respect to the Merger, and, if
the remaining Requisite Regulatory Approvals are received or action is taken,
there can be no assurance as to the date of such remaining Requisite Regulatory
Approvals or action.
 
     First American and Deposit Guaranty are not aware of any governmental
approvals or actions that may be required for consummation of the Merger other
than as described above. Should any other approval or action be required, First
American and Deposit Guaranty currently contemplate that such approval of action
would be sought.
 
     See "-- The Effective Time," "-- Conditions to the Merger" and
"-- Termination of the Merger Agreement."
 
                     RESTRICTIONS ON RESALES BY AFFILIATES
 
     The shares of First American Common Stock issuable to Deposit Guaranty
Shareholders upon consummation of the Merger have been registered under the
Securities Act. Such securities may be traded freely without restriction by
those shareholders who are not deemed to be "affiliates" of First American or
Deposit Guaranty, as that term is defined in the rules promulgated under the
Securities Act.
 
     Shares of First American Common Stock received by those Deposit Guaranty
Shareholders who are deemed to be affiliates of Deposit Guaranty at the time of
the Deposit Guaranty Special Meeting may be resold without registration under
the Securities Act only as permitted by Rule 145 under the Securities Act or as
otherwise permitted thereunder. Commission guidelines regarding qualifying for
the "pooling of interests" method of accounting also limit sales of shares of
the acquiring and acquired company by affiliates of either company in a business
combination. Commission guidelines also indicate that the "pooling of interests"
method of accounting generally will not be challenged on the basis of sales by
affiliates of the acquiring or acquired company if such affiliates do not
dispose of any of the shares of the corporation they own, or shares of a
corporation they receive in connection with a merger, during the period
beginning 30 days before the merger is consummated and ending when financial
results covering at least 30 days of post-merger operations of the combined
companies have been published.
 
     Each of First American and Deposit Guaranty has agreed in the Merger
Agreement to use its reasonable best efforts to cause each person who is an
affiliate (for purposes of Rule 145 under the Securities Act and for purposes of
qualifying the Merger for "pooling of interests" accounting treatment) of such
party to deliver to the other party a written agreement intended to ensure
compliance with the Securities Act (in the case of Deposit Guaranty affiliates)
and to preserve the ability of the Merger to be accounted for as a
"pooling-of-interests."
 
     First American has agreed in the Merger Agreement to use its best efforts
to publish, not later than 15 days after the end of the first full calendar
month following the month in which the Effective Time occurs, financial results
covering at least 30 days of post-Merger combined operations, as contemplated by
Accounting Series Release No. 135 issued by the Commission.
 
THE MERGER
 
                                       56
<PAGE>   69
 
                        INFORMATION ABOUT OUR COMPANIES
 
                   MANAGEMENT AND OPERATIONS AFTER THE MERGER
 
     Following the consummation of the Merger, it is anticipated that the
current senior management of First American will be augmented by the addition of
Mr. Robinson, who will serve as Vice Chairman and Chief Operating Officer of
First American, and Mr. McMillan, who will serve as Chairman of the Deposit
Guaranty operations of the combined company.
 
     As of the Effective Time, First American will increase the size of the
First American Board by five members and will appoint five directors of Deposit
Guaranty mutually agreed upon by Deposit Guaranty and First American to the
First American Board. If any of such directors are appointed to a class of First
American directors whose terms expire before December 31, 1999, First American
will include such persons on the list of the First American Board's nominees at
the next annual meeting of First American Shareholders at which directors of
that class are elected. If any such person cannot serve as a director of First
American, First American will elect a member of the Advisory Boards to
substitute for such person. See "THE MERGER -- Interests of Certain Persons in
the Merger."
 
     Promptly after the Effective Time, the members of the Deposit Guaranty
Board (other than those appointed to the First American Board) and the members
of the Board of Directors of Deposit Guaranty National Bank will be appointed or
elected as members of the Advisory Boards. Such persons will serve in such
capacity for a period of not less than 36 months after the Effective Time, and
any persons who are members of the Advisory Boards as of the Effective Time will
continue to be members of the Advisory Boards for the same period. See "THE
MERGER-- Interests of Certain Persons in the Merger."
 
     First American currently expects that, following the consummation of the
Merger, Deposit Guaranty National Bank's existing branches will continue to use
the Deposit Guaranty National Bank name in the markets in which they currently
operate.
 
     For additional information regarding management and operations of the
combined company, see "-- Information About First American" and "-- Information
About Deposit Guaranty."
 
                                                 INFORMATION ABOUT OUR COMPANIES
 
                                       57
<PAGE>   70
 
                   PRICE RANGE OF COMMON STOCK AND DIVIDENDS
 
MARKET PRICES
 
     First American Common Stock is authorized for quotation on Nasdaq under the
trading symbol "FATN." As of March 6, 1998, First American Common Stock was held
of record by approximately 10,042 persons. The following table sets forth the
high and low closing sale prices of the First American Common Stock as reported
by Nasdaq.
 
     Deposit Guaranty Common Stock is listed on the NYSE under the symbol "DEP."
As of March 6, 1998, Deposit Guaranty Common Stock was held of record by
approximately 7,127 persons. The following table sets forth the high and low
closing sale prices for Deposit Guaranty Common Stock as reported by the NYSE
Composite Transactions List for the periods indicated.
 
     The prices set forth under "Deposit Guaranty Common Stock Equivalent"
represent the closing sales prices of First American Common Stock for the
corresponding periods, multiplied by the Exchange Ratio of 1.17.
 
<TABLE>
<CAPTION>
                                                 FIRST AMERICAN    DEPOSIT GUARANTY    DEPOSIT GUARANTY
                                                  CLOSING SALES      CLOSING SALES       COMMON STOCK
                                                    PRICES(A)           PRICES            EQUIVALENT
                                                 ---------------   -----------------   -----------------
                                                  HIGH     LOW      HIGH       LOW      HIGH       LOW
                                                 ------   ------   -------   -------   -------   -------
<S>                                              <C>      <C>      <C>       <C>       <C>       <C>
YEAR ENDED DECEMBER 31, 1996:
  First Quarter................................  $24      $21.38   $   23.75 $   21.50 $   28.08 $   25.01
  Second Quarter...............................   22.63    21.06       24.13     22        26.47     24.64
  Third Quarter................................   24.03    20.56       24.50     22        28.12     24.06
  Fourth Quarter...............................   29.25    24          31        24        34.22     28.08
YEAR ENDED DECEMBER 31, 1997:
  First Quarter................................   34.38    28.25       33.38     29.63     40.22     33.05
  Second Quarter...............................   39.50    30.22       31.88     30        46.22     35.36
  Third Quarter................................   49.63    38.50       33.31     31.88     58.06     45.05
  Fourth Quarter...............................   54.75    45.13       57.31     33.75     64.06     52.80
YEAR ENDED DECEMBER 31, 1998:
  First Quarter (through March 10, 1998).......   48.94    44          55.94     50.56     57.26     51.48
</TABLE>
 
- ---------------
 
(a) Adjusted to reflect a two-for-one stock split effective May 9, 1997.
 
INFORMATION ABOUT OUR COMPANIES
 
                                       58
<PAGE>   71
 
DIVIDENDS
 
     The following table sets forth dividends declared per share of First
American Common Stock and Deposit Guaranty Common Stock, respectively, for the
periods indicated. The ability of either First American or Deposit Guaranty to
pay dividends to its respective shareholders is subject to certain restrictions.
See "-- Supervision and Regulation of First American and Deposit Guaranty."
 
<TABLE>
<CAPTION>
                                                              FIRST AMERICAN   DEPOSIT GUARANTY
                                                               DIVIDENDS(a)       DIVIDENDS
                                                              --------------   ----------------
<S>                                                           <C>              <C>
YEAR ENDED DECEMBER 31, 1996:
  First Quarter.............................................      $.140             $.165
  Second Quarter............................................       .155              .175
  Third Quarter.............................................       .155              .175
  Fourth Quarter............................................       .155              .200
YEAR ENDED DECEMBER 31, 1997:
  First Quarter.............................................       .155              .200
  Second Quarter............................................       .200              .200
  Third Quarter.............................................       .200              .200
  Fourth Quarter............................................       .200              .230
YEAR ENDED DECEMBER 31, 1998:
  First Quarter (through March 10, 1998)....................       .200              .230
</TABLE>
 
- ---------------
 
(a) Adjusted to reflect a two-for-one stock split effective May 9, 1997.
 
                                                 INFORMATION ABOUT OUR COMPANIES
 
                                       59
<PAGE>   72
 
                        INFORMATION ABOUT FIRST AMERICAN
 
GENERAL
 
     First American was incorporated in Tennessee in 1968 and is registered as a
bank holding company under the BHCA and as a savings and loan holding company
under the Home Owners' Loan Act, as amended ("HOLA"). First American owns all of
the capital stock of First American National Bank, a national banking
association headquartered in Nashville, Tennessee ("FANB"); First American
Federal Savings Bank, a federal savings bank headquartered in Roanoke, Virginia;
and First American Enterprises, Inc., a Tennessee corporation headquartered in
Nashville, Tennessee. First American's subsidiary banks engage in lending in the
following areas: commercial, consumer (amortizing mortgages and other consumer
loans) and real estate (construction, commercial mortgages and other real estate
loans).
 
     FANB owns 98.50% of the issued and outstanding capital stock of IFC
Holdings, Inc. (formerly INVEST Financial Corporation), a Delaware corporation
headquartered in Tampa, Florida, which is engaged in the distribution of
securities, other investment products, and insurance, and 49% of the capital
stock of The SSI Group, Inc., a Florida corporation headquartered in Mobile,
Alabama, which is engaged in health care claims processing.
 
     First American coordinates the financial resources of the consolidated
enterprise and maintains systems of financial, operational and administrative
controls that allow coordination of selected policies and activities. First
American derives its income from interest, dividends and management fees
received from its subsidiaries.
 
     As of December 31, 1997, First American had total assets of approximately
$10.8 billion, total deposits of approximately $8.0 billion and shareholders'
equity of approximately $908 million. The mailing address of the principal
executive offices of First American is First American Center, Nashville,
Tennessee 37237-0700, and the telephone number is (615) 748-2000.
 
"YEAR 2000" INFORMATION SYSTEM ISSUES
 
     The term "Year 2000 issue" refers to the necessity of converting computer
information systems such that such systems recognize more than two digits to
identify a year in any given date field, and are thereby able to differentiate
between years in the twentieth and twenty-first centuries ending with the same
two digits (e.g. 1900 and 2000). This issue affects not only First American, but
virtually all companies, organizations and governments worldwide that use
computer information systems. To address the Year 2000 issue, First American has
adopted a broad-based approach designed to encompass First American's total
systems and non-systems environments. This approach includes the development of
a conversion time line, costs budget, resource allocation and independent
verification of each system's capacity to properly recognize dates following
such conversion. First American has formed an enterprise-wide steering committee
and implementation team to oversee and complete the conversion project.
 
     A principal Year 2000 issue for First American relates to its mainframe
computer operating system software and application software. The operating
system software is subject to a data processing outsourcing agreement with IBM
Global Services ("IBM"). First American management believes that IBM is well
into the process of modifying this operating system code. In addition, First
American contracted with PLATINUM technology, inc., a leading software
technology company, to assist First American in its Year 2000 efforts by
converting First American's proprietary code to Year 2000 compliance, and this
work was substantially complete as of December 31, 1997. First American is also
actively working with its other third party software vendors to ensure Year 2000
readiness. An inventory of software applications at First American has been
conducted and third party vendors have been contacted regarding the status of
the Year 2000 compliance of their products. First American plans to conduct
extensive testing of application systems used in its operations, including both
internally-developed and third-party-vendor application systems, beginning in
early 1998. With respect to credit decisions, First American is taking steps to
ensure that Year 2000 compliance is taken into account in its loan underwriting
procedures. Year 2000 issues related to physical facilities and other electronic
interactions are also being addressed.
 
INFORMATION ABOUT OUR COMPANIES
 
                                       60
<PAGE>   73
 
     First American expects to be substantially Year 2000 compliant by the end
of 1998. Management anticipates that internally-developed and third-party
provided applications will be tested for compliance in 1998 and 1999. The costs
of First American's overall Year 2000 initiative have not yet been finally
determined, but are not expected to exceed $5 million in the aggregate.
 
MANAGEMENT AND ADDITIONAL INFORMATION
 
     Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities and the principal
holders thereof, certain relationships and related transactions and other
related matters as to First American can be found under "OTHER INFORMATION FOR
THE FIRST AMERICAN ANNUAL MEETING," and, in addition, is incorporated by
reference or set forth in the First American Annual Report on Form 10-K for the
year ended December 31, 1996, incorporated herein by reference. First American
Shareholders and Deposit Guaranty Shareholders desiring copies of such document
may contact First American at its address or telephone number indicated under
"ADDITIONAL INFORMATION -- Where You Can Find More Information."
 
                       INFORMATION ABOUT DEPOSIT GUARANTY
 
GENERAL
 
     Deposit Guaranty is a Mississippi business corporation organized in 1968 as
a bank holding company registered under the BHCA and is headquartered in
Jackson, Mississippi. Deposit Guaranty conducts business through its banking
subsidiary, Deposit Guaranty National Bank, and through its various bank-related
subsidiaries. Through its subsidiaries, which include 170 branch banking
offices, Deposit Guaranty services customers primarily in Mississippi, Louisiana
and Arkansas, offering complete banking, mortgage banking, discount brokerage
and trust services. Deposit Guaranty also provides mortgage banking services in
Texas, Nebraska, Indiana, Iowa and Oklahoma through its subsidiaries. On
September 24, 1997, Deposit Guaranty entered into a definitive agreement to
acquire Victory Bancshares, Inc., with approximately $118 million in total
assets, located in Memphis, Tennessee.
 
     At December 31, 1997, Deposit Guaranty had assets of approximately $6.9
billion, deposits of approximately $5.4 billion and stockholders' equity of
approximately $635 million. The principal executive offices of Deposit Guaranty
are located at 210 East Capitol Street, Jackson, Mississippi 39201, and its
telephone number is (601) 354-8564.
 
MANAGEMENT AND ADDITIONAL INFORMATION
 
     Certain information relating to the executive compensation, various benefit
plans, voting securities and the principal holders thereof, certain
relationships and other related matters as to Deposit Guaranty is incorporated
by reference or set forth in Deposit Guaranty Annual Report on Form 10-K for the
year ended December 31, 1996, incorporated herein by reference. Deposit Guaranty
Shareholders and First American Shareholders desiring copies of such documents
may contact Deposit Guaranty at its address or phone number indicated under
"ADDITIONAL INFORMATION -- Where You Can Find More Information."
 
       SUPERVISION AND REGULATION OF FIRST AMERICAN AND DEPOSIT GUARANTY
 
GENERAL
 
     As registered bank holding companies, First American and Deposit Guaranty
are subject to the supervision of, and to regular inspection by, the Federal
Reserve Board. As a savings and loan holding company, First American is also
subject to the supervision of the Office of Thrift Supervision (the "OTS") under
HOLA. The bank subsidiaries of both First American and Deposit Guaranty are
organized as national banking associations, which are subject to regulation,
supervision and examination by the Officer of the
 
                                                 INFORMATION ABOUT OUR COMPANIES
 
                                       61
<PAGE>   74
 
Comptroller of the Currency (the "COMPTROLLER"). First American owns a federal
savings bank subject to supervision, regulation and examination by the OTS. The
deposits of each of the banking subsidiaries of Deposit Guaranty and First
American are insured, up to applicable limits, by the Federal Deposit and
Insurance Corporation (the "FDIC"), which maintains back-up enforcement
authority over each institution. In addition to banking laws, regulations and
regulatory agencies, First American and Deposit Guaranty and their subsidiaries
and affiliates are subject to various other laws and regulations and supervision
and examination by other regulatory agencies, all of which, directly or
indirectly, affect the operations and management of First American and Deposit
Guaranty and their ability to make distributions. The following discussion
summarizes certain aspects of those laws and regulations that affect First
American and Deposit Guaranty. To the extent statutory or regulatory provisions
or proposals are described, the description is qualified in its entirety by
reference to the particular statutory or regulatory provision or proposal.
Supervision and regulation of bank holding companies and their subsidiaries are
intended primarily for the protection of depositors, the deposit insurance funds
of the FDIC and the banking system as a whole, not for the protection of bank
holding company shareholders or creditors. Further information on the
supervision and regulation of First American, Deposit Guaranty and their
subsidiaries may be found in the respective Annual Reports on Form 10-K for the
year ended December 31, 1996 for each of the companies. See "ADDITIONAL
INFORMATION -- Where You Can Find More Information."
 
     The activities of First American and Deposit Guaranty and those of
companies which each controls or in which either holds more than 5% of the
voting stock are limited to banking, managing or controlling banks, furnishing
services to or performing services for their subsidiaries or any other activity
which the Federal Reserve Board determines to be so closely related to banking
or managing or controlling banks as to be a proper incident thereto. In making
such determinations, the Federal Reserve Board is required to consider whether
the performance of such activities by a bank holding company or its subsidiaries
can reasonably be expected to produce benefits to the public such as greater
convenience, increased competition or gains in efficiency that outweigh possible
adverse effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices. Generally, bank
holding companies, such as First American and Deposit Guaranty, are required to
obtain prior approval of the Federal Reserve Board to engage in any new activity
or to acquire more than 5% of any class of voting stock of any company.
 
     Bank holding companies are also required to obtain the prior approval of
the Federal Reserve Board before acquiring more than 5% of any class of voting
stock of any bank that is not already majority-owned by the bank holding
company. Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "INTERSTATE BANKING AND BRANCHING ACT"), bank holding companies
may acquire banks in states other than their home states without regard to the
permissibility of such acquisitions under state law, but subject to any state
requirement that the bank has been organized and operating for a minimum period
of time, not to exceed five years, and the requirement that the bank holding
company, prior to or following the proposed acquisition, controls no more than
10% of the total amount of deposits of insured depository institutions in the
United States and less than 30% of such deposits in that state (or such lesser
or greater amount set by state law). Under the Tennessee Bank Structure Act, no
bank holding company, whether incorporated in Tennessee or elsewhere, may
acquire any bank in Tennessee that has been in operation for less than five
years, or organize a new bank in Tennessee, except in the case of certain
interim bank mergers and acquisitions of banks in financial difficulty. Under
Tennessee law pertaining to bank mergers, banks in separate counties in
Tennessee that have been in operation for at least five years may merge. Banks
with principal offices in the same county may merge without regard to the
five-year aging requirement. Under these provisions, First American could in the
future acquire banks in Tennessee that have been in operation for five years,
but may not form or acquire a new bank in any Tennessee county other than
Davidson County, in which the main office of First American National Bank is
located.
 
     The Interstate Banking and Branching Act also authorizes banks to merge
across state lines, thereby creating interstate branches. This provision, which
became effective June 1, 1997, allowed each state, prior to the effective date,
the opportunity to "opt out" of this provision, thereby prohibiting interstate
branching within that state. No states in which First American's banking
subsidiaries are located adopted legislation to "opt out" of the interstate
branching provisions. Furthermore, pursuant to the Interstate Banking and
 
INFORMATION ABOUT OUR COMPANIES
 
                                       62
<PAGE>   75
 
Branching Act, a bank is now able to open new branches in a state in which it
does not already have banking operations if such state enacts a law permitting
such de novo branching.
 
     Proposals to change the laws and regulations governing the banking industry
are frequently introduced in Congress, in the state legislatures and before the
various bank regulatory agencies. The likelihood and timing of any such
proposals or bills being enacted and the impact they might have on First
American, Deposit Guaranty and their subsidiaries cannot be determined at this
time.
 
CAPITAL AND OPERATIONAL REQUIREMENTS
 
     The Federal Reserve Board, the Comptroller, the OTS and the FDIC have
issued substantially similar risk-based and leverage capital guidelines
applicable to United States bank holding companies and federally insured
depository institutions. In addition, those regulatory agencies may from time to
time require that a banking organization maintain capital above the minimum
levels, whether because of its financial condition or actual or anticipated
growth. The Federal Reserve Board risk-based guidelines applicable to bank
holding companies define a two-tier capital framework. Tier 1 capital generally
consists of common and qualifying preferred shareholders' equity, less goodwill,
certain intangibles and other adjustments. Tier 2 capital consists of
subordinated and other qualifying debt, and the allowance for credit losses up
to 1.25% of risk-weighted assets. The sum of Tier 1 and Tier 2 capital less
investments in unconsolidated subsidiaries represents qualifying total capital,
at least 50% of which must consist of Tier 1 capital. Risk-based capital ratios
are calculated by dividing Tier 1 and total capital by risk-weighted assets. For
purposes of calculating risk-weighted assets, assets and off-balance sheet
exposures are assigned to one of four categories of risk weights, based
primarily on relative credit risk. The minimum Tier 1 risk-based capital ratio
is 4% and the minimum total risk-based capital ratio is 8%. First American's
Tier 1 and total risk-based capital ratios under these guidelines at September
30, 1997 were 9.06% and 11.46%, respectively, and Deposit Guaranty's were 9.59%
and 10.84%, respectively.
 
     The leverage ratio is determined by dividing Tier 1 capital by adjusted
average total assets. Although the stated minimum ratio is 3%, most banking
organizations are required to maintain ratios of at least 100 to 200 basis
points above 3%. First American's and Deposit Guaranty's leverage ratios at
September 30, 1997 were 7.71% and 7.27%, respectively. First American Federal
Savings Bank is subject to similar capital requirements adopted by the OTS.
Under the OTS capital guidelines, a savings association is required to maintain
tangible capital of at least 1.5% of tangible assets, core (leverage) capital of
at least 3% of the association's adjusted total assets and risk-based capital of
at least 8% of risk-weighted assets.
 
     The other U.S. federal banking agencies have established risk-based and
leverage capital guidelines for federally-insured banks and thrifts that are
substantially similar to the Federal Reserve Board's capital guidelines for bank
holding companies. At September 30, 1997, each of the depository institution
subsidiaries of First American and Deposit Guaranty was in compliance with these
applicable federal capital adequacy guidelines.
 
     The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective U.S. federal regulatory agencies
to implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a banking institution to capital raising requirements. An
"undercapitalized" bank must develop a capital restoration plan and its parent
holding company must guarantee that bank's compliance with the plan in order for
the capitalization plan to be accepted by the appropriate bank regulator. The
liability of the parent holding company under any such guarantee is limited to
the lesser of 5% of the bank's assets at the time it became "undercapitalized"
or the amount needed to comply with the plan. Furthermore, in the event of the
bankruptcy of the parent holding company, such guarantee would take priority
over the parent's general unsecured creditors. In addition, FDICIA requires the
various regulatory agencies to prescribe certain non-
 
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capital standards for safety and soundness related generally to operations and
management, asset quality and executive compensation and permits regulatory
action against a financial institution that does not meet such standards.
 
     The various regulatory agencies have adopted substantially similar
regulations that define the five capital categories identified by FDICIA, using
the total risk-based capital, Tier 1 risk-based capital and leverage capital
ratios as the relevant capital measures. Such regulations establish various
degrees of corrective action to be taken when an institution is considered
undercapitalized, including, in the most severe cases, placing an institution
into conservatorship or receivership. Under the regulations, a "well
capitalized" institution must have a Tier 1 capital ratio of at least 6%, a
total capital ratio of at least 10% and a leverage ratio of a least 5% and not
be subject to a capital directive order. An "adequately capitalized" institution
must have a Tier 1 capital ratio of at least 4%, a total capital ratio of at
least 8% and a leverage ratio of at least 4%, or 3% in some cases. Under these
guidelines, each of the banking subsidiaries of First American and Deposit
Guaranty was considered well capitalized as of September 30, 1997.
 
     Banking agencies have also adopted final regulations which mandate that
regulators take into consideration concentrations of credit risk and risks from
non-traditional activities, as well as an institution's ability to manage those
risks, when determining the adequacy of an institution's capital. That
evaluation will be made as a part of the institution's regular safety and
soundness examination. Banking agencies have adopted final regulations requiring
regulators to consider interest rate risk (when the interest rate sensitivity of
an institution's assets does not match the sensitivity of its liabilities or its
off-balance sheet position) in the determination of a bank's capital adequacy.
 
     Distributions.  First American and Deposit Guaranty both derive funds for
cash distributions to their respective shareholders from a variety of sources,
including cash and temporary investments. The primary source of such funds,
however, is dividends received from their banking subsidiaries. Under applicable
law, the national banking subsidiaries of First American and Deposit Guaranty
may not pay a dividend, without the prior approval of the Comptroller, if the
total of all dividends declared in any calendar year exceeds the total of its
net profits of the preceding two calendar years, less any required transfers to
surplus or to a fund for the retirement of any preferred stock. In addition,
federal savings associations must provide the OTS with at least 30 days' notice
prior to declaring a dividend and are subject to other OTS regulations governing
capital distributions. Each of the banking subsidiaries is prohibited from
paying a dividend if thereafter the subsidiary would fail to maintain capital
within regulatory minimums. The appropriate U.S. federal regulatory authority is
authorized to determine under certain circumstances relating to the financial
condition of the bank or bank holding company that the payment of dividends
would be an unsafe or unsound practice and to prohibit payment thereof.
 
     Federal Reserve Board policy provides that, as a matter of prudent banking,
a bank holding company generally should not maintain a rate of cash dividends
unless its net income available to common shareholders has been sufficient to
fully fund the dividends, and the prospective rate of earnings retention appears
to be consistent with the holding company's capital needs, asset quality and
overall financial condition.
 
     In addition to the foregoing, the ability of First American, Deposit
Guaranty and their respective banking subsidiaries to pay dividends may be
affected by the various minimum capital requirements and the capital and
non-capital standards established under FDICIA, as described above. The right of
First American, Deposit Guaranty, their respective shareholders and their
respective creditors to participate in any distribution of the assets or
earnings of their respective subsidiaries is further subject to the prior claims
of creditors of the respective subsidiaries.
 
     "Source of Strength" Policy; Cross-Guarantee Liability.  According to
Federal Reserve Board policy, bank holding companies are expected to act as a
source of financial strength to each subsidiary bank and to commit resources to
support each such subsidiary. This support may be required at times when a bank
holding company may not be able to provide such support. Under the
cross-guarantee provisions of the Federal Deposit Insurance Act, in the event of
a loss suffered or anticipated by the FDIC -- either as a result of default of a
banking or thrift subsidiary of a bank holding company such as First American or
Deposit
 
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Guaranty or related to FDIC assistance provided to a subsidiary in danger of
default -- the other banking subsidiaries of such bank holding company may be
assessed for the FDIC's loss, subject to certain exceptions.
 
ENFORCEMENT POWERS OF THE BANKING AGENCIES
 
     The U.S. federal and state banking agencies have broad enforcement powers
over bank holding companies and their subsidiaries, including, in the case of
the federal agencies, the power to terminate deposit insurance, impose
substantial fines and other civil penalties and, in the most severe cases, to
appoint a conservator or receiver for a depository institution. Failure to
maintain adequate capital or to comply with applicable laws, regulations and
supervisory agreements could subject First American, Deposit Guaranty or their
subsidiaries to these enforcement provisions.
 
                          FIRST AMERICAN CAPITAL STOCK
 
FIRST AMERICAN COMMON STOCK
 
     General.  First American is authorized to issue 100,000,000 shares of First
American Common Stock, of which 57,713,411 shares were outstanding as of March
6, 1998. First American Common Stock is traded on Nasdaq under the trading
symbol "FATN." As of March 6, 1998, 15,300,000 shares of First American Common
Stock were reserved for issuance under various employee benefit plans of First
American or otherwise, pursuant to the First American Dividend Reinvestment and
Stock Purchase Plan and pursuant to that certain agreement (the "CHARTER FEDERAL
AGREEMENT") by and between First American and Charter Federal Savings Bank in
connection with certain litigation with the U.S. Government with respect to the
treatment of supervisory goodwill. After taking into account the shares reserved
as described above and the number of shares expected to be issued in the Merger,
the number of authorized shares of First American Common Stock available for
other corporate purposes as of March 6, 1998 was approximately 27,000,000. The
First American Board is proposing an amendment to the First American Charter
that would increase the number of authorized shares of First American Common
Stock to 200,000,000. See "AMENDMENT TO FIRST AMERICAN CHARTER -- Amendment to
First American Charter to Increase Number of Authorized Shares of Common Stock."
 
     Voting and Other Rights.  The holders of First American Common Stock are
entitled to one vote per share, and, in general, assuming the presence of a
quorum, a majority of votes cast with respect to a matter is sufficient to
authorize action upon routine matters. Directors are elected by a plurality of
the votes cast, and each First American Shareholder entitled to vote in such
election is entitled to vote each share of stock for as many persons as there
are directors to be elected. In elections for directors, such shareholders do
not have the right to cumulate their votes (unless action is taken to provide
otherwise by charter amendment, which action management does not currently
intend to propose). In general, (i) amendments to the First American Charter
must be approved by each voting group entitled to vote separately thereon by a
majority of the votes entitled to be cast by that voting group, if the amendment
would create dissenter's appraisal rights as to that group, and otherwise by a
majority of the votes cast thereon; (ii) a merger or share exchange required to
be approved by the First American Shareholders must be approved by each voting
group entitled to vote separately thereon by a majority of the votes entitled to
be cast by that voting group; and (iii) the dissolution of First American, or
the sale of all or substantially all of the property of First American other
than in the usual and regular course of business, must be approved by a majority
of all votes entitled to be cast thereon.
 
     In the event of liquidation, holders of First American Common Stock would
be entitled to receive pro rata any assets legally available for distribution to
First American Shareholders with respect to shares held by them, subject to any
prior rights of any First American preferred stock (as described below) then
outstanding.
 
     First American Common Stock does not have any preemptive rights, redemption
privileges, sinking fund privileges or conversion rights. All the outstanding
shares of First American Common Stock are, and upon issuance the shares of First
American Common Stock to be issued to Deposit Guaranty Shareholders will be,
validly issued, fully paid and nonassessable.
 
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     First American Corporation Shareholder Services department acts as transfer
agent and registrar for First American Common Stock.
 
     Distributions.  The holders of First American Common Stock are entitled to
receive such dividends or distributions as the First American Board may declare
out of funds legally available for such payments. The payment of distributions
by First American is subject to the restrictions of Tennessee law applicable to
the declaration of distributions by a business corporation. A corporation
generally may not authorize and make distributions if, after giving effect
thereto, it would be unable to meet its debts as they become due in the usual
course of business or if the corporation's total assets would be less than the
sum of its total liabilities plus the amount that would be needed, if it were to
be dissolved at the time of distribution, to satisfy claims upon dissolution of
shareholders who have preferential rights superior to the rights of the holders
of its common stock. In addition, the payment of distributions to shareholders
is subject to any prior rights of outstanding preferred stock. Share dividends,
if any are declared, may be paid from authorized but unissued shares.
 
     The ability of First American to pay distributions is affected by the
ability of its banking subsidiaries to pay dividends. The ability of such
banking subsidiaries, as well as of First American, to pay dividends in the
future currently is, and could be further, influenced by bank regulatory
requirements and capital guidelines. See "INFORMATION ABOUT OUR
COMPANIES -- Supervision and Regulation of First American and Deposit Guaranty."
 
FIRST AMERICAN PREFERRED STOCK
 
     First American has authorized 2,500,000 shares of preferred stock, without
par value, and may issue such preferred stock in one or more series, each with
such preferences, limitations, designations, conversion rights, voting rights
(not to exceed one vote per share), distribution rights, voluntary and
involuntary liquidation rights and other rights as it may determine. First
American has designated 300,000 shares of First American $2.375 Cumulative
Preferred Stock and 500,000 shares of First American Series A Junior Preferred
Stock. As of the date of this Joint Proxy Statement-Prospectus, no shares of
either such series of First American preferred stock were outstanding.
 
   COMPARATIVE RIGHTS OF SHAREHOLDERS OF FIRST AMERICAN AND DEPOSIT GUARANTY
 
     First American is a Tennessee corporation subject to the provisions of the
TBCA, the Tennessee Business Combination Act, the Tennessee Control Share
Acquisition Act (the "TCSAA"), the Tennessee Authorized Corporation Protection
Act (the "TACPA") and the Tennessee Greenmail Act (the "TGA"). Deposit Guaranty
is a Mississippi corporation subject to the provisions of the MBCA. Deposit
Guaranty Shareholders, whose rights are governed by the Deposit Guaranty
Articles, the Deposit Guaranty Bylaws and the MBCA, will become First American
Shareholders upon consummation of the Merger. As such, the rights of the former
Deposit Guaranty Shareholders will be governed by the First American Charter,
the First American By-Laws, and by the TBCA, the TCSAA, the TACPA and the TGA
(collectively, the "TENNESSEE LAW").
 
     While it is impractical to summarize all such differences, set forth below
are the material differences between the rights of Deposit Guaranty Shareholders
under the Deposit Guaranty Articles, the Deposit Guaranty Bylaws and the
applicable Mississippi corporations law and the rights of First American
Shareholders under the First American Charter, the First American By-laws and
the Tennessee Law.
 
BOARD OF DIRECTORS
 
     Size.  The Deposit Guaranty Articles and the Deposit Guaranty Bylaws
provide that the size of the Deposit Guaranty Board shall consist of not fewer
than nine nor more than 25 directors, the exact number to be determined from
time to time by resolution adopted by affirmative vote of the majority of the
entire Deposit Guaranty Board. The First American Charter and the First American
By-Laws provide that the size of the First American Board shall consist of not
fewer than nine nor more than 27 directors, the exact number to be determined
from time to time by the First American Board pursuant to a resolution adopted
by a majority of the First American Board.
 
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     Cumulative Voting.  The MBCA provides that shareholders may cumulate their
votes unless the corporation's articles of incorporation provide otherwise. The
TBCA provides that shareholders do not have the right to cumulate their votes
unless the corporation's charter provides otherwise. Pursuant to the Deposit
Guaranty Articles and the Deposit Guaranty Bylaws, Deposit Guaranty Shareholders
may cumulate their votes in the election of directors. Pursuant to the First
American By-Laws, First American Shareholders may not cumulate their votes in
the election of directors. As a result, it could be more difficult, in certain
circumstances, for a shareholder to gain representation on the First American
Board than on the Deposit Guaranty Board.
 
     Qualification of Directors.  The Deposit Guaranty Bylaws provide that each
director of Deposit Guaranty must hold in his own right stock of Deposit
Guaranty with an aggregate par, book or market value of no less than $1,000 as
of the date of such director's election. The Deposit Guaranty Bylaws further
provide that no person may be elected a director of Deposit Guaranty who is over
the age of 65 as of the first day of January immediately preceding the election
of directors, and no director shall be eligible for re-election who has failed
to attend more than 50% of Deposit Guaranty Board and committee meetings, unless
excused by the Deposit Guaranty Board. The First American By-laws provide that
no person may be elected or re-elected a director after reaching the age of 70
unless the First American Board deems that election or re-election (which may be
for a single additional term only) is in the best interests of First American or
unless the person owns greater than 1% of the issued and outstanding shares of
First American.
 
     Vacancies.  The MBCA and the TBCA provide that vacancies on a board of
directors may be filled by shareholders or the board of directors unless the
articles of incorporation provide otherwise. The Deposit Guaranty Bylaws provide
that any vacancy on the Deposit Guaranty Board, however created, may be filled
only by the Deposit Guaranty Shareholders, with such appointee to serve for the
unexpired term of his or her predecessor. The First American Charter and the
First American By-Laws provide that any vacancy on the First American Board is
to be filled only by a majority vote of directors then in office, such appointee
to serve for the unexpired term of his or her predecessor or, if there is no
predecessor, until the next annual meeting of shareholders.
 
     Removal.  The MBCA and the TBCA contain substantially similar provisions
with respect to removing directors, except that the TBCA also provides that a
corporation's charter can provide for removal of directors with cause by a
majority of the entire board of directors. The First American Charter does not
so provide. The Deposit Guaranty Articles provide for removal of directors only
at a meeting called expressly for such purpose and only upon a vote in favor of
removal by the holders of at least 80% of the shares then entitled to vote at an
election of directors. Because Deposit Guaranty Shareholders may cumulate their
votes in the election of directors, under the MBCA and the Deposit Guaranty
Articles a director cannot be removed if the votes cast against removal of the
director would be sufficient to elect the director if then cumulatively voted at
an election of the class of directors of which he or she is a part. The First
American Charter and the First American By-Laws provide for removal of directors
only for cause, only at a meeting called for that purpose and only upon a vote
for removal 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 such
purpose.
 
     Nomination of Directors.  Pursuant to the Deposit Guaranty Bylaws, notice
of nominations of directors by Deposit Guaranty Shareholders must be made by a
notice in writing delivered to Deposit Guaranty at its principle executive
offices not less than 60 days nor more than 75 days prior to the annual meeting,
provided that, if less than 60 days' notice or prior public disclosure of the
date of the meeting is given or made to Deposit Guaranty Shareholders, notice by
the Deposit Guaranty Shareholder must be received not later than the close of
business on the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made, whichever occurs
first. Pursuant to the First American By-Laws, nominations of directors by First
American Shareholders must be made in writing given to the Secretary of First
American not later than (i) 210 days in advance of an annual meeting of First
American Shareholders if the election is to be held at such meeting or (ii) the
close of business on the 10th day following the day on which notice is first
given to First American Shareholders of a special meeting held to elect such
directors.
 
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BUSINESS COMBINATION PROVISIONS
 
     The Mississippi Shareholder Protection Act (the "MSPA") imposes certain
requirements in connection with certain business combinations with interested
shareholders (as defined in the MSPA), but does not apply to bank holding
companies unless the bank holding company's certificate of incorporation
provides that the MSPA will apply; the Deposit Guaranty Articles do not so
provide.
 
     The Tennessee Business Combination Act provides that a party beneficially
owning 10% or more of the voting power of any class or series of then
outstanding shares entitled to vote generally in the election of directors of a
corporation (an "INTERESTED SHAREHOLDER") cannot engage in a business
combination with the corporation for a period of five years following such
Interested Shareholder's share acquisition date, unless the transaction either
(i) is approved by at least two-thirds of the voting stock of the corporation
not beneficially owned by such Interested Shareholder at a meeting called for
such purpose no earlier than five years after such Interested Shareholder's
share acquisition date or (ii) satisfies certain fairness criteria specified in
the TBCA. The Tennessee Business Combination Act exempts transactions with
Interested Shareholders if the transaction is approved by the corporation's
board of directors prior to the time when the person became an Interested
Shareholder. The Tennessee Business Combination Act also exempts transactions
with Interested Shareholders if the corporation enacts a charter amendment or
bylaw by a majority vote of shareholders who have held shares for more than one
year prior to the vote removing the corporation from the coverage of the Act, in
which case the business combination can take effect two years after such vote.
First American has not adopted a charter or by-law amendment removing First
American from the coverage of the Tennessee Business Combination Act.
 
     The Deposit Guaranty Articles require a vote of not less than 80% of the
votes entitled to be cast by the holders of all of the then-outstanding shares
of capital stock of Deposit Guaranty entitled to vote on all matters submitted
to Deposit Guaranty Shareholders generally ("DEPOSIT GUARANTY VOTING STOCK") to
approve certain business combinations with a Deposit Guaranty Interested
Shareholder (as defined herein), excluding Deposit Guaranty Voting Stock
beneficially owned by such Deposit Guaranty Interested Shareholder. A "DEPOSIT
GUARANTY INTERESTED SHAREHOLDER" generally means any person who is or has
announced or publicly disclosed a plan or intention to become the beneficial
owner of more than 10% of the outstanding Deposit Guaranty Voting Stock. The
special voting requirements do not apply if the business combination has been
approved by a majority of the Continuing Directors (as defined herein) or if the
business combination meets certain fair price, procedural and other requirements
described in the Deposit Guaranty Articles. A "CONTINUING DIRECTOR" is any
member of the Deposit Guaranty Board who is not an affiliate or associate (as
those terms are defined in the rules and regulations of the Exchange Act) or a
representative of the Deposit Guaranty Interested Shareholder and either was a
member of the Deposit Guaranty Board prior to the time that the Deposit Guaranty
Interested Shareholder became a Deposit Guaranty Interested Shareholder or is or
was recommended or elected to succeed a Continuing Director by a majority of
Continuing Directors.
 
     The First American Charter and the First American By-Laws contain
substantially similar provisions, except that the First American Charter and the
First American By-Laws require the affirmative vote of at least 75% of the votes
entitled to be cast by all holders of capital stock entitled to vote in the
election of directors (including the Interested Shareholder) and a majority of
the votes entitled to be cast by all holders of capital stock entitled to vote
in the election of directors, other than the shares beneficially owned by the
Interested Shareholder.
 
SHAREHOLDER RIGHTS PLAN
 
     Deposit Guaranty does not have in place a shareholder rights plan, but,
pursuant to the Deposit Guaranty Articles and the MBCA, the Deposit Guaranty
Board could adopt such a plan at any time without the approval or ratification
of the Deposit Guaranty Shareholders.
 
     First American has in place the First American Rights Agreement under which
holders of First American Common Stock have been and are issued the First
American Rights, the effect of which may be to discourage certain coercive or
abusive takeover tactics. Pursuant to the First American Rights Agreement, the
 
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First American Board authorized and declared a distribution of one First
American Right for each outstanding share of First American Common Stock to
First American Shareholders of record at the close of business on December 27,
1988 (the "RIGHTS RECORD DATE") and for each share of First American Common
Stock issued by First American after the Rights Record Date but prior to the
Distribution Date (as defined and described below). Accordingly, a First
American Right will attach to each share of First American Common Stock issued
in the Merger. Each First American Right entitles the registered holder, subject
to the terms of the First American Rights Agreement, to purchase from First
American one one-hundredth of a share (a "UNIT") of Series A Junior Preferred
Stock of First American (the "PREFERRED STOCK"), at a purchase price of $80.00
per Unit, subject to adjustment. The First American Rights attach to all
certificates representing shares of outstanding First American Common Stock, and
no separate First American Rights certificates have been issued. The First
American Rights will separate from the First American Common Stock, and the
distribution date for the First American Rights (the "DISTRIBUTION DATE") will
occur, upon the earlier of: (i) 10 days following public announcement (the date
of the announcement being the "STOCK ACQUISITION DATE") that a person or group
of affiliated or associated persons (other than First American, any subsidiary
of First American or any employee benefit plan of First American or such
subsidiary) has acquired, obtained the right to acquire, or otherwise obtained
the beneficial ownership of 20% or more of the then outstanding shares of the
First American Common Stock, or (ii) 10 days following the commencement of a
tender or exchange offer that would result in a person or group beneficially
owning 20% or more of the then outstanding shares of the First American Common
Stock. As soon as practicable after the Distribution Date, First American Rights
certificates would be mailed to holders of record of the First American Common
Stock as of the close of business on the Distribution Date and, thereafter, the
separate First American Rights certificates alone would represent the First
American Rights.
 
     Until a First American Right is exercised, the holder thereof has no rights
as a shareholder of First American, including the right to vote or to receive
dividends. Once the First American Right is exercised, however, each Unit of
Preferred Stock will have one vote, voting together as a single class with the
First American Common Stock.
 
     The First American Rights are not exercisable until the Distribution Date
and will expire at the close of business on December 27, 1998 (the "FINAL
EXPIRATION DATE") unless earlier redeemed by First American. They may be
redeemed by First American at its option, by action of a majority of the First
American independent directors, at any time prior to the earlier of (i) the
close of business on the Final Expiration Date or (ii) the close of business on
the tenth day following the Stock Acquisition Date. The Rights may only be
redeemed in whole, not in part, at a price of $.01 per First American Right (the
"REDEMPTION PRICE"), payable, at the election of such majority of independent
directors, in cash or shares of First American Common Stock. Although no action
has been taken in such respect, it is currently anticipated that First American
will renew the First American Rights Agreement prior to its scheduled expiration
as of the Final Expiration Date.
 
