<PAGE> 1
As filed with the Securities and Exchange Commission on August 9, 1994
Registration No. 33-_______
PRELIMINARY COPIES
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
__________________________
SOUTHTRUST CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 6711 63-0574085
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
420 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 254-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
__________________________
AUBREY D. BARNARD
SOUTHTRUST CORPORATION
420 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 254-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With copies to:
C. LARIMORE WHITAKER, ESQ. CRAIG N. LANDRUM, ESQ.
BRADLEY, ARANT, ROSE & WHITE HEIDELBERG & WOODLIFF, P.A.
1400 PARK PLACE TOWER 14TH FLOOR CAPITAL TOWERS
2001 PARK PLACE 125 SOUTH CONGRESS STREET
BIRMINGHAM, ALABAMA 35203 JACKSON, MISSISSIPPI 39201
(205) 521-8000 (601) 948-3800
_________________________ __________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate offering Amount of
securities to be registered registered per unit price registration fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $2.50 per share . . . 294,584 Shares
Rights to Purchase Series A Junior * $2,026,114.58** $698.66
Participating Preferred Stock . . . . . . . 130,926 Rights
===================================================================================================================================
</TABLE>
* Not Applicable
** Estimated solely for purposes of determining the amount of the registration
fee in accordance with Rule 457(f)(2) under the Securities Act of 1933.
____________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
SOUTHTRUST CORPORATION
CROSS-REFERENCE SHEET SHOWING THE LOCATION IN THE
PROXY STATEMENT/PROSPECTUS OF INFORMATION REQUIRED
BY PART I OF FORM S-4 PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
Location or Heading In Proxy
Item Statement/Prospectus
---- ----------------------------
<S> <C> <C>
1. Forepart of Registration Statement and Forepart of Registration Statement and Outside Front Cover Page of
Outside Front Cover Page of Prospectus Prospectus
2. Inside Front and Outside Back Cover Pages of Available Information; Incorporation of Certain Documents by Reference;
Prospectus Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Summary
Charges and Other Information
4. Terms of the Transaction Summary; The Merger; Description of Capital Stock of SouthTrust;
Comparison of the Common Stock of SouthTrust and Jefferson; Certain
Federal Income Tax Considerations
5. Pro Forma Financial Information *
6. Material Contacts with the Company Being Summary; The Merger
Acquired
7. Additional Information Required for *
Reoffering by Persons and Parties Deemed to
be Underwriters
8. Interests of Named Experts and Counsel Legal Matters
9. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
10. Information With Respect to S-3 Registrants Summary
11. Incorporation of Certain Information by Incorporation of Certain Documents by Reference
Reference
12. Information With Respect to S-2 or S-3 *
Registrants
13. Incorporation of Certain Information by *
Reference
14. Information With Respect to Registrants *
Other Than S-3 or S-2 Registrants
15. Information With Respect to S-3 Companies *
16. Information With Respect to S-2 or S-3 *
Companies
17. Information With Respect to Companies Other Summary; Certain Information Concerning the Business of Jefferson;
Selected than S-3 or S-2 Companies Financial Data of Jefferson;
Management's Discussion and Analysis of Financial Condition and Results
of Operations of Jefferson; Index to the Financial Statements of Jefferson
18. Information if Proxies, Consents or Introduction; Summary; The Merger; Additional Information
Authorizations are to be Solicited
19. Information if Proxies, Consents or *
Authorizations are not to be Solicited, or
in an Exchange Offer
- ---------------------------------------------------
</TABLE>
* Not Applicable
<PAGE> 3
FIRST JEFFERSON CORPORATION
854 HOWARD AVENUE
BILOXI, MISSISSIPPI 39530
______________________________________________________________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
______________________________________________________________________________
Notice is hereby given that a Special Meeting of Shareholders of First
Jefferson Corporation, a Mississippi corporation and registered bank holding
company ("Jefferson"), will be held on September ___, 1994, at ______ __.m.,
local time, at The Jefferson Bank, Board Room, 854 Howard Avenue, Biloxi,
Mississippi 39530 for the following purposes (the "Special Meeting"):
1. To consider and vote upon the Agreement and Plan of Merger,
dated as of April 25, 1994 (the "Merger Agreement"), a copy of which is
annexed as Exhibit A to the accompanying Proxy Statement/Prospectus,
between Jefferson and SouthTrust of Mississippi, Inc., a Mississippi
corporation ("ST-Sub"), joined in by SouthTrust Corporation, a Delaware
corporation ("SouthTrust"), whereby Jefferson will be merged with and into
ST-Sub and the shareholders of Jefferson, subject to rights of dissent,
will receive 2.967 shares of common stock of SouthTrust (which exchange
ratio is subject to appropriate adjustment and the possible payment of a
contingent cash amount in the event of certain occurrences) in exchange
for each outstanding share of common stock of Jefferson, exclusive of
certain qualifying shares of common stock of Jefferson held by certain
directors of Jefferson's banking subsidiary and shares of common stock of
Jefferson held in the treasury of Jefferson, with cash being paid in lieu
of any fractional shares of common stock of SouthTrust, pursuant to and in
accordance with the terms and conditions of the Merger Agreement, all as
more fully described in the accompanying Proxy Statement/Prospectus; and
2. To consider and act upon such other matters, including, in
particular, adjournment of the Special Meeting to allow further
solicitation of proxies if necessary, as may properly come before the
Special Meeting or any adjournment or adjournments thereof.
Only those persons who were holders of record of the common stock of
Jefferson at the close of business on ______________, 1994, are entitled to
notice of and to vote at the Special Meeting and any adjournments thereof.
Pursuant to Article 13 of the Mississippi Business Corporation Act,
shareholders of Jefferson are entitled to dissent from the transactions
contemplated by the Merger Agreement. A copy of the provisions of the
Mississippi Business Corporation Act regarding such rights of dissent is
attached hereto as Exhibit B.
The Special Meeting may be adjourned from time to time without notice
other than announcement at the Special Meeting, or at any adjournment thereof,
and any business for which notice is hereby given may be transacted at any such
adjournment.
A Proxy Statement/Prospectus relating to and a proxy for use in connection
with the Special Meeting are enclosed.