     The First American Rights Agreement also provides First American
Shareholders certain rights in the following situations. In the event that (i) a
person becomes the beneficial owner of 20% or more of the then outstanding
shares of First American Common Stock or (ii) during the pendency of any tender
or exchange offer for First American Common Stock or prior to the expiration of
20 business days (or such later date as a majority of the independent directors
may determine) after the date such tender or exchange offer is terminated or
expires, a person becomes the beneficial owner of 10% or more of the then
outstanding shares of First American Common Stock (unless the 10% beneficial
ownership results from certain limited circumstances specified in the First
American Rights Agreement), then, in each case, each holder of a First American
Right will thereafter have the right to receive, upon exercise, First American
Common Stock having a value equal to two times the exercise price of the First
American Right.
 
     In addition, in the event that, at any time following the Stock Acquisition
Date, (i) First American is acquired in a merger or other business combination
transaction (with certain limited exceptions specified in the First American
Rights Agreement) and First American is not the surviving corporation; (ii) any
person effects a share exchange or merger of First American and all or part of
the First American Common Stock is converted or exchanged for securities, cash
or property of any other person; or (iii) 50% or more of First
 
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American's assets or earning power is sold or transferred, each holder of a
First American Right (except First American Rights which previously have been
voided pursuant to the "Beneficial Ownership" provision of the First American
Rights Agreement) shall thereafter have the right to receive, upon exercise,
common stock of the acquiring person having a value equal to two times the
exercise price of the First American Right.
 
SHAREHOLDER MEETINGS
 
     Shareholder Action without a Meeting.  Under both the MBCA and the TBCA,
shareholders may act by written consent if all the shareholders entitled to vote
on the action consent to taking such action without a meeting. Under the TBCA,
the affirmative vote of the number of shares that would be necessary to
authorize or take such action at a meeting is the act of the shareholders. Under
the MBCA, shareholders may act by written consent only if the action is taken by
all the shareholders entitled to vote thereon.
 
     Shareholder Business.  Pursuant to the Deposit Guaranty Bylaws, for
business to be properly brought before a meeting by a Deposit Guaranty
shareholder, the Deposit Guaranty Shareholder must have given written notice
(delivered to, or mailed and received by, the Secretary of Deposit Guaranty) no
sooner than 60 and no later than 75 days prior to an annual meeting and no
sooner than 40 and no later than 60 days prior to a special meeting (provided
that, if less than 60 days' notice or prior public disclosure of the date of an
annual meeting is given or made to Deposit Guaranty Shareholders, notice by the
Deposit Guaranty Shareholder must be received not later than the close of
business on the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made, whichever occurs
first). The notice must set forth a brief description of the business desired to
be brought before the meeting and the reasons for conducting the business at the
meeting, the name and record address of the Deposit Guaranty Shareholder
proposing such business, the class and number of shares of Deposit Guaranty
stock beneficially owned by the Deposit Guaranty Shareholder and any material
interest of the Deposit Guaranty Shareholder in such business.
 
     The First American By-Laws set forth a substantially similar provision,
except that the First American By-Laws require compliance with Rule 14a-8 under
the Exchange Act and that a shareholder's proposed business or proposal must be
received by the General Counsel of First American no fewer than 120 days before
the date of First American's proxy statement released to First American
Shareholders in connection with the previous year's annual meeting of First
American Shareholders.
 
     Special Meetings of Shareholders.  The MBCA and the TBCA provide that a
special meeting of shareholders 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 bylaws or, unless the articles of
incorporation provide otherwise, by written demand of the shareholders having at
least 10% of all the votes entitled to be cast on an issue to be considered at
the proposed special meeting. The Deposit Guaranty Bylaws provide that a special
meeting of Deposit Guaranty Stockholders may be called by the Deposit Guaranty
Board, or by the Chairman of the Board or the President, and must be called by
the Chairman of the Board of Deposit Guaranty if the holders of at least 10% of
the votes entitled to be cast on the issue to be considered at the proposed
special meeting properly deliver written demand for such a meeting to Deposit
Guaranty's Secretary. The First American Bylaws provide that special meetings of
First American Shareholders may be called by the First American Board, the
Chairman of the Board, the Vice Chairman of the First American Board or the
President of First American, and must be called by the First American Board
Chairman of the First American Board, the Vice Chairman of the First American
Board 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 such a meeting from First
American Shareholders owning at least 10% of the entire capital stock of First
American issued and outstanding and entitled to vote at such meeting, together
with a certified check for $50,000 payable to First American to cover First
American's expenses in connection with such meeting.
 
     Notice of Meeting.  The MBCA and the TBCA require a corporation to notify
its shareholders with respect to each annual or special meeting no fewer than 10
and no more than 60 days before the meeting date (notice generally need be given
only to shareholders entitled to vote at such meeting). Such notice need not
include a description of the purpose of the annual meeting, but must include
such a description if the meeting
 
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is a special meeting. In addition, the First American By-Laws provide that
notice of special meetings called at the request of shareholders must be given
no fewer than 45 and no more than 60 days before the meeting.
 
DISSENTERS' APPRAISAL RIGHTS
 
     Under the MBCA, shareholders have the right to dissent from certain
proposed business actions, including consummation of a merger or share exchange
that requires shareholder approval. For a detailed description of such
provisions of the MBCA, see "ADDITIONAL INFORMATION -- Dissenters' Appraisal
Rights" and Appendix E to this Joint Proxy Statement-Prospectus.
 
     Under the TBCA, shareholders have dissenter's rights generally similar to
those under the MBCA, but under the TBCA, these rights do not apply to
shareholders of corporations listed on an exchange registered under Section 6 of
the Exchange Act or quoted on a national market system. Because First American
is quoted on Nasdaq, First American Shareholders currently do not have
dissenters' appraisal rights.
 
TAKEOVER STATUTES
 
     Regulation of Tender Offers.  The Mississippi Business Tender Offer Law of
1980 (the "MBTOL") imposes certain restrictions on certain tender offers for the
securities of "subject companies," which are defined as corporations or other
entities issuing equity securities (excluding banks and savings and loan
associations) where at least 20% of such outstanding equity securities are owned
by Mississippi residents and the fair market value of such corporation's or
other entity's assets owned or controlled in Mississippi exceed one million
dollars. The MBTOL requires the party making the tender offer to file a
registration statement with the Secretary of Mississippi that indicates any
plans to gain control of the corporation that is the subject of the tender
offer. The Secretary of State has authority to require additional information
concerning the takeover and may require a hearing on the matter. Certain tender
offers are exempt from the MBTOL, including those in which the consideration to
be paid in the transaction consists at least in part of securities issued in a
transaction registered under the Securities Act.
 
     The Tennessee Investor Protection Act address similar circumstances, but
the Tennessee Investor Protection Act does not apply to bank holding companies
that, like First American, are subject to U.S. federal regulation.
 
     Control Share Acquisitions.  The TCSAA provides that Control Shares (as
defined herein) acquired in a Control Share Acquisition (as defined herein) have
the same voting rights as all other shares in the same class or series only if
voting rights are granted by the holders of a majority of all shares entitled to
vote generally with respect to the election of directors, excluding shares held
by the acquiring person, by any officer of the corporation or by any director of
the corporation who is also an employee. Absent such a resolution, Control
Shares will regain their voting rights only upon transfer to another person
unless that transfer is a Control Share Acquisition. "CONTROL SHARE ACQUISITION"
is defined as the acquisition, directly or indirectly, of ownership or power to
direct the voting of Control Shares. "CONTROL SHARES" are defined as shares
that, but for the provisions of the TCSAA, would have voting power with respect
to shares of the corporation that, when added to all other shares of the
corporation owned by such person or with respect to which such person may vote
or direct the voting of (other than by virtue of a revocable proxy or written
consent), would entitle that person to exercise or direct the exercise of voting
power of the corporation in the election of directors within the ranges of (i)
one-fifth or more but less than one-third of all voting power, (ii) one-third or
more but less than a majority of all voting power, or (iii) a majority or more
of all voting power, but only to the extent that an acquisition causes the
acquiring person to exceed any of these the three thresholds of voting power for
which the acquiring person has not previously received permission to obtain
pursuant to the TCSAA. The TCSAA provides that any person who has made a Control
Share Acquisition or who holds of record 10% or more of the outstanding shares
of the corporation and who announces a good faith intention to make a Control
Share Acquisition may deliver to the corporation a statement containing certain
information about such person and such acquisition ("CONTROL SHARE ACQUISITION
STATEMENT"). If an acquiring person demands contemporaneously with the delivery
of a Control Share Acquisition Statement a special meeting of shareholders for
the purpose of considering the voting rights to be accorded the Control Shares
acquired or to
 
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be acquired, the board of directors of the corporation shall call such a meeting
within 20 days of the receipt of such demand, and shall hold such meeting within
fifty days of the receipt of such demand. Such demand must be accompanied by an
undertaking to pay the corporation's reasonable expenses (not including expenses
incurred in opposing such demand) in connection with noticing and holding the
special meeting. Charter or bylaw provisions effective prior to the occurrence
of a Control Share Acquisition may authorize the redemption, at the option of
the corporation, of all but not less than all Control Shares acquired in a
Control Share Acquisition at any time during the period ended 60 days after the
last acquisition of Control Shares by an acquiring person from the acquiring
person for fair value if (i) no Control Share Acquisition Statement has been
filed or (ii) a Control Share Acquisition Statement has been filed and the
shares are not accorded voting rights by the shareholders. A charter or bylaw
provision effective prior to the occurrence of a Control Share Acquisition may
provide that, in the event Control Shares acquired in a Control Share
Acquisition are accorded voting rights and the acquiring person has a majority
or more of all voting power entitled to vote generally for the election of
directors, all shareholders of the corporation (other than the acquiring person)
who do not vote in favor of granting such voting power shall be entitled to an
appraisal of the fair value of their shares ("CONTROL SHARE DISSENTING RIGHT").
 
     The First American By-Laws expressly provide that the TCSAA shall apply
with respect to shares of First American, authorize redemption of control shares
pursuant to the TCSAA and do not provide for Control Share Dissenting Rights.
 
     The Mississippi Control Share Act (the "MCSA") excludes bank holding
companies, such as Deposit Guaranty, from its coverage unless such company
elects to be covered thereby by amending its Articles of Incorporation to so
provide; Deposit Guaranty has not so amended the Deposit Guaranty Articles.
 
CONSIDERATION OF NON-SHAREHOLDER INTERESTS BY BOARD OF DIRECTORS
 
     The Deposit Guaranty Articles require the Deposit Guaranty Board to
consider all relevant factors when evaluating whether certain proposed business
combinations or certain dispositions of all or substantially all of the assets
of Deposit Guaranty or of any Deposit Guaranty subsidiary, any offer to purchase
any or all of Deposit Guaranty's securities, any solicitation of proxies for
election of directors of Deposit Guaranty, or any similar transaction or event
is in the best interests of Deposit Guaranty and Deposit Guaranty Shareholders,
including: the adequacy of the consideration being paid in connection with such
transaction; the social and economic effects of the transaction on Deposit
Guaranty, any Deposit Guaranty subsidiary, depositors, loan and other customers,
creditors and employees of Deposit Guaranty and its subsidiaries, and other
elements of the community in which Deposit Guaranty and its subsidiaries operate
or are located; the business, financial condition and earning prospects of the
acquiring person, including, but not limited to, debt service and other existing
or likely financial obligations of the acquiring person, and the possible effect
of such conditions upon Deposit Guaranty, its subsidiaries and the other
elements of the community in which Deposit Guaranty and its Subsidiaries operate
or are located; and the competence, experience and integrity of the acquiring
person and its management.
 
     The First American Charter requires the First American Board to consider
all relevant factors when evaluating whether certain proposed business
combinations or certain dispositions of all or substantially all of First
American or of any First American subsidiary, any offer to purchase any or all
of First American's securities, any solicitation of proxies for election of
directors of First American, or any similar transaction is in the best interests
of First American and First American Shareholders, including: the consideration
being offered in the proposed transaction in relation to the then-current market
price, in relation to the then-current value of First American in a freely
negotiated transaction and in relation to the First American Board's then-
current estimate of the future value of First American as an independent entity;
the social and economic effects on the employees, customer, suppliers and other
constituents of First American and its subsidiaries and on the communities in
which First American and its subsidiaries operate or are located; and the
desirability of maintaining First American's independence from other entities.
 
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CERTAIN PURCHASES OF THE CORPORATION'S SECURITIES
 
     The TGA provides that it is unlawful for any Tennessee corporation which
has a class of voting stock registered or traded on a national securities
exchange or registered with the Commission pursuant to Section 12(g) of the
Exchange Act or any subsidiary of such corporation to purchase, directly or
indirectly, any of its shares at a price above the market value of such shares
from any person who holds more than 3% of the class of the securities to be
purchased if such person has held such shares for less than two years, unless
the purchase has been approved by the affirmative vote of a majority of the
outstanding shares of each class of voting stock of the corporation, or,
alternatively, unless the corporation makes an offer of at least equal value per
share to all holders of such class. The TGA applies to purchases of First
American Common Stock. Mississippi law does not contain a comparable provision.
 
INDEMNIFICATION
 
     Deposit Guaranty.  The Deposit Guaranty Articles require Deposit Guaranty
to indemnify any person who was or is a party or is threatened to be made a
party (a "DEFENDANT") to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"PROCEEDING") (other than a Proceeding by or in the right of Deposit Guaranty),
as a result of serving or having served as a director, officer, employee or
agent of Deposit Guaranty, or serving or having served at the request of Deposit
Guaranty in such a capacity with another entity, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such Proceeding, if he or she
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of Deposit Guaranty, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his or
her conduct was unlawful.
 
     In the case of a Proceeding by or in the right of Deposit Guaranty, Deposit
Guaranty shall indemnify a Defendant for expenses (including attorneys' fees)
reasonably incurred in defending any such Proceeding if such Defendant acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of Deposit Guaranty; provided, however, that Deposit
Guaranty will not indemnify any such person in respect of any Proceeding as to
which such person has been adjudged to be liable for negligence or misconduct in
the performance of his duty to Deposit Guaranty unless, and only to the extent
that, the court in which such action or suit was brought shall determine upon
application that despite the adjudication of liability, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for expenses that the Court deems proper.
 
     Determining the propriety of indemnification rests with (i) a majority vote
of a quorum of directors of the entire Deposit Guaranty Board not interested in
the action, (ii) by written opinion of independent legal counsel if such quorum
cannot be obtained, (iii) Deposit Guaranty Stockholders or (iv) any court of
competent jurisdiction within the State of Mississippi; provided that, to the
extent that a Defendant is successful on the merits or otherwise in any
Proceeding, he or she will be indemnified against expenses (including attorneys'
fees), without the necessity of such a determination.
 
     The Deposit Guaranty Articles specifically provide that the provisions
therein are not exclusive of any other rights to which those seeking
indemnification may be entitled and that Deposit Guaranty's policy is that
indemnification of the persons specified in the Deposit Guaranty Articles shall
be made to the fullest extent permitted by law. Expenses incurred in defending
or investigating a threatened or pending action may be paid by Deposit Guaranty
in advance of final disposition as authorized by the Deposit Guaranty Board and
upon an undertaking by or on behalf of the Defendant to repay such amount in the
event that the Defendant is not entitled to indemnification.
 
     The Deposit Guaranty Articles further provide that Deposit Guaranty may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, trustee, employee or agent of Deposit Guaranty, or is or was
serving in such a capacity with another entity at Deposit Guaranty's request,
for liability asserted against or incurred by him or her in such capacity,
regardless of whether Deposit Guaranty would have had the power or the
obligation to indemnify such person against such liability under the provisions
 
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discussed above; provided, that Deposit Guaranty shall not purchase or maintain
insurance coverage for a formal order by a bank regulatory agency assessing
civil money penalties against a director or employee.
 
     First American.  The First American Charter provides that indemnification
to the full extent permitted by law for directors, officers, employees and
agents of First American may be provided either directly or through insurance,
and that no director of First American shall be personally liable to First
American or its shareholders for monetary damages for breach of any fiduciary
duty as a director to the full extent permitted by law.
 
     The First American By-Laws provide that First American will indemnify any
Defendant in any Proceeding (other than a Proceeding by or in the right of First
American) by reason of serving or having served as a director of First American
(or counsel to the First American Board), an advisory director, or an officer of
First American, or serving or having served at the request of the corporation in
such a capacity with another entity against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding,
including any appeal, if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interest of First
American, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his conduct was unlawful.
 
     The First American By-Laws provide, however, that no indemnification shall
be made (i) if a judgment or other final disposition adverse to the Defendant
establishes his liability for intentional misconduct or knowing violation of the
law or for an unlawful distribution under Tennessee law, (ii) if a judgment or
other final adjudication adverse to the Defendant for breach of the Defendant's
duty of loyalty to First American is based upon such Defendant gaining personal
benefit or advantage to which he was not entitled, (iii) for any amounts if the
Defendant is adjudged liable to First American or for any amounts paid to First
American in settlement of a proceeding by or in the right of First American, or
(iv) in a proceeding by First American directly (and not derivatively) for
expenses, unless such proceeding is brought after a change in control of First
American.
 
     The First American By-Laws provide that First American shall indemnify a
Defendant pursuant to the By-laws unless a determination is made that the
Defendant did not meet the standard of conduct therein specified. Determination
of the propriety of indemnification shall be made by the First American Board
acting by a quorum consisting of disinterested directors, by independent legal
counsel if such a quorum is not obtainable, or, even if obtainable, if the
majority of a quorum of disinterested directors so directs, or by the First
American Shareholders.
 
     The First American By-Laws provide that, subject to certain procedural
requirements, First American shall pay expenses reasonably incurred in any
Proceeding (other than a Proceeding brought by First American directly unless
that action follows a change in control) in advance of the final disposition of
the matter if the Defendant undertakes to repay such amount in the event that
such Defendant is ultimately determined not to be entitled to indemnification,
unless a quorum of disinterested directors or independent legal counsel directed
by the First American Board (in the event that such a quorum is not obtainable)
reasonably and promptly determines in a written opinion that indemnity is not
proper under the terms of the First American By-Laws.
 
     The First American By-Laws provide that the indemnity provision contained
therein are additional to, and not limitations on, any other rights to which a
Defendant seeking indemnification may be entitled under law, agreement,
insurance policy, or otherwise. The First American By-Laws provide that the
corporation may indemnify and advance expenses to any employee or agent of First
American who is not a director or officer (and his heirs, executors and
administrators) to the same extent as to a director or officer if the First
American Board determines that to do so is in First American's best interests.
The First American By-laws provide that First American may purchase insurance
coverage for the purpose of indemnifying the directors, officers, employees and
agents of First American and its subsidiaries regardless of whether such entity
would have had the power or the obligation to indemnify such person against such
liability under the provisions discussed above.
 
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AMENDMENTS TO ARTICLES OF INCORPORATION AND BYLAWS
 
     The Deposit Guaranty Articles provide that altering, amending or repealing
the provisions of the Deposit Guaranty Articles relating to (including changes
to provisions that would have the effect of permitting action inconsistent with
or in circumvention of such provisions relating to) the Deposit Guaranty Board
(including, with respect to directors, the number, term length, classification,
removal and procedure for filling vacancies) and certain business combinations
with Interested Shareholders requires the affirmative vote of at least 80% of
the votes of all classes of shares of stock entitled to vote in the election of
directors voting as a single class, excluding shares beneficially owned by a
Deposit Guaranty Interested Shareholder.
 
     The First American Charter provides that altering, amending or repealing
the provisions of the First American Charter relating to (including changes to
provisions that would have the effect of permitting action inconsistent with or
in circumvention of such provisions relating to) the First American Board
(including, with respect to directors, the number, term length, classification,
removal and procedure for filling vacancies) and certain business combinations
with Interested Shareholders requires (i) the affirmative vote of at least 75%
of the votes entitled to be cast by all holders of voting stock voting as a
single class and (ii) a majority of the votes entitled to be cast by all holders
of voting stock, other than shares of voting stock which are beneficially owned
by an Interested Shareholder, if any.
 
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                             ADDITIONAL INFORMATION
 
                          DISSENTERS' APPRAISAL RIGHTS
 
     The MBCA provides Deposit Guaranty Shareholders dissenters' rights of
appraisal in connection with the Merger. The following summarizes certain MBCA
provisions in connection with such dissenters' rights. This summary is qualified
in its entirety by reference to MBCA Sections 13.01 to 13.31, a copy of which is
attached as Appendix F to this Joint Proxy Statement-Prospectus.
 
     The availability of dissenters' rights is conditioned upon compliance with
applicable law. Accordingly, any Deposit Guaranty Shareholder who wishes to
dissent from the proposed Merger and receive the value of such Deposit Guaranty
Stockholder's Deposit Guaranty Common Stock in cash should consult with his or
her counsel.
 
     A Deposit Guaranty Shareholder's failure to vote against the Merger will
not constitute a waiver of his or her appraisal or similar rights. A vote
against the Merger by a Deposit Guaranty Shareholder will not be deemed to
satisfy all of the notice requirements under Mississippi law with respect to
appraisal rights.
 
     Pursuant to MBCA Section 13.21(a), in order to be eligible to exercise the
right to dissent, a Deposit Guaranty Shareholder must (i) give notice in writing
to First American prior to the vote on the Merger that such Stockholder intends
to demand payment for his or her shares of Deposit Guaranty Common Stock if the
Merger is consummated, and (ii) not vote such shares of Deposit Guaranty Common
Stock in favor of the Merger.
 
     If the Merger is approved at the Deposit Guaranty Special Meeting, pursuant
to MBCA Section 13.22, First American, within ten days after the Effective Date,
must deliver a written notice (the "DISSENTERS' NOTICE") to all Deposit Guaranty
Shareholders who satisfied the requirements referred to in the preceding
paragraph. This notice must (i) state where the payment demand ("PAYMENT
DEMAND") must be sent and where Deposit Guaranty Certificates must be deposited,
(ii) inform holders of uncertificated Deposit Guaranty shares to what extent
transfer of the shares will be restricted after the payment demand is received,
(iii) supply a form for demanding payment that includes the date of the first
announcement to the news media or to Deposit Guaranty Shareholders of the terms
of the proposed Merger and requires that the Deposit Guaranty Shareholder
asserting dissenters' rights certify whether he or she acquired beneficial
ownership of the shares of Deposit Guaranty Common Stock before that date, (iv)
set a date by which First American must receive the Payment Demand, which date
may not be fewer than 30 nor more than 60 days after the date the Dissenters'
Notice is delivered, and (v) be accompanied by a copy of Article 13 of the MBCA.
 
     A Deposit Guaranty Shareholder sent a Dissenters' Notice must, pursuant to
MBCA Section 13.23, demand payment, certify that such Deposit Guaranty
Shareholder acquired beneficial ownership of the shares of Deposit Guaranty
Common Stock before the date required to be set forth in the Dissenters' Notice,
and deposit such Deposit Guaranty Shareholder's certificates in accordance with
the terms of the Dissenters' Notice.
 
     A Deposit Guaranty Shareholder who demands payment and deposits such
Deposit Guaranty Shareholder's shares in accordance with the previous paragraph
retains all other rights of a Deposit Guaranty Shareholder until those rights
are canceled or modified by the consummation of the Merger or the taking of any
other proposed corporate action.
 
     A Deposit Guaranty Shareholder who does not demand payment or deposit such
Deposit Guaranty Shareholder's share certificates where required, in each case
by the date set forth in the Dissenters' Notice, is not entitled to payment for
such Deposit Guaranty Shareholder's shares of Deposit Guaranty Common Stock.
 
     Pursuant to MBCA Section 13.25, as soon as the Merger is effective, or upon
receipt of a Payment Demand, First American is required to pay each dissenting
Deposit Guaranty Shareholder who has complied with such Deposit Guaranty
Shareholder's obligations under law the amount First American estimates to be
the fair value of such Deposit Guaranty Shareholder's shares, plus accrued
interest. This payment must be
 
                                                          ADDITIONAL INFORMATION
 
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accompanied by (i) Deposit Guaranty's consolidated statement of financial
condition as of the end of a fiscal year ending not more than 16 months before
the date of payment, an income statement for that year, a statement of changes
in stockholders' equity for the year, and the latest available interim financial
statements, if any; (ii) a statement of First American's estimate of the fair
value of the shares of Deposit Guaranty Common Stock; (iii) an explanation of
how the interest was calculated; (iv) a statement of the dissenting Deposit
Guaranty Shareholder's right to demand payment under MBCA Section 13.28; and (v)
a copy of Article 13 of the MBCA.
 
     Pursuant to MBCA Section 13.27, First American may elect to withhold
payment from a dissenter who was not the beneficial owner of the shares of
Deposit Guaranty Common Stock on the date set forth in the Dissenters' Notice as
the date of the first announcement to news media or to the Deposit Guaranty
Shareholders of the terms of the proposed Merger.
 
     To the extent First American elects to withhold payment as described in the
immediately preceding paragraph, after consummation of the Merger, First
American shall estimate the fair value of the shares of Deposit Guaranty Common
Stock, plus accrued interest, and shall pay this amount to each dissenting
Deposit Guaranty Shareholder who agrees to accept it in full satisfaction of
such Deposit Guaranty Shareholder's demand. First American shall send with its
offer a statement of its estimate of the fair value of the shares of Deposit
Guaranty Common Stock, an explanation of how the interest was calculated and a
statement of the dissenter Deposit Guaranty Shareholder's right to demand
payment pursuant to MBCA Section 13.28.
 
     Pursuant to MBCA Section 13.28, a dissenting Deposit Guaranty Shareholder
may notify First American in writing of such Deposit Guaranty Shareholder's
estimate of the fair value of such Deposit Guaranty Shareholder's shares of
Deposit Guaranty Common Stock and amount of interest due, and demand payment of
such estimate (less any payments previously made) or reject First American's
offer under MBCA Section 13.27 and demand payment of the fair value of such
shares and interest due, if: (i) the dissenting Deposit Guaranty Shareholder
believes that the amount paid under MBCA Section 13.25 or offered under MBCA
Section 13.27 is less than the fair value of such shares or that the interest
due is incorrectly calculated; (ii) First American fails to make payment under
MBCA Section 13.25 within 60 days after the date set forth demanding payment; or
(iii) First American, having failed to take the proposed corporate action, does
not return the deposited certificates within 60 days after the date set for
demanding payment.
 
     A dissenting Deposit Guaranty Shareholder waives the right to demand
payment under MBCA Section 13.28 unless such stockholder notifies First American
of such demand in writing within 30 days after First American makes or offers
payment for such stockholder's shares of Deposit Guaranty Common Stock.
 
     Pursuant to MBCA Section 13.30, if a demand for payment under MBCA Section
13.28 remains unsettled, First American must commence a proceeding within 60
days after receiving the Payment Demand and petition the court to determine the
fair value of the shares of Deposit Guaranty Common Stock and accrued interest.
If First American does not commence this proceeding within this 60-day period,
it shall pay each dissenting Deposit Guaranty Shareholder whose demand remains
unsettled the amount demanded.
 
     First American must commence this proceeding in the chancery court of Hinds
County, Mississippi (the "CHANCERY COURT"). First American must make all
dissenting Deposit Guaranty Shareholders whose demands remained unsettled
parties to the proceeding and all parties must be served with a copy of the
petition. The Chancery Court may appoint one or more persons as appraisers to
receive evidence and recommend a decision on the question of fair value. The
appraisers shall have the powers described in the order appointing them, or in
any amendment to it. Dissenting Deposit Guaranty Shareholders are entitled to
the same discovery rights as parties to other civil litigation.
 
     Each dissenting Deposit Guaranty Shareholder made a party to the proceeding
is entitled to judgment (i) for the amount, if any, by which the Chancery Court
finds the fair value of such Deposit Guaranty Shareholder's shares, plus
interest, exceeds the amount paid by First American, or (ii) for the fair value,
plus accrued interest, of such Deposit Guaranty Shareholder's after-acquired
shares for which First American elected to withhold payment under MBCA Section
13.27.
 
ADDITIONAL INFORMATION
 
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     Pursuant to MBCA Section 13.31, the court in an appraisal proceeding shall
determine all costs of the proceeding including the reasonable compensation and
expense of appraisers appointed by the court. The court shall assess these costs
against First American, except that the court may assess costs against all or
some of the dissenting Deposit Guaranty Shareholders, in amounts the court finds
equitable, to the extent the court finds the dissenting Deposit Guaranty
Shareholders acted arbitrarily, vexatiously or not in good faith in demanding
payment.
 
     The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable: (i) against First
American and in favor of any and all dissenting Deposit Guaranty Shareholders if
the court finds that First American did not substantially comply with the
requirements of MBCA Sections 13.20 through 13.28, or (ii) against either First
American or a dissenting Deposit Guaranty Shareholder, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously or not in good faith with respect to the
rights provided by Article 13 of the MBCA.
 
     If the court finds that the services of counsel for any dissenting Deposit
Guaranty Shareholder were of substantial benefit to other dissenting Deposit
Guaranty Shareholders similarly situated and that the fees for those services
shall not be assessed against First American, the Court may award to those
counsel reasonable fees to be paid out of the amounts awarded the dissenting
Deposit Guaranty Shareholders who were benefited.
 
                                 LEGAL OPINION
 
     The legality of the First American Common Stock to be issued in connection
with the Merger will be passed upon by Mary Neil Price, General Counsel of First
American. As of the First American Record Date, Ms. Price beneficially owned
17,678 shares of First American Common Stock.
 
                                    EXPERTS
 
     The consolidated financial statements of First American and subsidiaries as
of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, have been incorporated by reference herein and
in the registration statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as an expert in accounting and auditing.
 
     With respect to the unaudited interim financial information for the periods
ended March 31, 1997 and 1996, June 30, 1997 and 1996, and September 30, 1997
and 1996, incorporated by reference herein, KPMG Peat Marwick LLP has reported
that it applied limited procedures in accordance with professional standards for
review of such information. However, KPMG Peat Marwick LLP's separate reports
included in First American's quarterly reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997, and September 30, 1997, and incorporated by
reference herein, state that KPMG Peat Marwick LLP did not audit and it does not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on KPMG Peat Marwick 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.
 
     The consolidated financial statements of Deposit Guaranty and subsidiaries
as of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, have been incorporated by reference herein and
in the Registration Statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, also incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP covering the December 31, 1994
consolidated financial statements refers to a change in the method of accounting
for debt and equity securities.
 
                                                          ADDITIONAL INFORMATION
 
                                       79
<PAGE>   92
 
     With respect to the unaudited interim financial information for the periods
ended March 31, 1997 and 1996, June 30, 1997 and 1996, and September 30, 1997
and 1996, incorporated by reference herein, KPMG Peat Marwick LLP has reported
that it applied limited procedures in accordance with professional standards for
a review of such information. However, KPMG Peat Marwick LLP's separate reports
included in Deposit Guaranty's quarterly reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997, and September 30, 1997, incorporated by
reference herein, state that KPMG Peat Marwick LLP did not audit and it does not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on KPMG Peat Marwick 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 of 1933 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 Act.
 
     Representatives of KPMG Peat Marwick LLP are expected to be present at the
First American Annual Meeting and at the Deposit Guaranty Special Meeting. In
each case, such representatives will have the opportunity to make a statement if
they desire to do so and are expected to be available to respond to appropriate
questions.
 
                             SHAREHOLDER PROPOSALS
 
     First American Shareholders may submit proposals to be considered for
shareholder action at the 1999 annual meeting if they do so in accordance with
applicable regulations of the Commission. Any such proposals must be submitted
to Mary Neil Price, General Counsel and Corporate Secretary of First American
Corporation, 721 First American Center, Nashville, Tennessee 37237-0721, and
must be received no later than November 19, 1998, in order to be considered for
inclusion in the First American 1999 proxy materials.
 
     Deposit Guaranty will hold a 1998 annual meeting only if the Merger is not
consummated. In the event that such an annual meeting is held, Deposit Guaranty
will inform its shareholders of the date upon which such meeting will be held
and the date by which proposals from Deposit Guaranty Shareholders must be
received in order to be considered for inclusion in the proxy materials for such
meeting. Deposit Guaranty Shareholders submitting proposals must meet the
requirements specified in Rule 14a-8 under the Exchange Act.
 
                                 OTHER MATTERS
 
     As of the date of this Joint Proxy Statement-Prospectus, the Deposit
Guaranty Board and the First American Board know of no matters that will be
presented for consideration at the Deposit Guaranty Special Meeting or the First
American Annual Meeting, respectively, other than as described in this Joint
Proxy Statement-Prospectus. If any other matters should properly come before
either meeting or any adjournments or postponements thereof and be voted upon,
the enclosed proxies will be deemed to confer discretionary authority on the
individuals named as proxies therein to vote the shares represented by such
proxies as to any such matters. The persons named as proxies intend to vote or
not to vote in accordance with the recommendation of the respective managements
of Deposit Guaranty and First American.
 
                      WHERE YOU CAN FIND MORE INFORMATION
 
     First American has filed with the Commission a Registration Statement under
the Securities Act that registers the distribution to Deposit Guaranty
Shareholders of the shares of First American Common Stock to be issued in
connection with the Merger (the "REGISTRATION STATEMENT"). The Registration
Statement, including the attached exhibits and schedules, contain additional
relevant information about First American and the First American Common Stock.
The rules and regulations of the Commission allow us to omit certain information
included in the Registration Statement from this Joint Proxy
Statement-Prospectus.
 
ADDITIONAL INFORMATION
 
                                       80
<PAGE>   93
 
     In addition, First American and Deposit Guaranty file reports, proxy
statements and other information with the Commission under the Exchange Act. You
may read and copy this information at the following locations of the SEC:
 
<TABLE>
<S>                           <C>                                    <C>
   Public Reference Room            New York Regional Office                Chicago Regional Office
   450 Fifth Street, N.W.             7 World Trade Center                      Citicorp Center
         Room 1024                         Suite 1300                       500 West Madison Street
   Washington, D.C. 2054            New York, New York 10048                      Suite 1400
                                                                         Chicago, Illinois 60661-2511
</TABLE>
 
     You may also obtain copies of this information by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates.
 
     The Commission also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like First
American and Deposit Guaranty, who file electronically with the Commission. The
address of that site is http://www.sec.gov.
 
     You can also inspect reports, proxy statements and other information about
First American at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006, and about Deposit Guaranty at
the offices of the NYSE, 20 Broad Street, New York, New York 10005.
 
     The Commission allows First American and Deposit Guaranty to "incorporate
by reference" information into this Joint Proxy Statement-Prospectus. This means
that the companies can disclose important information to you by referring you to
another document filed separately with the Commission. The information
incorporated by reference is considered to be a part of this Joint Proxy
Statement-Prospectus, except for any information that is superseded by other
information that is set forth directly in this document.
 
     This Joint Proxy Statement-Prospectus incorporates by reference the
documents set forth below that First American and Deposit Guaranty have
previously filed with the Commission. They contain important information about
the companies and their financial condition.
 
<TABLE>
<CAPTION>
FIRST AMERICAN SEC FILINGS                     PERIOD
- --------------------------                     ------
<S>                                            <C>
Annual Report on Form 10-K...................  Year ended December 31, 1996, as filed March
                                               28, 1997
Quarterly Reports on Form 10-Q...............  Quarters ended:
                                               - March 31, 1997, as filed May 13, 1997
                                               - June 30, 1997, as filed August 13, 1997
                                               - September 30, 1997, as filed November 13,
                                                 1997
The description of the First American Common
  Stock and the First American Rights
  contained in registration statements filed
  pursuant to Section 12 of the Exchange Act,
  including any amendment or reports filed
  for the purpose of updating that
  description
Current Reports on Form 8-K..................  Filed:
                                               - April 18, 1997
                                               - December 12, 1997
Annual Report on Form 11-K...................  Year ended December 31, 1996, as filed June
                                               25, 1997
</TABLE>
 
                                                          ADDITIONAL INFORMATION
 
                                       81
<PAGE>   94
 
<TABLE>
<CAPTION>
DEPOSIT GUARANTY SEC FILINGS                   PERIOD
- ----------------------------                   ------
<S>                                            <C>
Annual Report on Form 10-K...................  Year ended December 31, 1996, as filed March
                                               31, 1997
Quarterly Reports on Form 10-Q...............  Quarters ended:
                                               - March 31, 1997, as filed May 15, 1997
                                               - June 30, 1997, as filed August 14, 1997
                                               - September 30, 1997, as filed November 14,
                                                 1997
Registration Statement on Form 8-A...........  Filed November 27, 1996, setting forth a
                                               description of the Deposit Guaranty Common
                                               Stock (including any amendments or reports
                                               filed for the purpose of updating such
                                               description)
Current Reports on Form 8-K..................  Filed
                                               - December 15, 1997
                                               - February 5, 1998
Annual Report on Form 11-K...................  Year ended December 31, 1996, as filed June
                                               24, 1997
</TABLE>
 
     First American and Deposit Guaranty incorporate by reference additional
documents that either company may filed with the Commission between the date of
this Joint Proxy Statement-Prospectus and the dates of the First American Annual
Meeting and the Deposit Guaranty Special Meeting. These documents include
periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as proxy statements.
 
     First American has supplied all information contained or incorporated by
reference in this Joint Proxy Statement-Prospectus relating to First American,
as well as all pro forma financial information, and Deposit Guaranty has
supplied all such information relating to Deposit Guaranty.
 
     You can obtain any of the documents incorporated by reference in this
document through First American or Deposit Guaranty, as the case may be, or from
the Commission through the Commission's Internet world wide web site at the
address described above. Documents incorporated by reference are available from
the companies without charge, excluding any exhibits to those documents unless
the exhibit is specifically incorporated by reference as an exhibit in this
Joint Proxy Statement-Prospectus. You can obtain documents incorporated by
reference in this Joint Proxy Statement-Prospectus by requesting them in writing
or by telephone from the appropriate company at the following addresses:
 
<TABLE>
<CAPTION>
                FIRST AMERICAN                                DEPOSIT GUARANTY
                --------------                                ----------------
<S>                                            <C>
               Carroll Kimball                               Joe J. Powell III
        Director Of Investor Relations                     Senior Vice President
          First American Corporation                       Deposit Guaranty Corp.
            First American Center                         210 East Capitol Street
       Nashville, Tennessee 37237-0700                   Jackson, Mississippi 39201
           Telephone (615) 748-2455                       Telephone (601) 354-8564
</TABLE>
 
     If you would like to request documents from First American, please do so by
April 10, 1998 to receive them before the First American Annual Meeting. If you
would like to request documents from Deposit Guaranty, please do so by April 8,
1998 to receive them before the Deposit Guaranty Special Meeting. If you request
any incorporated documents from us, we will mail them to you by first class
mail, or another equally prompt means, within one business day after we receive
your request.
 
     You should rely only on the information contained in or incorporated by
reference in this Joint Proxy Statement-Prospectus in considering how to vote
your shares at the First American Annual Meeting or the Deposit Guaranty Special
Meeting, as the case may be. Neither First American nor Deposit Guaranty has
authorized anyone to provide you with information that is different from the
information in this document. This Joint Proxy Statement-Prospectus is dated
March   , 1998. You should not assume that the information contained in this
document is accurate as of any date other than that date. Neither the mailing of
this Joint Proxy Statement-Prospectus nor the issuance of First American Common
Stock in the Merger shall create any implication to the contrary.
 
ADDITIONAL INFORMATION
 
                                       82
<PAGE>   95
 
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
 
     This Joint Proxy Statement-Prospectus contains certain forward-looking
statements about the financial condition, results of operations and business of
each of our companies and about the combined company following the consummation
of the Merger. These statements concern the cost savings, revenue enhancements
and other advantages we expect to obtain from the Merger, the anticipated impact
of the Merger on First American's financial performance and earnings estimates
for the combined company. These statements appear in several sections of this
Joint Proxy Statement-Prospectus, including "SUMMARY," "THE MERGER -- Reasons of
First American for the Merger," "-- Reasons of Deposit Guaranty for the Merger,"
"-- Opinion of First American's Financial Advisor" and "-- Opinion of Deposit
Guaranty's Financial Advisor." Also, when we use any of the words "believes,"
"expects," "anticipates," "intends," "estimates," "plans" or similar
expressions, we are making forward-looking statements.
 
     Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions. The future results and shareholder
values of First American and Deposit Guaranty, and of the combined company, may
differ materially from those expressed in these forward-looking statements. Many
of the factors that could influence or determine actual results are
unpredictable and not within the control of First American or Deposit Guaranty.
In addition, neither First American nor Deposit Guaranty intend to, nor are they
obligated to, update these forward-looking statements after they distribute this
Joint Proxy Statement-Prospectus, even if new information, future events or
other circumstances have made them incorrect or misleading as of any future
date. For all of these statements, First American and Deposit Guaranty claim the
protection of the safe harbor for forward-looking statements provided in the
Private Securities Litigation Reform Act of 1995.
 
     Factors that may cause actual results to differ materially from those
contemplated by these forward-looking statements include, among others, the
following possibilities: (i) the cost savings we expect from the Merger might
not be fully realized or realized within the time frame we anticipate; (ii)
revenues following the Merger are lower than we expect; (iii) deposit attrition,
customer loss or revenue loss following the Merger is greater than we
anticipate; (iv) competitive pressure among financial services providers in the
mid-south region of the United States or in the financial services industry
generally increases significantly; (v) costs or difficulties related to
regulatory requirements involved in combining our business are greater than
expected; (vi) interest rates change in such a way as to reduce our margins;
(vii) general economic or monetary conditions, either nationally or regionally,
are less favorable than expected, resulting in a deterioration in credit quality
or a diminished demand for our services and products; (viii) changes in laws or
government rules, or the way in which courts interpret these laws or rules,
adversely affect our business; and (ix) business conditions, inflation or
securities markets undergo significant change.
 
                                                          ADDITIONAL INFORMATION
 
                                       83
<PAGE>   96
 
                                       84
<PAGE>   97
 
                       FINANCIAL AND BUSINESS INFORMATION
 
          UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
 
     The following Unaudited Pro Forma Combined Condensed Balance Sheet as of
September 30, 1997, combines the historical consolidated balance sheet of First
American and the historical consolidated statement of condition of Deposit
Guaranty as if the Merger had been effective on September 30, 1997, after giving
effect to certain adjustments described in the attached Notes to Unaudited Pro
Forma Combined Condensed Financial Information.
 
     The Unaudited Pro Forma Combined Condensed Income Statements for the nine
months ended September 30, 1997 and 1996 and the years ended December 31, 1996,
1995 and 1994 present the combined results of operations of First American and
Deposit Guaranty as if the Merger had been effective at the beginning of each
period presented therein, after giving effect to certain adjustments described
in the attached Notes to Unaudited Pro Forma Combined Condensed Financial
Information.
 
     The unaudited pro forma combined condensed financial information and
accompanying notes reflect the application of the "pooling of interests" method
of accounting for the Merger. Under this method of accounting, the recorded
assets, liabilities, shareholders' equity, income and expenses of First American
and Deposit Guaranty are combined and reflected at their historical amounts.
 
     While no assurances can be given, it is expected that the combined company
will achieve significant merger benefits in the form of operating cost savings
and revenue enhancements. The pro forma earnings, which do not reflect any
direct costs, potential savings or revenue enhancements expected to result from
the consolidation of operations of First American and Deposit Guaranty, are not
indicative of the results of future operations. No assurances can be given with
respect to the ultimate level of expense savings or revenue enhancements.
 
     The pro forma combined condensed financial information does not include the
effects prior to dates of acquisition of First American's acquisition of
Hartsville Bancshares, Inc. which was completed January 1, 1997, or Deposit
Guaranty's acquisitions of Jefferson Guaranty Bancorp of Metairie, Louisiana,
completed on January 3, 1997, First Capital Bancorp, Inc. of Monroe, Louisiana,
completed on March 31, 1997, NBC Financial Corporation of Baton Rouge,
Louisiana, completed June 30, 1997 and CitiSave Financial Corporation of Baton
Rouge Louisiana, completed July 31, 1997, or Deposit Guaranty's acquisition of
Victory Bancshares, which is expected to be completed in early 1998. These
acquisitions are not significant to the historical financial position or results
of operations of First American or Deposit Guaranty, as the case may be, either
individually or in the aggregate.
 