By Order of the Board of Directors
D'AUBY H. SCHIEL
President and Chief Executive Officer
Biloxi, Mississippi
August ____, 1994
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY SO THAT JEFFERSON MAY BE ASSURED OF THE PRESENCE OF A
QUORUM AT THE SPECIAL MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE> 4
PROXY STATEMENT/PROSPECTUS
PROXY STATEMENT OF
FIRST JEFFERSON CORPORATION
FOR A SPECIAL MEETING OF ITS SHAREHOLDERS
TO BE HELD SEPTEMBER __, 1994
___________________________________________________________
THIS PROXY STATEMENT INCLUDES THE PROSPECTUS OF
SOUTHTRUST CORPORATION
RELATING TO UP TO 294,584 SHARES OF COMMON STOCK
(PAR VALUE $2.50 PER SHARE)
TO BE ISSUED IN CONNECTION WITH A PROPOSED MERGER OF
FIRST JEFFERSON CORPORATION INTO SOUTHTRUST OF MISSISSIPPI, INC.,
A WHOLLY-OWNED SUBSIDIARY OF SOUTHTRUST CORPORATION
___________________________________________________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IN CONNECTION
WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SOUTHTRUST
CORPORATION OR FIRST JEFFERSON CORPORATION. THIS PROXY STATEMENT/PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE SHARES TO WHICH
IT RELATES OR AN OFFER OF ANY KIND TO ANY PERSON IN ANY JURISDICTION WHERE SUCH
AN OFFER WOULD BE UNLAWFUL. NEITHER DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF. ALL INFORMATION CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS RELATING TO SOUTHTRUST CORPORATION AND ITS SUBSIDIARIES
HAS BEEN SUPPLIED BY SOUTHTRUST CORPORATION AND ALL INFORMATION RELATING TO
FIRST JEFFERSON CORPORATION HAS BEEN SUPPLIED BY FIRST JEFFERSON CORPORATION.
THIS PROXY STATEMENT/PROSPECTUS AND THE ACCOMPANYING FORM OF PROXY ARE
FIRST BEING MAILED TO SHAREHOLDERS OF FIRST JEFFERSON CORPORATION ON OR ABOUT
AUGUST ___, 1994.
_________________________________________________
THE SECURITIES OF SOUTHTRUST CORPORATION OFFERED IN CONNECTION WITH THE
MERGER DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS
OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
The date of this Proxy Statement/Prospectus is August ____, 1994.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Certain Federal Income Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Description of SouthTrust Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Market and Dividend Information Respecting the Common Stock of SouthTrust and Jefferson . . . . . . . . . . . . . . . . . . . 28
Comparison of the Common Stock of SouthTrust and Jefferson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Supervision and Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Certain Information Concerning the Business of Jefferson and the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Selected Financial Data of Jefferson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Management's Discussion and Analysis of Financial Condition and Results of Operations of Jefferson . . . . . . . . . . . . . 37
Beneficial Ownership of Jefferson Common Stock and Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Incorporation of Certain Documents By Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Index to the Financial Statements of Jefferson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Exhibit A - Agreement and Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Mississippi Dissent Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
AVAILABLE INFORMATION
SouthTrust Corporation, a Delaware corporation ("SouthTrust"), is
subject to the informational requirements of the Securities Exchange Act of
1934 (the "Exchange Act") and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can
be inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Northwestern Atrium Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549, at prescribed rates.
SouthTrust has filed a Registration Statement on Form S-4 (herein,
together with all amendments thereto, called the "Registration Statement") with
the Commission under the Securities Act of 1933 (the "Securities Act"), with
respect to the shares of common stock of SouthTrust offered hereby. This Proxy
Statement/Prospectus does not contain all of the information and undertakings
set forth in the Registration Statement and the exhibits and schedules thereto.
For further information with respect to SouthTrust and the shares of common
stock of SouthTrust, reference is made to the Registration Statement and the
exhibits and schedules thereto. Statements contained in this Proxy
Statement/Prospectus as to the contents of any contract or other document
referred to are not necessarily complete, and in each instance reference is
made to a copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement and the exhibits and schedules
thereto may be inspected at the Commission's office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies thereof may be obtained from the Public
Reference Section of the Commission at such address at prescribed rates.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE
AVAILABLE ON REQUEST WITHOUT CHARGE FROM AUBREY D. BARNARD, SOUTHTRUST
CORPORATION, 420 NORTH 20TH STREET, BIRMINGHAM, ALABAMA 35203, TELEPHONE NUMBER
(205) 254-5000. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY __________, 1994. SEE "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
2
<PAGE> 6
INTRODUCTION
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of
common stock, par value $1.00 per share ("Jefferson Common Stock"), of First
Jefferson Corporation, a Mississippi corporation and registered bank holding
company ("Jefferson"), in connection with the solicitation of proxies by the
Board of Directors of Jefferson for use at a special meeting of shareholders of
Jefferson to be held on September __, 1994, at _____ __.m., local time, at The
Jefferson Bank, Board Room, 854 Howard Avenue, Biloxi, Mississippi 39530 and at
any postponement or adjournment thereof (the "Special Meeting").
The purpose of the Special Meeting is to consider and vote upon that
certain Agreement and Plan of Merger, dated as of April 25, 1994 (the "Merger
Agreement"), between Jefferson and SouthTrust of Mississippi, Inc., a
Mississippi corporation ("ST-Sub"), joined in by SouthTrust Corporation, a
Delaware corporation ("SouthTrust"), providing for the merger of Jefferson into
ST-Sub (the "Merger") and, subject to rights of dissent and exclusive of shares
of Jefferson Common Stock held by certain directors of Jefferson's banking
subsidiary (the "Qualifying Directors' Shares") and shares of Jefferson Common
Stock held in the treasury of Jefferson, the conversion in the Merger of each
outstanding share of Jefferson Common Stock into 2.967 shares of common stock,
par value $2.50 per share, of SouthTrust ("SouthTrust Common Stock"), which
exchange ratio is subject to appropriate adjustment and the possible payment of
a contingent cash amount in the event of certain occurrences.
No fractional shares of SouthTrust Common Stock will be issued in the
Merger, and, in lieu thereof, each holder of shares of Jefferson Common Stock
who otherwise would have been entitled to receive a fractional share of
SouthTrust Common Stock will be entitled to receive a cash payment in an amount
equal to the product of (i) the fractional interest of a share of SouthTrust
Common Stock to which such holder otherwise would have been entitled and (ii)
the last sales price of such share of SouthTrust Common Stock as reported on
the Automated Quotation System of the National Association of Securities
Dealers, Inc. - National Market System ("NASDAQ") on the last trading day
immediately preceding the Effective Time of the Merger (as defined below).
The 2.967 shares of SouthTrust Common Stock for which each share of
Jefferson Common Stock may be exchanged in the Merger had an aggregate market
value, based upon the average of the last sales price of SouthTrust Common
Stock for the five trading days immediately preceding __________, 1994, of
approximately $_____. See "DESCRIPTION OF SOUTHTRUST CAPITAL STOCK-SouthTrust
Common Stock" and "MARKET AND DIVIDEND INFORMATION RESPECTING THE COMMON STOCK
OF SOUTHTRUST AND JEFFERSON." Because the number of shares of SouthTrust
Common Stock to be received for each share of Jefferson Common Stock in the
Merger is fixed, a change in the market price of SouthTrust Common Stock before
the Effective Time of the Merger would affect the value of the SouthTrust
Common Stock to be received in the Merger in exchange for each share of
Jefferson Common Stock. However, Jefferson is not obligated to consummate the
Merger in the event that the average last sales price of a share of SouthTrust
Common Stock as reported by NASDAQ for the last ten trading days immediately
preceding the Effective Time of the Merger is less than $16.25 per share,
unless SouthTrust elects to adjust the exchange ratio so such exchange ratio
shall equal the product of $56.00 divided by the last sales price of a share of
SouthTrust Common Stock on the trading day immediately prior to the Effective
Time of the Merger. For additional information regarding the terms of the
Merger, see the Merger Agreement which is attached hereto as Exhibit A and "THE
MERGER."