                                              FINANCIAL AND BUSINESS INFORMATION
 
                                       85
<PAGE>   98
 
                   PRO FORMA COMBINED CONDENSED BALANCE SHEET
                                  (UNAUDITED)
 
     The following unaudited pro forma combined condensed balance sheet combines
the consolidated historical balance sheets of First American and Deposit
Guaranty, assuming the companies had been combined as of September 30, 1997, on
a "pooling of interests" accounting basis.
 
<TABLE>
<CAPTION>
                                                                 AT SEPTEMBER 30, 1997
                                                 -----------------------------------------------------
                                                    FIRST       DEPOSIT      PROFORMA
                                                  AMERICAN      GUARANTY    ADJUSTMENTS     COMBINED
                                                 -----------   ----------   -----------    -----------
                                                                (DOLLARS IN THOUSANDS)
<S>                                              <C>           <C>          <C>            <C>
Assets
  Cash and due from other banks................  $   508,953   $  425,158    $     --      $   934,111
  Time deposits with other banks...............        9,557        3,629          --           13,186
  Securities:
     Held to maturity..........................      653,277      178,253          --          831,530
     Available for sale........................    1,737,776    1,347,767          --        3,085,543
                                                 -----------   ----------    --------      -----------
          Total securities.....................    2,391,053    1,526,020          --        3,917,073
                                                 -----------   ----------    --------      -----------
  Federal funds sold and securities purchased
     under agreements to resell................       58,291       52,060          --          110,351
  Trading account securities...................       71,348        1,211          --           72,559
  Total loans..................................    7,152,252    4,355,619          --       11,507,871
  Unearned discount and net deferred loan
     fees......................................          527        2,188          --            2,715
                                                 -----------   ----------    --------      -----------
     Loans, net of unearned discount and net
       deferred loan fees......................    7,151,725    4,353,431          --       11,505,156
  Allowance for loan losses....................      115,297       65,065          --          180,362
                                                 -----------   ----------    --------      -----------
          Total net loans......................    7,036,428    4,288,366          --       11,324,794
  Premises and equipment, net..................      189,004      169,870          --          358,874
  Foreclosed properties........................        3,700        4,400          --            8,100
  Other assets.................................      293,648      368,718      31,000(3)       693,366
                                                 -----------   ----------    --------      -----------
          Total assets.........................  $10,561,982   $6,839,432    $ 31,000      $17,432,414
                                                 ===========   ==========    ========      ===========
Liabilities
  Deposits.....................................  $ 7,701,405   $5,283,351    $     --       12,984,756
  Short-term borrowings........................    1,485,278      614,569          --        2,099,847
  Long-term debt...............................      210,056      176,444          --          386,500
  Other liabilities............................      275,973      140,982     102,000(3)       518,955
                                                 -----------   ----------    --------      -----------
          Total liabilities....................    9,672,712    6,215,346     102,000       15,990,058
                                                 -----------   ----------    --------      -----------
Shareholders' equity
  Common stock.................................      145,948       22,345      98,380(2)       266,673
  Capital surplus..............................      116,114      156,716     (98,380)(2)      174,450
  Retained earnings............................      643,745      441,079     (71,000)(3)    1,013,824
  Other........................................      (14,869)          --          --          (14,869)
                                                 -----------   ----------    --------      -----------
          Realized shareholders' equity........      890,938      620,140     (71,000)       1,440,078
  Net unrealized gains (losses) on securities
     available for sale, net of tax............       (1,668)       3,946          --            2,278
                                                 -----------   ----------    --------      -----------
          Total shareholders' equity...........      889,270      624,086     (71,000)       1,442,356
                                                 -----------   ----------    --------      -----------
          Total liabilities and shareholders'
            equity.............................  $10,561,982   $6,839,432    $ 31,000      $17,432,414
                                                 ===========   ==========    ========      ===========
</TABLE>
 
  See accompanying Notes to Pro Forma Combined Condensed Financial Statements.
 
FINANCIAL AND BUSINESS INFORMATION
 
                                       86
<PAGE>   99
 
                PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
                                  (UNAUDITED)
 
     The following unaudited pro forma combined condensed statements of income
presents the combined statements of income of First American and Deposit
Guaranty, assuming the companies had been combined for each period presented on
a pooling of interests accounting basis.
 
<TABLE>
<CAPTION>
                                                                      FOR THE NINE MONTHS ENDED
                                                                          SEPTEMBER 30, 1997
                                                             --------------------------------------------
                                                              FIRST     DEPOSIT     PROFORMA
                                                             AMERICAN   GUARANTY   ADJUSTMENTS   COMBINED
                                                             --------   --------   -----------   --------
                                                               (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                                          <C>        <C>        <C>           <C>
Interest income
  Interest and fees on loans...............................  $430,797   $278,344    $     --     $709,141
  Interest and dividends on securities.....................   118,079     82,512          --      200,591
  Other interest income....................................     6,084      2,051          --        8,135
                                                             --------   --------    --------     --------
         Total interest income.............................   554,960    362,907          --      917,867
                                                             --------   --------    --------     --------
Interest expense
  Interest on deposits.....................................   214,930    123,073          --      338,003
  Interest on short-term borrowings........................    42,817     21,387          --       64,204
  Interest on long-term debt...............................    14,834      5,272          --       20,106
                                                             --------   --------    --------     --------
         Total interest expense............................   272,581    149,732          --      422,313
Net interest income........................................   282,379    213,175          --      495,554
Provision for loan losses..................................        --      5,625          --        5,625
                                                             --------   --------    --------     --------
  Net interest income after provision for loan losses......   282,379    207,550          --      489,929
                                                             --------   --------    --------     --------
Noninterest income.........................................   187,433     96,005          --      283,438
  Net realized gain (loss) on sales and writedowns of
    securities.............................................     1,407      1,464          --        2,871
                                                             --------   --------    --------     --------
         Total noninterest income..........................   188,840     97,469          --      286,309
                                                             --------   --------    --------     --------
Noninterest expense........................................   298,509    202,377          --      500,886
                                                             --------   --------    --------     --------
Income from continuing operations before income tax
  expense..................................................   172,710    102,642          --      275,352
                                                             --------   --------    --------     --------
Income tax expense.........................................    66,106     34,837          --      100,943
                                                             --------   --------    --------     --------
Net income.................................................  $106,604   $ 67,805          --     $174,409
                                                             ========   ========    ========     ========
Per common share:
  Net income(4)............................................  $   1.81   $   1.65          --     $   1.63
Weighted-average common shares outstanding.................    58,776     41,171          --      106,946
</TABLE>
 
  See accompanying Notes to Pro Forma Combined Condensed Financial Statements.
 
                                              FINANCIAL AND BUSINESS INFORMATION
 
                                       87
<PAGE>   100
 
                PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
 
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                FOR THE NINE MONTHS ENDED
                                                                    SEPTEMBER 30, 1996
                                                       --------------------------------------------
                                                        FIRST     DEPOSIT     PROFORMA
                                                       AMERICAN   GUARANTY   ADJUSTMENTS   COMBINED
                                                       --------   --------   -----------   --------
                                                         (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                                    <C>        <C>        <C>           <C>
Interest income
  Interest and fees on loans.........................  $406,537   $241,682    $     --     $648,219
  Interest and dividends on securities...............   111,203     70,194          --      181,397
  Other interest income..............................     8,215      8,469          --       16,684
                                                       --------   --------    --------     --------
          Total interest income......................   525,955    320,345          --      846,300
                                                       --------   --------    --------     --------
Interest expense
  Interest on deposits...............................   210,614    112,722          --      323,336
  Interest on short-term borrowings..................    37,829     21,146          --       58,975
  Interest on long-term debt.........................    19,176      2,580          --       21,756
                                                       --------   --------    --------     --------
          Total interest expense.....................   267,619    136,448          --      404,067
                                                       --------   --------    --------     --------
  Net interest income................................   258,336    183,897          --      442,233
Provision for loan losses............................        --      4,005          --        4,005
                                                       --------   --------    --------     --------
  Net interest income after provision for loan
     losses..........................................   258,336    179,892          --      438,228
                                                       --------   --------    --------     --------
Noninterest income...................................   119,662     86,853          --      206,515
  Net realized gain (loss) on sales and writedowns of
     securities......................................     1,522         79          --        1,601
                                                       --------   --------    --------     --------
          Total noninterest income...................   121,184     86,932          --      208,116
                                                       --------   --------    --------     --------
Noninterest expense..................................   237,286    171,727          --      409,013
                                                       --------   --------    --------     --------
Income before income tax expense.....................   142,234     95,097          --      237,331
Income tax expense...................................    54,126     30,972          --       85,098
                                                       --------   --------    --------     --------
Net income...........................................  $ 88,108   $ 64,125    $     --     $152,233
                                                       --------   --------    --------     --------
Per common share:
  Net income(4)......................................  $   1.49   $   1.66    $     --     $   1.46
Weighted-average common shares outstanding...........    59,178     38,620          --      104,363
</TABLE>
 
  See accompanying Notes to Pro Forma Combined Condensed Financial Statements.

FINANCIAL AND BUSINESS INFORMATION
 
                                       88
<PAGE>   101
 
                PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                          FOR THE YEAR ENDED DECEMBER 31, 1996
                                                     ----------------------------------------------
                                                      FIRST     DEPOSIT     PROFORMA
                                                     AMERICAN   GUARANTY   ADJUSTMENTS    COMBINED
                                                     --------   --------   -----------   ----------
                                                        (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                                  <C>        <C>        <C>           <C>
Interest income
  Interest and fees on loans.......................  $546,803   $327,065     $    --     $  873,868
  Interest and dividends on securities.............   149,426     94,427          --        243,853
  Other interest income............................    10,820     10,730          --         21,550
                                                     --------   --------     -------     ----------
          Total interest income....................   707,049    432,222          --      1,139,271
                                                     --------   --------     -------     ----------
Interest expense
  Interest on deposits.............................   282,741    151,375          --        434,116
  Interest on short-term borrowings................    49,617     27,222          --         76,839
  Interest on long-term debt.......................    24,993      4,091          --         29,084
                                                     --------   --------     -------     ----------
          Total interest expense...................   357,351    182,688          --        540,039
                                                     --------   --------     -------     ----------
Net interest income................................   349,698    249,534          --        599,232
Provision for loan losses..........................        --      5,340          --          5,340
                                                     --------   --------     -------     ----------
  Net interest income after provision for loan
     losses........................................   349,698    244,194          --        593,892
                                                     --------   --------     -------     ----------
Noninterest income.................................   178,066    117,233          --        295,299
  Net realized gain (loss) on sales and writedowns
     of securities.................................     2,467         12          --          2,479
                                                     --------   --------     -------     ----------
          Total noninterest income.................   180,533    117,245          --        297,778
                                                     --------   --------     -------     ----------
Noninterest expense................................   334,455    237,208          --        571,663
                                                     --------   --------     -------     ----------
Income before income tax expense...................   195,776    124,231          --        320,007
                                                     --------   --------     -------     ----------
Income tax expense.................................    74,204     40,621          --        114,825
                                                     --------   --------     -------     ----------
Net income.........................................  $121,572   $ 83,610     $    --     $  205,182
                                                     ========   ========     =======     ==========
Per common share:
  Net income(4)....................................  $   2.05   $   2.16     $    --     $     1.96
Weighted-average common shares outstanding.........    59,184     38,760          --        104,533
</TABLE>
 
  See accompanying Notes to Pro Forma Combined Condensed Financial Statements.

                                              FINANCIAL AND BUSINESS INFORMATION
 
                                       89
<PAGE>   102
 
                PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                          FOR THE YEAR ENDED DECEMBER 31, 1995
                                                     ----------------------------------------------
                                                      FIRST     DEPOSIT     PROFORMA
                                                     AMERICAN   GUARANTY   ADJUSTMENTS    COMBINED
                                                     --------   --------   -----------   ----------
                                                        (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                                  <C>        <C>        <C>           <C>
Interest income
  Interest and fees on loans.......................  $469,449   $287,742    $     --     $  757,191
  Interest and dividends on securities.............   143,299    107,138          --        250,437
  Other interest income............................     6,951      7,824          --         14,775
                                                     --------   --------    --------     ----------
          Total interest income....................   619,699    402,704          --      1,022,403
                                                     --------   --------    --------     ----------
Interest expense
  Interest on deposits.............................   238,667    143,640          --        382,307
  Interest on short-term borrowings................    48,751     29,792          --         78,543
  Interest on long-term debt.......................    19,971         --          --         19,971
                                                     --------   --------    --------     ----------
     Total interest expense........................   307,389    173,432          --        480,821
                                                     --------   --------    --------     ----------
Net interest income................................   312,310    229,272          --        541,582
Provision for loan losses..........................        83      2,160          --          2,243
                                                     --------   --------    --------     ----------
  Net interest income after provision for loan
     losses........................................   312,227    227,112          --        539,339
                                                     --------   --------    --------     ----------
Noninterest income.................................   107,750     91,070          --        198,820
  Net realized gain on sales and write-downs of
     securities....................................       737        919          --          1,656
                                                     --------   --------    --------     ----------
          Total noninterest income.................   108,487     91,989          --        200,476
                                                     --------   --------    --------     ----------
Noninterest expense................................   252,448    211,452          --        463,900
                                                     --------   --------    --------     ----------
Income before income tax expense...................   168,266    107,649          --        275,915
Income tax expense.................................    65,186     35,029          --        100,215
                                                     --------   --------    --------     ----------
Net income.........................................  $103,080   $ 72,620    $     --     $  175,700
                                                     ========   ========    ========     ==========
Per common share:
  Net income(4)....................................  $   1.82   $   1.89    $     --     $     1.73
Weighted-average common shares outstanding.........    56,630     38,431          --        101,594
</TABLE>
 
  See accompanying Notes to Pro Forma Combined Condensed Financial Statements.

FINANCIAL AND BUSINESS INFORMATION
 
                                       90
<PAGE>   103
 
                PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                         FOR THE YEAR ENDED DECEMBER 31, 1994
                                                     --------------------------------------------
                                                      FIRST     DEPOSIT     PROFORMA
                                                     AMERICAN   GUARANTY   ADJUSTMENTS   COMBINED
                                                     --------   --------   -----------   --------
                                                       (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S>                                                  <C>        <C>        <C>           <C>
Interest income
  Interest and fees on loans.......................  $373,163   $204,434    $     --     $577,597
  Interest and dividends on securities.............   129,510     86,285          --      215,795
  Other interest income............................     4,363     16,553          --       20,916
                                                     --------   --------    --------     --------
          Total interest income....................   507,036    307,272          --      814,308
                                                     --------   --------    --------     --------
Interest expense
  Interest on deposits.............................   173,205    109,316          --      282,521
  Interest on short-term borrowings................    28,529     16,565          --       45,094
  Interest on long-term debt.......................     7,060         --          --        7,060
                                                     --------   --------    --------     --------
          Total interest expense...................   208,794    125,881          --      334,675
                                                     --------   --------    --------     --------
Net interest income................................   298,242    181,391          --      479,633
Provision for loan losses..........................    (9,919)    (4,750)         --      (14,669)
                                                     --------   --------    --------     --------
  Net interest income after provision for loan
     losses........................................   308,161    186,141          --      494,302
                                                     --------   --------    --------     --------
Noninterest income.................................    82,881     79,878          --      162,759
  Net realized gain on sales and writedowns of
     securities....................................     2,834     13,621          --       16,455
                                                     --------   --------    --------     --------
          Total noninterest income.................    85,715     93,499          --      179,214
                                                     --------   --------    --------     --------
Noninterest expense................................   239,270    180,047          --      419,317
                                                     --------   --------    --------     --------
Income before income tax expense...................   154,606     99,593          --      254,199
Income tax expense.................................    57,404     32,463          --       89,867
                                                     --------   --------    --------     --------
Net income.........................................  $ 97,202   $ 67,130    $     --     $164,332
                                                     ========   ========    ========     ========
Per common share:
  Net income(4)....................................  $   1.70   $   1.90    $     --     $   1.67
Weighted-average common shares outstanding.........    57,340     35,336          --       98,683
</TABLE>
 
  See accompanying Notes to Pro Forma Combined Condensed Financial Statements.
 
                                              FINANCIAL AND BUSINESS INFORMATION
 
                                       91
<PAGE>   104
 
          NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
 
(1) The unaudited pro forma combined condensed information presented herein is
     not necessarily indicative of the results of operations or the combined
     financial position that would have resulted had the acquisitions been
     consummated at the beginning of the applicable periods presented, nor is it
     necessarily indicative of the results of operations in future periods or
     the future financial position of the combined entities. See "Cautionary
     Statements Concerning Forward Looking Information."
 
(2) The Deposit Guaranty acquisition will be accounted for on a "pooling of
     interests" accounting basis, and accordingly the related pro forma
     adjustments herein reflect, where applicable, an Exchange Ratio of 1.17
     shares of First American Common Stock for each of the 40,814,000 shares of
     Deposit Guaranty Common Stock which were outstanding at September 30, 1997.
 
     As a result, information was adjusted for the acquisitions by the (i)
     addition of 48,617,000 shares of First American Common Stock amounting to
     $121,542,000; (ii) elimination of 40,814,000 shares of Deposit Guaranty
     Common Stock; and (iii) recording the difference of $98,380,000 as a
     decrease to capital surplus.
 
     As of September 30, 1997, First American and Deposit Guaranty had
     15,690,612 and 1,498,665 shares of common stock reserved for issuance,
     primarily for stock option plans, respectively, which are not included in
     the unaudited pro forma financial information presented herein.
 
(3) In connection with the Merger, the companies expect to incur certain
     restructuring and merger-related costs, including investment banking,
     legal, accounting, and other related transaction costs and fees.
     Additionally, the companies expect to incur other restructuring and
     merger-related costs associated with the integration of the separate
     companies and institution of efficiencies anticipated as a result of the
     Merger. Based on information currently available, the total amount of
     restructuring and merger related charges to be recognized in connection
     with the Merger is estimated to be approximately $71 million, after tax.
     The following is a breakdown of the estimated restructuring and merger
     related costs:
 
<TABLE>
<CAPTION>
                                                              (MILLIONS)
                                                              ----------
<S>                                                           <C>
Severance...................................................     $ 27
Systems and software writeoffs..............................       13
Facilities contracts........................................       18
Charitable foundation.......................................       15
Other.......................................................       29
                                                                 ----
Estimated restructuring and merger related costs............      102
Income tax effect...........................................      (31)
                                                                 ----
          Total.............................................     $ 71
                                                                 ====
</TABLE>
 
     These restructuring and merger related costs will be charged to expense in
     the period in which the Merger is consummated, or in subsequent periods
     when incurred. Since the Merger has not yet been consummated, the
     restructuring and merger related expenses can only be estimated at this
     time, and are subject to revision as further information becomes available.
 
(4) Income per share data has been computed in accordance with APB Opinion No.
     15 based on the combined historical net income applicable to the First
     American Shareholders and Deposit Guaranty Shareholders using the
     historical weighted average shares outstanding of First American Common
     Stock and the weighted average outstanding shares of Deposit Guaranty,
     adjusted to equivalent shares of First American Common Stock, as of the
     earliest applicable period presented.
 
(5) Certain insignificant reclassifications have been included herein to conform
     statement presentations. Transactions conducted in the ordinary course of
     business between First American and Deposit Guaranty are immaterial and,
     accordingly, have not been eliminated.
 
FINANCIAL AND BUSINESS INFORMATION
 
                                       92
<PAGE>   105
 
(6) First American expects to realize significant revenue enhancements and cost
     savings from the Deposit Guaranty acquisition. The pro forma financial
     information, which does not reflect any revenue enhancements or potential
     savings from the consolidation of operations of First American and Deposit
     Guaranty, is not indicative of future operations. No assurance can be given
     with respect to the ultimate level of revenue enhancements or cost savings.
     As indicated by the foregoing pro forma combined condensed financial
     information and based solely on the foregoing assumptions, the Merger would
     have diluted First American's historical net income per common share for
     the nine months ended September 30, 1997, and the year ended December 31,
     1996 by 11.04% and 4.6%, respectively. See "ADDITIONAL
     INFORMATION -- Cautionary Statement Concerning Forward-Looking
     Information."
 
                                              FINANCIAL AND BUSINESS INFORMATION
 
                                       93
<PAGE>   106
 
                                       94
<PAGE>   107
 
                      AMENDMENT TO FIRST AMERICAN CHARTER
 
                AMENDMENT TO FIRST AMERICAN CHARTER TO INCREASE
           NUMBER OF AUTHORIZED SHARES OF FIRST AMERICAN COMMON STOCK
 
     The First American Charter currently authorizes the issuance of a total of
100 million shares of First American Common Stock. Of such authorized shares,
57,713,411 shares were outstanding as of March 6, 1998 and a further 15,300,000
shares are reserved for issuance pursuant to First American's employee and
director benefit plans, the Charter Federal Agreement and the First American
DRIP. Consummation of the Merger is expected to require the issuance, or the
reservation for future issuance, of approximately an additional 51 million
shares of First American Common Stock. Giving effect to the foregoing,
27,000,000 shares of First American Common Stock are available for issuance as
of March 6, 1998. First American does not presently have a number of authorized
shares of First American Common Stock not otherwise reserved for issuance
sufficient to consummate the Merger. Accordingly, the First American Board has
proposed the Charter Amendment, pursuant to which the First American Charter
would be amended to increase the number of shares of First American Common Stock
authorized for issuance thereunder from 100 million to 200 million. Approval of
the Charter Amendment by First American Shareholders, together with approval by
such First American Shareholders of the Merger Agreement, is a condition to the
parties' obligations to consummate the Merger. See "THE MERGER -- Conditions to
the Merger."
 
     The additional shares of First American Common Stock authorized pursuant to
the Charter Amendment (the "ADDITIONAL SHARES") and not otherwise reserved could
be issued at the discretion of the First American Board without further action
by First American Shareholders, except as required by applicable law, regulation
or rule (including applicable rules of Nasdaq or other securities exchange or
market on which the shares of First American Common Stock may then be listed or
authorized for quotation), in connection with acquisitions, efforts to raise
additional capital for First American and for other corporate purposes. The
issuance of shares of First American Common Stock, including the Additional
Shares, may, in certain situations, dilute the present equity ownership position
of current First American Shareholders. Shares of First American Common Stock
will be issued only upon a determination by the First American Board that such
proposed issuance is in the best interests of First American.
 
     As of the date of this Joint Proxy Statement-Prospectus, First American has
no plans or commitments that would involve the issuance of the Additional
Shares, other than pursuant to the Merger Agreement and the Merger. The increase
in the authorized shares of First American Common Stock will allow the First
American Board to consider and, if in the best interests of First American
Shareholders, take advantage of other merger or acquisition possibilities. As
part of its business strategy, First American continually considers potential
strategic business combinations, and it is the policy of First American not to
comment on such matters publicly until a definitive agreement with respect
thereto has been reached. In addition, the discretion vested in the First
American Board to authorize the issuance and sale of authorized but unissued
shares of First American Common Stock could, under some circumstances, be used
to discourage certain potential business combinations that some First American
Shareholders may believe to be in the best interests of First American
Shareholders and make more difficult management changes that may occur if a
potential business combination were successful, although First American has no
current intention of issuing shares of First American Common Stock for this
purpose.
 
     If the Charter Amendment is approved, Section (A) of Article VI of the
First American Charter would read in its entirety as follows:
 
          (A) Authorized Shares. The maximum number of shares which the
     Corporation shall have authority to issue is TWO HUNDRED MILLION
     (200,000,000) shares of common stock with a par value of TWO dollars and
     FIFTY cents ($2.50) per share and TWO MILLION FIVE HUNDRED THOUSAND
     (2,500,000) shares of preferred stock without par value.
 
     THE FIRST AMERICAN BOARD RECOMMENDS THAT FIRST AMERICAN SHAREHOLDERS VOTE
"FOR" THE CHARTER AMENDMENT. The Charter Amendment will be approved if the
number of votes cast at the First American Annual Meeting favoring such approval
exceeds the votes cast opposing such approval, provided a quorum is present
thereat.
                                             AMENDMENT TO FIRST AMERICAN CHARTER
 
                                       95
<PAGE>   108
 
                                       96
<PAGE>   109
 
            OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                      ELECTION OF FIRST AMERICAN DIRECTORS
 
     The First American By-Laws provide that the First American Board shall
consist of not less than nine nor more than 27 directors, and shall be divided
into three classes, each class to be as nearly equal in number as practicable.
As permitted in the First American By-Laws, on January 15, 1998, the First
American Board fixed the number of directors at eighteen. The terms for eight
directors expire at the First American Annual Meeting. The terms for five
directors expire at the 1999 annual meeting. The terms for six directors expire
at the 2000 annual meeting. In each case, directors will serve until their
respective successors are duly elected and qualified. At each annual meeting,
one class of directors will be elected for a three-year term.
 
     At the First American Annual Meeting, one director will be elected to hold
office until the 1999 annual meeting, and six directors will be elected to hold
office until the 2001 annual meeting. As a result, the division of First
American's directors into three classes will be six directors, six directors and
six directors with terms expiring at the 1999, 2000 and 2001 annual meetings,
respectively. The nominees for the class of 2001 are REGINALD D. DICKSON, GENE
C. KOONCE, DALE W. POLLEY, JAMES F. SMITH, JR., CAL TURNER, JR. and TED H.
WELCH; and the nominee for the class of 1999 is DAVID K. WILSON.
 
     Unless a proxy specifies otherwise, the persons named in the proxy will
vote the shares covered thereby FOR the nominees as listed above. Each nominee
has consented to be a candidate and to serve, if elected. While the First
American Board has no reason to believe that any nominee will be unavailable, if
such an event should occur, it is intended that such shares of First American
Common Stock will be voted for substitute nominee(s) as selected by the First
American Board.
 
     All of First American's directors also serve as directors of FANB,
Nashville, Tennessee.
 
                       NOMINEES FOR ELECTION TO THE BOARD
 
<TABLE>
<S>                                                             <C>
REGINALD D. DICKSON                                             Age -- 51
Director, Chairman of the Community Affairs Committee           Director since 1981
and Member of the Executive and Human Resources Committees      Term to expire 2001
</TABLE>
 
     Mr. Dickson is President Emeritus of INROADS, Inc., a non-profit minority
career development organization and Chairman of Buford, Dickson, Harper &
Sparrow, Inc., an investment, research and counseling firm in St. Louis,
Missouri. From 1983 through 1992, Mr. Dickson served as President and Chief
Executive Officer of INROADS, Inc. Mr. Dickson also serves as a director of
Dollar General Corporation.
 
<TABLE>
<S>                                                             <C>
GENE C. KOONCE                                                  Age -- 66
Director and Member of the Audit                                Director since 1981
Committee and the Committee on Directors                        Term to expire 2001
</TABLE>
 
     Mr. Koonce is Vice Chairman of Atmos Energy Corporation, a natural and
propane gas distribution company. Until its acquisition on July 31, 1997, Mr.
Koonce served as Chairman, President, Chief Executive Officer and a member of
the Board of Directors of United Cities Gas Company, which now operates as a
Division of Atmos Energy Corporation. Mr. Koonce also serves as a director of
Atmos Energy Corporation.
 
                         OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       97
<PAGE>   110
 
<TABLE>
<S>                                                             <C>
DALE W. POLLEY                                                  Age -- 48
Director, President,                                            Director since 1991
President of FANB                                               Term to expire 2001
and Member of the Executive and Community Affairs Committees
</TABLE>
 
     Since August 1997, Mr. Polley has served as President and Principal
Financial Officer of First American and FANB. From January 1994 until August
1997, Mr. Polley served as Vice Chairman of First American and as President of
FANB. From December 1991 to January 1994, Mr. Polley served as Vice Chairman and
Chief Administrative Officer of First American and FANB. From November 1992
through 1994, he also served as Principal Financial Officer of First American
and FANB. Mr. Polley also serves as a Director of the Federal Reserve Bank of
Atlanta -- Nashville branch.
 
<TABLE>
<S>                                                             <C>
JAMES F. SMITH, JR.                                             Age -- 68
Director, Chairman of the Development and Executive             Director since 1983
Committees and Member of the Asset Policy Committee             Term to expire 2001
</TABLE>
 
     From 1991 through December 1994, Mr. Smith served as Chairman of the Board
of First American and FANB. Mr. Smith also serves as a director of Pilot
Corporation and Plasti-Line, Inc.
 
<TABLE>
<S>                                                             <C>
CAL TURNER, JR.                                                 Age -- 58
Director and Member of the Human Resources                      Director since 1989
and Community Affairs Committees                                Term to expire 2001
</TABLE>
 
     Since 1988, Mr. Turner has held the position of Chairman and Chief
Executive Officer of Dollar General Corporation, a chain of discount retail
stores. Mr. Turner also serves as a director of Thomas Nelson Publishers, Inc.
and Shoney's, Inc.
 
<TABLE>
<S>                                                             <C>
TED H. WELCH                                                    Age -- 64
Director and Member of the Asset                                Director since 1994
Policy and Audit Committees                                     Term to expire 2001
</TABLE>
 
     Mr. Welch has been a self-employed real estate investor and operator since
1975. Since 1993, he has served as President and Chief Executive Officer of
Eagle Communications, Inc., a publisher of periodicals. Mr. Welch also serves as
a director of National Health Investors, Inc., Southeast Service Corporation,
American Constructors, Inc., and Logan's Roadhouse Restaurant, Inc.
 
<TABLE>
<S>                                                             <C>
DAVID K. WILSON                                                 Age -- 78
Director, Member of the Executive and Human Resources           Director since 1974
Committees and the Committee on Directors                       Term to expire 1999
</TABLE>
 
     Mr. Wilson is Chairman of Cherokee Equity Corporation, a holding company.
He also serves as a member of the Vanderbilt University Board of Trust.
 
                    CONTINUING DIRECTORS UNTIL 1999 MEETING
 
<TABLE>
<S>                                                             <C>
EARNEST W. DEAVENPORT, JR.                                      Age -- 59
Director, Chairman of the Human Resources Committee and
  Member                                                        Director since 1989
of the Executive and Development Committees                     Term to expire 1999
</TABLE>
 
     Mr. Deavenport is Chairman of the Board and Chief Executive Officer of
Eastman Chemical Company. Mr. Deavenport also serves as a director for Milliken
and Company, as Chairman of the National Association of Manufacturers, as a
director of the Chemical Manufacturers Association, as a member of the Policy
Committee of the Business Roundtable, and as a trustee of the Malcolm Baldridge
National Quality Award Foundation.
 
OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       98
<PAGE>   111
 
<TABLE>
<S>                                                             <C>
MARTHA R. INGRAM                                                Age -- 62
Director and Member of the Audit and Community Affairs          Director since 1993
Committees and the Committee on Directors                       Term to expire 1999
</TABLE>
 
     Since June 1995, Mrs. Ingram has served as Chairman of Ingram Industries
Inc., a diversified transportation and energy company, a distributor of consumer
products, and a non-standard automobile insurance company. From 1981 to June
1995, Mrs. Ingram served as the Director of Public Affairs of Ingram Industries
Inc. and has served as a member of its Board of Directors since 1981. Mrs.
Ingram also serves as a member of the Board of Directors of Baxter
International, Inc., Weyerhaeuser Company, and Ingram Micro Inc.
 
<TABLE>
<S>                                                             <C>
JAMES R. MARTIN                                                 Age -- 54
Director and Member of the Community Affairs                    Director since 1989
and Audit Committees                                            Term to expire 1999
</TABLE>
 
     Mr. Martin is the Chairman of the Board and Chief Executive Officer of
Plasti-Line, Inc., a Knoxville-based manufacturer of indoor and outdoor sign
products and point of purchase marketing products for corporate identification
programs.
 
<TABLE>
<S>                                                             <C>
ROSCOE R. ROBINSON                                              Age -- 67
Director and Member of the Development and Human                Director since 1992
Resources Committees and the Committee on Directors             Term to expire 1999
</TABLE>
 
     Dr. Robinson is a Professor of Medicine at Vanderbilt University Medical
Center in Nashville, Tennessee and the former Vice Chancellor for Health Affairs
of Vanderbilt University, a position he held from 1981 until his retirement in
1997. Dr. Robinson also serves as a director of ClinTrials Research, Inc. and as
a trustee of Duke University.
 
<TABLE>
<S>                                                             <C>
WILLIAM S. WIRE, II                                             Age -- 66
Director, Member of the Community Affairs,                      Director since 1989
Human Resources and Asset Policy Committees                     Term to expire 1999
and the Committee on Directors
</TABLE>
 
     Mr. Wire is the former Chairman and Chief Executive Officer of Genesco,
Inc., a manufacturer and retailer of footwear and related products, and a
manufacturer of tailored clothing. He served as Chairman of Genesco, Inc. from
1986 until his retirement in 1994. From 1986 to February 1993, he also served as
Chief Executive Officer of Genesco, Inc. Mr. Wire serves as a director of
Genesco, Inc., Dollar General Corporation, and American Endoscopy Services, Inc.
 
                    CONTINUING DIRECTORS UNTIL 2000 MEETING
 
<TABLE>
<S>                                                             <C>
DENNIS C. BOTTORFF                                              Age -- 53
Director, Chairman and Chief Executive Officer of the
  Company                                                       Director since 1991
and First American National Bank, Member of the                 Term to expire 2000
Executive, Asset Policy and Development Committees
</TABLE>
 
     Since August 1997, Mr. Bottorff has served as Chairman and Chief Executive
Officer of First American and FANB. From January 1995 until August 1997, he also
served as President of First American. Throughout 1994, he served as President
and Chief Executive Officer of First American and as Chief Executive Officer of
FANB. From November 1991 through January 1994, Mr. Bottorff also served as
President of FANB. Mr. Bottorff also serves as a director of Ingram Industries,
Inc., as a member of the Vanderbilt University Board of Trust and as a director
of IFC Holdings, Inc. and The SSI Group, Inc., both of which are affiliates of
First American.
 
                         OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       99
<PAGE>   112
 
<TABLE>
<S>                                                             <C>
JAMES A. HASLAM, II                                             Age -- 67
Director, Chairman of the Committee on Directors                Director since 1983
and Member of the Executive and Asset Policy Committees         Term to expire 2000
</TABLE>
 
     Since July 1995, Mr. Haslam has served as Chairman of Pilot Corporation, a
retail operator of travel centers and convenience stores/gasoline stations. Mr.
Haslam served as President and Chief Executive Officer of Pilot Corporation from
its founding in November 1958 to July 1995. He also serves as a member of the
University of Tennessee Board of Trustees.
 
     Robert A. McCabe, Jr., a director and executive officer of the Company, is
married to the daughter of Mrs. Haslam.
 
<TABLE>
<S>                                                             <C>
WALTER G. KNESTRICK                                             Age -- 60
Director, Chairman of the Asset Policy Committee                Director since 1990
and Member of the Executive and Development Committees          Term to expire 2000
</TABLE>
 
     Mr. Knestrick founded Walter Knestrick Contractor, Inc., a commercial and
industrial building contractor, and has served as Chairman of its Board since
1969.
 
<TABLE>
<S>                                                             <C>
ROBERT A. MCCABE, JR.                                           Age -- 47
Director, Vice Chairman, and President                          Director since 1994
First American Enterprises, Inc.,                               Term to expire 2000
Member of the Executive and Development Committee
</TABLE>
 
     Since January 1994, Mr. McCabe has served as Vice Chairman of First
American and FANB and President -- First American Enterprises. Mr. McCabe served
as President, General Bank, FANB throughout 1992 and 1993. Mr. McCabe also
serves as a member of the Board of Directors of Sirrom Capital Corporation and
as director of IFC Holdings, Inc. and The SSI Group, Inc., both of which are
affiliates of First American.
 
<TABLE>
<S>                                                             <C>
CELIA A. WALLACE                                                Age -- 53
Director, Member of the Development and                         Director since 1996
Audit Committees                                                Term to expire 2000
</TABLE>
 
     Since 1986, Ms. Wallace has been Chairman of the Board and Chief Executive
Officer of Southern Medical Health Systems, Inc., a healthcare provider holding
company. Ms. Wallace also serves as Chairman of the Board of Chunchula Energy
Corporation and serves as a director of The SSI Group, Inc.
 
<TABLE>
<S>                                                             <C>
TOBY S. WILT                                                    Age -- 53
Director, Chairman of the Audit Committee, and Member           Director since 1992
of the Executive and Asset Policy Committees                    Term to expire 2000
</TABLE>
 
     Mr. Wilt is the President of TSW Investment Company, a private investment
company in Nashville, Tennessee and Chairman of the Board of The Christie Cookie
Company, a gourmet baking company. Mr. Wilt also serves as a director of Outback
Steakhouse, Inc.
 
                    DESCRIPTION OF THE BOARD AND COMMITTEES
 
     During 1997 the First American Board held eight regular meetings and one
special meeting. The Board has seven standing committees: Executive, Asset
Policy, Audit, Community Affairs, Human Resources, Development, and the
Committee on Directors.
 
     The Executive Committee consists of the Chief Executive Officer and not
less than three other directors who are elected by the Board. At present, the
Executive Committee is comprised of the Chief Executive Officer, the President,
the Vice Chairman, and seven other directors, six of whom are the chairmen of
the other standing committees. The Executive Committee can act on behalf of the
full Board on all matters concerning the management and conduct of the business
affairs of the Company except those matters which cannot by law be delegated by
the Board. The Executive Committee meets on the call of the Chairman of the
 
OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       100
<PAGE>   113
 
Executive Committee or the Chief Executive Officer of First American. The
Executive Committee met three times in 1997.
 
     The Asset Policy Committee consists of six directors who are not officers
or employees of the Company and the Chief Executive Officer. The Asset Policy
Committee is responsible for all credit related matters, including the approval
of credit policies and procedures. It monitors the loan portfolio of FANB,
reviews significant loan transactions, reviews credit examinations, and monitors
compliance with regulatory requirements and applicable laws and regulations. The
Asset Policy Committee also reviews regulatory examinations, as well as
asset/liability policies and procedures. The Asset Policy Committee met seven
times in 1997.
 
     The Audit Committee consists of seven directors who are not officers or
employees of First American. During 1997, the members of the Audit Committee
were Messrs. Wilt (Chairman), Anderson, Koonce, Martin, Welch, Mrs. Ingram and
Mrs. Wallace. Under the FDICIA, the Audit Committee must consist wholly of
outside directors, must include at least two members who have banking or
financial management expertise and may not include any "large customers" of
FANB. The Audit Committee meets all of these requirements. The Audit Committee
acts on behalf of the First American Board to ensure that the affairs and
operations of First American and its subsidiaries are subject to proper
financial audits and internal control procedures. It approves the selection of
independent public accountants, oversees the relationship between First
American's independent public accountants and its management, reviews the
arrangements for and scope of internal and external audits, considers comments
from internal and external auditors and management's replies, discusses areas of
concern, and monitors the adequacy of internal controls and supervises the
internal audit function. The Audit Committee also reviews the allowance for loan
and lease losses and internal loan audits. It reports to the First American
Board in connection with the activities, findings and reports of both the
internal and independent auditors of First American and its subsidiaries,
provides guidance and assistance to the auditors, and ensures that the auditors
are free to exercise their function independently of management, wherever
appropriate. The Audit Committee also reviews the various reports required to be
filed with bank regulatory agencies. The Audit Committee met seven times during
1997.
 
     The Community Affairs Committee, consisting of six directors who are not
officers or employees of First American and the President of First American,
advises and counsels management in matters of community activities,
contributions, government affairs and compliance with the Community Reinvestment
Act and other laws or regulations of similar purpose. In 1997, the Community
Affairs Committee met three times.
 
     The Human Resources Committee, consisting of six directors who are not
officers or employees of First American, serves as the First American
compensation committee and oversees all personnel practices and procedures of
First American and its subsidiaries. It also oversees all benefit programs and
acts with regard to salary administration. The Human Resources Committee sets
the salaries of certain officers of First American and recommends to the full
First American Board the salaries of officers of First American who are also
directors. The Human Resources Committee met five times during 1997.
 
     The Committee on Directors is comprised of six directors who are not
officers or employees of First American. The Committee is responsible for
establishing criteria for the evaluation of members of the First American Board,
evaluating the First American Board and recommending whether members should be
nominated for re-election. The Committee also evaluates the size and composition
of the Board and establishes criteria for director nominations. The Committee
administers the corporate governance program of First American adopted by the
First American Board on January 16, 1997. Included in this program are
guidelines on corporate governance issues, a statement of responsibility of the
board and its members, director evaluations of the First American Board
processes, and self and peer reviews. The First American By-Laws provide that
the Committee on Directors may receive recommendations from shareholders of
First American for membership on the First American Board if written notice is
submitted to the Chief Executive Officer of First American within 60 days prior
to the meeting of the Committee, containing the name, address, and principal
occupation of the proposed nominee, and the name, address and number of shares
owned by the notifying First American Shareholder. During 1997, the Committee on
Directors was composed of Messrs. Haslam (Chairman), Koonce, Robinson, Wilson
and Wire and Mrs. Ingram. The Committee on Directors met once during 1997.
 
                         OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       101
<PAGE>   114
 
     The Development Committee is comprised of five directors who are not
officers or employees of First American, the Chief Executive Officer and the
Vice Chairman. The Committee serves as an oversight committee to advise and
counsel management as to the investigation, development and implementation of
nontraditional banking products or services offered through First American or
its affiliates. The Development Committee also provides general oversight of
corporate and personal trust services, reviews preliminary reports and
recommendations concerning strategic growth through mergers and acquisitions and
ensures that these activities are undertaken and conducted in accordance with
applicable laws, regulations, corporate policy and sound financial planning. The
Development Committee met three times in 1997.
 
     No incumbent director attended fewer than 75% of the aggregate of (i) the
total number of meetings held during 1996 by the First American Board (during
the period in which he or she was a director), and (ii) the total number of
meetings held during 1996 by all committees of the Board of which such director
was a member (during the period that he or she served).
 
            SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
     Under federal securities laws, First American's executive officers and
directors, and persons who own more than ten percent of the common stock of
First American are required to report their ownership of such stock and any
changes in that ownership with the Commission. These persons are also required
to furnish First American with copies of these reports.
 
     Based solely on its review of the copies of such forms received by it, or
written representations from reporting persons, First American believes that all
of these filing requirements were satisfied during the period ended December 31,
1997.
 
                SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
 
     The following table sets forth, as of January 29, 1998, information
regarding ownership of First American's outstanding common stock by any entity
or person known by First American to be the beneficial owner of more than 5% of
the outstanding shares of common stock.
 
<TABLE>
<CAPTION>
                                                             AMOUNT AND NATURE
                                                               OF BENEIFICAL     PERCENT
NAME AND ADDRESS OF BENEIFICIAL OWNER                            OWNERSHIP       OF CLASS
- -------------------------------------                        -----------------   --------
<S>                                                          <C>                 <C>
John Hancock Mutual Life Insurance Company, John Hancock
  Subsidiaries, Inc., The Berkeley Financial Group, and
  John Hancock Advisors, Inc.(1)...........................    3,176,358(2)        5.5%
</TABLE>
 
- ---------------
     (1) This information is based on an Initial Schedule 13G filed with the
Commission by: John Hancock Mutual Life Insurance Company, John Hancock
Subsidiaries, Inc., both with addresses at John Hancock Place, P.O. Box 111,
Boston, MA 02117, The Berkeley Financial Group and John Hancock Advisors, Inc.,
both with addresses at 101 Huntington Avenue, Boston, MA 02199.
 
     (2) The above described beneficial owners report voting and dispositive
power as follows: John Hancock Advisors, Inc. has direct beneficial ownership
and sole voting power of 3,176,358 shares. Through their parent-subsidiary
relationship to John Hancock Advisors, Inc., John Hancock Mutual Life Insurance
Company, John Hancock Subsidiaries, Inc., and The Berkeley Financial Group have
indirect, beneficial ownership of these same shares.
 
OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       102
<PAGE>   115
 
                        SECURITY OWNERSHIP OF MANAGEMENT
 
     The following table sets forth the number of shares held beneficially,
directly or indirectly, as of the First American Record Date, by all directors
and nominees for director, the First American Chief Executive Officer, First
American's four most highly compensated officers other than the Chief Executive
Officer and the Senior Counsel (the "NAMED EXECUTIVE OFFICERS") and by all
directors and executive officers as a group, together with the percentage of the
outstanding shares of First American Common Stock which such ownership
represents.
 
<TABLE>
<CAPTION>
                                                                     SHARES           PERCENTAGE
NAME OF BENEFICIAL OWNER                                      BENEFICIALLY OWNED**     OF CLASS
- ------------------------                                      --------------------    ----------
<S>                                                           <C>                     <C>
Sam H. Anderson, Jr. .......................................             255,665(1)        .4%
Dennis C. Bottorff..........................................             705,310(2)       1.2%
Brian L. Cooper.............................................              51,094(3)         *
Earnest W. Deavenport, Jr. .................................              15,323(4)         *
Reginald D. Dickson.........................................               6,252(5)         *
James A. Haslam, II.........................................             150,771(6)        .2%
Martha R. Ingram............................................              24,000(5)         *
Walter G. Knestrick.........................................             483,487(7)         1%
Gene C. Koonce..............................................              12,637(5)         *
James R. Martin.............................................              14,000(8)         *
Robert A. McCabe, Jr. ......................................             269,849(9)        .5%
Dale W. Polley..............................................             292,570(10)       .5%
Roscoe R. Robinson..........................................               6,000(5)         *
Martin E. Simmons...........................................             124,038(11)       .2%
James F. Smith, Jr. ........................................             308,684(12)       .5%
Cal Turner, Jr. ............................................             143,115(13)       .2%
M. Terry Turner.............................................             105,840(14)       .2%
Celia A. Wallace............................................                 200            *
Ted H. Welch................................................               9,691(15)        *
David K. Wilson.............................................             723,736(16)     1.23%
Toby S. Wilt................................................             204,000(5)        .3%
William S. Wire, II.........................................              26,528(5)         *
All Directors, Nominees for Director and Executive Officers
  as a Group................................................           4,584,923(17)      7.8%(18)
</TABLE>
 
- ---------------
 
 * less than .1%
** Adjusted for May 9, 1997 2-for-1 stock split.
 (1) Includes 35,198 shares held by Mrs. Anderson for which Mr. Anderson
     disclaims beneficial ownership, 64,928 shares held by Mr. Anderson's adult
     children for which he holds investment and voting power, 25,697 shares held
     by companies which Mr. Anderson owns or controls and options to purchase
     400 shares of First American Common Stock issued pursuant to the First
     American Corporation 1993 Non-Employee Director Stock Option Plan (the
     "1993 PLAN") which are currently exercisable.
 (2) Includes 15,192 shares held in Mr. Bottorff's FIRST Plan accounts (First
     American's Section 401(k) Plan), 172,648 shares (over which Mr. Bottorff
     has voting but not investment authority) granted pursuant to a restricted
     stock award under the First American Corporation 1991 Employee Stock
     Incentive Plan (the "1991 PLAN"), options for 248,840 shares issued
     pursuant to the 1991 Plan which are currently exercisable and 1,043 share
     equivalents held in Mr. Bottorff's Stock Account maintained under his
     Salary Deferral Agreement with First American.
 (3) Includes 1,071 shares held in Mr. Cooper's FIRST Plan accounts, 33,780
     shares (over which Mr. Cooper has voting but not investment authority)
     granted pursuant to a restricted award under the 1991 Plan, options for
     8,500 shares issued pursuant to the 1991 Plan which are currently
     exercisable and 1,043 share equivalents held in Mr. Cooper's Stock Account
     maintained under his Salary Deferral Agreement with First American.
 
                         OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       103
<PAGE>   116
 
 (4) Includes options for 4,000 shares issued pursuant to the 1993 Plan which
     are currently exercisable and 1,170 share equivalents held in Mr.
     Deavenport's Stock Account maintained under the First American Corporation
     Director's Deferred Compensation Plan.
 (5) Includes options for 4,000 shares issued pursuant to the 1993 Plan which
     are currently exercisable.
 (6) Includes options for 4,000 shares issued pursuant to the 1993 Plan which
     are currently exercisable and 16,024 shares owned by Mrs. Haslam as to
     which Mr. Haslam disclaims beneficial ownership.
 (7) Includes options for 4,000 shares issued pursuant to the 1993 Plan which
     are currently exercisable and 114,941 shares held by a trust for which Mr.
     Knestrick acts as trustee.
 (8) Includes options for 4,000 shares issued pursuant to the 1993 Plan which
     are currently exercisable, 2,000 shares held by trusts for which Mr. Martin
     acts as trustee and 2,000 shares owned by his spouse as to which he
     disclaims beneficial ownership.
 (9) Includes 20,737 shares held in Mr. McCabe's FIRST Plan accounts, 1,001
     shares owned by his children and 312 shares owned by his spouse as to which
     he disclaims beneficial ownership, 73,210 shares (over which Mr. McCabe has
     voting but not investment authority) granted pursuant to a restricted stock
     award under the 1991 Plan, options for 92,560 shares issued pursuant to the
     1991 Plan which are currently exercisable and options for 1,219 shares
     issued pursuant to the Star Award Plan that are currently exercisable.
(10) Includes 11,165 shares held in Mr. Polley's FIRST Plan accounts, 93,415
     shares (over which Mr. Polley has voting but not investment authority)
     granted pursuant to a restricted stock award under the 1991 Plan and
     options for 150,800 shares issued pursuant to the 1991 Plan which are
     currently exercisable.
(11) Includes 8,432 shares held in Mr. Simmons' FIRST Plan accounts, 33,254
     shares (over which Mr. Simmons has voting but not investment authority)
     granted pursuant to a restricted stock award under the 1991 Plan and
     options for 53,560 shares issued pursuant to the 1991 Plan which are
     currently exercisable.
(12) Includes options for 4,000 shares issued pursuant to the 1993 Plan which
     are currently exercisable and 40,118 shares owned by Mrs. Smith as to which
     Mr. Smith disclaims beneficial ownership.
(13) Includes options for 4,000 shares issued pursuant to the 1993 Plan which
     are currently exercisable and 2,276 shares held by a trust for which Mr.
     Turner acts as trustee.
(14) Includes 3,905 shares held in Mr. Turner's FIRST Plan accounts, 44,968
     shares (over which Mr. Turner has voting but not investment authority)
     granted pursuant to a restricted stock award under the 1991 Plan and
     options for 43,360 shares issued pursuant to the 1991 Plan which are
     currently exercisable.
(15) Includes options for 1,200 shares pursuant to the 1993 Plan which are
     currently exercisable.
(16) Includes options for 4,000 shares issued pursuant to the 1993 Plan which
     are currently exercisable and 600,000 shares owned by a corporation
     beneficially owned by Mr. Wilson.
(17) Includes 911,297 shares of First American Common Stock owned by or for
     spouses, children, other relatives, trusts and firms which a director or
     officer controls, where such beneficial ownership may be attributed to the
     director or officer. This amount also includes 663,110 shares granted
     pursuant to restricted stock awards under the 1991 Plan to executive
     officers over which the officers have voting but not investment authority,
     options for 48,763 shares which officers have the right to acquire under
     First American's STAR Award Plan which are currently exercisable, options
     for 793,355 shares issued pursuant to the 1991 Plan which are currently
     exercisable, 53,600 shares which non-employee directors have the right to
     acquire under the 1993 Plan which are currently exercisable and 125,372
     shares held in FIRST Plan accounts.
(18) For purposes of computing this percentage, shares which may be acquired by
     directors and officers under stock options which were exercisable as of the
     First American Record Date or within 60 days thereof are deemed to be
     outstanding.
 
OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       104
<PAGE>   117
 
                             EXECUTIVE COMPENSATION
 
SUMMARY COMPENSATION TABLE
 
     The following table summarizes the compensation paid or accrued by First
American to the Named Executive Officers during the three fiscal years ended
December 31, 1997.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                                                      LONGTERM
                                                                                                    COMPENSATION
                                                                                         -----------------------------------
                                                ANNUAL COMPENSATION                        AWARDS            PAYOUTS
                              -------------------------------------------------------    ----------   ----------------------
                                                               OTHER       RESTRICTED    SECURITIES                 ALL
                                                               ANNUAL        STOCK       UNDERLYING    LTIP        OTHER
                                                            COMPENSATION     AWARDS       OPTIONS     PAYOUTS   COMPENSATION
NAME AND PRINCIPAL POSITION   YEAR   SALARY($)   BONUS($)       ($)          ($)(1)       SARS(#)       ($)        ($)(2)
- ---------------------------   ----   ---------   --------   ------------   ----------    ----------   -------   ------------
<S>                           <C>    <C>         <C>        <C>            <C>           <C>          <C>       <C>
Dennis C. Bottorff..........  1997    605,000         --         --        1,954,985       72,400       --         33,300
  Chairman and Chief          1996    585,000    321,750         --          926,751(3)    43,000       --         32,450
  Executive Officer           1995    550,000    275,000         --               --           --       --         28,500
Dale W. Polley..............  1997    410,000         --         --        1,318,429       35,000       --         24,600
  President                   1996    395,000    217,250         --          279,000       18,750       --         23,700
                              1995    350,000    175,000         --               --           --       --         20,400
Robert A. McCabe, Jr. ......  1997    315,000         --         --          907,874       26,800       --         18,900
  Vice Chairman               1996    290,000    159,500         --          162,750       10,500       --         17,400
                              1995    270,000    135,000         --           93,678           --       --         15,600
Martin E. Simmons...........  1997    315,000         --         --          546,104       26,800       --         18,900
  Senior Counsel              1996    290,000    159,500         --          162,750       10,500       --         17,400
                              1995    230,000    115,000         --           29,000           --       --         12,889
M. Terry Turner.............  1997    242,000         --         --          608,153       11,800       --         14,520
  President -- General Bank   1996    235,000    129,250         --          116,250        7,750       --         14,100
                              1995    229,000    114,500         --           29,000           --       --         13,206
Brian L. Cooper.............  1997    215,000     22,570         --          338,642       11,000       --          7,979
  Executive Vice
    President --              1996    165,000     66,000         --           60,450        8,000       --          8,460
  Marketing; President,       1995     55,000         --     25,000          170,500       18,000       --             --
  AmeriStar Investments
  and Trusts
</TABLE>
 
- ---------------
 
(1) As of December 31, 1997, the total number of restricted shares and their
    aggregate market value were as follows: Mr. Bottorff held 121,862 restricted
    shares valued at $6,062,635; Mr. Polley held 59,960 restricted shares valued
    at $2,983,010; Mr. McCabe held 47,522 restricted shares valued at
    $2,364,220; Mr. Simmons held 28,557 restricted shares valued at $1,420,711;
    Mr. Turner held 27,634 restricted shares valued at $1,374,792; and Mr.
    Cooper held 20,936 restricted shares valued at $1,041,566.
(2) Amounts in this column for 1997 include First American matching
    contributions under First American's FIRST Plan (401(k)), and FIRST Plan
    Supplemental Executive Retirement Plan (401(k) SERP) for the Named Executive
    Officers as follows: Mr. Bottorff: 401(k) -- $9,500, 401(k) SERP -- $23,800;
    Mr. Polley: 401(k) -- $9,500, 401(k) SERP -- $15,100; Mr. McCabe:
    401(k) -- $9,500, 401(k) SERP -- $9,400; Mr. Simmons: 401(k) -- $9,500,
    401(k) SERP -- $9,400; Mr. Turner: 401(k) -- $9,500, 401(k) SERP -- $5,020;
    Mr. Cooper: 401(k) -- $7,979, 401(k) SERP -- $0.
(3) Of the 20,288 shares of restricted stock issued to Mr. Bottorff in 1996,
    5,788 shares were issued pursuant to the First American executive stock
    ownership guidelines established by the Human Resources Committee in 1994.
    These shares will vest in three years if he maintains his ownership level.
 
                         OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       105
<PAGE>   118
 
OPTION GRANTS
 
     Shown below is information concerning stock options granted to the Named
Executive Officers during 1997 pursuant to the 1991 Plan. Options were granted
on January 16, 1997 and vest 20% per year on the anniversary date of grant over
five years. First American granted no stock appreciation rights ("SARS") in
1997.
 
                     OPTION/SAR GRANTS IN LAST FISCAL YEAR
 
<TABLE>
<CAPTION>
                                                                  INDIVIDUAL GRANTS
                                   -------------------------------------------------------------------------------
                                                   PERCENT OF                               POTENTIAL REALIZABLE
                                                     TOTAL                                 VALUE AT ASSUMED ANNUAL
                                    NUMBER OF     OPTIONS/SARS                              RATES OF STOCK PRICE
                                    SECURITIES     GRANTED TO     EXERCISE                 APPRECIATION FOR OPTION
                                    UNDERLYING    EMPLOYEES IN       OR                             TERM
                                   OPTIONS/SARS   FISCAL YEAR    BASE PRICE   EXPIRATION   -----------------------
NAME                                GRANTED(#)        1996         ($/SH)        DATE        5%($)        10%($)
- ----                               ------------   ------------   ----------   ----------   ----------   ----------
<S>                                <C>            <C>            <C>          <C>          <C>          <C>
Dennis C. Bottorff...............     72,400          9.2%        $29.5625     01/16/07    $1,346,039   $3,411,127
Dale W. Polley...................     35,000         4.45%        $29.5625     01/16/07    $  650,709   $1,649,025
Robert A. McCabe, Jr.............     26,800          3.4%        $29.5625     01/16/07    $  498,257   $1,262,682
Martin E. Simmons................     26,800          3.4%        $29.5625     01/16/07    $  498,257   $1,262,682
M. Terry Turner..................     11,800          1.5%        $29.5625     01/16/07    $  219,382   $  555,957
Brian L. Cooper..................      6,000         0.76%        $29.5625     01/16/07    $  111,550   $  282,690
                                       5,000         0.63%        $47.7500     10/16/07    $  150,149   $  380,506
</TABLE>
 
     Actual realizable values, if any, on stock option exercises are dependent
on the future performance of First American Common Stock and overall stock
market conditions. There can be no assurance that the amounts reflected will be
achieved.
 
OPTION EXERCISES AND FISCAL YEAR-END VALUES
 
     Shown below is information with respect to exercises by the Named Executive
Officers during 1997 of options to purchase shares pursuant to First American's
stock option plans and information with respect to unexercised options to
purchase shares held by the Named Executive Officers as of December 31, 1997.
 
              AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES
 
<TABLE>
<CAPTION>
                                                                 NUMBER OF SECURITIES
                                                                UNDERLYING UNEXERCISED       VALUE OF UNEXERCISED IN-
                                    SHARES                          OPTIONS/SARS AT           THE-MONEY OPTIONS/SARS
                                   ACQUIRED                      DECEMBER 31, 1997(#)         AT DECEMBER 31, 1997($)
                                      ON           VALUE      ---------------------------   ---------------------------
NAME                              EXERCISE(#)   REALIZED($)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
- ----                              -----------   -----------   -----------   -------------   -----------   -------------
<S>                               <C>           <C>           <C>           <C>             <C>           <C>
Dennis C. Bottorff..............    100,000     $4,262,500      197,200        181,200      $7,325,800     $4,474,775
Dale W. Polley..................     20,000     $  460,000      129,100         79,400      $5,028,850     $1,929,962
Robert A. McCabe, Jr............     29,823     $  976,678       83,577         58,000      $2,971,369     $1,414,625
Martin E. Simmons...............      2,000     $   43,875       37,840         54,560      $1,301,192     $1,337,870
M. Terry Turner.................      3,864     $  125,500       34,900         38,400      $1,139,762     $1,009,387
Brian L. Cooper.................      3,100     $   34,612        5,700         28,200      $  158,737     $  607,175
</TABLE>
 
     Based on the closing price of $49.75 per share of First American Common
Stock as of December 31, 1997. First American granted no SARs in 1997.
 
     First American has entered into contracts with certain of its executive
officers, including the Named Executive Officers with the exception of Mr.
Simmons, that provide generally for a payment equal to a stated multiple of the
officer's annual base salary and annual cash bonus as well as the employee's
annual cash bonus for the full year in which a Change in Control or Potential
Change in Control (as such terms are defined herein) takes place in the event of
a termination of the officer's employment by the Company other than "for cause"
or as a result of death or disability. For Messrs. Bottorff, Polley, McCabe and
Turner, the multiple is
 
OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       106
<PAGE>   119
 
three times their respective annual base salary and annual cash bonus; for Mr.
Cooper, the multiple is two times. Additionally, the contracts provide that the
officers shall be paid such amounts if the officer voluntarily terminates his
employment with First American if, after a Change in Control or a Potential
Change in Control, (i) there is a reduction in the officer's annual base salary
or annual bonus opportunity, (ii) the officer is required by First American,
involuntarily, to relocate to an office more than 35 miles from the office where
the officer was located at the time of the Change in Control or Potential Change
in Control, (iii) there is a material reduction in the officer's
responsibilities, authority, or duties, (iv) the officer's benefits are
materially reduced, or (v) First American does not honor the terms of the
contracts. These contracts generally provide for an excise tax gross-up with
respect to any taxes incurred under Section 4999 of the Code after a Change in
Control or Potential Change in Control. Additionally, these contracts provide
for an extension of life insurance, medical insurance, and other employment
benefits upon the occurrence of a Change in Control or Potential Change in
Control. "Change in Control" and "Potential Change in Control" have the meanings
ascribed to them in the Company's 1991 Employee Stock Incentive Plan.
 
                                RETIREMENT PLANS
 
     The following table shows the estimated annual retirement benefit payable
to participating employees, including officers, in the salary ranges and years
of service classifications indicated, under the combined terms of the First
American Master Retirement Plan (which covers most officers and other salaried
employees on a non-contributory basis) and Supplemental Executive Retirement
Program. Consequently, the benefit and compensation limits imposed under
Sections 415 and 401(a)(17) of the Code have not been applied. The table assumes
retirement at age 65 in 1998.
 
                               PENSION PLAN TABLE
 
<TABLE>
<CAPTION>
                                            YEARS OF SERVICE
               --------------------------------------------------------------------------
REMUNERATION   5 YEARS    10 YEARS   15 YEARS   20 YEARS   25 YEARS   30 YEARS   35 YEARS
- ------------   --------   --------   --------   --------   --------   --------   --------
<S>            <C>        <C>        <C>        <C>        <C>        <C>        <C>
 $  175,000    $ 12,013   $ 24,025   $ 36,038   $ 50,938   $ 65,838   $ 80,738   $ 95,638
    200,000      13,825     27,650     41,475     58,600     75,725     92,850    109,975
    250,000      17,450     34,900     52,350     73,925     95,500    117,075    138,650
    300,000      21,075     42,150     63,225     89,250    115,275    141,300    167,325
    350,000      24,700     49,400     74,100    104,575    135,050    165,525    196,000
    400,000      28,325     56,650     84,975    119,900    154,825    189,750    224,675
    450,000      31,950     63,900     95,850    135,225    174,600    213,975    253,350
    500,000      35,575     71,150    106,725    150,550    194,375    238,200    282,025
    550,000      39,200     78,400    117,600    165,875    214,150    262,425    310,700
    600,000      42,825     85,650    128,475    181,200    233,925    286,650    339,375
    650,000      46,450     92,900    139,350    196,525    253,700    310,875    368,050
    700,000      50,075    100,150    150,225    211,850    273,475    335,100    396,725
    750,000      53,700    107,400    161,100    227,175    293,250    359,325    425,400
    800,000      57,325    114,650    171,975    242,500    313,025    383,550    454,075
    850,000      60,950    121,900    182,850    257,825    332,800    407,775    482,750
    900,000      64,575    129,150    193,725    273,150    352,575    432,000    511,425
    950,000      68,200    136,400    204,600    288,475    372,350    456,225    540,100
  1,000,000      71,825    143,650    215,475    303,800    392,125    480,450    568,775
  1,100,000      79,075    158,150    237,225    334,450    431,675    528,900    626,125
  1,200,000      86,325    172,650    258,975    365,100    471,225    577,350    683,475
  1,300,000      93,575    187,150    280,725    395,750    510,775    625,800    740,825
  1,400,000     100,825    201,650    302,475    426,400    550,325    674,250    798,175
  1,500,000     108,075    216,150    324,225    457,050    589,875    722,700    855,525
</TABLE>
 
     Covered compensation includes salary and bonus. The calculation of
retirement benefits under the plans generally is based upon average earnings for
the highest five consecutive years of the fifteen years preceding retirement.
The credited years of service for Messrs. Bottorff, Polley, McCabe, Simmons,
Turner and Cooper
 
                         OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       107
<PAGE>   120
 
are 6, 6, 21, 5, 18 and 2 respectively. Benefits are calculated on the basis of
straight life income payments and are not subject to any deduction for Social
Security or other offset amounts.
 
                           COMPENSATION OF DIRECTORS
 
     Directors who are not officers of First American receive an annual retainer
of $18,000 plus $1,000 for attendance of each regular or special board meeting
and each committee meeting. For 1998, the retainer has been increased to
$20,000. The Chairmen of the Asset Policy, Community Affairs, Development, Human
Resources and Audit Committees receive additional annual retainers of $6,000
each. Non-employee directors of First American who also serve on FANB's
Knoxville Community Board and AmeriStar Advisory Board receive attendance fees
for those advisory board meetings ranging from $500 to $1,250 per meeting.
During 1997, the total directors' fees paid by the Company and its subsidiaries
to each of the outside directors of First American ranged from $22,000 to
$53,000; the aggregate amount paid by First American to all outside directors in
1997 was $684,000. In addition, under the 1993 Plan, each non-employee director
is annually granted the option to purchase 1,000 shares (now 2,000 shares as a
result of the May 9, 1997 stock split) of First American's Common Stock at a
purchase price equal to market price on the day of the annual meeting of
shareholders. In 1997, the pre-split purchase price was $32.00 per share. These
options vest 20% per year over five years. Under First American's Director's
Deferred Compensation Plan, each director may annually elect to defer payment of
all or a portion of his or her retainer and fees until attaining the age of 65.
Such deferred amounts become payable upon the termination of the tenure of a
director provided the director has attained the age of 65.
 
         HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     During 1997, the First American Board's Human Resources Committee was
composed of Messrs. Deavenport (Chairman), Dickson, Robinson, Turner, Wilson and
Wire. None of these persons has at any time been an officer or employee of First
American or any of its subsidiaries. During 1997, no member of the Human
Resources Committee had any relationship requiring disclosure by First American
under Item 404 of SEC Regulation S-K, and there existed no relationships
involving the executive officers, directors or Human Resources Committee members
and the executive officers, directors or compensation committee members of any
other entity such as to constitute an interlock for disclosure purposes under
applicable Commission regulations.
 
           HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
OVERALL POLICY
 
     First American's policy is to tie a significant portion of executive
compensation to First American's performance and to appreciation in its stock
price. Our objectives are to hire and retain highly qualified people, to
motivate them to achieve First American's performance goals, to link management
and shareholder interests and to reward individual contribution as well as
overall results.
 
     The Human Resources Committee is generally responsible for making executive
compensation decisions for First American. The Human Resources Committee is
responsible for granting stock options and restricted stock. The Human Resources
Committee is also responsible for approving salaries and bonuses for executive
officers, with the exception of those who also serve as directors whose salaries
and bonuses are approved by the non-employee members of the First American
Board. In 1997, the First American Board made no modifications to our
recommendations with respect to those officers.
 
     The executive compensation program consists of three components: base
salary, annual incentive compensation and long-term incentive stock options and
restricted stock grants. The Human Resources Committee reviews the program
annually. Under the program, total achievable compensation generally ranges from
the 50th to the 75th percentile when compared with similar positions in selected
comparable companies. In setting 1997 base salaries, the Human Resources
Committee reviewed the Towers Perrin Consulting 1996 Salary Survey and the data
pertaining to a group of 17 "high-performing" banks (the "PEER GROUP") included
 
OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       108
<PAGE>   121
 
in the 1996 Wyatt Financial Survey. Both of these surveys are conducted annually
on a national basis by independent consulting firms. Fourteen of the Peer Group
banks are included in the KBW 50 Index shown in the Shareholder Return
Performance Graph. The KBW 50 is composed of 50 of the nation's major banking
companies, including all money center banks and most major regional banks, and
is meant to be representative of the price performance of the nation's large
banks. The Human Resources Committee has not used compensation data for money
center banks and large regional banks in determining First American executive
compensation. Instead, the Human Resources Committee uses data from the selected
Peer Group comprised generally of bank holding companies with excellent
performance and similar strategies or operating characteristics and from the
Towers Perrin Consulting 1996 Salary Survey of similarly-sized companies. In
determining annual and long term incentive compensation, the Human Resources
Committee relies on market information, including the TPF&C Executive Banking
Survey. Generally, executive officers have the opportunity to earn a maximum
performance-based bonus equal to 80% to 100% of base salary and to receive stock
options and restricted stock of from 45% to 135% of base salary. In addition,
consistent with 1996 market data for similar positions at comparable companies,
the Chief Executive Officer has an opportunity to receive stock options and
restricted stock equal in value to up to 190% of base salary.
 
     Both annual and long-term incentive compensation are based on performance.
Appreciation in the value of the First American Common Stock is also a key
element of these components. On an annual basis, the Committee establishes
performance goals which are consistent with First American's three-year
strategic plan. In 1997, these goals reflected soundness thresholds and
performance goals. The soundness threshold consisted of maximum ratios of
criticized and classified assets to capital and non-performing loans to total
loans and other real estate owned, and a minimum ratio of common equity to
average total assets (the "SOUNDNESS THRESHOLD"). The performance goals
consisted of (i) an earnings per share target; (ii) a return on equity target;
and (iii) a specified level of productivity (the "PERFORMANCE GOALS"). In 1997
the Soundness Threshold was set at a level consistent with First American's
strategic framework.
 
     In 1993, section 162(m) was added to the Code pursuant to the Omnibus
Budget Reconciliation Act of 1993. This Section generally limits the corporate
deduction for compensation paid to the Chief Executive Officer and each of the
four other highest paid executive officers to $1 million per year. However,
certain performance-based compensation, as defined in the IRS regulations, is
exempt from the limitations on deductibility. In 1997, the Human Resources
Committee adopted terms for the annual and long-term incentive programs in order
for compensation payable under these programs to qualify as "performance-based"
for purposes of section 162(m) of the Code. These terms were approved by the
First American Shareholders at the 1997 annual meeting.
 
BASE SALARIES
 
     In determining an executive officer's starting salary, the responsibilities
of the position, the officer's experience and the competitive marketplace,
particularly the salaries of comparable positions at other financial
institutions, are considered. In 1994, the Human Resources Committee adopted an
approach for base salary adjustments for executive officers under which a target
rate for each position, including that of Chief Executive Officer, was
established by using the midpoint between the 50th percentile of the TPF&C
Executive Banking Survey with an asset size regression analysis and the 50th
percentile of the Peer Group. Following an annual performance evaluation, if the
executive is found to be meeting performance expectations and fully functioning,
it is the intent that base salary will be increased to the target rate. In
future years, unless an executive assumes greater responsibilities, base salary
increases will generally reflect the annual market movement of the salary range
structure. In 1995, the data was reviewed for several positions, and the Human
Resources Committee decided to raise the 1994 market data by 3% (the estimated
market increase) rather than conduct a position-by-position analysis. In 1996
and 1997, a full market analysis was again performed. In 1997, two changes were
made to the methodology. In order to more appropriately evaluate the positions
of the most senior executive management other than the Chief Executive Officer,
base salaries for these executives were benchmarked against the Chief Executive
Officer, using industry-relational percentages to Chief Executive Officer
compensation for positions which are traditionally second or third within an
organization. Data used for this analysis was also provided by Towers Perrin
Consulting. In addition, for executive positions
 
                         OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       109
<PAGE>   122
 
outside of the most senior executive management, broad salary bands were
assigned and salary increases were determined using the same merit guidelines
established for all Company employees. These merit increases are performance
driven and a function of position in range and performance.
 
ANNUAL INCENTIVE COMPENSATION
 
     Executive officers are eligible to receive annual incentive compensation,
generally of varying percentages of base salary, depending upon the officer's
position and responsibilities. The value of the incentive compensation received
depends upon the degree to which established corporate, and in some cases unit
or individual, performance goals are achieved. In 1997, the Human Resources
Committee established, and the First American Board of Directors approved, the
Soundness Threshold relating to corporate performance goals for the award of
annual incentive compensation. If the Soundness Threshold was not met, no annual
incentive compensation would have been paid. Once the Soundness Threshold was
met, to the extent the annual incentive compensation award was based on
corporate as opposed to individual or unit performance, annual incentive
compensation earned was based on the achievement of the Performance Goals, which
were weighted equally for the corporate portion of the award.
 
     In addition to the Soundness Threshold and Performance Goals, in 1997 the
Human Resources Committee also approved a program under which those employees
participating in the annual incentive compensation program could choose to
receive a portion or all of their potential annual incentive compensation in the
form of restricted First American Common Stock. This program for executive
management was approved by the Human Resources Committee on March 7, 1997. The
objectives of the new program are to (i) focus management on achieving
performance equivalent to high performing peers; (ii) improve alignment between
management and shareholder interests; (iii) reduce short term compensation
expense in order to allow First American to invest in other critical areas; and
(iv) to motivate and retain senior managers.
 
     Under the program, executive officers may elect to receive their annual
incentive compensation in cash or in restricted stock of First American or in a
combination of the two for a four-year performance cycle. The cash portion of
the incentive award is earned and paid on an annual basis. To the extent that an
executive elects to receive restricted stock instead of cash, that portion of
the incentive award is eligible for a 100% match by First American, also paid in
restricted stock. The restricted stock portion of the award is granted in the
first year of the performance cycle. Provided the target performance criteria
are attained, the restrictions on 25% of the restricted stock portion of the
award will lapse in each year of the four-year performance cycle. If the
performance criteria are not attained in any year of the performance cycle, the
restrictions on those shares will lapse ten years from the date of grant. The
matching portion is granted in the second year of the performance cycle.
 
     For purposes of the First American-matched portion of the restricted stock
grant, the performance criteria established by the Human Resources Committee
require achievement of median market-to-book valuation (or such other
performance criteria as the Human Resources Committee may deem appropriate) of a
high performing Peer Group. The Peer Group and the performance criteria will be
determined by the Human Resources Committee on an annual basis in conjunction
with the analysis of First American's investment bankers. Once the performance
criteria is achieved, vesting of the First American-matched portion will occur
over a four year period, provided the performance criteria is attained prior to
January, 2001. If the performance criteria is not attained by this time, the
restrictions on the First American-matched portion of the restricted shares will
lapse ten years from the date of grant. In 1997, this Peer Group was composed of
Barnett Banks, Inc., Fifth Third Bancorp, First Bank System, Inc., First
Tennessee National Corp., Huntington Bancshares, Inc., Marshall & Ilsley
Corporation, National Commerce Bancorp, Norwest Corporation, Provident Bancorp,
Inc., Star Banc Corporation, Synovus Financial Corp., Valley National Bancorp,
Wells Fargo & Co, Wilmington Trust Corp. and Zions Bancorporation. Ten of the
Peer Group are included in the KBW 50 Index shown in the Shareholder Return
Performance Graph. Under the program, the Committee may revise the performance
criteria and/or the constituency of the high performing Peer Group as
appropriate.
 
OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       110
<PAGE>   123
 
LONG-TERM INCENTIVE COMPENSATION
 
     First American's long-term incentive compensation program has two
components: restricted stock awards and annual stock option grants.
 
     Restricted stock awards are grants of shares of First American's Common
Stock which are issued in the officer's name but are held by First American and
cannot be sold or transferred during the restriction period. The lapse of the
restrictions is tied to corporate performance. These awards generally are
granted annually, and the number of shares granted is based on the importance of
the executive to achievement of the Company's long-term Performance Goals, the
market data and a valuation model developed by Towers Perrin Consulting. In
applying the model, each grant covers a three-year performance period. Dividends
are paid on these shares during this period.
 
     For each year of the performance period, an executive may earn one, two or
three points, depending upon the achievement of the Performance Goals. However,
if First American does not achieve the Soundness Threshold, two points are
deducted. If less than three points are earned over the performance period, no
restricted stock becomes vested at the end of the period. At the end of the
period, up to 100% of the restricted stock may be vested in the executive free
of restriction, with the percentage varying (from 50% to 100%) based upon the
number of points earned. Any shares which are not vested remain restricted for
twelve more years, and dividends on such shares are forfeited during the
twelve-year period. In any event, after the passage of 15 years the restrictions
lapse if the executive is still employed by First American. In 1997,
participants earned two points based on the achievement of the Performance
Goals.
 
     Annual stock option grants are designed to align the interests of executive
officers with those of First American Shareholders. Because the full value of an
executive's compensation is not realized absent appreciation in the stock price
over time, stock options also help to retain key executives and to provide an
incentive for them to create long-term First American Shareholder value. The
Human Resources Committee sets guidelines for the size of these awards based on
competitive compensation data including an analysis of the TPF&C Banking Survey,
the responsibilities and experience of the executive and the recommendation of
the chief executive officer. The number of options granted is based upon their
projected value using market data and the Black-Scholes valuation model
developed with the assistance of a national independent compensation consulting
firm. The Black-Scholes model considers stock price, as well as price volatility
and dividends over an historical period to estimate an expected value of a
share. Normally options are granted at an exercise price equal to market value
on the date of grant and vest over five years at a rate of 20% per year.
 
STOCK OWNERSHIP POLICY
 
     To further align the interests of management and First American
Shareholders, the Human Resources Committee established an executive stock
ownership policy in 1994. Under the policy, executive officers are encouraged to
acquire and hold shares of First American Common Stock with a value equal to or
exceeding either three or two times their annual salary depending on the
executive's job grade. The Chief Executive Officer's target was established at
four times annual salary. Executives who achieve the target level within three
years are granted restricted stock equal to 10% of their holdings; those who
achieve the target level within four years, 7.5%; and those who achieve the
target level within five years, 5%. If the stock holdings are retained for three
years from the date of grant, the restrictions will lapse; if not, the shares
will be forfeited. Since inception of the policy, the Chief Executive Officer
and ten other executive officers have achieved the ownership target.
 
CHIEF EXECUTIVE OFFICER COMPENSATION
 
     In 1997, the Human Resources Committee applied the methodologies described
above in determining the Chief Executive Officer's base salary, annual and
long-term incentive compensation. With First American Board approval, Mr.
Bottorff's base salary was increased to $605,000 effective January 1, 1997. His
annual incentive compensation was dependent upon the achievement of the three
Performance Goals, each of which was weighted equally.
 
                         OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       111
<PAGE>   124
 
     In 1997, Mr. Bottorff elected to receive 100% of his annual incentive
compensation in restricted stock of the Company. Pursuant to this election,
36,086 restricted shares were issued to Mr. Bottorff in 1997. This incentive
compensation is eligible for a 100% match by First American, also paid in
restricted stock. The First American-matched grant, an additional 36,086
restricted shares, was granted by the Human Resources Committee in January 1998.
In 1997, the Soundness Threshold and target Performance Goals were attained;
therefore, the restrictions on 2,256 shares of the restricted stock granted to
Mr. Bottorff in 1997 lapsed. Based on the market value as of January 15, 1998,
the lapsed shares were worth $103,494 or 17.11% of Mr. Bottorff's base salary.
The shares of First American-matched restricted stock granted to Mr. Bottorff in
1998 will vest 25% per year over a four-year period commencing on the date that
performance criteria established by the Committee are achieved by First
American, provided that such performance criteria are achieved prior to January
2001.
 
     Also in 1997, Mr. Bottorff was granted long-term incentive compensation in
the form of 72,400 stock options and 25,200 shares of restricted stock. The
stock options will vest 20% per year over a five-year period; the restricted
stock vests in three to 15 years based on the performance cycle referenced
above.
 
     In 1991, Mr. Bottorff was granted options on 400,000 shares, which
represent approximately the same number as would have been granted to the chief
executive officer over three years under the long-term plan. These options
vested from 1992 through 1996 as the Performance Goals established by the Human
Resources Committee were met. Mr. Bottorff was also granted 60,000 restricted
shares in 1991. The restrictions on these shares lapsed at the end of 1996 after
determining performance for each three-year period.
 
     In 1997, First American met or surpassed the Performance Goals established
for the year, so that Mr. Bottorff earned two points toward the final third on
20,000 shares of restricted stock granted to him in 1994 for the 1995-97
performance cycle, two points toward the second third of 29,000 shares of
restricted stock granted to him in 1996 for the 1996-98 performance cycle, and
two points toward the first third of 25,200 shares of restricted stock granted
in 1997 for the 1997-99 performance cycle. The restrictions on these shares
lapse upon the attainment of at least six points at the end of and over each
three-year performance period. Any shares which do not become unrestricted
through the attainment of performance goals remain restricted for twelve more
years, and any dividends on these remaining shares are forfeited during the
12-year period.
 
     Since 1991, Mr. Bottorff has satisfied the vesting and performance
requirements on a total of 477,200 stock options and 80,000 shares of restricted
stock granted to him since his employment with First American. All shares of
restricted stock and stock options have been adjusted to reflect First
American's 2-for-1 Common Stock split effective on May 9, 1997.
 
     Submitted by the Human Resources Committee of the First American Board,
 
              Earnest W. Deavenport, Jr. (Chairman)
              Reginald D. Dickson
              Roscoe R. Robinson
              Cal Turner, Jr.
              David K. Wilson
              William S. Wire, II
 
OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       112
<PAGE>   125
 
                    SHAREHOLDER RETURN PERFORMANCE GRAPH(3)
 
     The following graph compares the yearly percentage change in the return on
First American's Common Stock with the Standard & Poor's 500 Stock Index and the
KBW 50 Index for the past five years.(1)(2)
 
<TABLE>
<CAPTION>
        Measurement Period
      (Fiscal Year Covered)          First American         S & P 500            KBW 50
<S>                                 <C>                 <C>                 <C>
Dec-92                                     100                 100                 100
Dec-93                                     118                 110                 106
Dec-94                                     102                 112                 100
Dec-95                                     186                 153                 160
Dec-96                                     232                 189                 227
Dec-97                                     408                 252                 332
</TABLE>
 
- ---------------
 
(1) $100 invested on December 31, 1992 in stock or index -- including
    reinvestment of dividends. Fiscal year ending December 31.
(2) The KBW 50 Index is a market-capitalization weighted bank stock index
    comprised of 50 major banking companies and is published daily by Keefe,
    Bruyette & Woods, Inc.
(3) Adjusted to reflect two-for-one stock split effective May 9, 1997.
 
                         OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       113
<PAGE>   126
 
                                CERTAIN TRANSACTIONS
 
     Some of First American's executive officers and directors, or members of
the immediate families of any of the foregoing persons, are customers of First
American's subsidiary banks and some of the First American executive officers
and directors, or members of their immediate family, are directors or officers
of corporations, or members of partnerships, which are customers of First
American's subsidiary banks. As customers they had transactions in the ordinary
course of business, including borrowings, all of which were on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and do not involve more than
the normal risk of collectibility or present any other unfavorable features.
 
     In 1993, First American solicited competitive proposals from three vendors
for the design, fabrication, installation and maintenance of a new retail
merchandising system which was implemented in 1994. Following review of the
proposals submitted, Design Performance Group, a division of American Sign and
Marketing Services, Inc., a wholly owned subsidiary of Plasti-Line, Inc. was
selected as the vendor. Mr. Martin, a member of the First American Board, is the
Chairman of the Board of Directors and Chief Executive Officer of Plasti-Line,
Inc. and has an equity interest of approximately 50% in Plasti-Line, Inc. Mr.
Smith, a member of the First American Board, also serves on the Board of
Directors of Plasti-Line, Inc. In accordance with First American's policy
relating to business transactions with directors and their related interests,
the First American Board approved the selection of Design Performance Group as
the vendor for this project with Messrs. Martin and Smith abstaining from the
vote. In 1997, the amount paid to Design Performance Group was $364,667.05.
 
     In August 1996, FANB entered into an agreement with Pilot Corporation, a
retail operator of convenience stores/gasoline stations, so as to permit FANB to
install, operate and maintain automated cash dispensers ("ATMS") at 38 Pilot Oil
stores. Mr. Haslam, a member of the First American Board, is a director of Pilot
Corporation, of which he and his family own 100%. Mr. Smith, a member of the
First American Board, also serves on the Board of Directors of Pilot
Corporation. In 1997, FANB paid Pilot Corporation a total of $111,674.75 based
upon the number of cash withdrawal transactions effected through these ATMs.
FANB anticipates that in the future, payments to Pilot under this agreement will
be approximately $180,000 per year.
 
     In April 1996, FANB acquired 49% of The SSI Group, Inc. ("SSI"), a
healthcare claims processing company headquartered in Mobile, Alabama. At that
time, the remaining shares of SSI were owned 49% by Southern Medical Health
Systems, Inc. ("SMHS") and 2% by Ms. Wallace individually. Ms. Wallace owns 100%
of SMHS. In conjunction with that transaction, FANB acquired the option to
purchase additional shares of SSI to maintain its 49% ownership upon the
occurrence of certain events. SSI's January 1, 1997 acquisition of CareWare
Systems, Inc., a medical management computer software company for SSI stock,
triggered FANB's ability to exercise its option. FANB exercised this option and
purchased 15,569 shares of SSI common stock from SMHS for $228,024 in
conjunction with the CareWare Systems, Inc. acquisition.
 
     On August 1, 1997, First American entered into an employment agreement with
Martin E. Simmons. Under this agreement, Mr. Simmons became senior counsel to
First American and is responsible for providing legal and related services to
First American and its subsidiaries. The agreement extends from August 1, 1997
through July 31, 2002 (with a possible extension to December 31, 2002), and
provides for a base salary of $315,000 per year plus an annual incentive-based
bonus opportunity of up to $157,500 during calendar years 1997-2000. Mr. Simmons
will participate in Company benefit plans covering management employees, but
will not receive further grants under First American's stock compensation plans.
If Mr. Simmons terminates his employment with First American without cause, or
if First American terminates his employment (other than for cause), Mr. Simmons
will receive two years of salary continuation and certain bonus opportunities if
such a termination occurs prior to August 1, 1998. If such a termination occurs
on or after August 1, 1998, Mr. Simmons will receive salary continuation for the
full term of the agreement. In either case, Mr. Simmons will immediately vest in
stock options, ownership restricted stock and any performance-based restricted
stock that has been fully earned and be entitled to certain early retirement
benefits. However, if Mr. Simmons' employment is terminated within two years of
a change in control of First American that takes place prior to
 
OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       114
<PAGE>   127
 
September 1, 2000, Mr. Simmons will be entitled to receive a lump-sum payment of
his salary and remaining bonus opportunity for the remaining term of the
agreement, and generally the same stock compensation and early retirement
benefits as otherwise provided in the agreement upon termination.
 
                    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
     KPMG Peat Marwick LLP Certified Public Accountants, have been First
American's independent auditors since 1971 and reported on First American's
consolidated financial statements for the year ended December 31, 1996. On
February 27, 1998, the Audit Committee appointed KPMG Peat Marwick LLP as First
American's independent auditors for the year ending December 31, 1998. KPMG Peat
Marwick LLP is a member of the SEC Practice Section of the American Institute of
Certified Public Accountants division for CPA firms. Accordingly, KPMG Peat
Marwick LLP has periodic "peer reviews" that consist of a review of the quality
of the firm's accounting and auditing practices by another CPA firm. A
representative of KPMG Peat Marwick LLP is expected to attend the First American
Annual Meeting and will be provided the opportunity to make a statement and/or
respond to appropriate questions from shareholders.
 