In connection with the Merger, each holder of any right to purchase
shares of preferred stock of Jefferson or shares of Jefferson Common Stock
pursuant to existing options or rights (the "Jefferson Options") shall have
such rights canceled, and in exchange therefor, each such holder shall receive
such number of shares of SouthTrust Common Stock as shall be produced by
dividing 34,563 by the aggregate number of shares of Jefferson Common Stock
subject to all such Jefferson Options and then multiplying such result by the
number of shares of Jefferson Common Stock subject to the Jefferson Options
held by each such holder. In addition, the Merger Agreement provides that the
outstanding shares of 8% Noncumulative Preferred Stock, par value $5.00 per
share, of Jefferson (the "8% Preferred Stock"), and the outstanding 10%
Convertible Subordinated Debentures due December 31, 1999 of Jefferson (the
"Debentures") shall be called for redemption or repurchase, as the case may be,
effective as of the Effective Time of the Merger, and to the extent that
Jefferson needs additional funds to effectuate such redemption or repurchase
without adversely affecting its capital requirements, SouthTrust has agreed in
the Merger Agreement to provide such funds.
3
<PAGE> 7
Subject to the approval of the Merger Agreement by the shareholders of
Jefferson and the satisfaction or waiver of all conditions contained in the
Merger Agreement, the Merger will become effective upon the filing of
appropriate Articles of Merger with the Secretary of State of the State of
Mississippi (the "Effective Time of the Merger"). It is anticipated that such
documents will be filed and the Merger will become effective on or about
September ___, 1994.
This Proxy Statement/Prospectus was first sent or given to
shareholders of Jefferson on or about August ___, 1994. SouthTrust has filed a
Registration Statement with the Commission with respect to the shares of
SouthTrust Common Stock to be issued pursuant to the Merger. This document
also constitutes the Prospectus of SouthTrust that is included as part of such
Registration Statement. All information contained in this Proxy
Statement/Prospectus pertaining to SouthTrust and ST-Sub was supplied by
SouthTrust, and all information contained in this Proxy Statement/Prospectus
pertaining to Jefferson was supplied by Jefferson.
A copy of the Merger Agreement is attached hereto as Exhibit A, and
the description thereof contained in this Proxy Statement/Prospectus is
qualified in its entirety by reference to such Exhibit A.
VOTING AT THE SPECIAL MEETING
The Board of Directors of Jefferson has fixed the close of business on
August ___, 1994 as the record date (the "Record Date") for the determination
of holders of shares of capital stock of Jefferson entitled to notice of and to
vote at the Special Meeting. On the Record Date, Jefferson had issued and
outstanding 88,438 shares of Jefferson Common Stock, and 66,640 shares of the
8% Preferred Stock. Only the holders of the outstanding Jefferson Common Stock
are entitled to vote at the Special Meeting. The presence, in person or by
proxy, of the holders of a majority of the outstanding shares of Jefferson
Common Stock entitled to vote is necessary to constitute a quorum at the
Special Meeting, and the affirmative vote of the holders of a majority of the
outstanding shares of Jefferson Common Stock entitled to vote thereon is
required to approve the Merger Agreement. Each holder of record of shares of
Jefferson Common Stock on the Record Date is entitled to one vote for each
share of such stock held of record.
As of the Record Date, Jefferson directors and executive officers (a
total of 7 persons) beneficially owned a total of 57,585 shares of Jefferson
Common Stock (exclusive of 21,602 shares of Jefferson Common Stock which may be
acquired by such persons pursuant to the Jefferson Options), representing
approximately 65.11% of the shares of Jefferson Common Stock entitled to vote
at the Special Meeting. All of such directors and officers have advised
Jefferson that, as of the date of the Proxy Statement/Prospectus, they intend
to vote for the approval of the Merger Agreement.
THE BOARD OF DIRECTORS OF JEFFERSON HAS UNANIMOUSLY APPROVED THE
MERGER AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT. SEE "THE MERGER - BACKGROUND OF THE MERGER; REASONS FOR THE MERGER;
RECOMMENDATION OF THE BOARD OF DIRECTORS OF JEFFERSON."
A proxy in the form enclosed, properly completed and returned in time
for the voting thereof at the Special Meeting, with instructions specified
thereon, will be voted in accordance with such instructions. Only votes FOR a
particular matter constitute affirmative votes. Votes that are withheld or
abstain, including broker non-votes, with respect to a matter are counted for
quorum purposes, but since they are not cast for a particular matter, such
votes have the same effect as negative votes with respect to the proposal
regarding the Merger Agreement. If no specification is made, a signed proxy
will be voted FOR approval of the Merger Agreement. A proxy may be revoked at
any time prior to its exercise (i) by filing with the Secretary of Jefferson
either an instrument revoking the proxy or a duly executed proxy bearing a
later date or (ii) by attending the Special Meeting and voting in person.
Attendance at the Special Meeting will not in itself revoke a proxy.
In addition to the use of the mail, proxies may be solicited by
telephone, telecopy or personally by the directors, officers and employees of
Jefferson, who will receive no extra compensation for their services. The
expenses of such solicitation will be paid by Jefferson. Jefferson will
reimburse banks, brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy soliciting material
to the beneficial owners of shares of Jefferson Common Stock.
SHAREHOLDERS OF JEFFERSON ARE REQUESTED TO COMPLETE, SIGN AND DATE THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE.
4
<PAGE> 8
SUMMARY
The following is a brief summary of certain information contained in
or incorporated by reference into this Proxy Statement/Prospectus with respect
to Jefferson, SouthTrust and the terms of the Merger. The following summary is
not intended to be complete and is qualified in all respects by the information
appearing elsewhere herein or incorporated by reference into this Proxy
Statement/Prospectus, the Exhibits hereto and the documents referred to herein.
PARTIES TO THE MERGER
SouthTrust
SouthTrust is a regional bank holding company headquartered in
Birmingham, Alabama. As of June 30, 1994, SouthTrust had consolidated total
assets of approximately $15.9 billion. Following the enactment of Alabama's
interstate banking legislation in 1987, SouthTrust has pursued a strategy of
acquiring banks and financial institutions throughout the areas of Florida,
Georgia, North Carolina, South Carolina and Tennessee and offers a full range
of banking services through 39 bank subsidiaries operating more than 400
offices. SouthTrust, through its bank-related subsidiaries, also offers a
range of other services, including mortgage banking services, data processing
services and securities brokerage services. The largest bank subsidiary of
SouthTrust is SouthTrust Bank of Alabama, N.A., Birmingham, Alabama (the oldest
predecessor of which was incorporated in 1887), which had approximately $5.2
billion in total assets as of June 30, 1994. Of SouthTrust's $15.9 billion in
assets as of June 30, 1994, approximately $9.7 billion were in Alabama,
approximately $2.8 billion were in Georgia and approximately $2.5 billion were
in Florida.