                           ANNUAL REPORT ON FORM 10-K
 
     To obtain a copy of First American's Annual Report on Form 10-K for the
year ended December 31, 1997, together with financial statements and schedules,
as filed with the Commission (available without charge to Shareholders), please
write to Carroll E. Kimball, Executive Vice President and Director of Investor
Relations, First American Corporation, 815 First American Center, Nashville,
Tennessee 37237-0815 or call (615) 736-6267.
 
                         OTHER INFORMATION FOR THE FIRST AMERICAN ANNUAL MEETING
 
                                       115
<PAGE>   128
 
 
                                                                      APPENDIX A
================================================================================
 
                          AGREEMENT AND PLAN OF MERGER
 
                                    BETWEEN
 
                           FIRST AMERICAN CORPORATION
 
                                      AND
 
                             DEPOSIT GUARANTY CORP.
 
                          DATED AS OF DECEMBER 7, 1997
 
================================================================================
                                                                      APPENDIX A
<PAGE>   129
 
                               TABLE OF CONTENTS
 
                                   ARTICLE I
                                   THE MERGER
 
<TABLE>
<S>     <C>                                                           <C>
 1.1.   The Merger..................................................   A-5
 1.2.   Effective Time..............................................   A-5
 1.3.   Effects of the Merger.......................................   A-5
 1.4.   Conversion of Company Common Stock..........................   A-5
 1.5.   Stock Options...............................................   A-6
 1.6.   Parent Common Stock.........................................   A-7
 1.7.   Charter.....................................................   A-7
 1.8.   By-Laws.....................................................   A-7
 1.9.   Directors and Officers......................................   A-7
 1.10.  Tax Consequences; Accounting Treatment......................   A-7
                                ARTICLE II
                            EXCHANGE OF SHARES
 2.1.   Parent to Make Shares Available.............................   A-7
 2.2.   Exchange of Shares..........................................   A-8
                               ARTICLE III
                     DISCLOSURE SCHEDULES; STANDARDS
                    FOR REPRESENTATIONS AND WARRANTIES
 3.1.   Disclosure Schedules........................................   A-9
 3.2.   Standards...................................................   A-9
                                ARTICLE IV
              REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 4.1.   Corporate Organization......................................  A-10
 4.2.   Capitalization..............................................  A-10
 4.3.   Authority; No Violation.....................................  A-11
 4.4.   Consents and Approvals......................................  A-12
 4.5.   Reports.....................................................  A-12
 4.6.   Financial Statements........................................  A-12
 4.7.   Broker's Fees...............................................  A-13
 4.8.   Absence of Certain Changes or Events........................  A-13
 4.9.   Legal Proceedings...........................................  A-13
 4.10.  Taxes.......................................................  A-13
 4.11.  Employees...................................................  A-14
 4.12.  SEC Reports.................................................  A-15
 4.13.  Company Information.........................................  A-15
 4.14.  Compliance with Applicable Law..............................  A-15
 4.15.  Certain Contracts...........................................  A-15
 4.16.  Agreements with Regulatory Agencies.........................  A-16
 4.17.  Business Combination Provision; Takeover Laws...............  A-16
 4.18.  Administration of Fiduciary Accounts........................  A-16
 4.19.  Environmental Matters.......................................  A-16
 4.20.  Opinion.....................................................  A-17
 4.21.  Approvals...................................................  A-17
 4.22.  Loan Portfolio..............................................  A-17
 4.23.  Property....................................................  A-17
 4.24.  Accounting for the Merger; Reorganization...................  A-18
</TABLE>
 
APPENDIX A
 
                                       A-2
<PAGE>   130
<TABLE>
<S>     <C>                                                           <C>
 
                                ARTICLE V
                      REPRESENTATIONS AND WARRANTIES
                                OF PARENT
 5.1.   Corporate Organization......................................  A-18
 5.2.   Capitalization..............................................  A-18
 5.3.   Authority; No Violation.....................................  A-19
 5.4.   Consents and Approvals......................................  A-20
 5.5.   Reports.....................................................  A-20
 5.6.   Financial Statements........................................  A-20
 5.7.   Broker's Fees...............................................  A-21
 5.8.   Absence of Certain Changes or Events........................  A-21
 5.9.   Legal Proceedings...........................................  A-21
 5.10.  Taxes.......................................................  A-21
 5.11.  Employees...................................................  A-21
 5.12.  SEC Reports.................................................  A-22
 5.13.  Parent Information..........................................  A-22
 5.14.  Compliance with Applicable Law..............................  A-22
 5.15.  Ownership of Company Common Stock; Affiliates and
        Associates..................................................  A-22
 5.16.  Agreements with Regulatory Agencies.........................  A-22
 5.17.  Environmental Matters.......................................  A-23
 5.18.  Opinion.....................................................  A-23
 5.19.  Approvals...................................................  A-23
 5.20.  Loan Portfolio..............................................  A-23
 5.21.  Property....................................................  A-24
 5.22.  Accounting for the Merger; Reorganization...................  A-24
                                ARTICLE VI
                COVENANTS RELATING TO CONDUCT OF BUSINESS
 6.1.   Covenants of the Company....................................  A-24
 6.2.   Covenants of Parent.........................................  A-27
 6.3.   Conduct of Parent's Business................................  A-27
                               ARTICLE VII
                          ADDITIONAL AGREEMENTS
 7.1.   Regulatory Matters..........................................  A-27
 7.2.   Access to Information.......................................  A-28
 7.3.   Stockholder Meetings........................................  A-28
 7.4.   Legal Conditions to Merger..................................  A-28
 7.5.   Affiliates..................................................  A-29
 7.6.   Stock Exchange Listing......................................  A-29
 7.7.   Employee Benefit Plans; Existing Agreements.................  A-29
 7.8.   Indemnification.............................................  A-30
 7.9.   Additional Agreements.......................................  A-31
 7.10.  Directorships...............................................  A-31
 7.11.  Coordination of Dividends...................................  A-32
 7.12.  Advisory Boards.............................................  A-32
 7.13.  Foundation..................................................  A-32
                               ARTICLE VIII
                           CONDITIONS PRECEDENT
 8.1.   Conditions to Each Party's Obligation To Effect the
        Merger......................................................  A-32
 8.2.   Conditions to Obligations of Parent.........................  A-33
 8.3.   Conditions to Obligations of the Company....................  A-33
</TABLE>
 
                                                                      APPENDIX A
 
                                       A-3
<PAGE>   131
<TABLE>
<S>     <C>                                                           <C>
 
                                ARTICLE IX
                        TERMINATION AND AMENDMENT
 9.1.   Termination.................................................  A-35
 9.2.   Effect of Termination.......................................  A-37
 9.3.   Amendment...................................................  A-38
 9.4.   Extension; Waiver...........................................  A-38
                                ARTICLE X
                            GENERAL PROVISIONS
10.1.   Closing.....................................................  A-38
10.2.   Nonsurvival of Representations, Warranties and Agreements...  A-38
10.3.   Expenses....................................................  A-38
10.4.   Notices.....................................................  A-38
10.5.   Interpretation..............................................  A-39
10.6.   Counterparts................................................  A-39
10.7.   Entire Agreement............................................  A-39
10.8.   Governing Law...............................................  A-39
10.9.   Enforcement of Agreement....................................  A-39
10.10.  Severability................................................  A-39
10.11.  Publicity...................................................  A-40
10.12.  Assignment; Third Party Beneficiaries.......................  A-40
</TABLE>
 
APPENDIX A
 
                                       A-4
<PAGE>   132
 
                          AGREEMENT AND PLAN OF MERGER
 
     AGREEMENT AND PLAN OF MERGER, dated as of December 7, 1997, between First
American Corporation, a Tennessee corporation ("Parent"), and Deposit Guaranty
Corp., a Mississippi corporation (the "Company"). (Parent and the Company are
sometimes collectively referred to herein as the "Constituent Corporations".)
 
     WHEREAS, the Boards of Directors of Parent and the Company have determined
that it is in the best interests of their respective companies and their
shareholders to consummate the business combination transaction provided for
herein in which the Company will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into Parent; and
 
     WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
 
     NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
 
                                   ARTICLE I
 
                                   THE MERGER
 
     1.1.  The Merger.  Subject to the terms and conditions of this Agreement,
in accordance with the Mississippi Business Corporation Act (the "MBCA") and the
Tennessee Business Corporation Act. (the "TBCA") at the Effective Time (as
defined in Section 1.2 hereof), the Company shall merge with and into Parent.
Parent shall be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger, and shall continue its corporate
existence under the laws of the State of Tennessee. The name of the Surviving
Corporation shall continue to be First American Corporation. Upon consummation
of the Merger, the separate corporate existence of the Company shall terminate.
Parent may at any time change the method of effecting the combination with the
Company (including without limitation the provisions of this Article I) if and
to the extent it deems such change to be desirable, including without limitation
to provide for a merger of the Company into a wholly-owned subsidiary of Parent;
provided, however, that no such change shall (A) alter or change the amount or
kind of consideration to be issued to holders of Company Common Stock as
provided for in this Agreement (the "Merger Consideration"), (B) adversely
affect the tax treatment of the Company's shareholders as a result of receiving
the Merger Consideration or (C) materially impede or delay consummation of the
transactions contemplated by this Agreement.
 
     1.2.  Effective Time.  The Merger shall become effective as set forth in
the articles of merger (the "Articles of Merger") which shall be filed with the
Secretary of State of the State of Mississippi (the "Mississippi Secretary") and
the Secretary of State of the State of Tennessee (the "Tennessee Secretary") on
the Closing Date (as defined in Section 10.1 hereof). The term "Effective Time"
shall be the date and time when the Merger becomes effective, as set forth in
the Articles of Merger.
 
     1.3.  Effects of the Merger.  At and after the Effective Time, the Merger
shall have the effects set forth in Section 11.06 of the MBCA and Section 21-108
of the TBCA.
 
     1.4.  Conversion of Company Common Stock.
 
     (a) At the Effective Time, subject to Section 2.2(e) and Section 9.1(g)
hereof, each share of the common stock, no par value, of the Company (the
"Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares (as defined herein) and other than
shares of Company Common Stock held directly or indirectly by Parent or the
Company or any of their respective Subsidiaries (as defined below) (except for
Trust Account Shares and DPC shares, as such terms are defined in Section 1.4(b)
hereof)) shall, by virtue of this Agreement and without any action on the part
of the holder thereof, be converted into and exchangeable for 1.17 shares (the
"Exchange Ratio") of the common stock, par value $2.50 per share, of Parent
("Parent Common Stock") (together with the number of
 
                                                                      APPENDIX A
 
                                       A-5
<PAGE>   133
 
Parent Rights (as defined in Section 5.2 hereof) associated therewith). All of
the shares of Company Common Stock converted into Parent Common Stock pursuant
to this Article I shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each certificate (each a "Certificate")
previously representing any such shares of Company Common Stock shall thereafter
only represent the right to receive (i) the number of whole shares of Parent
Common Stock and (ii) the cash in lieu of fractional shares into which the
shares of Company Common Stock represented by such Certificate have been
converted pursuant to this Section 1.4(a) and Section 2.2(e) hereof.
Certificates previously representing shares of Company Common Stock shall be
exchanged for certificates representing whole shares of Parent Common Stock and
cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2 hereof, without
any interest thereon. If, between the date of this Agreement and the Effective
Time, the shares of Parent Common Stock shall be changed into a different number
or class of shares by reason of any reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or a stock dividend
thereon shall be declared with a record date within said period, the Exchange
Ratio shall be adjusted accordingly.
 
     (b) At the Effective Time, all shares of Company Common Stock that are
owned directly or indirectly by Parent or the Company or any of their respective
Subsidiaries (other than shares of Company Common Stock (x) held directly or
indirectly in trust accounts, managed accounts and the like or otherwise held in
a fiduciary capacity for the benefit of third parties (any such shares, and
shares of Parent Common Stock which are similarly held, whether held directly or
indirectly by Parent or the Company, as the case may be, being referred to
herein as "Trust Account Shares") and (y) held by Parent or the Company or any
of their respective Subsidiaries in respect of a debt previously contracted (any
such shares of Company Common Stock, and shares of Parent Common Stock which are
similarly held, whether held directly or indirectly by Parent or the Company,
being referred to herein as "DPC Shares")) shall be cancelled and shall cease to
exist and no stock of Parent or other consideration shall be delivered in
exchange therefor. All shares of Parent Common Stock that are owned by the
Company or any of its Subsidiaries (other than Trust Account Shares and DPC
Shares) shall become treasury stock of Parent.
 
     (c) Notwithstanding anything in this Agreement to the contrary, shares of
Company Common Stock which are outstanding immediately prior to the Effective
Time and with respect to which dissenters' rights shall have been properly
demanded in accordance with Article 13 of the MBCA ("Dissenting Shares") shall
not be converted into the right to receive, or be exchangeable for, Parent
Common Stock or cash in lieu of fractional shares but, instead, the holders
thereof shall be entitled to payment of the appraised value of such Dissenting
Shares in accordance with the provisions of Article 13 of the MBCA; provided,
however, that (i) if any holder of Dissenting Shares shall subsequently deliver
a written withdrawal of his demand for appraisal of such shares, or (ii) if any
holder fails to establish his entitlement to dissenters' rights as provided in
Article 13 of the MBCA, such holder or holders (as the case may be) shall
forfeit the right to appraisal of such shares of Company Common Stock and each
of such shares shall thereupon be deemed to have been converted into the right
to receive, and to have become exchangeable for, as of the Effective Time,
Parent Common Stock and/or cash in lieu of fractional shares, without any
interest thereon, as provided in Section 1.4(a) and Article II hereof.
 
     1.5.  Stock Options.  (a) At the Effective Time, each option granted by the
Company to purchase shares of Company Common Stock (each a "Company Option")
which is outstanding and unexercised immediately prior thereto shall cease to
represent a right to acquire shares of Company Common Stock and shall be
converted automatically into an option to purchase shares of Parent Common Stock
in an amount and at an exercise price determined as provided below (and
otherwise subject to the terms of the Stock-Based, Long-Term Incentive Plan and
the Stock-Based, Long-Term Incentive Plan II (the "Company Option Plans"), the
agreements evidencing grants thereunder and any other agreements between the
Company and an optionee regarding Company Options):
 
          (1) the number of shares of Parent Common Stock to be subject to the
     new option shall be equal to the product of the number of shares of Company
     Common Stock subject to the original option and the Exchange Ratio,
     provided that any fractional shares of Parent Common Stock resulting from
     such multiplication shall be rounded down to the nearest whole share; and

APPENDIX A
 
                                       A-6
<PAGE>   134
 
          (2) the exercise price per share of Parent Common Stock under the new
     option shall be equal to the exercise price per share of Company Common
     Stock under the original option divided by the Exchange Ratio, provided
     that such exercise price shall be rounded up to the nearest cent.
 
The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code")) shall be and is intended to be effected in a manner
which is consistent with Section 424(a) of the Code and, to the extent it is not
so consistent, such Section 424(a) shall override anything to the contrary
contained herein. The duration and other terms of the new option shall be the
same as the original option except that all references to the Company shall be
deemed to be references to Parent.
 
     (b) Prior to the Effective Time, Parent shall reserve for issuance the
number of shares of Parent Common Stock necessary to satisfy Parent's
obligations under this Section 1.5. Promptly after the Effective Time (but in no
event later than five business days thereafter), Parent shall file with the
Securities and Exchange Commission (the "SEC") a registration statement on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the shares of Parent Common Stock subject to options to
acquire Parent Common Stock issued pursuant to Section 1.5(a) hereof, and shall
use its best efforts to maintain the current status of the prospectus contained
therein, as well as comply with applicable state securities or "blue sky" laws,
for so long as such options remain outstanding.
 
     1.6.  Parent Common Stock.  Except for shares of Parent Common Stock owned
by the Company or any of its Subsidiaries (other than Trust Account Shares and
DPC Shares), which shall be converted into treasury stock of Parent as
contemplated by Section 1.4 hereof, the shares of Parent Common Stock issued and
outstanding immediately prior to the Effective Time shall be unaffected by the
Merger and such shares shall remain issued and outstanding.
 
     1.7.  Charter.  At the Effective Time, the Restated Charter of Parent, as
in effect at the Effective Time, shall be the Charter of the Surviving
Corporation.
 
     1.8.  By-Laws.  At the Effective Time, the By-Laws of Parent, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
 
     1.9.  Directors and Officers.  Except as provided in Section 7.10 hereof,
the directors and officers of Parent immediately prior to the Effective Time
shall be the directors and officers of the Surviving Corporation, each to hold
office in accordance with the Restated Charter and By-Laws of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified.
 
     1.10.  Tax Consequences; Accounting Treatment.  It is intended that the
Merger shall (i) constitute a reorganization within the meaning of Section
368(a) of the Code and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code, and (ii) be
accounted for as a "pooling of interests" under GAAP (as defined herein).
 
                                   ARTICLE II
 
                               EXCHANGE OF SHARES
 
     2.1.  Parent to Make Shares Available.  At or prior to the Effective Time,
Parent shall deposit, or shall cause to be deposited, with a bank or trust
company (which may be a Subsidiary of Parent) (the "Exchange Agent") selected by
Parent and reasonably satisfactory to the Company, for the benefit of the
holders of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of Parent Common Stock and the cash in lieu
of fractional shares (such cash and certificates for shares of Parent Common
Stock, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to Section
1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding shares of
Company Common Stock.
 
                                                                      APPENDIX A
 
                                       A-7
<PAGE>   135
 
     2.2.  Exchange of Shares.  (a) As soon as practicable after the Effective
Time, and in no event more than three business days thereafter, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates a
form letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing the
shares of Parent Common Stock and the cash in lieu of fractional shares into
which the shares of Company Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. The Company
shall have the right to review both the letter of transmittal and the
instructions prior to the Effective Time and provide reasonable comments
thereon. Upon surrender of a Certificate for exchange and cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole shares of Parent Common Stock to
which such holder of Company Common Stock shall have become entitled pursuant to
the provisions of Article I hereof and (y) a check representing the amount of
cash in lieu of fractional shares, if any, which such holder has the right to
receive in respect of the Certificate surrendered pursuant to the provisions of
this Article II, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the cash in lieu of fractional
shares and unpaid dividends and distributions, if any, payable to holders of
Certificates.
 
     (b) No dividends or other distributions declared after the Effective Time
with respect to Parent Common Stock and payable to the holders of record thereof
shall be paid to the holder of any unsurrendered Certificate until the holder
thereof shall surrender such Certificate in accordance with this Article II.
After the surrender of a Certificate in accordance with this Article II, 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 Parent Common Stock represented by such
Certificate.
 
     (c) If any certificate representing shares of Parent Common Stock is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of Parent Common Stock in any name other
than that of the registered holder of the Certificate surrendered, or required
for any other reason, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
 
     (d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the shares of Company Common Stock which were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented for transfer
to the Exchange Agent, they shall be cancelled and exchanged for certificates
representing shares of Parent Common Stock as provided in this Article II.
 
     (e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Parent Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of
Parent. In lieu of the issuance of any such fractional share, Parent shall pay
to each former stockholder of the Company who otherwise would be entitled to
receive a fractional share of Parent Common Stock an amount in cash determined
by multiplying (i) the average of the closing sale prices of Parent Common Stock
on the Nasdaq National Market (the "Nasdaq/NMS") as reported by The Wall Street
Journal for the five trading days immediately preceding the date on which the
Effective Time shall occur by (ii) the fraction of a share of Parent Common
Stock which such holder would otherwise be entitled to receive pursuant to
Section 1.4 hereof.
 
     (f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for twelve months after the Effective Time shall be
paid to Parent. Any stockholders of the Company who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of their shares of
 
APPENDIX A
 
                                       A-8
<PAGE>   136
 
Parent Common Stock, cash in lieu of fractional shares and unpaid dividends and
distributions on the Parent Common Stock deliverable in respect of each share of
Company Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon. Notwithstanding the
foregoing, none of Parent, the Company, the Exchange Agent or any other person
shall be liable to any former holder of shares of Company Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
 
     (g) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond in such amount as Parent may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of Parent Common Stock and cash in lieu of
fractional shares deliverable in respect thereof pursuant to this Agreement.
 
                                  ARTICLE III
 
                        DISCLOSURE SCHEDULES; STANDARDS
                       FOR REPRESENTATIONS AND WARRANTIES
 
     3.1.  Disclosure Schedules.  Prior to the execution and delivery of this
Agreement, the Company has delivered to Parent, and Parent has delivered to the
Company, a schedule (in the case of the Company, the "Company Disclosure
Schedule," and in the case of Parent, the "Parent 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 of such party's
representations or warranties contained in Article IV, in the case of the
Company, or Article V, in the case of Parent, or to one or more of such party's
covenants contained in Article VI; provided, however, that notwithstanding
anything in this Agreement to the contrary (a) no such item is required to be
set forth in the Disclosure Schedule as an exception to a representation or
warranty if its absence would not result in the related representation or
warranty being deemed untrue or incorrect under the standard established by
Section 3.2, and (b) 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 represents a material exception or material fact, event
or circumstance or that such item has had or would have a Material Adverse
Effect (as defined herein) with respect to either the Company or Parent,
respectively.
 
     3.2.  Standards.  (a) No representation or warranty of the Company
contained in Article IV or of Parent contained in Article V shall be deemed
untrue or incorrect for any purpose under this Agreement, and no party hereto
shall be deemed to have breached a representation or warranty for any purpose
under this Agreement, in any case as a consequence of the existence or absence
of any fact, circumstance or event unless such fact, circumstance or event,
individually or when taken together with all other facts, circumstances or
events inconsistent with any representations or warranties contained in Article
IV, in the case of the Company, or Article V, in the case of Parent, has had a
Material Adverse Effect with respect to the Company or Parent, respectively.
 
     (b) As used in this Agreement, the term "Material Adverse Effect" means,
with respect to Parent or the Company, as the case may be, a material adverse
effect on (i) the business, results of operations or financial condition of such
party and its Subsidiaries taken as a whole, other than any such effect
attributable to or resulting from (w) any change in banking or similar laws,
rules or regulations of general applicability or interpretations thereof by
courts or governmental authorities, (x) any change in GAAP or regulatory
accounting principles applicable to banks, thrifts or their holding companies
generally, (y) any action or omission of the Company or Parent or any Subsidiary
of either of them taken with the express prior written consent of the other
party hereto, or (z) any expenses incurred by such party which expenses are
contemplated by or reasonably incurred in connection with this Agreement or the
transactions contemplated hereby or (ii) the ability of such party and its
Subsidiaries to consummate the transactions contemplated hereby.
 
                                                                      APPENDIX A
 
                                       A-9
<PAGE>   137
 
                                   ARTICLE IV
 
                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
     Subject to Article III, the Company hereby represents and warrants to
Parent as follows:
 
     4.1.  Corporate Organization.  (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Mississippi. The Company has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary. The Company is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHC Act").
The Articles of Incorporation and By-laws of the Company, copies of which have
previously been made available to Parent, are true and correct copies of such
documents as in effect as of the date of this Agreement. As used in this
Agreement, the word "Subsidiary" when used with respect to any party means any
corporation, partnership or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial reporting
purposes.
 
     (b) Deposit Guaranty National Bank (the "Company Bank") is a national
banking association duly organized, validly existing and in good standing under
the laws of the United States of America. The deposit accounts of the Company
Bank are insured by the Federal Deposit Insurance Corporation (the "FDIC")
through the Bank Insurance Fund and the Savings Association Insurance Fund to
the fullest extent permitted by law, and all premiums and assessments required
to be paid in connection therewith have been paid when due. Each of the
Company's other Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization. Each of the Company's Subsidiaries has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or the location of the properties and assets owned or leased
by it makes such licensing or qualification necessary. Except as set forth on
Section 4.1(b) of the Company Disclosure Schedule, the articles of
incorporation, by-laws and similar governing documents of each Subsidiary of the
Company, copies of which have previously been made available to Parent, are true
and correct copies of such documents as in effect as of the date of this
Agreement.
 
     (c) The minute books of the Company and each of its Subsidiaries contain
true and correct records of all meetings and other corporate actions held or
taken since December 31, 1995 of their respective stockholders and Boards of
Directors (including committees of their respective Boards of Directors).
 
     4.2.  Capitalization.  (a) The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock, 25,000,000 shares of
Class A Voting Preferred stock, no par value (the "Company Class A Preferred
Stock"), and 25,000,000 shares of Class B Non-Voting Preferred stock, no par
value (the "Company Class B Preferred Stock" and, together with the Company
Class A Preferred Stock, the "Company Preferred Stock"). As of November 30,
1997, there were 40,817,741 shares of Company Common Stock outstanding and no
shares of Company Common Stock held by the Company as treasury stock. As of
November 30, 1997, there were (i) no shares of Company Common Stock reserved for
issuance upon exercise of outstanding stock options or otherwise except for (x)
1,883,230 shares of Company Common Stock reserved for issuance pursuant to the
Company Option Plans and described in Section 4.2(a) of the Company Disclosure
Schedule, (y) 808,435 shares of Company Common Stock reserved for issuance upon
consummation of the merger of Victory Bancshares, Inc. (the "Victory Merger")
with and into the Company pursuant to the Agreement and Plan of Merger (the
"Victory Merger Agreement"), dated as of September 24, 1997, among the Company,
the Company Bank, Victory Bancshares, Inc., and Victory Bank and Trust Company,
and (z) 8,122,730 shares of Company Common Stock reserved for issuance upon
exercise of the option (the "Option") to be issued to Parent pursuant to the
Stock Option Agreement, to be entered into on the date hereof, between Parent
and Company (the "Stock Option Agreement"), and (ii) no shares of Company
Preferred Stock issued or outstanding, held in the Company's treasury or
reserved for issuance upon exercise of outstanding stock options or otherwise.
All of the issued and outstanding shares of Company Common
 
APPENDIX A
 
                                      A-10
<PAGE>   138
 
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. Except as referred to above or reflected in
Section 4.2(a) of the Company Disclosure Schedule, the Company does not have and
is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Company Common Stock or Company Preferred Stock or any other
equity security of the Company or any securities representing the right to
purchase or otherwise receive any shares of Company Common Stock or any other
equity security of the Company. The names of the optionees, the date of each
option to purchase Company Common Stock granted, the number of shares subject to
each such option, the expiration date of each such option, and the price at
which each such option may be exercised under the Company Option Plans are set
forth in Section 4.2(a) of the Company Disclosure Schedule.
 
     (b) Section 4.2(b)of the Company Disclosure Schedule sets forth a true and
correct list of all of the Subsidiaries of the Company. Except as set forth in
Section 4.2(b) of the Company Disclosure Schedule, the Company owns, directly or
indirectly, all of the issued and outstanding shares of the capital stock of
each of such Subsidiaries, free and clear of all liens, charges, encumbrances
and security interests whatsoever, and all of such shares are duly authorized
and validly issued and are fully paid, nonassessable (subject, however, in the
case of the Company Bank, to the provisions of Section 55 of Title 12 of the
United States Code) and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Subsidiary of the Company has or is bound
by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary. Assuming
compliance by Parent with Section 1.5 hereof, and except as provided in Section
4.2(b) of the Company Disclosure Schedule, at the Effective Time, there will not
be any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character by which the Company or any of its Subsidiaries will
be bound calling for the purchase or issuance of any shares of the capital stock
of the Company or any of its Subsidiaries. Except for its Subsidiaries, the
Company does not own (other than in a bona fide fiduciary capacity or in
satisfaction of a debt previously contracted) beneficially, directly or
indirectly, any shares of any equity securities or similar interests of any
person, or any interest in a partnership or joint venture of any kind.
 
     4.3.  Authority; No Violation.  (a) The Company has full corporate power
and authority to execute and deliver this Agreement and the Stock Option
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Stock Option Agreement and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly approved by the Board of Directors of the Company. The Board of
Directors of the Company has directed that this Agreement and the transactions
contemplated hereby be submitted to the Company's stockholders for approval at a
meeting of such stockholders and, except for the adoption of this Agreement by
the requisite vote of the Company's stockholders, no other corporate proceedings
on the part of the Company are necessary to approve this Agreement and the Stock
Option Agreement and to consummate the transactions contemplated hereby and
thereby. This Agreement has been, and the Stock Option Agreement will be, duly
and validly executed and delivered by the Company and (assuming due
authorization, execution and delivery by Parent) this Agreement constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
 
     (b) Except as set forth in Section 4.3(b) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement or the Stock
Option Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby or thereby, nor compliance by the Company with
any of the terms or provisions hereof or thereof, will (i) violate any provision
of the Articles of Incorporation or By-Laws of the Company or the certificate of
incorporation, by-laws or similar governing documents of any of its
Subsidiaries, or (ii) assuming that the consents and approvals referred to in
Section 4.4 hereof are duly obtained, (x) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to the
Company or any of its Subsidiaries, or any of their respective properties or
assets, or
 
                                                                      APPENDIX A
 
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(y) violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of the respective properties or
assets of the Company or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Company
or any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected.
 
     4.4.  Consents and Approvals.  Except for (a) the filing of applications
and notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (b) the filing of such applications, filings,
authorizations, orders and approvals as may be required under applicable state
law, (c) the filing with the SEC of a joint proxy statement in definitive form
relating to the meetings of the Company's stockholders and Parent's stockholders
to be held in connection with this Agreement and the transactions contemplated
hereby (the "Proxy Statement") and the filing and declaration of effectiveness
of the registration statement on Form S-4 (the "S-4") in which the Proxy
Statement will be included as a prospectus, (d) the approval of this Agreement
by the requisite vote of the stockholders of the Company, (e) the filing of the
Articles of Merger with the Mississippi Secretary pursuant to the MBCA and with
the Tennessee Secretary pursuant to the TBCA, (f) approval for quotation of the
Parent Common Stock to be issued in the Merger on the Nasdaq/NMS, and (g) such
filings, authorizations or approvals as may be set forth in Section 4.4 of the
Company Disclosure Schedule, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or with
any third party are necessary in connection with (1) the execution and delivery
by the Company of this Agreement and the Stock Option Agreement and (2) the
consummation by the Company of the Merger and the other transactions
contemplated hereby and thereby.
 
     4.5.  Reports.  The Company and each of its Subsidiaries have timely filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to file since December
31, 1995 with (i) the Federal Reserve Board, (ii) the FDIC, (iii) the Office of
the Comptroller of the Currency (the "OCC"), (iv) any state banking commissions
or any other state regulatory authority (each a "State Regulator") and (v) any
other self-regulatory organization ("SRO") (collectively, the "Regulatory
Agencies"), and have paid all fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of the Company and its Subsidiaries, and
except as set forth in Section 4.5 of the Company Disclosure Schedule, no
Regulatory Agency has initiated any proceeding or, to the knowledge of the
Company, investigation into the business or operations of the Company or any of
its Subsidiaries since December 31, 1995. There is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of the Company or any of its
Subsidiaries.
 
     4.6.  Financial Statements.  The Company has previously made available to
Parent copies of (a) the consolidated statements of condition of the Company and
its Subsidiaries as of December 31 for the fiscal years 1995 and 1996, and the
related consolidated statements of earnings, changes in stockholders' equity and
cash flows for the fiscal years 1994 through 1996, inclusive, as reported in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
filed with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of KPMG Peat
Marwick LLP, independent public accountants with respect to the Company, and (b)
the unaudited consolidated statements of condition of the Company and its
Subsidiaries as of September 30, 1997 and December 31, 1996 and the unaudited
consolidated statements of earnings and cash flows for the nine-month period
ended September 30, 1997 as reported in the Company's Quarterly Report on Form
10-Q for the period ended September 30, 1997 filed with the SEC under the
Exchange Act. The December 31, 1996 consolidated statement of condition of the
Company (including the related notes, where applicable) fairly presents the
consolidated financial position of the Company and its Subsidiaries as of the
date thereof, and the other financial statements referred to in this Section 4.6
(including the related notes, where applicable) fairly
 
APPENDIX A
 
                                      A-12
<PAGE>   140
 
present, and the financial statements to be filed with the SEC after the date
hereof will fairly present (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount), the results of the
consolidated operations and consolidated financial position of the Company and
its Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) complies, and the financial statements to be filed with the SEC
after the date hereof will comply, with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto; and
each of such statements (including the related notes, where applicable) has
been, and the financial statements to be filed with the SEC after the date
hereof will be, prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of the Company and its
Subsidiaries have been, and are being, maintained in accordance with GAAP and
any other applicable legal and accounting requirements.
 
     4.7.  Broker's Fees.  Neither the Company nor any Subsidiary of the Company
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated by this Agreement
or the Stock Option Agreement, except that the Company has engaged, and will pay
a fee or commission to, Credit Suisse First Boston Corporation ("First Boston")
in accordance with the terms of a letter agreement between First Boston and the
Company, a true and correct copy of which has been previously made available by
the Company to Parent.
 
     4.8.  Absence of Certain Changes or Events.  (a) Except as may be set forth
in Section 4.8(a) of the Company Disclosure Schedule, or as disclosed in any
Company Report (as defined in Section 4.12) filed with the SEC prior to the date
of this Agreement, since December 31, 1996, there has been no change or
development or combination of changes or developments which, individually or in
the aggregate, has had a Material Adverse Effect on the Company.
 
     (b) Except as set forth in Section 4.8(b) of the Company Disclosure
Schedule or as disclosed in any Company Report filed with the SEC prior to the
date of this Agreement, since December 31, 1996, the Company and its
Subsidiaries have carried on their respective businesses in the ordinary course
consistent with their past practices.
 
     (c) Except as set forth in Section 4.8(c) of the Company Disclosure
Schedule, since September 30, 1997, neither the Company nor any of its
Subsidiaries has (i) increased the wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any executive officer, employee,
or director from the amount thereof in effect as of September 30, 1997 (which
amounts have been previously disclosed to Parent), granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonus (except (x) for salary increases and bonus
payments made in the ordinary course of business consistent with past practices
and (y) the Company may adopt the severance plan described in Section 6.1(j) of
the Company Disclosure Schedule), (ii) suffered any strike, work stoppage,
slow-down, or other labor disturbance, (iii) been a party to a collective
bargaining agreement, contract or other agreement or understanding with a labor
union or organization, or (iv) had any union organizing activities.
 
     4.9.  Legal Proceedings.  (a) Except as set forth in Section 4.9 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to any, and there are no pending or, to the Company's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against the
Company or any of its Subsidiaries or challenging the validity or propriety of
the transactions contemplated by this Agreement.
 
     (b) Except as set forth in Section 4.9(b) of the Company Disclosure
Schedule, there is no injunction, order, judgment, decree, or regulatory
restriction imposed upon the Company, any of its Subsidiaries or the assets of
the Company or any of its Subsidiaries.
 
     4.10.  Taxes.  (a) Except as set forth in Section 4.10(a) of the Company
Disclosure Schedule, each of the Company and its Subsidiaries has (i) duly and
timely filed (including applicable extensions granted
 
                                                                      APPENDIX A
 
                                      A-13
<PAGE>   141
 
without penalty) all Tax Returns (as hereinafter defined) required to be filed
at or prior to the Effective Time, and such Tax Returns are true and correct,
and (ii) paid in full or made adequate provision in the financial statements of
the Company (in accordance with GAAP) for all Taxes (as hereinafter defined)
shown to be due on such Tax Returns. Except as set forth in Section 4.10(a) of
the Company Disclosure Schedule, (i) as of the date hereof neither the Company
nor any of its Subsidiaries has requested any extension of time within which to
file any Tax Returns in respect of any fiscal year which have not since been
filed and no request for waivers of the time to assess any Taxes are pending or
outstanding, and (ii) as of the date hereof, with respect to each taxable period
of the Company and its Subsidiaries, the federal and state income Tax Returns of
the Company and its Subsidiaries have been audited by the Internal Revenue
Service or appropriate state tax authorities or the time for assessing and
collecting income Tax with respect to such taxable period has closed and such
taxable period is not subject to review.
 
     (b) For the purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but not
limited to income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest, penalties
or additions attributable thereto. For purposes of this Agreement, "Tax Return"
shall mean any return, report, information return or other document (including
any related or supporting information) with respect to Taxes.
 
     4.11.  Employees.  (a) Section 4.11(a) of the Company Disclosure Schedule
sets forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); "pension" plan, fund or program (within the
meaning of section 3(2) of ERISA); each employment, termination or severance
agreement; and each other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to (the "Plans") by the Company, any of its
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), all of which together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 414(b), (c), (m) or (o) of
the Code, for the benefit of any employee or former employee of the Company, any
Subsidiary or any ERISA Affiliate.
 
     (b) The Company has heretofore made available to Parent with respect to
each of the Plans true and correct copies of each of the following documents if
applicable: (i) the Plan document; (ii) the actuarial report for such Plan for
each of the last two years, (iii) the most recent determination letter from the
Internal Revenue Service for such Plan and (iv) the most recent summary plan
description and related summaries of material modifications.
 
     (c) Except as set forth in Section 4.11(c) of the Company Disclosure
Schedule: each of the Plans is in compliance with the applicable provisions of
the Code and ERISA; each of the Plans intended to be "qualified" within the
meaning of section 401(a) of the Code has received a favorable determination
letter from the IRS and to the knowledge of the Company, nothing has occurred
which could reasonably be expected to result in the revocation of such letter;
no Plan has an accumulated or waived funding deficiency within the meaning of
section 412 of the Code; neither the Company nor any ERISA Affiliate has
incurred, directly or indirectly, any liability to or on account of a Plan
pursuant to Title IV of ERISA (other than PBGC premiums); to the knowledge of
the Company no proceedings have been instituted to terminate any Plan that is
subject to Title IV of ERISA; no "reportable event," as such term is defined in
section 4043(c) of ERISA, has occurred with respect to any Plan (other than a
reportable event with respect to which the thirty day notice period has been
waived); no condition exists that presents a material risk to the Company of
incurring a liability to or on account of a Plan pursuant to Title IV of ERISA;
no Plan is a multiemployer plan (within the meaning of section 4001(a)(3) of
ERISA) and no Plan is a multiple employer plan as defined in Section 413 of the
Code; and there are no pending, or to the knowledge of the Company, threatened
or anticipated claims (other than routine claims for benefits) by, on behalf of
or against any of the Plans or any trusts related thereto.
 
APPENDIX A
 
                                      A-14
<PAGE>   142
 
     (d) Except as set forth in Section 4.11(d) of the Company Disclosure
Schedule or as otherwise contemplated by this Agreement or any other agreements
entered into by any party hereto in connection with the execution hereof:
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in conjunction with any
other event) (i) result in any payment (including, without limitation,
severance, unemployment compensation, "excess parachute payment" within the
meaning of Section 280G of the Code, forgiveness of indebtedness or otherwise)
becoming due to any officer, director or employee of the Company or any of its
Subsidiaries under any Plan or otherwise, (ii) increase any benefits payable
under any Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits.
 
     4.12.  SEC Reports.  The Company has previously made available to Parent a
true and correct copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since December 31, 1995 by
the Company with the SEC pursuant to the Securities Act or the Exchange Act (the
"Company Reports") and (b) communication mailed by the Company to its
stockholders since December 31, 1995, and no such registration statement,
prospectus, report, schedule, proxy statement or communication contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date. The Company has timely filed all Company Reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all Company Reports complied
with the published rules and regulations of the SEC with respect thereto.
 
     4.13.  Company Information.  The information relating to the Company and
its Subsidiaries which is provided to Parent by the Company or its
representatives for inclusion in the Proxy Statement and the S-4, or in any
other document filed with any other regulatory agency in connection herewith,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Proxy Statement
(except for such portions thereof that relate only to Parent or any of its
Subsidiaries) will comply with the provisions of the Exchange Act and the rules
and regulations thereunder.
 
     4.14.  Compliance with Applicable Law.  The Company and each of its
Subsidiaries hold, and have at all times held, all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to the
Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries has received notice of any violations of any of the above.
 
     4.15.  Certain Contracts.  (a) Except as set forth in Section 4.15(a) of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is a party to or bound by any contract (whether written or oral) (i) with
respect to the employment of any directors or consultants, (ii) which, upon the
consummation of the transactions contemplated by this Agreement, will (either
alone or upon the occurrence of any additional acts or events) result in any
payment or benefits (whether of severance pay or otherwise) becoming due, or the
acceleration or vesting of any rights to any payment or benefits, from Parent,
the Company, the Surviving Corporation or any of their respective Subsidiaries
to any director or consultant thereof, (iii) which is a material contract (as
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after
the date of this Agreement that has not been filed or incorporated by reference
in the Company Reports, (iv) which is a consulting agreement (including data
processing, software programming and licensing contracts) not terminable on 90
days or less notice involving the payment of more than $500,000 per annum, or
(v) which materially restricts the conduct of any line of business by the
Company or any of its Subsidiaries. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.15(a), whether or not set
forth in Section 4.15(a) of the Company Disclosure Schedule, is referred to
herein as a "Company Contract." The Company has previously delivered or made
available to Parent true and correct copies of each Company Contract.
 
                                                                      APPENDIX A
 
                                      A-15
<PAGE>   143
 
     (b) Except as set forth in Section 4.15(b) of the Company Disclosure
Schedule, (i) each Company Contract described in clause (iii) of Section 4.15(a)
is valid and binding and in full force and effect, (ii) the Company and each of
its Subsidiaries has performed all obligations required to be performed by it to
date under each Company Contract described in clause (iii) of Section 4.15(a),
(iii) no event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a default on the part of the Company or any
of its Subsidiaries under any Company Contract described in clause (iii) of
Section 4.15(a), and (iv) no other party to any Company Contract described in
clause (iii) of Section 4.15(a) is, to the knowledge of the Company, in default
in any respect thereunder.
 
     4.16.  Agreements with Regulatory Agencies.  Except as set forth in Section
4.16 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth on Section 4.16 of the Company
Disclosure Schedule, a "Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies, its management or
its business, nor has the Company or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
 
     4.17.  Business Combination Provision; Takeover Laws.  Assuming the
accuracy of the representation contained in Section 5.5 hereof, the Company has
taken all action required to be taken by it in order to exempt this Agreement
and the Stock Option Agreement and the transactions contemplated hereby and
thereby from, and this Agreement and the Stock Option Agreement and the
transactions contemplated hereby and thereby are exempt from, the requirements
of any "moratorium," "control share," "fair price" or other anti-takeover laws
and regulations (collectively, "Takeover Laws") of the State of Mississippi,
including the Mississippi Shareholder Protection Act and the Mississippi Control
Share Act. The transactions contemplated by this Agreement have been approved by
the Board of Directors of the Company for purposes of, and, assuming the
accuracy of the representation contained in Section 5.5 hereof, are exempt from,
Article Seventh of the Company's Articles of Incorporation (such approval
including approval of the majority of the Continuing Directors of the Company,
as such term is defined in such Article Seventh).
 
     4.18.  Administration of Fiduciary Accounts.  The Company and each of its
Subsidiaries has properly administered all accounts for which it acts as a
fiduciary, including but not limited to accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents and
applicable state and federal law and regulation and common law. Neither the
Company nor any of its Subsidiaries nor any of their respective directors,
officers or employees has committed any breach of trust with respect to any such
fiduciary account, and the accountings for each such fiduciary account are true
and correct and accurately reflect the assets of such fiduciary account.
 