SouthTrust has taken advantage of the passage of interstate banking
legislation by acquiring banks in or near major metropolitan markets in
Florida, Georgia, North Carolina, South Carolina and Tennessee. The effect of
this expansion has been to give SouthTrust access to metropolitan markets with
favorable prospects for growth of population, per capita income, and business
development opportunities.
During 1993, SouthTrust effected acquisitions of 14 financial
institutions, with total assets of approximately $1.3 billion, and, as of the
date of this Proxy Statement/Prospectus, SouthTrust had effected in 1994
acquisitions of four financial institutions, with total assets of approximately
$525 million. The following table presents certain information with respect to
acquisitions which are currently pending as of the date of this Proxy
Statement/Prospectus, including the Merger:
<TABLE>
<CAPTION>
Total Total Total
Institution Location Assets Deposits Loans*
- ----------------- -------- ------ -------- -----
(in millions)
<S> <C> <C> <C> <C>
First Jefferson Corporation Biloxi, Mississippi $42.3 $38.2 $22.7
Community Bank of Charlotte Port Charlotte, Florida 38.7 29.7 33.1
Island Bank of Collier County Marco Island, Florida 29.3 24.9 14.0
Citrus National Bank Crystal River, Florida 35.7 32.1 22.2
University State Bank Corp. Tampa, Florida 19.8 17.5 11.8
American National Bank of Florida
(2 Branches) Gainesville, Florida 64.0 64.0 21.0
- ---------------------------
</TABLE>
*Net of unearned income
SouthTrust anticipates accounting for each of these pending
transactions pursuant to the purchase method of accounting, with the exception
of Community Bank of Charlotte, which will be accounted for as a pooling of
interests. Consummation of the pending transactions is subject, in each case,
to, among other things, approval by applicable regulatory authorities.
As a routine part of its business, SouthTrust evaluates opportunities
to acquire bank holding companies, banks and other financial institutions.
Thus, at any particular point in time, including the date of this Proxy
Statement/Prospectus, discussions and, in some cases, negotiations and due
diligence activities looking toward or culminating in the execution of
preliminary or definitive documents respecting potential acquisitions may occur
or be in progress. These transactions may involve SouthTrust acquiring such
financial institutions in exchange for cash or capital stock, and depending
upon the terms of these transactions, they may have a dilutive effect upon the
SouthTrust Common Stock to be issued to holders of Jefferson Common Stock in
the Merger.
The principal executive offices of SouthTrust are located at 420 North
20th Street, Birmingham, Alabama 35203, and its telephone number is (205)
254-5000.
5
<PAGE> 9
Jefferson
Jefferson was organized under the laws of the State of Mississippi in
September 1980 for the purpose of becoming a bank holding company, and as of
the date of the Proxy Statement/Prospectus, it holds approximately 96% of the
issued and outstanding capital stock of The Jefferson Bank, a Mississippi
banking corporation (the "Bank"). The Bank operates out of two offices in
Biloxi, and one office in D'Iberville, Mississippi. The Bank is a member of
and its deposits are insured by the Bank Insurance Fund ("BIF") of the Federal
Deposit Insurance Corporation ("FDIC"). Jefferson is subject to regulation,
examination and supervision by the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), and the Bank is subject to regulation,
examination and supervision by the FDIC and the Department of Banking and
Consumer Finance (the "Department"). See "CERTAIN INFORMATION CONCERNING THE
BUSINESS OF JEFFERSON AND THE BANK" and "SUPERVISION AND REGULATION."
The business of the Bank consists primarily of attracting deposits
from the general public and using these funds, as well as loan repayments and
borrowings, to originate loans, primarily for individuals and small businesses.
The Bank's primary market area for loans and deposits includes Harrison County
and Jackson County, Mississippi, and the total population of that area was
approximately 296,000 as of December 31, 1993.
Jefferson and the Bank each maintain their principal executive offices
at 854 Howard Avenue, Biloxi, Mississippi and the telephone number at such
office is (601) 374-4616.
SouthTrust of Mississippi, Inc.
ST-Sub, a Mississippi corporation, is a wholly-owned subsidiary of
SouthTrust. It was organized under the laws of Mississippi in 1994 for
purposes of acquiring Jefferson, and it has conducted no business activity
since its organization.
SPECIAL MEETING
The Special Meeting will be held at ______ __.m., local time, on
September __, 1994, at The Jefferson Bank, Board Room, 854 Howard Avenue,
Biloxi, Mississippi 39530 to consider and vote upon the Merger Agreement. Only
holders of record of shares of Jefferson Common Stock as of the close of
business on August ___, 1994 will be entitled to vote at the Special Meeting,
including any adjournment thereof.
THE MERGER
Terms of the Merger
Subject to approval of the Merger Agreement by the shareholders of
Jefferson at the Special Meeting, the receipt of required regulatory approvals,
and other conditions, Jefferson will be merged into ST-Sub pursuant to the
Merger Agreement. At the Effective Time of the Merger, each outstanding share
of Jefferson Common Stock will be converted, subject to rights of dissent and
exclusive of Qualifying Directors' Shares and shares of Jefferson Common Stock
held in the treasury of Jefferson, into the right to receive 2.967 shares of
SouthTrust Common Stock, which exchange ratio is subject to appropriate
adjustment in the event of certain stock splits and stock dividends effected by
SouthTrust and is subject to being supplemented by a possible contingent cash
payment in the event of certain events. No fractional shares of SouthTrust
Common Stock will be issued in the Merger, and, in lieu thereof, each holder of
shares of Jefferson Common Stock who otherwise would have been entitled to
receive a fractional share of SouthTrust Common Stock will be entitled to
receive a cash payment in an amount equal to the product of (i) the fractional
interest of a share of SouthTrust Common Stock to which such holder otherwise
would have been entitled and (ii) the last sales price of such share of
SouthTrust Common Stock as reported on NASDAQ on the last trading day
immediately preceding the Effective Time of the Merger. The Merger Agreement
contemplates that as of the Effective Time of the Merger, the Qualifying
Directors' Shares shall be repurchased by the surviving corporation in the
Merger in exchange for a cash purchase price of $1.00 per share. The Merger
Agreement provides that if the Effective Time of the Merger, following the
diligent and good faith effort of SouthTrust and Jefferson, occurs after
September 15, 1994, then SouthTrust shall pay to the holders of the outstanding
shares of Jefferson Common Stock an amount in cash equal to the cash dividends
that would have been declared and paid between January 1, 1994 and the
Effective Time of the Merger with respect to the SouthTrust Common Stock
issuable in the Merger, provided that the record dates of such dividends are
prior to September 16, 1994, less any dividends payable by Jefferson in respect
of Jefferson Common Stock with record dates on or before
6
<PAGE> 10
the Effective Time of the Merger. As of the Effective Time of the Merger, each
holder of Jefferson Options shall have such rights canceled, and in exchange
therefor, each such holder shall receive such number of shares of SouthTrust
Common Stock as shall be produced by dividing 34,563 by the aggregate number of
shares of Jefferson Common Stock subject to all such Jefferson Options and then
multiplying such result by the number of shares of Jefferson Common Stock
subject to the Jefferson Options held by each such holder. See "THE MERGER -
Effect of Merger on Jefferson Common Stock and Jefferson Options."
In connection with the Merger, the 8% Preferred Stock and the
Debentures shall be redeemed and/or repurchased as of the Effective Time of the
Merger. The Merger Agreement provides that if and to the extent that Jefferson
does not possess sufficient funds to redeem or repurchase such Preferred Stock
and the Debentures without adversely affecting its capital requirements,
SouthTrust shall supply the necessary funds.
The 2.967 shares of SouthTrust Common Stock for which each outstanding
share of Jefferson Common Stock may be exchanged in the Merger had an aggregate
value, based upon the average of the last sales price of SouthTrust Common
Stock for the five (5) trading days immediately preceding ___________, 1994, of
approximately $_____.
The Merger Agreement provides that Jefferson shall have the right to
terminate the Merger Agreement in the event that the average of the last sales
price of a share of SouthTrust Common Stock, as reported by NASDAQ for the last
ten trading days immediately prior to the Effective Time of the Merger, is less
than $16.25, unless SouthTrust elects to adjust the exchange ratio so that the
exchange ratio shall equal the product of $56.00 divided by the last sales
price of a share of SouthTrust Common Stock as reported by NASDAQ on the
trading day immediately preceding the Effective Time of the Merger.
As promptly as practicable after the Effective Time of the Merger,
SouthTrust or its agents shall send or cause to be sent to each former holder
of record of Jefferson Common Stock a letter of transmittal for use in
exchanging their stock certificates formerly representing such Jefferson Common
Stock for certificates representing the appropriate number of shares of
SouthTrust Common Stock.
Vote Required
The affirmative vote of the holders of a majority of the outstanding
shares of Jefferson Common Stock is required to approve the Merger Agreement.
The holders of the 8% Preferred Stock are not entitled to vote with respect to
the Merger Agreement. Directors and executive officers of Jefferson and their
affiliates owned, as of the Record Date, directly or indirectly, 57,585 shares
of Jefferson Common Stock (exclusive of 21,602 shares of Jefferson Common Stock
which may be acquired by such persons pursuant to the exercise of Jefferson
Options prior to the Effective Time of the Merger), constituting approximately
65.11% of the shares of Jefferson Common Stock outstanding on the Record Date
for the Special Meeting. It is anticipated that all shares held by such
persons will be voted for approval of the Merger Agreement.
Recommendation of the Board of Directors
THE MEMBERS OF THE BOARD OF DIRECTORS OF JEFFERSON HAVE UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND DETERMINED THAT THE MERGER IS FAIR, FROM A
FINANCIAL POINT OF VIEW, AND IS IN THE BEST INTERESTS OF JEFFERSON AND ITS
SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS OF JEFFERSON RECOMMENDS THAT
SHAREHOLDERS OF JEFFERSON VOTE IN FAVOR OF THE MERGER AGREEMENT. This
recommendation is based on a number of factors discussed in this Proxy
Statement/Prospectus. See "THE MERGER - Background of the Merger; Reasons for
the Merger; Recommendations of the Board of Directors of Jefferson."
Interests of Certain Named Persons in the Merger
The Merger Agreement provides that the Board of Directors of ST-Sub,
following the Merger, shall consist of those persons who are serving in such
capacity immediately prior to the Effective Time of the Merger, as well as
those persons who may be designated in writing by SouthTrust at or prior to the
Effective Time of the Merger, and the officers of ST-Sub shall be those persons
who are serving in such capacity immediately prior to the Effective Time of the
Merger, as well as those persons who may be designated in writing by SouthTrust
at or prior to the Effective Time of the Merger.
7
<PAGE> 11
The Merger Agreement provides that certain deferred compensation
arrangements between the Bank and its directors shall become obligations of
ST-Sub and shall continue in full force and effect following the Merger, that
salary continuation agreements between the Bank and Ms. D'Auby H. Schiel, the
Vice Chairman of the Board of Directors, President and Chief Executive Officer
of Jefferson and the Chairman of the Board of Directors and Chief Executive
Officer of the Bank, and Mr. David J. Washer, a director of Jefferson and the
President and Cashier of the Bank, shall continue in full force and effect
following the Merger, subject to such payments, because of any change of
control provisions contained in such agreements, being deferred for seven and
eleven years, respectively, following the Effective Time of the Merger, and
that the incentive compensation arrangements for the officers and employees of
Jefferson and the Bank who are employed by SouthTrust or one of its affiliates
following the Effective Time of the Merger shall continue in full force and
effect for one year following the Effective Time of the Merger, unless similar
incentive plans maintained by SouthTrust provide at least equal benefits to
those provided by such incentive arrangements of Jefferson and the Bank, and in
that case, those persons who are employed by SouthTrust or one of its
affiliates following the Effective Time of the Merger shall be afforded
benefits under the incentive programs of SouthTrust consistent with those
afforded comparable employees of SouthTrust or its affiliates.
See "THE MERGER - Interests of Certain Named Persons in the Merger"
and "THE MERGER - Business and Management of Jefferson Following the Merger;
Plans for Business of Jefferson."
Regulatory Approvals and Certain Other Conditions to the Merger; Waiver and
Amendment
The respective obligations of SouthTrust and Jefferson to consummate
the Merger are subject to the satisfaction of certain conditions, including,
among others, (i) the receipt of all required regulatory approvals with respect
to the Merger, (ii) the approval of the Merger Agreement by the requisite vote
of Jefferson's shareholders, and (iii) certain other conditions customary in
transactions of this kind.
The Merger is subject to approval by the Federal Reserve Board.
Accordingly, assuming that all conditions to the Merger contained in the Merger
Agreement are satisfied or waived and that the Merger Agreement has not been
terminated, the Merger Agreement provides that the Merger shall not be
consummated until within ten days of the later to occur of (i) the approval of
the transactions pursuant to the Merger Agreement by all required regulatory
authorities, including the Federal Reserve Board, and the expiration of all
requisite waiting periods, and (ii) approval by the shareholders of Jefferson
of the Merger Agreement.
On or about May 9, 1994, ST-Sub filed an application with the Federal
Reserve Board seeking approval to merge Jefferson into ST-Sub. SouthTrust
received a letter dated May 24, 1994 from the Federal Reserve Board requesting
certain additional information in connection with the application. On or about
June 2, 1994, ST-Sub filed with the Federal Reserve Board a response providing
such additional information, and the Federal Reserve Board accepted the
application on June 13, 1994. It is expected that the application will be
approved on or around August 12, 1994, however, no assurance can be given that
such approval will be received on such date or at all. Following approval of
the application by the Federal Reserve Board, the Merger may not be consummated
for a period of thirty days during which the United States Department of
Justice (the "Justice Department") may challenge the Merger on antitrust
grounds.
At any time before the Merger becomes effective, any party to the
Merger Agreement may waive conditions contained therein to its own obligations,
to the extent that such obligations, agreements and conditions are intended for
its own benefit. In addition, the Merger Agreement may be amended by written
instrument signed on behalf of each of the parties thereto.
See "THE MERGER - Regulatory Approvals and Certain Other Conditions to
the Merger; Waiver and Amendment."