     4.19.  Environmental Matters.  Except as set forth in Section 4.19 of the
Company Disclosure Schedule:
 
     (a) Each of the Company and its Subsidiaries and, to the knowledge of the
Company, each of the Participation Facilities and the Loan Properties (each as
hereinafter defined), are in compliance with all applicable federal, state and
local laws, including common law, regulations and ordinances, and with all
applicable decrees, orders and contractual obligations relating to pollution or
the discharge of, or exposure to, Hazardous Materials (as hereinafter defined)
in the environment or workplace ("Environmental Laws");
 
     (b) There is no suit, claim, action or proceeding, pending or, to the
knowledge of the Company, threatened, before any Governmental Entity or other
forum in which the Company, any of its Subsidiaries, any Participation Facility
or any Loan Property, has been or, with respect to threatened proceedings, may
be, named as a defendant (x) for alleged noncompliance (including by any
predecessor) with any Environmental Laws, or (y) relating to the release,
threatened release or exposure to any Hazardous Material whether or not
occurring at or on a site owned, leased or operated by the Company or any of its
Subsidiaries, any Participation Facility or any Loan Property;
APPENDIX A
 
                                      A-16
<PAGE>   144
 
     (c) To the knowledge of the Company, during the period of (x) the Company's
or any of its Subsidiaries' ownership or operation of any of their respective
current or former properties, (y) the Company's or any of its Subsidiaries'
participation in the management of any Participation Facility, or (z) the
Company's or any of its Subsidiaries' interest in a Loan Property, there has
been no release of Hazardous Materials in, on, under or affecting any such
property. To the knowledge of the Company, prior to the period of (x) the
Company's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) the Company's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(z) the Company's or any of its Subsidiaries' interest in a Loan Property, there
was no release of Hazardous Materials in, on, under or affecting any such
property, Participation Facility or Loan Property; and
 
     (d) The following definitions apply for purposes of this Section 4.19: (x)
"Hazardous Materials" means any chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum or other regulated substances or materials, (y) "
Loan Property" means any property in which the Company or any of its
Subsidiaries holds a security interest, and, where required by the context, said
term means the owner or operator of such property; and (z) "Participation
Facility" means any facility in which the Company or any of its Subsidiaries
participates in the management and, where required by the context, said term
means the owner or operator of such property.
 
     4.20.  Opinion.  Prior to the execution of this Agreement, the Company has
received an opinion from First Boston to the effect that as of the date thereof
and based upon and subject to the matters set forth therein, the Exchange Ratio
is fair to the stockholders of the Company from a financial point of view. Such
opinion has not been amended or rescinded as of the date of this Agreement.
 
     4.21.  Approvals.  As of the date of this Agreement, the Company knows of
no reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger)
should not be obtained.
 
     4.22.  Loan Portfolio.  (a) Except as set forth in Section 4.22 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to any written or oral (i) loan agreement, note or borrowing arrangement
(including, without limitation, leases, credit enhancements, commitments,
guarantees and interest-bearing assets) (collectively, "Loans"), other than
Loans the unpaid principal balance of which does not exceed $100,000, under the
terms of which the obligor was, as of October 31, 1997, over 90 days delinquent
in payment of principal or interest or in default of any other provision, or
(ii) as of June 30, 1997, Loan with any director, executive officer or five
percent or greater stockholder of the Company or any of its Subsidiaries, or to
the knowledge of the Company, any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing. Section 4.22 of
the Company Disclosure Schedule sets forth (i) all of the Loans in original
principal amount in excess of $100,000 of the Company or any of its Subsidiaries
that as of October 31, 1997, were classified by any bank examiner (whether
regulatory or internal) as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," "Loss," "Classified," "Criticized," "Credit Risk
Assets," "Concerned Loans," "Watch List" or words of similar import, together
with the principal amount of and accrued and unpaid interest on each such Loan
and the identity of the borrower thereunder, (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the other Loans of the Company and its
Subsidiaries that as of October 31, 1997, were classified as such, together with
the aggregate principal amount of and accrued and unpaid interest on such Loans
by category and (iii) each asset of the Company that as of October 31, 1997, was
classified as "Other Real Estate Owned" and the book value thereof.
 
     (b) Each Loan in original principal amount in excess of $100,000 (i) is
evidenced by notes, agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the extent secured, has been
secured by valid liens and security interests which have been perfected and
(iii) is the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
 
     4.23.  Property.  Each of the Company and its Subsidiaries has good and
marketable title free and clear of all liens, encumbrances, mortgages, pledges,
charges, defaults or equitable interests to all of the properties
                                                                      APPENDIX A
 
                                      A-17
<PAGE>   145
 
and assets, real and personal, tangible or intangible, which are reflected on
the consolidated statement of financial condition of the Company as of September
30, 1997 or acquired after such date, except (i) liens for taxes not yet due and
payable or contested in good faith by appropriate proceedings, (ii) pledges to
secure deposits and other liens incurred in the ordinary course of business,
(iii) such imperfections of title, easements and encumbrances, if any, as do not
interfere with the use of the respective property as such property is used on
the date of this Agreement, (iv) for dispositions and encumbrances of, or on,
such properties or assets in the ordinary course of business or (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens and encumbrances arising in the ordinary course of business. All
leases pursuant to which the Company or any Subsidiary of the Company, as
lessee, leases real or personal property are valid and enforceable in accordance
with their respective terms and neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any other party thereto, is in default
thereunder.
 
     4.24.  Accounting for the Merger; Reorganization.  As of the date of this
Agreement, the Company has no reason to believe that the Merger will fail to
qualify (i) for pooling-of-interests treatment under GAAP or (ii) as a
reorganization under Section 368(a) of the Code.
 
                                   ARTICLE V
 
                         REPRESENTATIONS AND WARRANTIES
                                   OF PARENT
 
     Subject to Article III, Parent hereby represents and warrants to the
Company as follows:
 
     5.1.  Corporate Organization.  (a) Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Tennessee.
Parent has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. Parent is duly registered as a bank holding company
under the BHC Act and as a savings and loan holding company under the Home
Owner's Loan Act, as amended ("HOLA"). The Restated Charter and By-laws of
Parent, copies of which have previously been made available to the Company, are
true and correct copies of such documents as in effect as of the date of this
Agreement.
 
     (b) Each Subsidiary of Parent that is a bank or savings institution (each a
"Parent Bank" and collectively, the "Parent Banks") is a bank or savings
institution duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization. The deposit accounts of the Parent Banks
are insured by the FDIC through the Bank Insurance Fund or Savings Association
Insurance Fund to the fullest extent permitted by law, and all premiums and
assessments required in connection therewith have been paid when due. Each of
Parent's other Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary of Parent has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary. The articles of incorporation, charter, by-laws and
similar governing documents of the Parent Banks, copies of which have previously
been made available to the Company, are true and correct copies of such
documents as in effect as of the date of this Agreement.
 
     (c) The minute books of Parent and each of its Subsidiaries contain true
and correct records of all meetings and other corporate actions held or taken
since December 31, 1995 of their respective stockholders and Boards of Directors
(including committees of their respective Boards of Directors).
 
     5.2.  Capitalization.  (a) As of the date of this Agreement, the authorized
capital stock of Parent consists of 100,000,000 shares of Parent Common Stock
and 2,500,000 shares of preferred stock, no par value ("Parent Preferred
Stock"). As of October 31, 1997, there were 58,402,763 shares of Parent Common
Stock and no shares of Parent Preferred Stock issued and outstanding, and no
shares of Parent Common Stock held
 
APPENDIX A
 
                                      A-18
<PAGE>   146
 
in Parent's treasury. As of the date of this Agreement, no shares of Parent
Common Stock or Parent Preferred Stock were reserved for issuance, except as set
forth in Section 5.2(a) of the Parent Disclosure Schedule and except for
5,000,000 shares of Parent Series A Junior Preferred Stock reserved for issuance
upon exercise of the rights (the "Parent Rights") distributed to holders of
Parent Common Stock pursuant to the Rights Agreement, dated as of December 14,
1988, between Parent and First American National Bank, as Rights Agent (the
"Parent Rights Agreement"). All of the issued and outstanding shares of Parent
Common Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except as
referred to above or reflected in Section 5.2(a) of the Parent Disclosure
Schedule and the Parent Rights Agreement, Parent does not have and is not bound
by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Parent Common Stock or Parent Preferred Stock or any other equity securities
of Parent or any securities representing the right to purchase or otherwise
receive any shares of Parent Common Stock or Parent Preferred Stock. The shares
of Parent Common Stock to be issued pursuant to the Merger will be duly
authorized and validly issued and, at the Effective Time, all such shares will
be fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
 
     (b) Section 5.2(b) of the Parent Disclosure Schedule sets forth a true and
correct list of all of the Parent Subsidiaries as of the date of this Agreement.
Except for INVEST Financial Corporation ("INVEST") and except as set forth in
Section 5.2(b) of the Parent Disclosure Schedule, as of the date of this
Agreement, Parent owns, directly or indirectly, all (or 98.25% in the case of
INVEST) of the issued and outstanding shares of capital stock of each of the
Subsidiaries of Parent, free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. As of the date of
this Agreement, no Subsidiary of Parent has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character with any party that is not a direct or indirect Subsidiary of Parent
calling for the purchase or issuance of any shares of capital stock or any other
equity security of such Subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of such Subsidiary.
 
     5.3.  Authority; No Violation.  (a) Parent has full corporate power and
authority to execute and deliver this Agreement and the Stock Option Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of Parent. The Board of Directors
of Parent has directed that the Parent Vote Matters (as defined in Section 5.4)
be submitted to Parent's stockholders for approval at a meeting of such
stockholders and, except for the approval of the Parent Vote Matters by the
requisite vote of Parent's stockholders, no other corporate proceedings on the
part of Parent are necessary to approve this Agreement and the Stock Option
Agreement and to consummate the transactions contemplated hereby and thereby.
Each of this Agreement and the Stock Option Agreement has been duly and validly
executed and delivered by Parent and (assuming due authorization, execution and
delivery by the Company) this Agreement constitutes a valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
 
     (b) Except as set forth in Section 5.3(b) of the Parent Disclosure
Schedule, neither the execution and delivery of this Agreement or the Stock
Option Agreement by Parent, nor the consummation by Parent of the transactions
contemplated hereby or thereby, nor compliance by Parent with any of the terms
or provisions hereof or thereof, will (i) violate any provision of the Restated
Charter or By-Laws of Parent, or the articles of incorporation or by-laws or
similar governing documents of any of its Subsidiaries or (ii) assuming that the
consents and approvals referred to in Section 5.4 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Parent or any of its Subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both,
 
                                                                      APPENDIX A
 
                                      A-19
<PAGE>   147
 
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Parent or any of
its Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Parent or any of its Subsidiaries is a party,
or by which they or any of their respective properties or assets may be bound or
affected.
 
     5.4.  Consents and Approvals.  Except for (a) the filing of applications
and notices, as applicable, with the Federal Reserve Board under the BHC Act,
and approval of such applications and notices, (b) such applications, filings,
authorizations, orders and approvals as may be required under applicable state
law, (c) the filing with the SEC of the Proxy Statement and the filing and
declaration of effectiveness of the S-4, (d) the approval and adoption of this
Agreement and the approval of an amendment (the "Charter Amendment") to Parent's
Restated Charter to increase the number of shares of Parent Common Stock
authorized for issuance thereunder to a number of shares sufficient to enable
Parent to consummate the Merger and the other transactions contemplated by this
Agreement, in each case by the requisite vote of the stockholders of Parent (the
approval of this Agreement and the Charter Amendment being referred to herein as
the "Parent Vote Matters"), (e) the filing of the Articles of Merger with the
Mississippi Secretary and the Tennessee Secretary, (f) such filings and
approvals as are required to be made or obtained under the securities or "Blue
Sky" laws of various states in connection with the issuance of the shares of
Parent Common Stock pursuant to this Agreement, (g) approval for quotation of
the Parent Common Stock to be issued in the Merger on the Nasdaq/NMS, and (h)
such filings, authorizations or approvals as may be set forth in Section 5.4 of
the Parent Disclosure Schedule, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are necessary
in connection with (1) the execution and delivery by Parent of this Agreement
and (2) the consummation by Parent of the Merger and the other transactions
contemplated hereby.
 
     5.5.  Reports.  Parent and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December 31,
1995 with any Regulatory Agency, and have paid all fees and assessments due and
payable in connection therewith. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Parent and its
Subsidiaries, and except as set forth in Section 5.5 of Parent Disclosure
Schedule, no Regulatory Agency has initiated any proceeding or, to the knowledge
of Parent, investigation into the business or operations of Parent or any of its
Subsidiaries since December 31, 1995. There is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Parent or any of its Subsidiaries.
 
     5.6.  Financial Statements.  Parent has previously made available to the
Company copies of (a) the consolidated balance sheets of Parent and its
Subsidiaries as of December 31 for the fiscal years 1995 and 1996 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1994 through 1996, inclusive, as reported in
Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
filed with the SEC under the Exchange Act, in each case accompanied by the audit
report of KPMG Peat Marwick LLP, independent public accountants with respect to
Parent, and (b) the unaudited consolidated balance sheet of Parent and its
Subsidiaries as of September 30, 1997 and September 30, 1996 and the related
unaudited consolidated statements of income, changes in shareholders' equity and
cash flows for the nine-month periods then ended as reported in Parent's
Quarterly Report on Form 10-Q for the period ended September 30, 1997 filed with
the SEC under the Exchange Act. The December 31, 1996 consolidated balance sheet
of Parent (including the related notes, where applicable) fairly presents the
consolidated financial position of Parent and its Subsidiaries as of the date
thereof, and the other financial statements referred to in this Section 5.6
(including the related notes, where applicable) fairly present and the financial
statements to be filed with the SEC after the date hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and changes in shareholders' equity and consolidated financial
position of Parent and its Subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth; each of such statements (including
the related notes, where applicable) complies, and the financial statements
 
APPENDIX A
 
                                      A-20
<PAGE>   148
 
to be filed with the SEC after the date hereof will comply, with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related notes,
where applicable) has been, and the financial statements to be filed with the
SEC after the date hereof will be, prepared in accordance with GAAP consistently
applied during the periods involved, except as indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q. The books
and records of Parent and its Subsidiaries have been, and are being, maintained
in accordance with GAAP and any other applicable legal and accounting
requirements.
 
     5.7.  Broker's Fees.  Neither Parent nor any Subsidiary of Parent, nor any
of their respective officers or directors, has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement or the
Stock Option Agreement, except that Parent has engaged, and will pay a fee or
commission to, Morgan Stanley & Co. Incorporated ("Morgan Stanley").
 
     5.8.  Absence of Certain Changes or Events.  Except as may be set forth in
Section 5.8 of the Parent Disclosure Schedule, or as disclosed in any Parent
Report (as defined in Section 5.12) filed with the SEC prior to the date of this
Agreement, since December 31, 1996, there has been no change or development or
combination of changes or developments which, individually or in the aggregate,
has had a Material Adverse Effect on Parent.
 
     5.9.  Legal Proceedings.  (a) Except as set forth in Section 5.9 of the
Parent Disclosure Schedule or in Parent's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, neither Parent nor any of its Subsidiaries is
a party to any and there are no pending or, to Parent's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Parent or any of
its Subsidiaries or challenging the validity or propriety of the transactions
contemplated by this Agreement.
 
     (b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Parent, any of its Subsidiaries or the assets of Parent
or any of its Subsidiaries.
 
     5.10.  Taxes.  Except as set forth in Section 5.10 of the Parent Disclosure
Schedule, each of Parent and its Subsidiaries has (i) duly and timely filed
(including applicable extensions granted without penalty) all Tax Returns
required to be filed at or prior to the Effective Time, and such Tax Returns are
true and correct, and (ii) paid in full or made adequate provision in the
financial statements of Parent (in accordance with GAAP) for all Taxes shown to
be due on such Tax Returns. Except as set forth in Section 5.10 of the Parent
Disclosure Schedule, (i) as of the date hereof, neither Parent nor any of its
Subsidiaries has requested any extension of time within which to file any Tax
Returns in respect of any fiscal year which have not since been filed and no
request for waivers of the time to assess any Taxes are pending or outstanding,
and (ii) as of the date hereof, with respect to each taxable period of Parent
and its Subsidiaries, the federal and state income Tax Returns of Parent and its
Subsidiaries have been audited by the Internal Revenue Service or appropriate
state tax authorities or the time for assessing and collecting income Tax with
respect to such taxable period has closed and such taxable period is not subject
to review.
 
     5.11.  Employees.  (a) Section 5.11(a) of the Parent Disclosure Schedule
sets forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of section 3(1) of the ERISA); "pension" plan, fund or
program (within the meaning of section 3(2) of ERISA); each employment,
termination or severance agreement; and each other employee benefit plan, fund,
program, agreement or arrangement, in each case, that is sponsored, maintained
or contributed to or required to be contributed to as of the date of this
Agreement (the "Parent Plans") by Parent, any of its Subsidiaries or by any
trade or business, whether or not incorporated (a "Parent ERISA Affiliate"), all
of which together with Parent would be deemed a "single employer" within the
meaning of Section 4001 of ERISA, for the benefit of any employee or former
employee of Parent, any Subsidiary or any Parent ERISA Affiliate.
 
     (b) Except as set forth in Section 5.11(b) of the Parent Disclosure
Schedule: each of the Parent Plans is in compliance with the applicable
provisions of the Code and ERISA; each of the Parent Plans intended to be
 
                                                                      APPENDIX A
 
                                      A-21
<PAGE>   149
 
"qualified" within the meaning of section 401(a) of the Code has received a
favorable determination letter from the IRS; no Parent Plan has an accumulated
or waived funding deficiency within the meaning of section 412 of the Code;
neither Parent nor any Parent ERISA Affiliate has incurred, directly or
indirectly, any liability to or on account of a Parent Plan pursuant to Title IV
of ERISA (other than PBGC premiums); to the knowledge of Parent no proceedings
have been instituted to terminate any Parent Plan that is subject to Title IV of
ERISA; no "reportable event," as such term is defined in section 4043(c) of
ERISA, has occurred with respect to any Parent Plan (other than a reportable
event with respect to which the thirty day notice period has been waived); and
no condition exists that presents a material risk to Parent of incurring a
liability to or on account of a Parent Plan pursuant to Title IV of ERISA; no
Parent Plan is a multiemployer plan (within the meaning of section 4001(a)(3) of
ERISA and no Parent Plan is a multiple employer plan as defined in Section 413
of the Code; and there are no pending, or, to the knowledge of Parent,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Parent Plans or any trusts related thereto.
 
     5.12.  SEC Reports.  Parent has previously made available to the Company a
true and correct copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since December 31, 1995 by
Parent with the SEC pursuant to the Securities Act or the Exchange Act (the
"Parent Reports") and (b) communication mailed by Parent to its shareholders
since December 31, 1995, and no such registration statement, prospectus, report,
schedule, proxy statement or communication contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date shall be deemed to modify information as of an earlier date.
Parent has timely filed all Parent Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Parent Reports complied with the published rules and
regulations of the SEC with respect thereto.
 
     5.13.  Parent Information.  The information relating to Parent and its
Subsidiaries to be contained in the Proxy Statement and the S-4, or in any other
document filed with any other regulatory agency in connection herewith, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading. The Proxy Statement (except for such portions
thereof that relate only to the Company or any of its Subsidiaries) will comply
with the provisions of the Exchange Act and the rules and regulations
thereunder. The S-4 will comply with the provisions of the Securities Act and
the rules and regulations thereunder.
 
     5.14.  Compliance with Applicable Law.  Parent and each of its Subsidiaries
holds, and has at all times held, all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default in any
respect under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to Parent or any of its
Subsidiaries and neither Parent nor any of its Subsidiaries knows of, or has
received notice of violation of, any violations of any of the above.
 
     5.15.  Ownership of Company Common Stock; Affiliates and Associates.  As of
the date hereof, neither Parent nor any of its affiliates or associates (as such
terms are defined under the Exchange Act) (i) beneficially owns, directly or
indirectly, or (ii) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any shares of
capital stock of the Company (other than Trust Account Shares and DPC Shares).
 
     5.16.  Agreements with Regulatory Agencies.  Except as set forth in Section
5.16 of the Parent Disclosure Schedule or as disclosed in Parent's Annual Report
on Form 10-K for the year ended December 31, 1996, neither Parent nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth in Section 5.16 of the Parent
Disclosure Schedule, a "Parent Regulatory
 
APPENDIX A
 
                                      A-22
<PAGE>   150
 
Agreement"), any Regulatory Agency or other Governmental Entity that restricts
the conduct of its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor has Parent or
any of its Subsidiaries been advised by any Regulatory Agency or other
Governmental Entity that it is considering issuing or requesting any Parent
Regulatory Agreement.
 
     5.17.  Environmental Matters.  Except as set forth in Section 5.17 of the
Parent Disclosure Schedule:
 
     (a) Each of Parent and its Subsidiaries and, to the knowledge of Parent,
each of the Participation Facilities and the Loan Properties (each as
hereinafter defined), are in compliance with all Environmental Laws;
 
     (b) There is no suit, claim, action or proceeding, pending or, to the
knowledge of Parent, threatened, before any Governmental Entity or other forum
in which Parent, any of its Subsidiaries, any Participation Facility or any Loan
Property, has been or, with respect to threatened proceedings, may be, named as
a defendant (x) for alleged noncompliance (including by any predecessor) with
any Environmental Laws, or (y) relating to the release, threatened release or
exposure to any Hazardous Material whether or not occurring at or on a site
owned, leased or operated by Parent or any of its Subsidiaries, any
Participation Facility or any Loan Property;
 
     (c) To the knowledge of Parent during the period of (x) Parent's or any of
its Subsidiaries' ownership or operation of any of their respective current or
former properties, (y) Parent's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) Parent's or any of its
Subsidiaries' interest in a Loan Property, there has been no release of
Hazardous Materials in, on, under or affecting any such property. To the
knowledge of Parent, prior to the period of (x) Parent's or any of its
Subsidiaries' ownership or operation of any of their respective current or
former properties, (y) Parent's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) Parent' s or any of its
Subsidiaries' interest in a Loan Property, there was no release of Hazardous
Materials in, on, under or affecting any such property, Participation Facility
or Loan Property; and
 
     (d) The following definitions apply for purposes of this Section 5.17: (x)
"Loan Property" means any property in which Parent or any of its Subsidiaries
holds a security interest, and, where required by the context, said term means
the owner or operator of such property; and (y) "Participation Facility" means
any facility in which Parent or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such property.
 
     5.18.  Opinion.  Prior to the execution of this Agreement, Parent has
received an opinion from Morgan Stanley to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
Exchange Ratio pursuant to this Agreement is fair from a financial point of view
to Parent. Such opinion has not been amended or rescinded as of the date of this
Agreement.
 
     5.19.  Approvals.  As of the date of this Agreement, Parent knows of no
reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger)
should not be obtained.
 
     5.20.  Loan Portfolio.  (a) Except as set forth in Section 5.20 of Parent
Disclosure Schedule, neither Parent nor any of its Subsidiaries is a party to
any written or oral (i) Loan, other than Loans the unpaid principal balance of
which does not exceed $100,000, under the terms of which the obligor was, as of
October 31, 1997, over 90 days delinquent in payment of principal or interest or
in default of any other provision, or (ii) Loan with any director, executive
officer or five percent or greater stockholder of Parent or any of its
Subsidiaries, or to the knowledge of Parent, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing. Section 5.20 of Parent Disclosure Schedule sets forth (i) all of the
Loans in original principal amount in excess of $100,000 of Parent or any of its
Subsidiaries that as of October 31, 1997, were classified by any bank examiner
(whether regulatory or internal) as "Other Loans Specially Mentioned," "Special
Mention," "Substandard," "Doubtful," "Loss," "Classified," "Criticized," "Credit
Risk Assets," "Concerned Loans," "Watch List" or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan and the identity of the borrower thereunder, (ii) by category of Loan
(i.e., commercial, consumer, etc.), all of the
                                                                      APPENDIX A
 
                                      A-23
<PAGE>   151
 
other Loans of Parent and its Subsidiaries that as of October 31, 1997, were
classified as such, together with the aggregate principal amount of and accrued
and unpaid interest on such Loans by category and (iii) each asset of Parent
that as of October 31, 1997, was classified as "Other Real Estate Owned" and the
book value thereof.
 
     (b) Each Loan in original principal amount in excess of $100,000 (i) is
evidenced by notes, agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the extent secured, has been
secured by valid liens and security interests which have been perfected and
(iii) is the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
 
     5.21.  Property.  Each of Parent and its Subsidiaries has good and
marketable title free and clear of all liens, encumbrances, mortgages, pledges,
charges, defaults or equitable interests to all of the properties and assets,
real and personal, tangible or intangible, and which are reflected on the
consolidated statement of financial condition of Parent as of September 30, 1997
or acquired after such date, except (i) liens for taxes not yet due and payable
or contested in good faith by appropriate proceedings, (ii) pledges to secure
deposits and other liens incurred in the ordinary course of business, (iii) such
imperfections of title, easements and encumbrances, if any, as do not interfere
with the use of the respective property as such property is used on the date of
this Agreement, (iv) for dispositions and encumbrances of, or on, such
properties or assets in the ordinary course of business or (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens and encumbrances arising in the ordinary course of business. All
leases pursuant to which Parent or any Subsidiary of Parent, as lessee, leases
real or personal property are valid and enforceable in accordance with their
respective terms and neither Parent nor any of its Subsidiaries nor, to the
knowledge of Parent, any other party thereto is in default thereunder.
 
     5.22.  Accounting for the Merger; Reorganization.  As of the date of this
Agreement, Parent has no reason to believe that the Merger will fail to qualify
(i) for pooling-of-interests treatment under GAAP or (ii) as a reorganization
under Section 368(a) of the Code.
 
                                   ARTICLE VI
 
                   COVENANTS RELATING TO CONDUCT OF BUSINESS
 
     6.1.  Covenants of the Company.  During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement, the Stock Option Agreement or the
Victory Merger Agreement or with the prior written consent of Parent, the
Company and its Subsidiaries shall carry on their respective businesses in the
ordinary course consistent with past practice. Without limiting the generality
of the foregoing, and except as set forth in Section 6.1 of the Company
Disclosure Schedule or as otherwise contemplated by this Agreement, the Stock
Option Agreement or the Victory Merger Agreement or as consented to in writing
by Parent, the Company shall not, and shall not permit any of its Subsidiaries
to:
 
     (a) solely in the case of the Company, declare or pay any dividends on, or
make other distributions in respect of, any of its capital stock, other than
normal quarterly dividends not in excess of $0.23 per share of Company Common
Stock;
 
     (b) (i) repurchase, redeem or otherwise acquire (except for the acquisition
of Trust Account Shares and DPC Shares, as such terms are defined in Section
1.4(b) hereof) any shares of the capital stock of the Company or any Subsidiary
of the Company, or any securities convertible into or exercisable for any shares
of the capital stock of the Company or any Subsidiary of the Company, except for
purchases of Company Common Stock pursuant to the Company's employee stock
purchase plan (the "ESPP") and, subject to the terms and conditions of this
Agreement, pursuant to the Company's Automatic Dividend Reinvestment Plan (the
"DRIP"), in each case consistent with past practice, (ii) split, combine or
reclassify any shares of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
 
APPENDIX A
 
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<PAGE>   152
 
substitution for shares of its capital stock, or (iii) issue, deliver or sell,
or authorize or propose the issuance, delivery or sale of, any shares of its
capital stock or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares, or enter into any
agreement with respect to any of the foregoing, other than pursuant to the ESPP
and, subject to the terms and conditions of this Agreement, pursuant to the
DRIP, except, in the case of clauses (ii) and (iii), for the issuance of Company
Common Stock (x) upon the exercise or fulfillment of rights or options issued or
existing pursuant to employee benefit plans, programs or arrangements, all to
the extent outstanding and in existence on the date of this Agreement and in
accordance with their present terms, (y) upon the consummation of the Victory
Merger or (z) pursuant to the Stock Option Agreement;
 
     (c) amend its Articles of Incorporation, By-laws or other similar governing
documents;
 
     (d) authorize or permit any of its officers, directors, employees or agents
to directly or indirectly solicit, initiate, facilitate or encourage any
inquiries relating to, or the making of any proposal which constitutes, a
"takeover proposal" (as defined below), or participate in any discussions or
negotiations, or provide third parties with any nonpublic information, relating
to any such inquiry or proposal or otherwise facilitate any effort or attempt to
make a takeover proposal; provided, however, that the Company may communicate
information about any such takeover proposal to its stockholders if, in the
judgment of the Company's Board of Directors, based upon the advice of outside
counsel, such communication is required under applicable law, provided further,
however, that the Company may, and may authorize and permit its officers,
directors, employees or agents to, (i) provide or cause to be provided such
information, and (ii) participate in such discussions or negotiations, if the
Board of Directors of the Company, after having consulted with and considered
the advice of outside counsel, has determined that the failure to do so could
cause the members of such Board of Directors to breach their fiduciary duties
under applicable laws. The Company will immediately cease and cause to be
terminated any existing activities, discussions or negotiations previously
conducted with any parties other than Parent with respect to any of the
foregoing. The Company will take all actions necessary or advisable to inform
the appropriate individuals or entities referred to in the first sentence hereof
of the obligations undertaken in this Section 6.1(d). The Company will notify
Parent immediately if any such inquiries or takeover proposals are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, the Company, and the Company will
promptly (within 24 hours) inform Parent in writing of all of the relevant
details with respect to the foregoing including the material terms and
conditions of such request or takeover proposal and the identity of the person
or group making such request or proposal. The Company will keep Parent fully
informed of the status and details (including amendments or proposed amendments)
of any such request or takeover proposal. As used in this Agreement, "takeover
proposal" shall mean any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving the Company or any
Subsidiary of the Company or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of, the
Company or any Subsidiary of the Company other than the transactions
contemplated or permitted by this Agreement and the Stock Option Agreement;
 
     (e) make any capital expenditures other than those which (i) are made in
the ordinary course of business or are necessary to maintain existing assets in
good repair and (ii) in any event are in an amount of no more than $500,000 in
the aggregate;
 
     (f) enter into any new line of business;
 
     (g) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire any assets, which would be material, individually or in the aggregate,
to the Company, or which could reasonably be expected to impede or delay
consummation of the Merger, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings in
the ordinary course of business consistent with past practices;
 
                                                                      APPENDIX A
 
                                      A-25
<PAGE>   153
 
     (h) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, or in any of the conditions to the Merger set forth in
Article VIII not being satisfied;
 
     (i) change its methods of accounting in effect at September 30, 1997,
except as required by changes in GAAP or regulatory accounting principles as
concurred to by the Company's independent auditors;
 
     (j) (i) except as set forth in Section 7.7 hereof, as required by
applicable law or as required to maintain qualification pursuant to the Code,
adopt, amend, or terminate any employee benefit plan (including, without
limitation, any Plan) or any agreement, arrangement, plan or policy between the
Company or any Subsidiary of the Company and one or more of its current or
former directors, officers or employees except that the Company may adopt the
amendments to the Company's deferred income plans as set forth in Section 6.1(j)
of the Company Disclosure Schedule (such plans, which are listed on Section
4.11(a) of the Company Disclosure Schedule, the "Deferred Income Plans") or (ii)
except for normal increases in the ordinary course of business consistent with
past practice or except as required by applicable law, increase in any manner
the compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any Plan or agreement as in effect as of the date
hereof (including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares); provided, however, that nothing contained herein shall
prohibit the Company (x) from paying 1997 bonuses under its incentive bonus
plans listed in Section 4.11(a) of the Company Disclosure Schedule under the
heading "Management Incentive Compensation Plans" (the "Bonus Plans") consistent
with past practice, except that in determining the amounts of such bonuses, the
Company shall be entitled to disregard the effect (including, without
limitation, the cost) of any actions reasonably taken by the Company or any of
its Subsidiaries in contemplation of the Merger or at the request of Parent, or
(y) on or prior to the Closing Date, from paying pro-rata 1998 bonuses under the
Bonus Plans in respect of the period from January 1, 1998 through the Closing
Date based on the Company's annualized performance (without regard to the effect
(including, without limitation, the cost) of any actions reasonably taken by the
Company or any of its Subsidiaries in contemplation of the Merger or at the
request of Parent) from January 1, 1998 through the end of the last full month
prior to consummation of the Merger;
 
     (k) take or cause to be taken any action which would disqualify the Merger
as a "pooling of interests" for accounting purposes or a reorganization under
Section 368(a) of the Code;
 
     (l) other than activities in the ordinary course of business consistent
with past practice, sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise dispose of, any of its
material assets, properties or other rights or agreements;
 
     (m) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
 
     (n) file any application to relocate or terminate the operations of any
banking office of it or any of its Subsidiaries;
 
     (o) create, renew, amend or terminate or give notice of a proposed renewal,
amendment or termination of, any material contract, agreement or lease for
goods, services or office space to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or their
respective properties is bound, other than the renewal in the ordinary course of
business of any lease the term of which expires prior to the Closing Date, or
amend or waive the provisions of any confidentiality or standstill agreement to
which the Company or any of its affiliates is a party as of the date hereof;
 
     (p) take any action or enter into any agreement that could reasonably be
expected to jeopardize or materially delay the receipt of any Requisite
Regulatory Approval (as defined in Section 8.1(c)); or
 
     (q) agree or commit to do any of the foregoing.
 
APPENDIX A
 
                                      A-26
<PAGE>   154
 
     6.2.  Covenants of Parent.  Except as set forth in Section 6.2 of the
Parent Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to in writing by the Company, Parent shall not, and shall not permit
any of its Subsidiaries to:
 
     (a) solely in the case of Parent, declare or pay any dividends on or make
any other distributions in respect of any of its capital stock other than its
current quarterly dividends; provided, however, that nothing contained herein
shall prohibit Parent from increasing the quarterly cash dividend on the Parent
Common Stock in a manner consistent with past practice;
 
     (b) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, or in any of the conditions to the Merger set forth in
Article VIII not being satisfied;
 
     (c) take any action or enter into any agreement that could reasonably be
expected to jeopardize or materially delay the receipt of any Requisite
Regulatory Approval;
 
     (d) change its methods of accounting in effect at September 30, 1997,
except in accordance with changes in GAAP or regulatory accounting principles as
concurred to by Parent's independent auditors;
 
     (e) take or cause to be taken any action which would disqualify the Merger
as a "pooling of interests" for accounting purposes or a reorganization under
Section 368(a) of the Code; or
 
     (f) agree to do any of the foregoing.
 
     6.3.  Conduct of Parent's Business.  During the period from the date of
this Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement, or with the prior written consent
of the Company, Parent shall, and shall cause its Subsidiaries to, carry on
their respective businesses in the ordinary course consistent with past
practice.
 
                                  ARTICLE VII
 
                             ADDITIONAL AGREEMENTS
 
     7.1.  Regulatory Matters.  (a) Parent and the Company shall promptly
prepare and file with the SEC the Proxy Statement and Parent shall promptly
prepare and file with the SEC the S-4, in which the Proxy Statement will be
included as a prospectus. Each of the Company and Parent shall use its
reasonable best efforts to have the S-4 declared effective under the Securities
Act as promptly as practicable after such filing, and each of the Company and
Parent shall thereafter mail the Proxy Statement to its respective stockholders.
Parent shall also use its reasonable best efforts to obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement.
 
     (b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger). The Company and Parent
shall have the right to review in advance, and to the extent practicable each
will consult the other on, in each case subject to applicable laws relating to
the exchange of information, all the information relating to the Company or
Parent, as the case may be, and any of their respective Subsidiaries, which
appears in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
 
                                                                      APPENDIX A
 
                                      A-27
<PAGE>   155
 
     (c) Parent and the Company shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement, the S-4 or any other statement, filing,
notice or application made by or on behalf of Parent, the Company or any of
their respective Subsidiaries to any Governmental Entity in connection with the
Merger and the other transactions contemplated by this Agreement.
 
     (d) Parent and the Company shall promptly furnish each other with copies of
written communications received by Parent or the Company, as the case may be, or
any of their respective Subsidiaries, Affiliates or Associates (as such terms
are defined in Rule 12b-2 under the Exchange Act as in effect on the date of
this Agreement) from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
 
     7.2.  Access to Information.  (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each party shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such period, it
shall, and shall cause its Subsidiaries to, make available to the other party
all information concerning its business, properties and personnel as the other
party may reasonably request. Neither party nor any of its Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of its customers, jeopardize
any attorney-client privilege or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
 
     (b) All information furnished to Parent pursuant to Section 7.2(a) shall be
subject to, and Parent shall hold all such information in confidence in
accordance with, the provisions of the confidentiality agreement (the
"Confidentiality Agreement"), between Parent and the Company. The Company shall
have the same obligations to Parent under the Confidentiality Agreement with
respect to information furnished to the Company pursuant to Section 7.2(a) as if
the Company were the receiving party under such agreement.
 
     (c) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
 
     7.3.  Stockholder Meetings.  The Company and Parent each shall take all
steps necessary to duly call, give notice of, convene and hold a meeting of its
respective stockholders to be held as soon as is reasonably practicable after
the date on which the S-4 becomes effective for the purpose of voting upon the
approval and adoption of this Agreement, in the case of the Company, and the
Parent Vote Matters, in the case of Parent. The Company will, through its Board
of Directors, recommend to its stockholders approval of this Agreement and the
transactions contemplated hereby and such other matters as may be submitted to
its stockholders in connection with this Agreement, provided, however, that the
Board of Directors of the Company may fail to make such recommendation, or
withdraw, modify or change any such recommendation in a manner adverse to
Parent, if such Board of Directors, after having consulted with and considered
the advice of outside counsel, has determined that the making of such
recommendation, or the failure to withdraw, modify or change its recommendation,
could cause the members of such Board of Directors to breach their fiduciary
duties under applicable law. The Parent will, through its Board of Directors,
recommend to its stockholders approval of the Parent Vote Matters and such other
matters as may be submitted to its stockholders in connection with this
Agreement. The Company and Parent shall coordinate and cooperate with respect to
the foregoing matters, with a view towards, among other things, holding the
respective meetings of each party's stockholders on the same day.
 
     7.4.  Legal Conditions to Merger.  Each of Parent and the Company shall,
and shall cause its Subsidiaries to, use their reasonable best efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VIII hereof, to
APPENDIX A
 
                                      A-28
<PAGE>   156
 
consummate the transactions contemplated by this Agreement and (b) to obtain
(and to cooperate with the other party to obtain) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity and any other
third party which is required to be obtained by the Company or Parent or any of
their respective Subsidiaries in connection with the Merger and the other
transactions contemplated by this Agreement, and to comply with the terms and
conditions of such consent, authorization, order or approval.
 
     7.5.  Affiliates.  (a) Each of Parent and the Company shall use its
reasonable best efforts to cause each director, executive officer and other
person who is an "affiliate" (for purposes of Rule 145 under the Securities Act
and for purposes of qualifying the Merger for "pooling-of-interests" accounting
treatment) of such party to deliver to the other party hereto, as soon as
practicable after the date of this Agreement, a written agreement, in the form
of Exhibit 7.5(a) hereto (in the case of affiliates of Parent) or 7.5(b) hereto
(in the case of affiliates of the Company).
 
     (b) Parent shall publish, not later than 15 days after the end of the first
full calendar month following the month in which the Effective Time occurs,
financial results covering at least 30 days of post-Merger combined operations
as contemplated by SEC Accounting Series Release No. 135.
 
     7.6.  Stock Exchange Listing.  Parent shall use its reasonable best efforts
to cause the shares of Parent Common Stock to be issued in the Merger to be
approved for quotation on the Nasdaq/NMS, subject to official notice of
issuance, as of the Effective Time.
 
     7.7.  Employee Benefit Plans; Existing Agreements.  (a) As of the Effective
Time, the employees of the Company and its Subsidiaries (the "Company
Employees") shall be eligible to participate in Parent's employee benefit plans
in which similarly situated employees of Parent or Parent Bank participate, to
the same extent as similarly situated employees of Parent or Parent Bank (it
being understood that inclusion of Company Employees in Parent's employee
benefit plans may occur at different times with respect to different plans),
provided, however, that Company Employees will not be entitled to participate in
any severance plan or program of Parent during the one-year period following the
Effective Time to the extent that such employees are covered by the severance
arrangements set forth on Section 7.7(d) of the Company Disclosure Schedule
during such one-year period. Notwithstanding the foregoing, Parent agrees to
provide or to cause one of its Subsidiaries to provide Company Employees, for a
period of one year following the Effective Time, with employee benefit plans or
arrangements that are, in the aggregate, not less favorable than those provided
to Company Employees immediately prior to the Effective Time.
 
     (b) With respect to each Parent Plan that is an "employee benefit plan," as
defined in Section 3(3)of ERISA, for purposes of determining eligibility to
participate, vesting, and entitlement to benefits, including for severance
benefits and vacation entitlement (but not for accrual of pension benefits),
service with the Company (or predecessor employers to the extent the Company
provides past service credit) shall be treated as service with Parent; provided
however, that such service shall not be recognized to the extent that such
recognition would result in a duplication of benefits. Such service also shall
apply for purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any preexisting condition limitations. Each
Parent Plan shall waive pre-existing condition limitations to the same extent
waived under the applicable Company Plan. Company Employees shall be given
credit for amounts paid under a corresponding benefit plan during the same
period for purposes of applying deductibles, copayments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and
conditions of the Parent Plan.
 
     (c) As of the Effective Time, Parent shall assume and honor and shall cause
the appropriate Subsidiaries of Parent to assume and to honor in accordance with
their terms all employment, severance and other compensation agreements and
arrangements existing prior to the execution of this Agreement which are between
the Company or any of its Subsidiaries and any director, officer or employee
thereof and which have been disclosed in the Company Disclosure Schedule. Parent
acknowledges and agrees that the Merger constitutes a "Change in Control" for
all purposes pursuant to those agreements and arrangements indicated on Section
4.11 of the Company Disclosure Schedule. The provisions of this Section 7.7(c)
are intended to be for the benefit of, and shall be enforceable by, each such
director, officer or employee.
 
                                                                      APPENDIX A
 
                                      A-29
<PAGE>   157
 
     (d) Parent and the Company agree that, prior to the Effective Time, the
Company shall adopt a severance plan substantially as provided in Section 7.7(d)
of the Company Disclosure Schedule. Parent agrees to maintain and to cause each
of its Subsidiaries to maintain such plan, without modification.
 
     (e) Parent agrees that, during the one year period following the Effective
Time, no Company Employee who is an "affiliate" as contemplated by Section
7.5(a) of this Agreement shall be involuntarily terminated other than for
"Cause" (as such term is defined in the Change of Control Termination Agreements
listed on Section 4.11(a) of the Company Disclosure Schedule (regardless of
whether such Company Employee is a party to any such agreement)), unless such
Company Employee has been given written notice of such involuntary termination
at least 60 days prior to the date of termination (provided, that no such notice
may be given prior to the Effective Time). This Section 7.7(e) is intended to be
for the benefit of, and shall be enforceable by, each such Company Employee.
 
     (f) Parent agrees that, from and after the Effective Time, Parent shall
assume and agree to perform all of the Company's obligations under the Deferred
Income Plans (as such Deferred Income Plans may be amended pursuant to Section
6.1(j) hereof). Without limiting the generality of the foregoing, Parent agrees
not to terminate or amend the Deferred Income Plans with respect to amounts
deferred thereunder as of the Effective Time in any manner adverse to the
interests of any of the participants in such plans, including, without
limitation, the rights of such participants to continue to accrue interest on
amounts deferred under the Deferred Income Plans at the most favorable interest
rates provided for in the applicable deferral agreement. The provisions of this
Section 7.7(f) are intended to be for the benefit of, and shall be enforceable
by, each participant in the Deferred Income Plans.
 
     (g) As soon as practicable after the date of this Agreement, the Company
and Parent shall establish a committee (the "Committee") consisting of the
persons set forth in Section 7.7(g) of the Company Disclosure Schedule. The
Committee shall operate in accordance with the procedures set forth in Section
7.7(g) of the Company Disclosure Schedule. The Committee shall direct the
payment of retention and other compensatory payments or severance to Company
Employees from and after the Effective Time in amounts and on such terms and
conditions as are determined by the Committee. Parent shall pay or cause to be
paid all such amounts as directed by the Committee, provided, however, that in
no event shall Parent be required to pay or cause to be paid an amount in excess
of $10 million in the aggregate (the "Section 7.7(g) Amount") pursuant to this
Section 7.7(g), provided further, however, that the Section 7.7(g) Amount shall
be reduced on a dollar-for-dollar basis to the extent that the amounts paid
pursuant to the severance arrangements set forth in Section 7.7(d) of the
Company Disclosure Schedule exceed $13.5 million, but in no event shall the
Section 7.7(g) Amount be less than $8.5 million. Parent's obligation to make the
payments contemplated by this Section 7.7(g) is intended to be for the benefit
of, and shall be enforceable by, each of the Company Employees to whom the
Committee has made an award.
 