Termination
The Merger Agreement may be terminated at any time prior to the
Effective Time of the Merger (i) by the mutual consent in writing of SouthTrust
and Jefferson, or (ii) by either SouthTrust or Jefferson individually, under
certain specified circumstances, including if the Merger shall not have
occurred on or prior to November 30, 1994, provided that the failure to
consummate the Merger on or before such date is not caused by a breach of the
Merger Agreement by the party seeking to terminate. See "THE MERGER -
Termination."
8
<PAGE> 12
Effective Time of the Merger
The Merger will become effective upon the filing of appropriate
Articles of Merger relating thereto with the Secretary of State of Mississippi.
The parties to the Merger Agreement will cause such Articles of Merger to be so
filed as soon as practicable after each of the conditions to consummation of
the Merger has been satisfied or waived. Subject to satisfaction of the
conditions contained in the Merger Agreement, the parties currently anticipate
that the Merger will become effective on or about September __, 1994, although
there can be no assurance as to whether or when the Merger will become
effective. See "THE MERGER - Effective Time of the Merger."
RIGHTS OF DISSENT AND APPRAISAL
By following the procedures provided by applicable law which are
described elsewhere in this Proxy Statement/Prospectus, a holder of shares of
Jefferson Common Stock is entitled to dissent from the Merger and demand the
fair value of the shares of Jefferson Common Stock held by such holder in cash.
See "THE MERGER - Rights of Dissent and Appraisal." A copy of the provisions
of the Mississippi Business Corporation Act regarding such rights of dissent is
attached hereto as Exhibit B.
COMPARATIVE STOCK PRICES
SouthTrust Common Stock is traded in the over-the-counter market
through the facilities of NASDAQ. The market for shares of Jefferson Common
Stock is not active and during the last two years, the sales price of all
shares of Jefferson Common Stock of which Jefferson had knowledge was $25.00
per share. The last sale of shares of Jefferson Common Stock known to
Jefferson occurred on or about August 13, 1993, at a sales price of $25.00 per
share.
The following table sets forth the applicable last sales prices, and
pro forma equivalents based upon such last sales prices, for SouthTrust Common
Stock as of selected dates.
<TABLE>
<CAPTION>
SouthTrust SouthTrust
Common Stock Common Stock
Last Sales Price Equivalent (3)
-------------------- -----------------
<S> <C> <C> <C>
(1) April 22, 1994 . . . . . . . . $19.375 $57.49
(2) August ___, 1994 . . . . . . . $__.__ $__.__
</TABLE>
__________________________________
(1) Last trading day preceding the execution of the Merger Agreement.
(2) Most recent date practicable preceding the date of this Proxy
Statement/Prospectus.
(3) Pro forma equivalents calculated using the historical last sales price
for SouthTrust Common Stock as of the selected date multiplied by the
conversion ratio of 2.967 shares of SouthTrust Common Stock per share
of Jefferson Common Stock.
Jefferson's shareholders are advised to obtain current market
quotations for or information regarding SouthTrust Common Stock and Jefferson
Common Stock. No assurance can be given as to the market price of SouthTrust
Common Stock or the value of Jefferson Common Stock at any time before the
Effective Time of the Merger or as to the market price of SouthTrust Common
Stock at any time thereafter. Because the exchange ratio of Jefferson Common
Stock for SouthTrust Common Stock is fixed, it will not compensate Jefferson's
shareholders for decreases in the market price of SouthTrust Common Stock which
could occur before the Effective Time of the Merger. In the event the market
price for SouthTrust Common Stock were to decrease, the value of the SouthTrust
Common Stock to be received in the Merger in exchange for Jefferson Common
Stock would decrease. However, Jefferson is not obligated to consummate the
Merger in the event that the average last sales price of a share of SouthTrust
Common Stock, as reported by NASDAQ for the last ten trading days immediately
preceding the Effective Time of the Merger, is less than $16.25 per share,
unless SouthTrust elects to adjust the exchange ratio so that the exchange
ratio shall equal the product of $56.00 multiplied by the last sales price of a
share of SouthTrust Common Stock as reported by NASDAQ on the trading day
immediately preceding the Effective Time of the Merger. It also should be
noted that, in the event the market price of SouthTrust Common Stock were to
increase, the value of the SouthTrust Common Stock to be received in the Merger
in exchange for Jefferson Common Stock would increase.
9
<PAGE> 13
See "MARKET AND DIVIDEND INFORMATION RESPECTING THE COMMON STOCK OF
SOUTHTRUST AND JEFFERSON."
RESALE OF SOUTHTRUST COMMON STOCK RECEIVED IN THE MERGER
The shares of SouthTrust Common Stock to be issued pursuant to the
Merger Agreement have been registered under the Securities Act, thereby
allowing such shares to be sold without restriction by shareholders of
Jefferson who are not deemed to be "affiliates" (as that term is defined in the
rules under the Securities Act) of Jefferson and who do not become affiliates
of SouthTrust. The shares of SouthTrust Common Stock to be issued to
affiliates of Jefferson may be resold only pursuant to an effective
registration statement, pursuant to Rule 145 under the Securities Act (which,
among other things, permits the resale of securities subject to certain volume
limitations) or in transactions otherwise exempt from registration under the
Securities Act. SouthTrust will not be obligated and does not intend to
register its shares under the Securities Act for resale by shareholders who are
affiliates. Since the aggregate number of shares of SouthTrust Common Stock
issuable in the Merger is less than any applicable volume limitation under Rule
145, an affiliate of Jefferson who otherwise complies with Rule 145, and
subject to the undertaking described below, will be free to resell, during any
given three-month period, all of the shares of SouthTrust Common Stock received
by such affiliate in the Merger.
In addition, at or prior to the Effective Time of the Merger, each
affiliate of Jefferson will deliver to SouthTrust a letter agreement pertaining
to the limitations on the transferability of such affiliate's shares of
SouthTrust Common Stock acquired in the Merger, and whereby such affiliate
shall represent and warrant, among other things, that he or she shall not sell,
pledge, transfer or otherwise dispose of such shares of SouthTrust Common Stock
in violation of the Securities Act or the rules and regulations thereunder.
See "THE MERGER - Resale of SouthTrust Common Stock Received in the
Merger."
DIFFERENCES IN RIGHTS OF JEFFERSON SHAREHOLDERS
Upon consummation of the Merger, Jefferson shareholders will become
SouthTrust stockholders. As a result, their rights as shareholders, which now
are governed by Mississippi corporate and banking law and Jefferson's Articles
of Incorporation and Bylaws, will be governed by Delaware corporate law and
SouthTrust's Restated Certificate of Incorporation and Bylaws. Because of
certain differences between the provisions of Mississippi law and Delaware
corporate law and of Jefferson's Articles of Incorporation and Bylaws and
SouthTrust's Restated Certificate of Incorporation and Bylaws, the current
rights of Jefferson shareholders will change after the Merger. Some of these
differences include anti-takeover provisions applicable to SouthTrust. See
"COMPARISON OF THE COMMON STOCK OF SOUTHTRUST AND JEFFERSON."
ACCOUNTING TREATMENT
The Merger will be accounted for by SouthTrust pursuant to the
purchase method of accounting. One effect of the purchase method of accounting
is that earnings of Jefferson will be combined with earnings of SouthTrust only
from and after the Effective Time of the Merger and such earnings will be
reduced by certain depreciation and amortization charges arising out of
purchase accounting adjustments. See "THE MERGER - Accounting Treatment."
TAX TREATMENT
Jefferson will receive an opinion of Heidelberg & Woodliff, P.A.,
counsel to Jefferson, to the effect that, for federal income tax purposes: (i)
the Merger will qualify as a reorganization under Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); (ii) no gain or loss
will be recognized by holders of shares of Jefferson Common Stock who receive
SouthTrust Common Stock in the Merger (except in connection with the receipt of
cash in lieu of fractional interests in shares of SouthTrust Common Stock and
any supplemental cash payment required to be made under the Merger Agreement);
(iii) the basis of the SouthTrust Common Stock received by the shareholders of
Jefferson pursuant to the Merger and the holding period therefor will be the
same as the basis and holding period of the Jefferson Common Stock surrendered
in exchange therefor; and (iv) each holder of a Jefferson Option who receives
SouthTrust Common Stock in cancellation therefor will recognize ordinary
income. See "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS."
THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES MAY VARY FOR EACH HOLDER
OF SHARES OF JEFFERSON COMMON STOCK. JEFFERSON SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX AND FINANCIAL ADVISORS AS TO THE EFFECT OF INCOME TAX AND
OTHER TAX CONSEQUENCES ON THEIR OWN PARTICULAR FACTS.
10
<PAGE> 14
EQUIVALENT SHARE DATA
The following summary presents comparative historical unaudited per
share data for both SouthTrust and Jefferson. The pro forma amounts assume the
Merger was effective as of the commencement of the periods presented and was
accounted for pursuant to the purchase method of accounting. SouthTrust's pro
forma amounts represent the combined pro forma results, and Jefferson pro forma
equivalent amounts are computed by multiplying the pro forma amounts by a
factor of 2.967 to reflect the exchange ratio in the Merger of 2.967 shares of
SouthTrust Common Stock for each share of Jefferson Common Stock. The data
presented should be read in conjunction with the historical financial
statements and the related notes thereto included elsewhere herein or
incorporated by reference herein.
<TABLE>
<CAPTION>
Year Ended Six Months
December 31, 1993 Ended June 30, 1994
------------------------ ----------------------
<S> <C> <C>
Net income (loss) per common share:
SouthTrust $ 1.94 $ 1.04
Jefferson 5.15 2.63
SouthTrust pro forma combined 1.94 1.04
Jefferson pro forma equivalent 5.75 3.09
Cash dividends per common share:
SouthTrust $ 0.60 $ 0.34
Jefferson 0 0
Jefferson pro forma equivalent (1) 1.78 1.01
Book value per common share (period end):
SouthTrust $ 13.25 $ 13.68
Jefferson 20.21 22.91
SouthTrust pro forma combined 13.23 13.67
Jefferson pro forma equivalent 39.25 40.55
- -------------------------------------------
</TABLE>
(1) Jefferson pro forma equivalent dividends per share represent
historical dividends per share declared by SouthTrust, multiplied by
the conversion ratio of 2.967 shares of SouthTrust Common Stock for
each share of Jefferson Common Stock.
11
<PAGE> 15
SELECTED FINANCIAL DATA
The following tables set forth certain selected historical
consolidated financial information for SouthTrust and Jefferson. The
historical income statement data included in the selected financial data for
the five most recent fiscal years are derived from audited consolidated
financial statements of SouthTrust and unaudited (except with respect to the
year ended December 31, 1993 which is audited) consolidated financial
statements of Jefferson. The financial data for the interim periods ended June
30, 1994 and 1993 are derived from the unaudited historical financial
statements of SouthTrust and Jefferson, respectively, and reflect, in the
respective opinion of management of SouthTrust and Jefferson all adjustments
(consisting only of recurring adjustments) necessary for a fair presentation of
such data. This information should be read in conjunction with the
consolidated financial statements of SouthTrust and Jefferson, and the related
notes thereto, included in documents included elsewhere herein or incorporated
herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
SOUTHTRUST CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months
Years Ended December 31, Ended June 30,
-------------------------------------------------- ------------------
1993 1992 1991 1990 1989 1994 1993
-------- -------- --------- --------- ------- -------- ---------
INCOME STATEMENT DATA
(in thousands except per share data):
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 927,551 $ 828,080 $ 823,725 $ 776,661 $ 684,624 $ 499,880 $ 456,241
Interest expense 397,743 382,930 474,453 498,329 450,147 212,628 197,338
--------- --------- --------- --------- --------- --------- ---------
Net interest income 529,808 445,150 349,272 278,332 234,477 287,252 258,903
Provision for loan losses 45,032 43,305 38,042 44,635 21,166 21,892 22,405
--------- --------- --------- --------- --------- --------- ---------
Net interest income after
provision for loan losses 484,776 401,845 311,230 233,697 213,311 265,360 236,498
Non-interest income 174,702 136,683 108,881 91,084 78,686 91,509 79,535
Non-interest expense 434,951 373,636 296,796 234,713 200,147 231,917 208,971
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes 224,527 164,892 123,315 90,068 91,850 124,952 107,062
Provision for income taxes 73,992 50,646 33,309 20,360 19,075 41,823 34,978
--------- --------- --------- --------- --------- --------- ---------
Net income $ 150,535 $ 114,246 $ 90,006 $ 69,708 $ 72,775 $ 83,129 $ 72,084
========= ========= ========= ========= ========= ========= =========
Net income per common share
and common share equivalent $ 1.94 $ 1.66 $ 1.42 $ 1.14 $ 1.21 $ 1.04 $ 0.94
Cash dividends declared
per common share 0.60 0.52 0.48 0.46 0.43 0.34 0.30
Average common shares and common
share equivalents outstanding 77,772 68,948 63,255 61,148 60,077 79,917 77,003
BALANCE SHEET DATA (at period end)
(in millions):
Total assets $14,708.0 $12,714.4 $10,158.1 $ 9,005.9 $ 7,763.2 $15,931.6 $13,672.9
Total loans net of unearned
income 9,448.3 7,546.6 5,965.0 5,531.4 4,690.5 10,524.1 8,411.3
Total deposits 11,515.4 10,082.3 8,277.2 7,228.0 6,054.5 11,827.2 10,798.0
Total stockholders' equity 1,051.8 860.4 662.0 549.6 507.1 1,093.8 954.7
</TABLE>
12
<PAGE> 16
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
<TABLE>
<CAPTION>
Six Months
Years Ended December 31, Ended June 30,
--------------------------------------------------- --------------------
1993 1992 1991 1990 1989 1994 1993
-------- -------- --------- --------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(in thousands except per share data):
Interest income $ 3,332 $ 2,720 $ 2,786 $ 3,032 $ 2,894 $1,800 $ 1,517
Interest expense 905 1,027 1,505 1,789 1,790 475 449
-------- -------- -------- --------- ------- ------ -------
Net interest income 2,427 1,693 1,281 1,243 1,104 1,325 1,068
Provision for loan losses 94 96 63 134 7 22 46
-------- -------- -------- --------- ------- ------ -------
Net interest income after
provision for loan losses 2,333 1,597 1,218 1,109 1,097 1,303 1,022
Non-interest income 376 373 326 362 353 152 210
Non-interest expense 2,000 1,617 1,442 1,374 1,484 1,065 838
-------- -------- -------- --------- ------- ------ -------
Income before income taxes
and minority interest 709 353 102 97 (34) 390 394
Provision for income taxes 231 109 19 (35) 25 137 128
Minority interest 24 12 7 7 5 11 12
-------- -------- -------- --------- ------- ------ -------
Net income (loss) $ 454 $ 232 $ 76 $ 125 $ (64) $ 242 $ 254
======== ======== ======== ========= ======= ====== =======
Net income (loss) per common
share and common share
equivalent $ 5.15 $ 2.64 $ 0.86 $ 1.43 $ (0.74) $ 2.63 $ 2.89
Cash dividends declared
per common share - - - - - - -
Average common shares and common
share equivalents outstanding 88,213 88,038 87,813 87,813 87,813 92,038 88,038
BALANCE SHEET DATA (at period end)
(in thousands):
Total assets $ 43,700 $ 32,768 $ 29,857 $ 30,705 $32,256 42,273 $34,906
Total loans net of unearned
income 22,337 18,373 16,522 18,142 16,138 22,729 20,607
Total deposits 39,673 29,211 26,476 27,186 28,961 38,203 31,093
Total stockholders' equity 2,121 1,566 1,320 1,230 1,093 2,359 1,820
</TABLE>
13
<PAGE> 17
THE MERGER
The terms of the Merger are set forth in the Merger Agreement. The
description of the Merger which follows summarizes the principal
provisions of the Merger Agreement, is not complete and is qualified
in all respects by reference to the Merger Agreement a copy of which
is attached hereto as Exhibit A.