     7.8.  Indemnification.  (a) In the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
proceeding or investigation in which any person who is now, or has been at any
time prior to the date of this Agreement, or who becomes prior to the Effective
Time, a director, officer or employee of the Company or any of its Subsidiaries
(the "Indemnified Parties") is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining to (i)
the fact that he is or was a director, officer or employee of the Company, any
of the Subsidiaries of the Company or any of their respective predecessors or
affiliates or (ii) this Agreement or any of the transactions contemplated
hereby, whether in any case asserted or arising before or after the Effective
Time, the parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto. It is understood and agreed that after the
Effective Time, Parent shall indemnify and hold harmless, as and to the extent
permitted by law, each such Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorney's fees and
expenses in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law), judgments, fines
and amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), the Indemnified Parties
may
APPENDIX A
 
                                      A-30
<PAGE>   158
 
retain counsel reasonably satisfactory to them after consultation with Parent;
provided, however, that (1) Parent shall have the right to assume the defense
thereof and upon such assumption Parent shall not be liable to any Indemnified
Party for any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof, except
that if Parent elects not to assume such defense or counsel for the Indemnified
Parties reasonably advises that there are issues which raise conflicts of
interest between Parent and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to them after consultation with Parent,
and Parent shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Parent shall in all cases be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties, (3)
Parent shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld) and (4) Parent shall
have no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim Indemnification under this Section 7.8, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify Parent thereof, provided that the failure to so notify shall not
affect the obligations of Parent under this Section 7.8 except to the extent
such failure to notify materially prejudices Parent. Parent's obligations under
this Section 7.8 shall continue in full force and effect without time limit from
and after the Effective Time.
 
     (b) Parent shall cause the persons serving as officers and directors of the
Company immediately prior to the Effective Time to be covered for a period of
three years from the Effective Time by the directors' and officers' liability
insurance policy maintained by the Company (provided that Parent may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy) with respect to
acts or omissions occurring prior to the Effective Time which were committed by
such officers and directors in their capacity as such; provided, however, that
in no event shall Parent be required to expend on an annual basis more than 200%
of the current amount expended by the Company (the "Insurance Amount") to
maintain or procure insurance coverage, and further provided that if Parent is
unable to maintain or obtain the insurance called for by this Section 7.8(b),
Parent shall use all reasonable efforts to obtain as much comparable insurance
as is available for the Insurance Amount.
 
     (c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent
assume the obligations set forth in this section.
 
     (d) The provisions of this Section 7.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
 
     7.9.  Additional Agreements.  In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such necessary action
as may be reasonably requested by Parent.
 
     7.10.  Directorships.  Parent shall cause its Board of Directors to be
expanded by five members and shall appoint those persons mutually agreed upon by
Parent and the Company from among those persons currently serving on the
Company's Board of Directors (such persons, and any substitute person as
provided in the last sentence of this paragraph, the "Nominees") to fill the
vacancies on Parent's Board of Directors created by such increase as of the
Effective Time. In the event any Nominee shall be appointed or elected to a
class of directors of Parent the term of which class of directors expires prior
to December 31, 1999, Parent shall include such person on the list of nominees
for director presented by the Board of Directors of Parent and for which said
Board shall solicit proxies at the annual meeting of stockholders of Parent
following the Effective Time at which directors are elected for such class. In
the event that any Nominee is unable to serve as a director of Parent as a
result of illness, death, resignation or any other reason, Parent shall elect a
member
 
                                                                      APPENDIX A
 
                                      A-31
<PAGE>   159
 
of the Advisory Boards established pursuant to Section 7.12 hereof selected by
Parent as a substitute nominee in accordance with this Section 7.10.
 
     7.11.  Coordination of Dividends.  After the date of this Agreement each of
Parent and the Company shall coordinate with the other the declaration of any
dividends in respect of the Parent Common Stock and the Company Common Stock and
the record dates and payments dates relating thereto, it being the intention of
the parties that the holders of Parent Common Stock or Company Common Stock
shall not receive more than one dividend, or fail to receive one dividend, for
any single calendar quarter with respect to their shares of Parent Common Stock
and/or Company Common Stock and any shares of Parent Common Stock any holder of
Company Common Stock receives in exchange therefor in the Merger.
 
     7.12.  Advisory Boards.  Promptly following the Effective Time, Parent
shall cause, for a period of not less than thirty-six months after the Effective
Time, those persons who are members of the Board of Directors of the Company
(other than any such persons who shall be appointed to the Board of Directors of
Parent pursuant to Section 7.10) and those persons who are members of the Board
of Directors of the Company Bank to be appointed or elected as members of one of
the Company Bank's existing community advisory boards. In addition, following
the Effective Time, Parent shall cause those persons who are members of such
community advisory boards as of the Effective Time to continue to be members of
such boards for a period of not less than thirty-six months after the Effective
Time. From and after the Effective Time, such advisory boards shall meet four
times per year. Each such advisory director shall be paid retainers and meeting
fees which, in the aggregate, on an annual basis, are no less than the retainers
and meeting fees (in respect of four meetings per year) paid to members of the
Company Bank's Jackson Advisory Board during calendar year 1997 (assuming all
meetings were attended) and which fees have been previously described to Parent.
 
     7.13.  Foundation.  At or prior to the Effective Time, Parent shall
establish, and contribute $15 million to, a charitable foundation for the
benefit of the communities served by the Company and its Subsidiaries, which
foundation shall be administered by a board to be appointed by the Board of
Directors of the Company, in consultation with Parent, prior to the Effective
Time.
 
                                  ARTICLE VIII
 
                              CONDITIONS PRECEDENT
 
     8.1.  Conditions to Each Party's Obligation To Effect the Merger.  The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
 
     (a) Stockholder Approvals. This Agreement shall have been approved and
adopted by the requisite vote of the stockholders of the Company under
applicable law, and the Parent Vote Matters shall have been approved by the
requisite votes of the stockholders of Parent under applicable law.
 
     (b) Listing of Shares. The shares of Parent Common Stock which shall be
issued to the stockholders of the Company upon consummation of the Merger shall
have been authorized for quotation on the Nasdaq/NMS, subject to official notice
of issuance.
 
     (c) Other Approvals. All regulatory approvals required to consummate the
transactions contemplated hereby (including the Merger) shall have been obtained
and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
 
     (d) S-4. The S-4 shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the S-4 shall have been issued and
no proceedings for that purpose shall have been initiated or threatened by the
SEC.
 
     (e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger shall be in effect. No statute, rule, regulation, order, injunction or
decree shall have been
APPENDIX A
 
                                      A-32
<PAGE>   160
 
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
 
     8.2.  Conditions to Obligations of Parent.  The obligation of Parent to
effect the Merger is also subject to the satisfaction or waiver by Parent at or
prior to the Effective Time of the following conditions:
 
     (a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of the Company set forth in this Agreement (other
than those set forth in Section 4.2) 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; and (ii) the representations and warranties of the Company set
forth in Section 4.2 of this Agreement shall be true and correct in all material
respects (without giving effect to Section 3.2 of this Agreement) 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. Parent shall have received a certificate signed on behalf of
the Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to the foregoing effect.
 
     (b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
 
     (c) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking an Injunction shall be pending.
 
     (d) Federal Tax Opinion. Parent shall have received an opinion from
Wachtell, Lipton, Rosen & Katz, counsel to Parent ("Parent's Counsel"), in form
and substance reasonably satisfactory to Parent, dated the Effective Time,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which 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 Code and that,
accordingly, for federal income tax purposes:
 
          (i) No gain or loss will be recognized by Parent or the Company as a
     result of the Merger;
 
          (ii) No gain or loss will be recognized by the shareholders of the
     Company who exchange all of their Company Common Stock solely for Parent
     Common Stock pursuant to the Merger (except with respect to cash received
     in lieu of a fractional share interest in Parent Common Stock); and
 
          (iii) The aggregate tax basis of the Parent Common Stock received by
     shareholders who exchange all of their Company Common Stock solely for
     Parent Common Stock pursuant to the Merger will be the same as the
     aggregate tax basis of the Company Common Stock surrendered in exchange
     therefor (reduced by any amount allocable to a fractional share interest
     for which cash is received).
 
In rendering such opinion, Parent's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form and
substance to such counsel.
 
     (e) Pooling of Interests. Parent shall have received a letter from KPMG
Peat Marwick LLP addressed to Parent, to the effect that the Merger will qualify
for "pooling of interests" accounting treatment.
 
     8.3.  Conditions to Obligations of the Company.  The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
 
     (a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of Parent set forth in this Agreement (other than
those set forth in Section 5.2) 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; and (ii) the representations and warranties of Parent set forth in
Section 5.2 of this Agreement shall be true and correct in all material respects
                                                                      APPENDIX A
 
                                      A-33
<PAGE>   161
 
(without giving effect to Section 3.2 of this Agreement) 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. The Company shall have received a certificate signed on behalf of
Parent by the Chief Executive Officer and the principal financial officer of
Parent to the foregoing effect.
 
     (b) Performance of Obligations of Parent. Parent shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of Parent by the Chief Executive Officer and the
principal financial officer of Parent to such effect.
 
     (c) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking an Injunction shall be pending.
 
     (d) Federal Tax Opinion. The Company shall have received an opinion from
Skadden, Arps, Slate, Meagher & Flom LLP (the "Company's Counsel"), in form and
substance reasonably satisfactory to the Company, dated the Effective Time,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which 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 Code and that,
accordingly, for federal income tax purposes:
 
          (i) No gain or loss will be recognized by Parent or the Company as a
     result of the Merger;
 
          (ii) No gain or loss will be recognized by the shareholders of the
     Company who exchange all of their Company Common Stock solely for Parent
     Common Stock pursuant to the Merger (except with respect to cash received
     in lieu of a fractional share interest in Parent Common Stock); and
 
          (iii) The aggregate tax basis of the Parent Common Stock received by
     shareholders who exchange all of their Company Common Stock solely for
     Parent Common Stock pursuant to the Merger will be the same as the
     aggregate tax basis of the Company Common Stock surrendered in exchange
     therefor (reduced by any amount allocable to a fractional share interest
     for which cash is received).
 
In rendering such opinion, the Company's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form and
substance to such counsel.
 
     (e) Pooling of Interests. The Company shall have received a letter from
KPMG Peat Marwick LLP addressed to Parent, to the effect that the Merger will
qualify for "pooling of interests" accounting treatment.
 
APPENDIX A
 
                                      A-34
<PAGE>   162
 
                                   ARTICLE IX
 
                           TERMINATION AND AMENDMENT
 
     9.1.  Termination.  This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of both the Company and Parent:
 
     (a) by mutual consent of the Company and Parent in a written instrument, if
the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
 
     (b) by either Parent or the Company upon written notice to the other party
(i) 60 days after the date on which any request or application for a Requisite
Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 60-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, provided, however, that no party shall
have the right to terminate this Agreement pursuant to this Section 9.1(b)(i) if
such denial or request or recommendation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the Merger;
 
     (c) by either Parent or the Company if the Merger shall not have been
consummated on or before September 30, 1998, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein;
 
     (d) by either Parent or the Company (provided that the terminating party
shall not be in material breach of any of its obligations under Section 7.3) if
any approval of the stockholders of either of the Company or Parent required for
the consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of such stockholders
or at any adjournment or postponement thereof;
 
     (e) by either Parent or the Company (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of any of
the representations or warranties set forth in this Agreement on the part of the
other party, which breach is not cured within thirty days following written
notice to the party committing such breach, or which breach, by its nature,
cannot be cured prior to the Closing; provided, however, that neither party
shall have the right to terminate this Agreement pursuant to this Section 9.1(e)
unless the breach of representation or warranty, together with all other such
breaches, would entitle the party receiving such representation not to
consummate the transactions contemplated hereby under Section 8.2(a) (in the
case of a breach of representation or warranty by the Company) or Section 8.3(a)
(in the case of a breach of representation or warranty by Parent);
 
     (f) by either Parent or the Company (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of any of
the covenants or agreements set forth in this Agreement on the part of the other
party, which breach shall not have been cured within thirty days following
receipt by the breaching party of written notice of such breach from the other
party hereto, or which breach, by its nature, cannot be cured prior to the
Closing;
 
     (g) by the Board of Directors of Parent, if the Board of Directors of the
Company shall have failed to recommend in the Proxy Statement that the Company's
stockholders approve and adopt this Agreement, or shall have withdrawn, modified
or changed in a manner adverse to Parent its approval or recommendation of this
Agreement and the transactions contemplated hereby; or
 
                                                                      APPENDIX A
 
                                      A-35
<PAGE>   163
 
     (h) by the Company at any time during the ten-day period commencing two
days after the Determination Date (as defined below), if either (x) both of the
following conditions are satisfied:
 
          (1) the Average Closing Price (as defined below) shall be less than
     the product of 0.80 and the Starting Price; and
 
          (2) (i) the number obtained by dividing the Average Closing Price by
     the Starting Price (such number being referred to herein as the "Parent
     Ratio") shall be less than (ii) the number obtained by dividing the Index
     Price on the Determination Date by the Index Price on the Starting Date and
     subtracting 0.15 from such quotient (such number being referred to herein
     as the "Index Ratio");
 
or (y) the Average Closing Price shall be less than the product of 0.75 and the
Starting Price; subject to the following four sentences. If the Company elects
to exercise its termination right pursuant to the immediately preceding
sentence, it shall give prompt written notice to Parent which notice shall
specify which of clauses (x) or (y) is applicable (or if both would be
applicable, which clause is being invoked); provided that such notice of
election to terminate may be withdrawn at any time within the aforementioned
ten-day period. During the five-day period commencing with its receipt of such
notice, Parent shall have the option in the case of a termination invoked under
clause (x), of adjusting the Exchange Ratio to equal the lesser of (i) a number
equal to a quotient (rounded to the nearest one-ten-thousandth), the numerator
of which is the product of 0.80, the Starting Price and the Exchange Ratio (as
then in effect) and the denominator of which is the Average Closing Price, and
(ii) a number equal to a quotient (rounded to the nearest one-ten-thousandth),
the numerator of which is the Index Ratio multiplied by the Exchange Ratio (as
then in effect) and the denominator of which is the Parent Ratio. During such
five-day period, Parent shall have the option, in the case of a termination
invoked under clause (y), to elect to increase the Exchange Ratio to equal a
number equal to a quotient (rounded to the nearest one-ten-thousandth), the
numerator of which is the product of 0.75, the Starting Price and the Exchange
Ratio (as then in effect) and the denominator of which is the Average Closing
Price. If Parent makes an election contemplated by either of the two preceding
sentences, within such five-day period, it shall give prompt written notice to
the Company of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to this Section 9.1(g) and this
Agreement shall remain in effect in accordance with its terms (except as the
Exchange Ratio shall have been so modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 9.1(g). For purposes of this
Section 9.1(g), the following terms shall have the meanings indicated:
 
     "Average Closing Price" means the average of the last reported sale prices
per share of Parent Common Stock as reported on Nasdaq/NMS (as reported in The
Wall Street Journal or, if not reported therein, in another mutually agreed upon
authoritative source) for the 20 consecutive trading days on Nasdaq/NMS ending
at the close of trading on the Determination Date.
 
     "Determination Date" means the fifth business day prior to the date on
which the approval of the Federal Reserve Board required for consummation of the
Merger shall be received, without regard to any requisite waiting periods in
respect thereof.
 
     "Index Group" means the group of each of the 34 bank holding companies
listed below, the common stock of all of which shall be publicly traded and as
to which there shall not have been, since the Starting Date and before the
Determination Date, an announcement of a proposal for such company to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market capitalization
as of the Starting Date. In the event that the common stock of any such company
ceases to be publicly traded or any such announcement is made with respect to
any such company, such company will be removed from the Index Group, and the
weights (which have been determined based on
 
APPENDIX A
 
                                      A-36
<PAGE>   164
 
the number of outstanding shares of common stock) redistributed proportionately
for purposes of determining the Index Price. The 34 bank holding companies and
the weights attributed to them are as follows:
 
<TABLE>
<CAPTION>
                    BANK HOLDING COMPANY                        WEIGHTING
                    --------------------                        ---------
<S>                                                             <C>
AmSouth Bancorporation......................................        1.1%
BankAmerica Corporation.....................................        9.1
Banc One Corporation........................................        7.7
BB&T Corporation............................................        1.8
The Bank of New York Company, Inc...........................        4.9
BankBoston Corporation......................................        1.9
Comerica, Inc...............................................        1.4
Crestar Financial Corporation...............................        1.4
Fifth Third Bancorp.........................................        2.0
First Chicago NBD Corporation...............................        3.8
Fleet Financial Group.......................................        3.3
Firstar Corporation.........................................        1.9
First Union Corporation.....................................        7.4
First Virginia Banks, Inc...................................        0.7
Huntington Bancshares, Inc..................................        2.5
Hibernia Corporation........................................        1.7
KeyCorp.....................................................        2.9
Mellon Bank Corporation.....................................        3.3
Mercantile Bancorporation, Inc..............................        1.7
NationsBank Corporation.....................................        9.2
National City Corporation...................................        2.8
Norwest Corporation.........................................        9.8
PNC Bank Corporation........................................        4.0
Regions Financial Corporation...............................        1.8
Star Banc Corporation.......................................        1.1
SunTrust Banks, Inc.........................................        2.8
UnionBanCal Corporation.....................................        0.7
Union Planters Corporation..................................        0.9
U.S. Bancorp................................................        3.2
Wachovia Corporation........................................        2.1
Wells Fargo & Company.......................................        1.1
                                                                  100.0%
</TABLE>
 
     "Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices of the companies
comprising the Index Group.
 
     "Starting Date" means December 5, 1997.
 
     "Starting Price" shall mean the last reported sale price per share of
Parent Common Stock on the Starting Date, as reported by Nasdaq/NMS (as reported
in The Wall Street Journal or, if not reported therein, in another mutually
agreed upon authoritative source).
 
     If any company belonging to the Index Group or Parent declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or Parent
shall be appropriately adjusted for the purposes of applying this Section
9.1(g).
 
     9.2.  Effect of Termination.  In the event of termination of this Agreement
by either Parent or the Company as provided in Section 9.1, this Agreement shall
forthwith become void and have no effect except
 
                                                                      APPENDIX A
 
                                      A-37
<PAGE>   165
 
(i) Sections 7.2(b), 9.2 and 10.3 shall survive any termination of this
Agreement and (ii) that notwithstanding anything to the contrary contained in
this Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.
 
     9.3.  Amendment.  Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of either
the Company or Parent; provided, however, that after any approval of the
transactions contemplated by this Agreement by the Company's stockholders, there
may not be, without further approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to the Company stockholders hereunder other than as contemplated by
this Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
 
     9.4.  Extension; Waiver.  At any time prior to the Effective Time, each of
the parties hereto, by action taken or authorized by its Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
 
                                   ARTICLE X
 
                               GENERAL PROVISIONS
 
     10.1.  Closing.  Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on the first
day which is (a) the last business day of month and (b) at least two business
days after the satisfaction or waiver (subject to applicable law) of the latest
to occur of the conditions set forth in Article VIII hereof (other than those
conditions which relate to actions to be taken at the Closing)(the "Closing
Date"), at such time, date and place as is agreed to by the parties hereto.
 
     10.2.  Nonsurvival of Representations, Warranties and Agreements.  None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than pursuant to
the Stock Option Agreement which shall terminate in accordance with its terms)
shall survive the Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
 
     10.3.  Expenses.  All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
 
     10.4.  Notices.  All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
 
        (a) if to Parent, to:
 
          First American Corporation
          First American Center
          Nashville, Tennessee 37237-0700
          Attention: Chief Executive Officer
 
APPENDIX A
 
                                      A-38
<PAGE>   166
 
            with a copy to:
 
            Wachtell, Lipton, Rosen & Katz
            51 W. 52nd Street
            New York, New York 10019
            Attention: Edward D. Herlihy, Esq.
 
            and
 
        (b) if to the Company, to:
 
            Deposit Guaranty Corp.
            210 East Capital Street
            Jackson, Mississippi 39201
            Attention: Chief Executive Officer
 
            with a copy to:
 
            Skadden, Arps, Slate, Meagher & Flom LLP
            919 Third Avenue
            New York, New York 10022
            Attn: William S. Rubenstein, Esq.
 
     10.5.  Interpretation.  When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to December 7, 1997.
 
     10.6.  Counterparts.  This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
 
     10.7.  Entire Agreement.  This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the Stock Option
Agreement and the Confidentiality Agreement.
 
     10.8.  Governing Law.  This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable conflicts of law.
 
     10.9.  Enforcement of Agreement.  The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in 7.2(b) of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of Section 7.2(b) of this
Agreement and to enforce specifically the terms and provisions thereof 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.
 
     10.10.  Severability.  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.
 
                                                                      APPENDIX A
 
                                      A-39
<PAGE>   167
 
     10.11.  Publicity.  Except as otherwise required by law or the rules of the
New York Stock Exchange or the Nasdaq/NMS, so long as this Agreement is in
effect, neither Parent nor the Company shall, or shall permit any of its
Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld.
 
     10.12.  Assignment; Third Party Beneficiaries.  Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
 
     IN WITNESS WHEREOF, Parent and the Company have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
 
                                          FIRST AMERICAN CORPORATION
 
                                          By /s/ DENNIS C. BOTTORFF
                                            ------------------------------------
                                            Name: Dennis C. Bottorff
                                            Title: Chairman, President and
                                                   Chief Executive Officer
 
                                          DEPOSIT GUARANTY CORP.
 
                                          By /s/ E.B. ROBINSON, JR.
                                            ------------------------------------
                                            Name: E.B. Robinson, Jr.
                                            Title: President and Chief
                                                   Executive Officer
 
APPENDIX A
 
                                      A-40
<PAGE>   168
 
                                                                      APPENDIX B
 
                  THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
                   CERTAIN PROVISIONS CONTAINED HEREIN AND TO
                         RESALE RESTRICTIONS UNDER THE
                       SECURITIES ACT OF 1933, AS AMENDED
 
     STOCK OPTION AGREEMENT, dated December 7, 1997, between Deposit Guaranty
Corp., a Mississippi corporation ("Issuer"), and First American Corporation, a
Tennessee corporation ("Grantee").
 
                              W I T N E S S E T H:
 
     WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(the "Agreement"); and
 
     WHEREAS, 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 8,122,730
fully paid and nonassessable shares of Issuer's Common Stock, no par value
("Common Stock"), at a price of $52.375 per share (the "Option Price");
provided, however, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. 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 either (i)
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after the date of the Agreement, the number of
shares of Common Stock subject to the Option shall be increased or decreased, as
appropriate, so that, after such issuance, such number 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 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
 
     2.  (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, 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 90 days following such Subsequent Triggering Event. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Time
(as defined in the Merger Agreement) 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 9.1(f) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional) ; or (iii) the passage of 12 months after termination of the
Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a termination by Grantee pursuant to Section 9.1(f) of
the Merger Agreement (unless the breach by Issuer giving rise to such right of
termination is non-volitional). The term "Holder" shall mean the holder or
holders of the Option.
 
                                                                      APPENDIX B
 
                                       B-1
<PAGE>   169
 
     (b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
 
          (i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
     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 shall
     have recommended that the shareholders of Issuer approve or accept any
     Acquisition Transaction. For purposes of this Agreement, "Acquisition
     Transaction" shall mean with respect to any person except Grantee or any
     Grantee subsidiary (w) a merger or consolidation, or any similar
     transaction, involving Issuer or any Significant Subsidiary (as defined in
     Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
     Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
     acquisition or assumption of all or a substantial portion of the assets or
     deposits of Issuer or any Significant Subsidiary of Issuer, (y) 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 (z) any substantially similar transaction; provided,
     however, that in no event shall (i) any merger, consolidation, purchase or
     similar transaction involving only the Issuer and one or more of its
     Subsidiaries, or involving only any two or more of such Subsidiaries, or
     (ii) any merger, consolidation or similar transaction as to which the
     common stockholders of Issuer immediately prior thereto own in the
     aggregate at least 60% of the common stock of the surviving corporation or
     its publicly-held parent corporation immediately following consummation
     thereof be deemed to be an Acquisition Transaction, provided that any such
     transaction is not entered into in violation of the terms of the Merger
     Agreement;
 
          (ii) Issuer or any Issuer Subsidiary, without having received
     Grantee's prior written consent, shall have authorized, recommended,
     proposed or publicly announced its intention to authorize, recommend or
     propose, to engage in an Acquisition Transaction with any person other than
     Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall
     have publicly withdrawn or modified, or publicly announced its intention to
     withdraw or modify, in any manner adverse to Grantee, its recommendation
     that the shareholders of Issuer approve the transactions contemplated by
     the Merger Agreement in anticipation of engaging in an Acquisition
     Transaction;
 
          (iii) Any person other than Grantee, any Grantee Subsidiary or any
     Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
     its business 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);
 
          (iv) Any person other than Grantee or any Grantee Subsidiary shall
     have made a bona fide proposal to Issuer or its shareholders by public
     announcement or written communication that is or becomes the subject of
     public disclosure to engage in an Acquisition Transaction;
 
          (v) After an overture is made by a third party to Issuer or its
     shareholders to engage in an Acquisition Transaction, Issuer shall have
     breached any covenant or obligation contained in the Merger Agreement and
     such breach (x) would entitle Grantee to terminate the Merger Agreement and
     (y) shall not have been cured prior to the Notice Date (as defined below);
     or
 
          (vi) Any person other than Grantee or any Grantee Subsidiary, other
     than in connection with a transaction to which Grantee has given its prior
     written consent, shall have filed an application or notice with the Federal
     Reserve Board, or other federal or state bank regulatory authority, which
     application or notice has been accepted for processing, for approval to
     engage in an Acquisition Transaction.
 
APPENDIX B
 
                                       B-2
<PAGE>   170
 
     (c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
 
          (i) The acquisition by any person of beneficial ownership of 25% or
     more of the then outstanding Common Stock; or
 
          (ii) The occurrence of the Initial Triggering Event described in
     paragraph (i) of subsection (b) of this Section 2, except that the
     percentage referred to in clause (y) shall be 25%.
 
     (d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event of which it has
notice (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, 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
agency is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval 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 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, provided that
failure or refusal of Issuer to designate such a bank account 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, and the Holder
shall deliver to Issuer this Agreement and a letter agreeing that the Holder
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
 
     (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 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 to 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; 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.
 
                                                                      APPENDIX B
 
                                       B-3
<PAGE>   171
 
     (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 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 premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
ss. 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 banking law, prior approval of or
notice to the Federal Reserve Board or to any state 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 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 Stock Option
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, or distributions
in respect of, the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares, distributions on or in respect of the Common Stock that would be
prohibited under the terms of the Merger Agreement, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof and the Option
Price shall be appropriately adjusted in such manner as shall fully preserve the
economic benefits provided hereunder and proper provision shall be made in any
agreement governing any such transaction to provide for such proper adjustment
and the full satisfaction of the Issuer's obligations hereunder.
 
     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 90 days 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 shelf registration
APPENDIX B
 
                                       B-4
<PAGE>   172
 
statement under the 1933 Act covering this Option and 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 this Option and 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 first
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
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering 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 inclusion of the Holder's Option or 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 25% 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 the Issuer shall
file a registration statement for the balance as promptly as practicable and no
reduction shall thereafter occur. 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 secondary offering underwriting agreements for the
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 Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Grantee as a result of any assignment or division of this Agreement.
 
     7.  (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (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 within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer 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
offer 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 a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
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 the 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
                                                                      APPENDIX B
 
                                       B-5
<PAGE>   173
 
principal office, 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. Within the latter to occur of (x) five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, 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, if any,
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 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 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 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
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 or the Option Shares either 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 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 Stock Option
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 Stock Option 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, or (B)
to the Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
 
     (d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition by any
person of beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a Repurchase Event
unless a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event. The parties hereto agree that Issuer's obligations to
repurchase the Option or Option Shares under this Section 7 shall not terminate
upon the occurrence of an Exercise Termination Event unless no Subsequent
Triggering Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
 
     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 one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of 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 represent less than 50% of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
 
APPENDIX B
 
                                       B-6
<PAGE>   174
 
     (b) The following terms have the meanings indicated:
 
          (1) "Acquiring Corporation" shall mean (i) the continuing or surviving
     corporation of a consolidation or merger with Issuer (if other than
     Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
     surviving person, and (iii) the transferee of all or substantially all of
     Issuer's assets.
 
          (2) "Substitute Common Stock" shall mean the common stock issued by
     the issuer of the Substitute Option upon exercise of the Substitute Option.
 
          (3) "Assigned Value" shall mean the Market/Offer Price, as defined in
     Section 7.
 
          (4) "Average Price" shall mean the average closing price of a share of
     the Substitute Common Stock for the one year immediately preceding the
     consolidation, merger or sale in question, but in no event higher than the
     closing price of the shares of 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, which 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 is then exercisable,
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 is then exercisable 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 or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
 
     (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 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
 
                                                                      APPENDIX B
 
                                       B-7
<PAGE>   175
 
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 right 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 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 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, in either case, 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 from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer following a
request for repurchase pursuant to this Section 9 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 Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five 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 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 best efforts to obtain all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder 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 the 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, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
 
     10.  The 90-day period for exercise of certain rights under Sections 2, 6,
7 and 13 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
 
     11.  Issuer hereby represents and warrants to Grantee as follows:
 
     (a) Issuer has full 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
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this
 
APPENDIX B
 
                                       B-8
<PAGE>   176
 
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Issuer.
 
     (b) 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 hereto, 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.
 
     12.  Grantee hereby represents and warrants to Issuer that:
 
     (a) Grantee has all requisite corporate power and authority to enter into
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by Grantee.
 
     (b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the 1933 Act.
 
     13.  Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent 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 within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA 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.
 
     14.  Each of Grantee and Issuer will use its 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 making application to authorize for
quotation the shares of Common Stock issuable hereunder on the New York Stock
Exchange or such other exchange or market on which the shares of Issuer may be
listed upon official notice of issuance and 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.
 
     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.
 
     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 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to
                                                                      APPENDIX B
 
                                       B-9
<PAGE>   177
 
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
cable, telegram, telecopy or telex, 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 New York, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
 
     19.  This Agreement may be executed in two 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 assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns, 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.
 
     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.
 
                                          DEPOSIT GUARANTY CORP.
 
                                          By:    /s/ E.B. ROBINSON, JR.
                                            ------------------------------------
                                            Name: E.B. Robinson, Jr.
                                            Title: President and Chief Executive
                                                    Officer
 
                                            FIRST AMERICAN CORPORATION
 
                                              By: /s/ DENNIS C. BOTTORFF
                                              ----------------------------------
                                              Name: Dennis C. Bottorff
                                              Title: Chairman, President and
                                                     Chief Executive Officer
                                                      
 
APPENDIX B
 
                                      B-10
<PAGE>   178
 
                                                                      APPENDIX C
 
                                   APPENDIX C
 
                           OPINION OF MORGAN STANLEY
 
March 11, 1998
Board of Directors
First American Corporation
First American Center
Fourth and Union
Nashville, TN 37237-0615
 
Members of the Board:
 
     We understand that First American Corporation ("First American" or the
"Company"), and Deposit Guaranty Corp. ("Deposit Guaranty"), have entered into
an Agreement and Plan of Merger, dated as of December 7, 1997 (the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of Deposit Guaranty with and into First American. Pursuant to the Merger, each
issued and outstanding share of common stock, no par value, of Deposit Guaranty
(the "Deposit Guaranty Common Stock"), other than shares held in treasury or
held by First American or any affiliate of First American, will be converted
into the right to receive 1.17 shares (the "Exchange Ratio") of common stock,
par value $2.50, of First American (the "First American Common Stock"). The
terms and conditions of the Merger are more fully set forth in the Merger
Agreement.
 
     You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to First American.
 
     For purposes of the opinion set forth herein, we have:
 
          (i) reviewed certain publicly available financial statements and other
     information of First American and Deposit Guaranty, respectively;
 
          (ii) reviewed certain internal financial statements and other
     financial and operating data concerning First American and Deposit Guaranty
     prepared by the managements of First American and Deposit Guaranty,
     respectively;
 
          (iii) analyzed certain financial projections by the managements of
     First American and Deposit Guaranty, respectively;
 
          (iv) discussed the past and current operations and financial condition
     and the prospects of First American and Deposit Guaranty with senior
     executives of First American and Deposit Guaranty, respectively;
 
          (v) reviewed the reported prices and trading activity for the First
     American Common Stock and Deposit Guaranty Common Stock;
 
          (vi) compared the financial performance of First American and Deposit
     Guaranty and the prices and trading activity of the First American Common
     Stock and the Deposit Guaranty Common Stock with that of certain other
     comparable publicly traded companies and their securities;
 
          (vii) discussed the results of regulatory examinations of First
     American and Deposit Guaranty with senior managements of the respective
     companies;
 
                                                                      APPENDIX C
 
                                       C-1
<PAGE>   179
 
          (viii) discussed with senior managements of First American and Deposit
     Guaranty the strategic objectives of the Merger and their estimates of the
     synergies and other benefits of the Merger for the combined company;
 
          (ix) analyzed the pro forma impact of the Merger on the combined
     company's earnings per share, consolidated capitalization and financial
     ratios;
 
          (x) reviewed the financial terms, to the extent publicly available, of
     certain comparable merger transactions;
 
          (xi) participated in discussions and negotiations among
     representatives of First American and Deposit Guaranty and their financial
     and legal advisors;
 
          (xii) reviewed the Merger Agreement and certain related documents; and
 
          (xiii) performed such other analyses and considered such other factors
     as we have deemed appropriate.
 
     We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, including the cost
savings and other synergies expected to result from the Merger, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of First
American and Deposit Guaranty. We have not made any independent valuation or
appraisal of the assets or liabilities of First American or Deposit Guaranty,
nor have we been furnished with any such appraisals and we have not examined any
individual loan credit files of First American or Deposit Guaranty. In addition,
we have assumed the Merger will be consummated substantially in accordance with
the terms set forth in the Merger Agreement. Our opinion is necessarily based on
economic, market and other conditions as in effect on, and the information made
available to us as of, the date hereof.
 
     We have acted as financial advisor to the Board of Directors of First
American in connection with this transaction and will receive a fee for our
services. In the past, Morgan Stanley & Co. Incorporated and its affiliates have
provided financial advisory and financing services for First American, and have
received fees for the rendering of these services.
 
     It is understood that this letter is for the information of the Board of
Directors of First American and may not be used for any other purpose without
our prior written consent, except that this opinion may be included in its
entirety in any filing made by First American with the Securities and Exchange
Commission with respect to the Merger. In addition, we express no opinion and
make no recommendation as to how the holders of First American Common Stock
should vote at the stockholders' meeting held in connection with the Merger.
 
     Based on the foregoing, we are of the opinion on the date hereof that the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to First American.
 
                                          Very truly yours,
 
                                          MORGAN STANLEY & CO. INCORPORATED
 
                                          By:     /s/ WILLIAM M. WEIANT
 
                                            ------------------------------------
                                                     William M. Weiant
                                                     Managing Director
 
APPENDIX C
 
                                       C-2
<PAGE>   180
 
                                                                      APPENDIX D
 
                                   APPENDIX D
 
                     OPINION OF CREDIT SUISSE FIRST BOSTON
 
March 11, 1998
 
Board of Directors
Deposit Guaranty Corp.
210 East Capitol Street
Jackson, MS 39215
 
Dear Sirs and Madame:
 
     You have asked us to advise you with respect to the fairness to the
stockholders of Deposit Guaranty Corp. (the "Company") from a financial point of
view of the Exchange Ratio pursuant to the terms of the Merger Agreement, dated
as of December 7, 1997 (the "Merger Agreement"), between the Company and First
American Corporation (the "Acquiror"). The Merger Agreement provides for the
merger (the "Merger") of the Company with the Acquiror pursuant to which each
outstanding share of common stock, no par value per share, of the Company will
be converted into 1.17 shares of common stock (the "Exchange Ratio"), $2.50 par
value per share, of the Acquiror.
 
     In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company and the Acquiror, as
well as the Merger Agreement. We have also reviewed certain other information,
including financial forecasts, provided to us by the Company and the Acquiror,
and have met with the Company's and the Acquiror's managements to discuss the
business and prospects of the Company and the Acquiror.
 
     We have also considered certain financial and stock market data of the
Company and the Acquiror, and we have compared those data with similar data for
other publicly held companies in businesses similar to the Company and the
Acquiror and we have considered the financial terms of certain other business
combinations and other transactions which have recently been effected. We also
considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant.
 
     In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts (including the estimates of future cost savings, operating
synergies and revenue enhancements expected to be achieved as a result of the
Merger), we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the Company's
and the Acquiror's managements. In addition, we have not been requested to make,
and have not made, an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of the Company or the Acquiror, nor have
we been furnished with any such evaluations or appraisals. Our opinion is
necessarily based upon financial, economic, market and other conditions as they
exist and can be evaluated on the date hereof. We are not expressing any opinion
as to the actual value of the common stock of the Acquiror when issued to the
Company's stockholders pursuant to the Merger or the prices at which such common
stock of the Acquiror will trade subsequent to the Merger.
 
     We have acted as financial advisor to the Company 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 the ordinary course of our business, we and our affiliates may actively
trade the debt and equity securities of both the Company and the Acquiror for
our own and such affiliate's accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
 
                                                                      APPENDIX D
 
                                       D-1
<PAGE>   181
 
     It is understood that this letter is for the information of the Board of
Directors in connection with its consideration of the Merger, does not
constitute a recommendation to any stockholder as to how such stockholder should
vote with respect to the Merger, and is not to be quoted or referred to, in
whole or in part, in any registration statement, prospectus or proxy statement,
or in any other document used in connection with the offering or sale of
securities, nor shall this letter be used for any other purposes, without our
prior written consent.
 
     Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair to the stockholders of the Company from
a financial point of view.
 
                                          Very truly yours,
 
                                          CREDIT SUISSE FIRST BOSTON CORPORATION
 
                                          By: /s/ MICHAEL E. MARTIN
 
                                            ------------------------------------
                                            Michael E. Martin
                                            Managing Director
 
APPENDIX D
 
                                       D-2
<PAGE>   182
 
                                                                      APPENDIX E
 
March 11, 1998
Board of Directors
Deposit Guaranty Corp.
210 East Capitol Street
Jackson, MS 39215
 
Dear Sirs and Madame:
 
     We hereby consent to the inclusion of our opinion letter dated March 11,
1998 to the Board of Directors of Deposit Guaranty Corp., included as Appendix D
to the Joint Proxy Statement-Prospectus which forms a part of the Registration
Statement on Form S-4 of First American Corporation, and to the references to
such opinion in such Joint Proxy Statement-Prospectus under the captions
"SUMMARY -- The Merger," "THE MERGER -- Background of the Merger," "-- Reasons
of Deposit Guaranty for the Merger" and "-- Opinion of Deposit Guaranty'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.
 
                               Very truly yours,
 
                                    CREDIT SUISSE FIRST BOSTON CORPORATION
 
                                    /s/ MICHAEL E. MARTIN
                                    --------------------------------------------
                                    Name: Michael E. Martin
                                    Title: Managing Director
 
APPENDIX E
<PAGE>   183
 
                                                                      APPENDIX F
 
                      MISSISSIPPI BUSINESS CORPORATION ACT
                                   ARTICLE 13
                               DISSENTERS' RIGHTS
 
          SUBARTICLE A. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
 
     794-13.01 DEFINITIONS -- In this Article:
 
          (1) "Corporation" means the issuer of the shares held by a dissenter
     before the corporate action, or the surviving or acquiring corporation by
     merger or share exchange of that issuer.
 
          (2) "Dissenter" means a shareholder who is entitled to dissent from
     corporate action under Section 79-4-13.02 and who exercises that right when
     and in the manner required by Sections 79-4-13.20 through 79-4-13.28.
 
          (3) "Fair value," with respect to a dissenter's shares, means the
     value of the shares immediately before the effectuation of the corporate
     action to which the dissenter objects, excluding any appreciation or
     depreciation in anticipation of the corporate action unless exclusion would
     be inequitable.
 
          (4) "Interest" means interest from the effective date of the corporate
     action until the date of payment, at the average rate currently paid by the
     corporation on its principal bank loans or, if none, at a rate that is fair
     and equitable under all the circumstances.
 
          (5) "Record shareholder" means the person in whose name shares are
     registered in the records of a corporation or the beneficial owner of
     shares to the extent of the rights granted by a nominee certificate on file
     with a corporation.
 
          (6) "Beneficial shareholder" means the person who is a beneficial
     owner of shares held in a voting trust or by a nominee as the record
     shareholder.
 
          (7) "Shareholder" means the record shareholder or the beneficial
     shareholder.
 
     79-4-13.02 RIGHT TO DISSENT. -- (a) A shareholder is entitled to dissent
from, and obtain payment of the fair value of his shares in the event of, any of
the following corporate action:
 
          (1) Consummation of a plan of merger to which the corporation is a
     party (i) if shareholder approval is required for the merger by Section
     79-4-11.03 or the articles of incorporation and the shareholder is entitled
     to vote on the merger, or (ii) if the corporation is a subsidiary that is
     merged with its parent under Section 79-4-11.04;
 
          (2) Consummation of a plan of share exchange to which the corporation
     is a party as the corporation whose shares will be acquired, if the
     shareholder is entitled to vote on the plan;
 
          (3) Consummation of a sale or exchange of all, or substantially all,
     of the property of the corporation other than in the usual and regular
     course of business, if the shareholder is entitled to vote on the sale or
     exchange, including a sale in dissolution, but not including a sale
     pursuant to court order or a sale for cash pursuant to a plan by which all
     or substantially all of the net proceeds of the sale will be distributed to
     the shareholders within one (1) year after the date of sale;
 
          (4) An amendment of the articles of incorporation that materially and
     adversely affects rights in respect of a dissenter's shares because it:
 
             (i) Alters or abolishes a preferential right of the shares;
 
             (ii) Creates, alters or abolishes a right in respect of redemption,
        including a provision respecting a sinking fund for the redemption or
        repurchase, of the shares;
 
             (iii) Alters or abolishes a preemptive right of the holder of the
        shares to acquire shares or other securities;
                                                                      APPENDIX F
 
                                       F-1
<PAGE>   184
 
             (iv) Excludes or limits the right of the shares to vote on any
        matter, or to cumulate votes, other than a limitation by dilution
        through issuance of shares or other securities with similar voting
        rights; or
 
             (v) Reduces the number of shares owned by the shareholder to a
        fraction of a share if the fraction share so created is to be acquired
        for cash under Section 79-4-6.04; or
 
          (5) Any corporate action taken pursuant to a shareholder vote to the
     extent the articles of incorporation, bylaws or a resolution of the board
     of directors provides that voting or nonvoting shareholders are entitled to
     dissent and obtain payment for their shares.
 
     (b) Nothing in subsection (a)(4) shall entitle a shareholder of a
corporation to dissent and obtain payment for his shares as a result of an
amendment of the articles of incorporation exclusively for the purpose of either
(i) making such corporation subject to application of the Mississippi Control
Share Act, or (ii) making such act inapplicable to a control share acquisition
of such corporation.
 
     (c) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
 
     79-4-13.03 DISSENT BY NOMINEES AND BENEFICIAL OWNERS. -- (a) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
 
     (b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
 
          (1) He submits to the corporation the record shareholder's written
     consent to the dissent not later than the time the beneficial shareholder
     asserts dissenters' rights; and
 
          (2) He does so with respect to all shares of which he is the
     beneficial shareholder or over which he has power to direct the vote.
 
     79-4-13.20 NOTICE OF DISSENTERS' RIGHTS. -- (a) If proposed corporate
action creating dissenters' rights under Section 79-4-13.02 is submitted to a
vote at a shareholders' meeting, the meeting notice must state that shareholders
are or may be entitled to assert dissenters' rights under this article and be
accompanied by a copy of this article.
 
     (b) If corporate action creating dissenters' rights under Section
79-4-13.02 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Section
79-4-13.22.
 
     79-4-13.21 NOTICE OF INTENT TO DEMAND PAYMENT. -- (a) If proposed corporate
action creating dissenters' rights under Section 79-4-13.02 is submitted to a
vote at a shareholders' meeting, a shareholder who wishes to assert dissenters'
rights (1) must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed action is
effectuated, and (2) must not vote his shares in favor of the proposed action.
 
     (b) A shareholder who does not satisfy the requirement of subsection (a) is
not entitled to payment for his shares under this article.
 
     79-4-13.22 DISSENTERS' NOTICE. -- (a) If proposed corporate action creating
dissenters' rights under Section 79-4-13.02 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of Section 79-4-13.21.
 
APPENDIX F
 
                                       F-2
<PAGE>   185
 
     (b) The dissenters' notice must be sent no later than ten (10) days after
the corporate action was taken, and must:
 
          (1) State where the payment demand must be sent and where and when
     certificates for certificated shares must be deposited;
 
          (2) Inform holders of uncertificated shares to what extent transfer of
     the shares will be restricted after the payment demand is received;
 
          (3) Supply a form for demanding payment that includes the date of the
     first announcement to news media or to shareholders of the terms of the
     proposed corporate action and requires that the person asserting
     dissenters' rights certify whether or not he acquired beneficial ownership
     of the shares before that date;
 
          (4) Set a date by which the corporation must receive the payment
     demand, which date may not be fewer than thirty (30) nor more that sixty
     (60) days after the date the subsection (a) notice is delivered; and
 
          (5) Be accompanied by a copy of this article.
 
     79-4-13.23 DUTY TO DEMAND PAYMENT. -- (a) A shareholder sent a dissenters'
notice described in Section 79-4-13.22 must demand payment, certify whether he
acquired beneficial ownership of the shares before the date required to be set
forth in the dissenter's notice pursuant to Section 79-4-13.22(b)(3), and
deposit his certificates in accordance with the terms of the notice.
 
     (b) The shareholder who demands payment and deposits his shares under
subsection (a) retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action.
 
     (c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
 
     79-4-13.24 SHARE RESTRICTIONS. -- (a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is taken or the restrictions
released under Section 79-4-13.26.
 
     (b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
 
     79-4-13.25 PAYMENT. -- (a) Except as provided in Section 79-4-13.27, as
soon as the proposed corporate action is taken, or upon receipt of a payment
demand, the corporation shall pay each dissenter who complied with Section
79-4-13.23 the amount the corporation estimates to be the fair value of his
shares, plus accrued interest.
 
     (b) The payment must be accompanied by:
 
          (1) The corporation's balance sheet as of the end of a fiscal year
     ending not more than sixteen (16) months before the date of payment, an
     income statement for that year, a statement of changes in shareholders'
     equity for that year, and the latest available interim financial
     statements, if any;
 
          (2) A statement of the corporation's estimate of the fair value of the
     shares;
 
          (3) An explanation of how the interest was calculated;
 
          (4) A statement of the dissenters' right to demand payment under
     Section 79-4-13.28; and
 
          (5) A copy of this article.
 
     79-4-13.26 FAILURE TO TAKE ACTION. -- (a) If the corporation does not take
the proposed action within sixty (60) days after the date set for demanding
payment and depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
                                                                      APPENDIX F
 
                                       F-3
<PAGE>   186
 
     (b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Section 79-4-13.22 and repeat the payment demand
procedure.
 
     79-4-13.27 AFTER-ACQUIRED SHARES. -- (a) A corporation may elect to
withhold payment required by Section 79-4-13.25 from a dissenter unless he was
the beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action.
 
     (b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares, plus accrued interest, and shall pay this amount
to each dissenter who agrees to accept it in full satisfaction of his demand.
The corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated and
a statement of the dissenter's right to demand payment under Section 79-4-13.28.
 
     79-4-13.28 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER. --
(a) A dissenter may notify the corporation in writing of his own estimate of the
fair value of his shares and amount of interest due, and demand payment of his
estimate (less any payment under Section 79-4-13.25), or reject the
corporation's offer under Section 79-4-13.27 and demand payment of the fair
value of his shares and interest due, if:
 
          (1) The dissenter believes that the amount paid under Section
     79-4-13.25 or offered under Section 79-4-13.27 is less than the fair value
     of his shares or that the interest due is incorrectly calculated;
 
          (2) The corporation fails to make payment under Section 79-4-13.25
     within sixty (60) days after the date set for demanding payment; or
 
          (3) The corporation, having failed to take the proposed action, does
     not return the deposited certificates or release the transfer restrictions
     imposed on uncertificated shares within sixty (60) days after the date set
     for demanding payment.
 
     (b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
within thirty (30) days after the corporation made or offered payment for his
shares.
 
                   SUBARTICLE C. JUDICIAL APPRAISAL OF SHARES
 
     79-4-13.30 COURT ACTION. -- (a) If a demand for payment under Section
79-4-13.28 remains unsettled, the corporation shall commence a proceeding within
sixty (60) days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the 60-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
 
     (b) The corporation shall commence the proceeding in the chancery court of
the county where a corporation's principal office (or, if none in this state,
its registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
 
     (c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
 
     (d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them,
 
APPENDIX F
 
                                       F-4
<PAGE>   187
 
or in any amendment to it. The dissenters are entitled to the same discovery
rights as parties in other civil proceedings.
 
     (e) Each dissenter made a party to the proceeding is entitled to judgment
(1) for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation, or (2) for
the fair value, plus accrued interest, of his after-acquired shares for which
the corporation elected to withhold payment under Section 79-4-13.27.
 
     79-4-13.31 COURT COSTS AND COUNSEL FEES. -- (a) The court in an appraisal
proceeding commenced under Section 79-4-13.30 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously or not in good faith in demanding
payment under Section 79-4-13.28.
 
     (b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
 
          (1) Against the corporation and in favor of any or all dissenters if
     the court finds the corporation did not substantially comply with the
     requirements of Sections 79-4-13.20 through 79-4-13.28; or
 
          (2) Against either the corporation or a dissenter, in favor of any
     other party, if the court finds that the party against whom the fees and
     expenses are assessed acted arbitrarily, vexatiously or not in good faith
     with respect to the rights provided by this article.
 
     (c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
 
                                                                      APPENDIX F
 
                                       F-5
<PAGE>   188
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 20.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     Sections 48-18-501 through 48-18-507 of the TBCA provide that a business
corporation may indemnify directors and officers against liabilities they may
incur in such capacities provided certain standards are met, including good
faith and the belief that the particular action is in the best interests of the
corporation. In general, this power to indemnify does not exist in the case of
actions against a director or officer by or in the right of the corporation if
the person entitled to indemnification shall have been adjudged to be liable to
the corporation. A corporation is required to indemnify directors and officers
against expenses they may incur in defending actions against them in such
capacities if they are successful on the merits or otherwise in the defense of
such actions.
 
     Section 48-18-507 of the TBCA provides that the foregoing provisions shall
not be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled, consistent with public policy, pursuant to any
provision of a corporation's charter, bylaws, general or specific action of its
board of directors, or contract, provided that no indemnification may be made in
connection with any proceeding charging improper personal benefit to an officer
or director, where such officer or director is adjudged liable on the basis that
personal benefit was improperly received.
 
     The First American Charter provides for the mandatory indemnification of
directors and officers in accordance with and to the full extent permitted by
the laws of Tennessee as in effect at the time of such indemnification. The
First American Bylaws provide that no indemnification of an officer or director
shall be made by First American (i) if a judgment or other final adjudication
adverse to such person establishes his liability for intentional misconduct or
knowing violation of the law or for unlawful distributions, (ii) if a judgment
or other final adjudication adverse to such person for breach of a duty of
loyalty to First American is based upon such person's gaining in fact personal
profit or advantage to which he was not entitled; and (iii) in a proceeding by
or in the right of the corporation, for any amounts if such person is adjudged
liable to the corporation, or for any amounts paid to First American in
settlement of such a proceeding by such person. First American has purchased
directors' and officers' liability insurance covering certain liabilities which
may be incurred by the officers and directors of First American in connection
with the performance of their duties.
 
     The foregoing is only a general summary of certain aspects of Tennessee law
and the provisions of the First American Charter and Bylaws dealing with
indemnification of directors and officers and does not purport to be complete.
It is qualified in its entirety by reference to the relevant statutes, which
contain detailed specific provisions regarding the circumstances under which and
the person for whose benefit indemnification shall or may be made, and
accordingly are included in Exhibit 99.4 hereto and incorporated herein by
reference, and to the First American Charter and Bylaws, which are incorporated
herein by reference. See "ADDITIONAL INFORMATION -- Where You Can Find More
Information."
 
ITEM 21.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
     The following exhibits are filed herewith or incorporated herein by
reference.
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                 DESCRIPTION
- -------                                -----------
<C>       <C>  <S>
  2.1      --  Agreement and Plan of Merger, by and between Deposit
               Guaranty Corp. and First American Corporation, dated as of
               December 7, 1997, included as Appendix A to the accompanying
               Joint Proxy Statement-Prospectus.
  4.1      --  Rights Agreement, dated December 14, 1988, between First
               American Corporation and First American Trust Company, N.A.
               (incorporated herein by reference to Exhibit 1 to First
               American's Current Report on Form 8-K dated December 14,
               1988).
  5.1      --  Opinion of Mary Neil Price, Esq., General Counsel of First
               American Corporation.
</TABLE>
 
                                      II-1
<PAGE>   189
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                 DESCRIPTION
- -------                                -----------
<C>       <C>  <S>
  8.1      --  Opinion of Wachtell, Lipton, Rosen & Katz.
 10.1      --  Employment Agreement, dated as of December 7, 1997, by and
               between First American Corporation and E.B. Robinson, Jr.
 10.2      --  Employment Agreement, dated as of December 7, 1997, by and
               between First American Corporation and Harold L. McMillan,
               Jr.
 23.1      --  Consent of Morgan, Stanley & Co. Incorporated.
 23.2      --  Consent of Credit Suisse First Boston Corporation (included
               as Appendix E to the accompanying Joint Proxy
               Statement-Prospectus).
 23.3      --  Consent of Mary Neil Price, General Counsel of First
               American Corporation, included in Exhibit 5.1 to this
               Registration Statement.
 23.4      --  Consent of Wachtell, Lipton, Rosen & Katz, included in
               Exhibit 8.1 to this Registration Statement.
 23.5      --  Consent of KPMG Peat Marwick LLP (with respect to First
               American Corporation).
 23.6      --  Consent of KPMG Peat Marwick LLP (with respect to Deposit
               Guaranty Corp.).
 24.1      --  Power of Attorney (set forth on the signature pages hereto).
 99.1      --  Stock Option Agreement, dated as of December 7, 1997, by and
               between Deposit Guaranty Corp. and First American
               Corporation, included as Appendix B to the accompanying
               Joint Proxy Statement -- Prospectus.
 99.2      --  Form of Proxy for Annual Meeting of Shareholders of First
               American Corporation.
 99.3      --  Form of Proxy for Special Meeting of Stockholders of Deposit
               Guaranty Corp.
 99.4      --  Provisions of Tennessee law regarding indemnification of
               directors and officers (incorporated herein by reference to
               Exhibit 99.1 of the First American Corporation Registration
               Statement on Form S-3, Registration No. 33-63097).
</TABLE>
 
ITEM 22.  UNDERTAKINGS
 
     (a) The undersigned registrant hereby undertakes:
 
          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement:
 
             (i) To include any prospectus required by Section 10(a)(3) of the
        Securities Act;
 
             (ii) To reflect in the prospectus any facts or events arising after
        the effective date of the registration statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information set forth
        in the registration statement;
 
             (iii) To include any material information with respect to the plan
        of distribution not previously disclosed in the registration statement
        or any material change in such information in the registration
        statement;
 
          (2) That, for the purpose of determining any liability under the
     Securities Act, 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 the 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.
 
     (b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
 
                                      II-2
<PAGE>   190
 
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
 
     (c) The undersigned registrant hereby undertakes 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.
 
     (d) The undersigned registrant hereby undertakes that every prospectus (i)
that is filed pursuant to paragraph (c) immediately preceding, or (ii) that
purports to meet the requirements of Sections 10(a)(3) of the Securities Act and
is used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act, 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.
 
     (e) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
 
     (f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
 
     (g) 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-3
<PAGE>   191
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Nashville, State of
Tennessee, this 11th day of March, 1998.
 
                                          FIRST AMERICAN CORPORATION
                                          (Registrant)
 
                                          By: /s/ DENNIS C. BOTTORFF
                                          --------------------------------------
                                                    Dennis C. Bottorff
                                                       Chairman and
                                                 Chief Executive Officer
 
                               POWER OF ATTORNEY
 
     We, the undersigned officers and directors of First American Corporation,
hereby severally constitute and appoint Mary Neil Price our true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for us and in our stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
and all documents relating thereto, and any subsequent registration statement
filed by First American Corporation pursuant to Rule 462(b) of the Securities
Act of 1933, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing necessary or advisable to be done in
and about the premises, as fully to all intents and purposes as she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or her substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
 
     WITNESS our hands on the dates set forth below.
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 11th day of March 1998.
 
<TABLE>
<CAPTION>
                      SIGNATURE                                    CAPACITY
                      ---------                                    --------
<C>                                                      <S>                           <C>
 
               /s/ DENNIS C. BOTTORFF                    Chairman, Chief Executive
- -----------------------------------------------------      Officer and Director
                 Dennis C. Bottorff                        (Principal Executive
                                                           Officer)
 
                 /s/ DALE W. POLLEY                      Director, President and
- -----------------------------------------------------      Principal Financial
                   Dale W. Polley                          Officer
 
              /s/ M. JACK VANNATTA, JR.                  Executive Vice President
- -----------------------------------------------------      (Principal Accounting
              Marvin Jack Vannatta, Jr.                    Officer)
 
              /s/ SAM H. ANDERSON, JR.                   Director
- -----------------------------------------------------
                Sam H. Anderson, Jr.
 
                                                         Director
- -----------------------------------------------------
             Earnest W. Deavenport, Jr.
 
                                                         Director
- -----------------------------------------------------
                 Reginald D. Dickson
 
                                                         Director
- -----------------------------------------------------
                 James A. Haslam II
</TABLE>
 
                                      II-4
<PAGE>   192
 
<TABLE>
<CAPTION>
                      SIGNATURE                                    CAPACITY
                      ---------                                    --------
<C>                                                      <S>                           <C>
 
                /s/ MARTHA R. INGRAM                     Director
- -----------------------------------------------------
                  Martha R. Ingram
 
               /s/ WALTER A. KNESTRICK                   Director
- -----------------------------------------------------
                 Walter A. Knestrick
 
                                                         Director
- -----------------------------------------------------
                   Gene C. Koonce
 
                                                         Director
- -----------------------------------------------------
                   James R. Martin
 
              /s/ ROBERT A. MCCABE, JR.                  Director
- -----------------------------------------------------
                Robert A. McCabe, Jr.
 
                                                         Director
- -----------------------------------------------------
                 Roscoe R. Robinson
 
               /s/ JAMES F. SMITH, JR.                   Director
- -----------------------------------------------------
                 James F. Smith, Jr.
 
                 /s/ CAL TURNER, JR.                     Director
- -----------------------------------------------------
                   Cal Turner, Jr.
 
                                                         Director
- -----------------------------------------------------
                  Celia A. Wallace
 
                  /s/ TED H. WELCH                       Director
- -----------------------------------------------------
                    Ted H. Welch
 
                                                         Director
- -----------------------------------------------------
                   David K. Wilson
 
                  /s/ TOBY S. WILT                       Director
- -----------------------------------------------------
                    Toby S. Wilt
 
               /s/ WILLIAM S. WIRE II                    Director
- -----------------------------------------------------
                 William S. Wire II
</TABLE>
 
                                      II-5
<PAGE>   193
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                               DESCRIPTION
- -------                              -----------
<C>     <C>  <S>
  2.1    --  Agreement and Plan of Merger, by and between Deposit
             Guaranty Corp. and First American Corporation, dated as of
             December 7, 1997, included as Appendix A to the accompanying
             Joint Proxy Statement-Prospectus.
  4.1    --  Rights Agreement, dated December 14, 1988, between First
             American Corporation and First American Trust Company, N.A.
             (incorporated herein by reference to Exhibit 1 to First
             American's Current Report on Form 8-K dated December 14,
             1988).
  5.1    --  Opinion of Mary Neil Price, Esq., General Counsel of First
             American Corporation.
  8.1    --  Opinion of Wachtell, Lipton, Rosen & Katz.
 10.1    --  Employment Agreement, dated as of December 7, 1997, by and
             between First American Corporation and E.B. Robinson, Jr.
 10.2    --  Employment Agreement, dated as of December 7, 1997, by and
             between First American Corporation and Harold L. McMillan,
             Jr.
 23.1    --  Consent of Morgan, Stanley & Co. Incorporated.
 23.2    --  Consent of Credit Suisse First Boston Corporation (included
             as Appendix E to the accompanying Joint Proxy
             Statement-Prospectus).
 23.3    --  Consent of Mary Neil Price, General Counsel of First
             American Corporation, included in Exhibit 5.1 to this
             Registration Statement.
 23.4    --  Consent of Wachtell, Lipton, Rosen & Katz, included in
             Exhibit 8.1 to this Registration Statement.
 23.5    --  Consent of KPMG Peat Marwick LLP (with respect to First
             American Corporation).
 23.6    --  Consent of KPMG Peat Marwick LLP (with respect to Deposit
             Guaranty Corp.).
 24.1    --  Power of Attorney (set forth on the signature pages hereto).
 99.1    --  Stock Option Agreement, dated as of December 7, 1997, by and
             between Deposit Guaranty Corp. and First American
             Corporation, included as Appendix B to the accompanying
             Joint Proxy Statement -- Prospectus.
 99.2    --  Form of Proxy for Annual Meeting of Shareholders of First
             American Corporation.
 99.3    --  Form of Proxy for Special Meeting of Stockholders of Deposit
             Guaranty Corp.
 99.4    --  Provisions of Tennessee law regarding indemnification of
             directors and officers (incorporated herein by reference to
             Exhibit 99.1 of the First American Corporation Registration
             Statement on Form S-3, Registration No. 33-63097).
</TABLE>

<PAGE>   1
                                                                     EXHIBIT 5.1

                   [On First American Corporation letterhead]


March 10, 1998

First American Corporation
First American Center
Nashville, TN 37237-0700


RE: Registration Statement on Form S-4 Related to the Acquisition of Deposit
    Guaranty Corp.

Ladies and Gentlemen:

     I and other members of my staff have acted as counsel to First American
Corporation, a Tennessee corporation (the "Company"), in connection with the
preparation and filing of a Registration Statement on Form S-4 (the
"Registration Statement") relating to the up to 50,310,000 shares (the "Shares")
of the Company's common stock, par value $2.50 per share, to be issued by the
Company in connection with the merger of Deposit Guaranty Corp., a Mississippi
corporation, with and into the Company.

     In rendering this opinion, I have examined such corporate records and other
documents, and I have reviewed such matters of law, as I have deemed necessary
or appropriate. Based on the foregoing, I am of the opinion that the Shares are
legally authorized and, when the Registration Statement has been declared
effective by order of the Securities and Exchange Commission and the Shares have
been issued and paid for upon the terms and conditions set forth in the
Registration Statement, the Shares will be validly issued, fully paid and
nonassessable.

     I hereby consent to be named in the Registration Statement and in the
related joint proxy statement-prospectus contained therein as the attorney who
passed upon the legality of the Shares and to the filing of a copy of this
opinion as Exhibit 5.1 to the Registration Statement.


                                          Very truly yours,


                                          /s/ Mary Neil Price
                                          ---------------------
                                          MARY NEIL PRICE
                                          General Counsel
                                          First American Corporation


<PAGE>   1
                                                                     EXHIBIT 8.1
                                                                     -------
                 [Letterhead of Wachtell, Lipton, Rosen & Katz]

                             [Form of Tax Opinion]





                                 March 11, 1998



First American Corporation
First American Center
Nashville, Tennessee  37237-0700

Ladies/Gentlemen:

     We have acted as special counsel to First American Corporation, a Tennessee
corporation ("First American"), in connection with the proposed merger (the
"Merger") of Deposit Guaranty Corp., a Mississippi corporation ("Deposit
Guaranty") with and into First American, upon the terms and conditions set
forth in the Agreement and Plan of Merger dated as of December 7, 1997, between
First American and Deposit Guaranty (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 certain
federal income tax consequences of the Merger.

     For purposes of the opinion set forth below, we have relied, with the
consent of First American and the consent of Deposit Guaranty, 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 Deposit Guaranty dated the date hereof (copies of which are attached hereto
and which are incorporated herein by reference), and have assumed that such
certificates will be complete and accurate as of the Effective Time. We have
also relied upon the accuracy of the Registration Statement and the Joint Proxy
Statement-Prospectus included therein (together, the "Proxy Statement"). Any
capitalized term used and not defined herein has the meaning given to it in the
Proxy Statement or the appendices thereto (including the Agreement). 
<PAGE>   2
First American Corporation
March 11, 1998
Page 2



          We have also assumed that the transactions contemplated by the
Agreement will be consummated in accordance therewith and as described in the
Proxy Statement and that the Merger will qualify as a statutory merger under
the applicable laws of the States of Mississippi and Tennessee.

          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 Code;

         (ii)  No gain or loss will be recognized by First American or Deposit
Guaranty as a result of the Merger;

        (iii)  No gain or loss will be recognized by the Deposit Guaranty
Shareholders who exchange all of their Deposit Guaranty Common Stock solely for
First American Common Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in First American Common
Stock); and

         (iv)  The aggregate tax basis of the First American Common Stock
received by Deposit Guaranty Shareholders who exchange all of their Deposit
Guaranty Common Stock solely for First American Common Stock pursuant to the
Merger will be the same as the aggregate tax basis of the Deposit Guaranty
Common Stock surrendered in exchange therefor (reduced by any amount allocable
to a fractional share interest for which cash is received).

          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 -- Certain Federal Income Tax
Consequences" and elsewhere in the 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.

          This opinion may not be applicable to stockholders subject to special
treatment under U.S. federal income tax law 
<PAGE>   3

First American Corporation
March 11, 1998
Page 3


(including, for example, non-U.S. persons, financial institutions, dealers in
securities, insurance companies or tax-exempt entities, holders who acquired
Deposit Guaranty Common Stock pursuant to the exercise of an employee stock
option or right or otherwise as compensation, and holders who hold Deposit
Guaranty Common Stock as part of a hedge, straddle or conversion transaction).


                              Very truly yours,

                              /s/ Wachtell, Lipton, Rosen & Katz


<PAGE>   1
                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT
                              --------------------

     AGREEMENT by and between First American Corporation, a Tennessee
corporation (the "Company") and E.B. Robinson, Jr. (the "Executive") dated as
of the 7th day of December, 1997.

     The Company has determined that it is in the best interests of the Company
and its shareholders to assure that Deposit Guaranty Corp., a Mississippi
corporation ("DGC") will have the continued dedication of the Executive
pending the merger of the Company and DGC (the "Merger") pursuant to the
Agreement and Plan of Merger dated as of December 7, 1997 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 (the "Board") 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 the last day of the calendar month in which the
Executive's 62nd birthday occurs (the "Employment Period").

     3. Terms of Employment. (a) Position and Duties. (i) (A) During the
Employment Period, the Executive shall serve as Vice Chairman and Chief
Operating Officer of the Company, President of First American National Bank and
a member of the Company's Policy Team 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 and Jackson, Mississippi. During the
Employment Period, the Executive shall report directly to the Chief Executive
Officer of the Company. The Executive shall serve on the Board and on the
Executive Committee thereof during the Employment Period.

<PAGE>   2
          (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 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) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") of no less
than $600,000 or if greater, 80% of the annual base salary paid to the Chief
Executive Officer of the Company. During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter at least
annually. Any increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Annual Base Salary
shall not be reduced after any such increase and the term Annual Base Salary as
utilized in this Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term "affiliated companies" shall include any
company controlled by, controlling or under common control with the Company.

          (ii) Annual Bonus. During the Employment Period, the Executive shall
be eligible to receive an annual cash bonus ("Annual Bonus") at a target of 50%
of his Annual Base Salary up to a maximum of 100% of Annual Base Salary,
provided the Annual Bonus shall be in a minimum amount such that the sum of the
Executive's Annual Base Salary and Annual Bonus shall be no less than 80% of 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.


                                       2

<PAGE>   3
          (iii) Incentive Awards.  On the Effective Date, the Company shall
grant the Executive 45,000 shares of restricted stock (the "Restricted Stock")
and an option to acquire 90,000 shares of the Company's stock (the "Option")
pursuant to the terms of the Company's stock incentive plan. The Option will
have an exercise price equal to the fair market value of the stock subject
thereto on the date of grant. Except as otherwise provided herein, the Option
and the Restricted Stock shall vest in three equal installments, on the first,
second and third anniversaries of the date of grant or, if earlier, upon a
change of control of the Company (as defined in the Company's stock incentive
plan). The Option will remain exercisable until the tenth anniversary of the
date of grant, unless forfeited prior thereto upon the Executive's termination
for Cause (as defined herein) or without Good Reason (as defined herein). At
such time as the Company makes its annual stock incentive grants, the Executive
shall be made grants with a value equal to 166% of his Annual Base Salary on
the same basis as peer executives, pursuant to the terms of the Company's stock
incentive plan.

          (iv)  Retirement.  The Executive shall be paid an annual retirement
benefit of 60% of his Final Average Pay (as defined below) commencing at age 62
for his life less any benefit payable pursuant to the Company's and DGC's
qualified retirement plan and in lieu of any benefit to which he might be
entitled under DGC's Supplemental Retirement Plan or any nonqualified retirement
plan of the Company or any of its affiliated companies (not including DGC's
Executive and Directors Deferred Income Plan) (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.
"Final Average Pay" means the average of the sum of the Executive's annual base
salary and annual bonus for the five calendar years prior to his date of
retirement.

          (v)   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 applicable to peer executives of the Company on a basis
no less favorable than that provided to peer executives of the Company,
including, without limitation, change of control severance arrangements which
shall be entered into on or prior to the Effective Date.


                                       3
<PAGE>   4
          (vi) 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.

          (vii) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, payment of
club dues, to the extent applicable to peer executives of the Company. During
the Employment Period, the Executive shall be entitled to the use of an
automobile and payment of related expenses, pursuant to the terms of DGC's
policy until the first anniversary of the Effective Date, and thereafter, in
accordance with the terms of the Company's policy as it applies to peer
executives of the Company.

          (viii) Office and Support Staff. During the Employment Period, 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.

          (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 peer 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


                                       4

<PAGE>   5
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

                  (iii)  conviction of a felony or guilty or nolo contendere
plea by the Executive with respect thereto, which is materially and
demonstrably injurious to the Company.

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), (ii) or (iii) above,
and specifying the particulars thereof in detail.


                                       5
<PAGE>   6
     (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.

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 


                                       6
<PAGE>   7
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 earned by the Executive under DGC's Variable
     Pay Plan for any of the three years prior to the Effective Date (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


                                       7

<PAGE>   8
          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 calendar
     month in which the Executive's 62nd birthday occurs (the "Continuation
     Period") divided by twelve and (2) the sum of (x) the Executive's Annual
     Base Salary and (y) the Recent Annual Bonus; and

          (ii)  for the Continuation Period, the Company shall continue to
provide medical and dental benefits (collectively "Medical Benefits") and other
welfare benefits to the Executive and his spouse on a basis such benefits were
provided to the Executive immediately prior to the Date of Termination;

          (iii) the Option and the Restricted Stock shall vest immediately;

          (iv)  for purposes of the Executive's Retirement Benefit, the
Executive shall be deemed to have terminated employment at the end of the
Continuation Period and have received compensation during such period equal to
the sum of his Annual Base Salary and Recent Annual Bonus in respect of the
calendar year immediately prior to the Date of Termination, and such benefit
shall commence at the end of the Continuation Period; and    

          (v)   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 the continued payment for one year following the Date of
Termination of the Executive's Annual Base Salary and Annual Bonus in the
amounts earned in respect of the calendar year immediately prior to the Date of
Termination, the payment of Accrued Obligations and the timely payment or
provision of Other Benefits. In addition, the Option and 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

                                       8
<PAGE>   9
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 the Chief Executive Officer of the Company and his beneficiaries,
the continued provision of Medical Benefits to the Executive's current spouse
and the payment of the Retirement Benefit to the Executive's current spouse
commencing upon the date the Executive would have attained age 62.

     (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 Option and 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 the Chief Executive Officer of the
Company, the continued provision of Medical Benefits to the Executive and his
current spouse and the payment of the Retirement Benefit commencing upon the
date the Executive attains age 62.

     (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 (x) his Annual Base Salary through the Date of Termination, and (y)
Other Benefits, in each case to the extent theretofore unpaid. With respect to 
the provision of Other Benefits, the term Other Benefits as utilized in this
Section 5(d) shall include the payment of the Retirement Benefit commencing
upon the date the Executive attains age 62.

     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


                                       9
<PAGE>   10
Company or any of its affiliated companies. Amounts which are vested benefits
or which the 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 or DGC 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 



                                       10
<PAGE>   11
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 KPMG Peat Marwick
LLP or such 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 the later of
(i) 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



                                       11

<PAGE>   12
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 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,

                                       12
<PAGE>   13
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. In no event shall an asserted violation of
the provisions of

                                       13
<PAGE>   14
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

     (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.

     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 Tennessee, 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


                                       14
<PAGE>   15
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

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 or control agreement between the parties
hereto or the Executive and DGC with respect to the subject matter hereof.


                                       15
<PAGE>   16
          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/ E. B. Robinson, Jr.
                                        ---------------------------------
                                        E. B. ROBINSON, JR.


                                        FIRST AMERICAN CORPORATION

                                        By /s/ Dennis C. Bottorff 
                                           ------------------------------
                                               DENNIS C. BOTTORFF

<PAGE>   1
                                                                    EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

     AGREEMENT by and between First American Corporation, a Tennessee
corporation (the "Company") and Howard L. McMillan, Jr. (the "Executive") dated
as of the 7th day of December, 1997.

     The Company has determined that it is in the best interests of the Company
and its shareholders to assure that Deposit Guaranty Corp., a Mississippi
corporation ("DGC") will have the continued dedication of the Executive pending
the merger of the Company and DGC (the "Merger") pursuant to the Agreement and
Plan of Merger dated as of December 7, 1997 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 (the
"Board") 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 the third anniversary thereof (the "Employment
Period").

     3.  Terms of Employment.  (a) Position and Duties. (i)(A) During the
Employment Period, the Executive shall serve as Chairman of Deposit Guaranty
System and shall have 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 Jackson, Mississippi. During
the Employment Period, the Executive shall report directly to the Chief
Operating Officer of the Company.

     (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



<PAGE>   2
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 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) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") of no less
than $350,000. During the Employment Period, the Annual Base Salary shall be
reviewed no more than 12 months after the last salary increase awarded to the
Executive prior to the Effective Date and thereafter at least annually. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.

          (ii) Annual Bonus. During the Employment Period, the Executive shall
be eligible to receive an annual cash bonus ("Annual Bonus") at a target of 50%
of his Annual Base Salary up to a maximum of 100% of Annual Base Salary.

          (iii) Incentive Awards. On the Effective Date, the Company shall
grant the Executive 15,000 shares of restricted stock (the "Restricted Stock")
and an option to acquire 30,000 shares of the Company's stock (the "Option")
pursuant to the terms of the Company's stock incentive plan. The Option will
have an exercise price equal to the fair market value of the stock subject
thereto on the date of grant. Except as otherwise provided herein, the Option
and the Restricted Stock shall vest in three equal installments, on the first,
second and third anniversaries of the date of grant or, if earlier, upon a
change of control of the Company (as defined in the Company's stock incentive
plan). The Option 


                                       2
<PAGE>   3
will remain exercisable until the tenth anniversary of the date of grant,
unless forfeited prior thereto upon the Executive's termination for Cause (as
defined herein) or without Good Reason (as defined herein). At such time as the
Company makes its annual stock incentive grants, the Executive shall be made
grants with a value equal to 100% of his Annual Base Salary on the same basis
as peer executives, pursuant to the terms of the Company's stock incentive
plan.

          (iv)  Retirement.  The Executive shall be paid an annual retirement
benefit of 50% of his Final Average Pay (as defined below) commencing at age 62
for his life less any benefit payable pursuant to the Company's and DGC's
qualified retirement plan and in lieu of any benefit to which he might be
entitled under DGC's Supplemental Retirement Plan or any nonqualified
retirement plan of the Company or any of its affiliated companies (not including
DGC's Executive and Directors' Deferred Income Plan) (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. "Final Average Pay" means the average of the sum of the
Executive's annual base salary and annual bonus for the five calendar years
prior to his date of retirement.

          (v)   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 applicable to peer executives of the Company on a basis
no less favorable than that provided to peer executives of the Company,
including, without limitation, change of control severance arrangements which
shall be entered into on or prior to the Effective Date.

          (vi)  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.

          (vii) Fringe Benefits.  During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, payment of
club dues, to the extent applicable to peer executives of the Company. During
the Employment Period, the Executive shall be entitled to the use of an
automobile and payment of related expenses, pursuant to the terms of DGC's
policy until the first anniversary of the Effective Date, and thereafter, in
accordance with the terms of the Company's policy as it applies to peer
executives of the Company.


                                       3
<PAGE>   4
          (viii)  Office and Support Staff.  During the Employment Period, the
Executive shall be entitled to an office 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.

          (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 peer 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

                                       4
<PAGE>   5
          (ii)  the willful engaging by the Executive in illegal conduct or
gross misconduct, which is materially and demonstrably injurious to the
Company, or

          (iii) conviction of a felony or guilty or nolo contendere plea by the
Executive with respect thereto, which is materially and demonstrably injurious
to the Company.

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), (ii) or (iii) 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;


                                       5
<PAGE>   6
          (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.

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 

                                       6
          
<PAGE>   7
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 earned by the Executive under DGC's Variable
     Pay Plan for any of the three years prior to the Effective Date (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

          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 (the "Continuation Period") divided by twelve and (2) the
     sum of (x) the Executive's Annual Base Salary and (y) the Recent Annual
     Bonus; and

          (ii) for the Continuation Period, the Company shall continue to
provide medical and dental benefits (collectively "Medical Benefits") and other
welfare benefits to the Executive and his spouse on a basis such benefits were
provided to the Executive immediately prior to the Date of Termination;

          (iii) the Option and the Restricted Stock shall vest immediately;


                                       7

<PAGE>   8
          (iv) for purposes of the Executive's Retirement Benefit, the
Executive shall be deemed to have terminated employment at the end of the
Continuation Period and have received compensation during such period equal to
the sum of his Annual Base Salary and Recent Annual Bonus in respect of the
calendar year immediately prior to the Date of Termination, and such benefit
shall commence upon the Executive's attainment of age 62; and

          (v)  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 the continued payment for one year following the Date of
Termination of the Executive's Annual Base Salary and Annual Bonus in the
amounts earned in respect of the calendar year immediately prior to the Date of
Termination, the payment of Accrued Obligations and the timely payment or
provision of Other Benefits. In addition, the Option and 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 peer
executives of the Company and their beneficiaries, the continued provision of
Medical Benefits to the Executive's current spouse and the payment of the
Retirement Benefit to the Executive's current spouse commencing upon the date
the Executive would have attained age 62.

     (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 Option and 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 


                                       8
<PAGE>   9
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 peer executives of the Company, the
continued provision of Medical Benefits to the Executive and his current spouse
and the payment of the Retirement Benefit commencing upon the date the
Executive attains age 62.

          (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 (x) his Annual Base Salary through the Date
of Termination, and (y) Other Benefits, in each case to the extent theretofore
unpaid. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(d) shall include the payment of the
Retirement Benefit commencing upon the date the Executive attains age 62.

          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 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

                                       9
<PAGE>   10
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 or DGC 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


                                       10
<PAGE>   11
KPMG Peat Marwick LLP or such 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 the later of (i) 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,


                                       11
<PAGE>   12
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 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

                                       12
<PAGE>   13
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


Executive's employment with the Company, the Executive shall 


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.

     (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.

     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


                                       13
<PAGE>   14
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 Tennessee, 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


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.



                                       14
<PAGE>   15
     (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
hereto or the Executive and DGC with respect to the subject matter hereof.



                                       15


<PAGE>   16

     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/ Howard L. McMillan, Jr.
                                   ---------------------------
                                       HOWARD L. McMILLAN, JR.


                                   FIRST AMERICAN CORPORATION


                                   By /s/ Dennis C. Bottorff 
                                      ------------------------
                                          DENNIS C. BOTTORFF


<PAGE>   1
                                                                    EXHIBIT 23.1

CONSENT OF MORGAN STANLEY & CO. INCORPORATED

March 11, 1998



First American Corporation



Dear Sirs:

         We hereby consent to the inclusion in the Registration Statement of
First American Corporation ("First American"), relating to the proposed merger
of First American and Deposit Guaranty Corp., of our opinion letter in the
Joint Proxy Statement/Prospectus which is a part of the Registration Statement,
and to the references of our firm name therein. In giving such consent, we do
not thereby 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 adopted by the Securities and Exchange Commission
thereunder nor do we 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.

                                             Very truly yours,


                                             MORGAN STANLEY & CO. INCORPORATED



                                             By: /s/ William M. Weiant
                                                -------------------------------

<PAGE>   1
                                                                    EXHIBIT 23.5

                              ACCOUNTANTS' CONSENT

The Board of Directors
First American Corporation:

We consent to the use of our audit report dated January 16, 1997, on the
consolidated financial statements of First American Corporation and subsidiaries
as of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, contained in First American Corporation's 1996
Annual Report on Form 10-K incorporated herein by reference herein and to the
reference to our firm under the headings "Selected Financial Data" and "Experts"
in the Joint Proxy Statement--Prospectus.

Nashville, Tennessee
March 11, 1998                                /s/ KPMG Peat Marwick LLP


<PAGE>   1
                                                                    EXHIBIT 23.6

           CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT ACCOUNTANTS

                         Independent Auditors' Consent

The Board of Directors
Deposit Guaranty Corp.:

     We consent to the use of our audit report dated February 5, 1997 on the
consolidated financial statements of Deposit Guaranty Corp. and subsidiaries as
of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, which report appears in the December 31, 1996,
annual report on Form 10-K of Deposit Guaranty Corp. incorporated herein by
reference and to the reference to our firm under the heading "Experts" and
"Summary--Selected Financial Data" in the Joint Proxy Statement--Prospectus. Our
audit report on the 1994 financial statements refers to a change in the method
of accounting for debt securities.

Jackson, Mississippi                           /s/ KPMG PEAT MARWICK LLP
March 11, 1998


<PAGE>   1
 
                                                                    EXHIBIT 99.2
 
                           FIRST AMERICAN CORPORATION
 
     PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS CALLED FOR APRIL 16, 1998.
 
     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 1998 Annual
Meeting of Shareholders of FIRST AMERICAN CORPORATION and any adjournments
thereof.
 
     The Board of Directors recommends a vote FOR the approval of Proposals 1, 2
and 4 and FOR the election of directors. Approval of Proposal 2 is a condition
to the obligation of First American and Deposit Guaranty to consummate the
Agreement and Plan of Merger being voted upon in Proposal 1. Proposals 3 and 4
are not such conditons.
 
<TABLE>
<S>    <C>
(1)[ ] FOR [ ] AGAINST [ ] ABSTAIN Approval and adoption of the
       Agreement and Plan of Merger by and between First American
       Corporation and Deposit Guaranty Corp.
(2)[ ] FOR [ ] AGAINST [ ] ABSTAIN Approval and adoption of the
       Amendment to the Restated Charter of First American
       Corporation to increase the number of authorized shares of
       Common Stock from 100 million to 200 million.
(3)[ ] FOR all of the following nominees for directors, Dickson,
       Koonce, Polley, Smith, Turner and Welch, to serve until the
       Annual Meeting in 2001, and Wilson to serve until the Annual
       Meeting in 1999, and until their successors have been
       elected and qualified (except as indicated to the contrary
       below):
   [ ] AGAINST the following nominees (print    [ ]  WITHHOLD AUTHORITY (ABSTAIN) to vote
       name(s)):                                     for the following nominees (print
                                                     name(s)):
   [ ] AGAINST all nominees                     [ ]  WITHHOLD AUTHORITY (ABSTAIN) to vote
                                                     for all nominees
(4)[ ] AUTHORITY GRANTED                        [ ]  AUTHORITY WITHHELD
       for the proxies to vote in their
       discretion on any other matter which
       may come before said Meeting or any
       adjournment thereof.
</TABLE>
<PAGE>   2
 
     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, FOR approval and adoption of the Amendment to the
Restated Charter of First American Corporation to increase the number of shares
of Common Stock, FOR the nominees in their election of directors, and by the
proxies in their discretion on any other matters which may properly come before
said Meeting or any adjournment thereof.
 
<TABLE>
<S>                                 <C>
- ------------------ (number of       PLEASE SIGN AND RETURN PROMPTLY
persons)                            ---------------------------------------------
WILL ATTEND THE ANNUAL MEETING      ---------------------------------------------
                                    DATE
                                                                           , 1998
                                    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.
</TABLE>
 
- --------------------------------------------------------------------------------
 
                 If you have changed your address, please PRINT
                         new address on the line above.

<PAGE>   1
 
                                                                    EXHIBIT 99.3
 
                             DEPOSIT GUARANTY CORP.
                                 P. O. BOX 730
                               JACKSON, MS 39205
 
                                     PROXY
 
     THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
 
     The undersigned hereby appoint(s) Sharon S. Greener, Charles L. Irby and
William R. James, jointly and individually, as Proxies, each with the power to
appoint his substitute and hereby authorize(s) them to represent the
undersigned, and to vote upon all matters that may properly come before the
meeting including the matters described in the Proxy Statement furnished
herewith, subject to any directions indicated in the reverse side, with full
power to vote, and to cumulate votes on, all shares of Common Stock of Deposit
Guaranty Corp. held of record by the undersigned on February 20, 1998, at the
special meeting of stockholders to be held on April 14, 1998, or any
adjournment(s) thereof. IF NO DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE FOR
THE APPROVAL AND ADOPTION OF THE AGREEMENT AND PLAN OF MERGER BY AND BETWEEN
FIRST AMERICAN CORPORATION AND DEPOSIT GUARANTY CORP. AND AT THE DISCRETION OF
THE PERSONS NAMED ABOVE IN CONNECTION WITH ANY OTHER BUSINESS PROPERLY COMING
BEFORE THE MEETING.
 
                        (Continued and to be dated and signed on the other side)
 
                             DEPOSIT GUARANTY CORP.
                                P. O. BOX 11011
                           NEW YORK, N.Y. 10203-0011
 
1.  Proposal to approve and adopt the Agreement and Plan of Merger by and
between Deposit Guaranty Corp. and First American Corporation.
 
                           [ ] FOR            [ ] AGAINST            [ ] ABSTAIN
 
           The Board of Directors recommends a vote "FOR" the Merger.
 
                                          ADDRESS CHANGE
                                          and/or comments
<PAGE>   2
 
                                          Sign here as name(s) appear(s)
                                          opposite.
 
                                          When shares are held by joint tenants,
                                          both should sign. When signing as
                                          attorney, executor, administrator,
                                          trustee or guardian, please give full
                                          title as such. If corporation or
                                          partnership, sign in full corporate or
                                          partnership name by authorized person.
 
                                          Dated: ____________________ , 1998
 
Signature:
- --------------------------------------------------------------------------------
 
Signature:
- --------------------------------------------------------------------------------
 
               Votes must be indicated (x) in Black or Blue Ink.
 
           PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
                          USING THE ENCLOSED ENVELOPE.


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