GENERAL
The Merger Agreement has been approved by the members of the Boards of
Directors of Jefferson, SouthTrust and ST-Sub. No approval of the Merger by
the stockholders of SouthTrust is required.
Pursuant to the Merger Agreement, Jefferson will be merged with and
into ST-Sub pursuant to the Mississippi Business Corporation Act, and ST-Sub
shall be the surviving corporation in the Merger. Upon the effectiveness of
the Merger, each outstanding share of Jefferson Common Stock shall be converted
into the right to receive 2.967 shares of SouthTrust Common Stock, subject to
rights of dissent and the possible payment of a contingent cash amount
described below, and exclusive of shares of Jefferson Common Stock held in the
treasury of Jefferson and Qualifying Directors' Shares. No fractional shares
of SouthTrust Common Stock will be issued in the Merger, and, in lieu thereof,
each holder of shares of Jefferson Common Stock who otherwise would have been
entitled to receive a fractional share of SouthTrust Common Stock will be
entitled to receive a cash payment in an amount equal to the product of (i) the
fractional interest of a share of SouthTrust Common Stock to which such holder
otherwise would have been entitled and (ii) the last sales price of such share
of SouthTrust Common Stock as reported by NASDAQ on the last business day
preceding the Effective Time of the Merger. The Merger Agreement provides that
Qualifying Directors' Shares will be repurchased by the surviving corporation
at the Effective Time of the Merger in exchange for a purchase price of $1.00
per share in cash. The Merger Agreement also provides that if the Effective
Time of the Merger, following the diligent and good faith effort of SouthTrust
and Jefferson, occurs after September 15, 1994, SouthTrust shall pay to the
holders of the outstanding Jefferson Common Stock an amount in cash equal to
the cash dividends that would have been declared and paid between January 1,
1994 and the Effective Time of the Merger with respect to the SouthTrust Common
Stock issuable in the Merger, provided that the record dates of such dividends
are prior to September 16, 1994, less the cash dividends payable by Jefferson
in respect of the Jefferson Common Stock with record dates on or before the
Effective Time of the Merger.
The Merger Agreement contemplates that the Jefferson Options shall be
canceled as of the Effective Time of the Merger, and each holder thereof shall
receive, in exchange therefor, such number of shares of SouthTrust Common Stock
as shall be produced by dividing 34,563 by the number of shares of Jefferson
Common Stock subject to all such Jefferson Options and then multiplying such
result by the number of shares of Jefferson Common Stock subject to the
Jefferson Options held by each such holder. In addition, as of the Effective
Time of the Merger, it is contemplated that the 8% Preferred Stock shall be
redeemed in exchange for payments not greater than the par value of the 8%
Preferred Stock, plus accrued but unpaid dividends thereon, and the Debentures
shall be repurchased in exchange for payments not greater than the principal
amount of such Debentures, plus accrued but unpaid interest thereon. To the
extent that Jefferson does not have adequate funds to redeem and/or repurchase
the 8% Preferred Stock and/or the Debentures without adversely affecting its
capital requirements, SouthTrust has agreed in the Merger Agreement to supply
such funds.
Subject to the approval of the Merger Agreement by the shareholders of
Jefferson, the satisfaction or waiver of the conditions contained in the Merger
Agreement, and the filing of appropriate Articles of Merger with the Secretary
of State of Mississippi, the Merger Agreement provides that the Effective Time
of the Merger will be within ten days after the later to occur of (i) the
approval of the transactions pursuant to the Merger Agreement by all required
regulatory authorities, including the Federal Reserve Board, (ii) the
expiration of thirty days (including any extension thereof) after the approval
of the Merger by the Federal Reserve Board during which the Justice Department
fails to object to the Merger, and (iii) approval by the shareholders of
Jefferson of the Merger.
BACKGROUND OF THE MERGER; REASONS FOR MERGER; RECOMMENDATION OF THE BOARD OF
DIRECTORS OF JEFFERSON
In late February 1994, representatives of Jefferson were approached by
representatives of SouthTrust regarding a possible business combination with
Jefferson. Discussions between such representatives regarding a possible
business combination ensued, and on March 15, 1994, the parties executed a
non-binding letter expressing
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an interest in pursuing such a transaction. Thereafter, the parties engaged in
discussions looking toward the execution of a definitive agreement respecting
the transaction.
At a Board of Directors meeting held on April 16, 1994, the Board of
Directors of Jefferson met to review and consider the Merger Agreement. At
such Board of Directors meeting, all of the directors of Jefferson present at
the meeting voted to approve the Merger and the Merger Agreement, subject to
final review and approval of the Merger Agreement by Jefferson's Chief
Executive Officer and Jefferson's counsel and other advisors. Thereafter, on
April 25, 1994, the Merger Agreement was executed by the parties.
The 2.967 shares of SouthTrust Common Stock to be exchanged for each
share of Jefferson Common Stock reflect prices that were negotiated on an
arm's-length basis between representatives of Jefferson and representatives of
SouthTrust. There was no affiliation between Jefferson and its
representatives, on one hand, and SouthTrust and ST-Sub, and their
representatives, on the other hand, prior to the execution of the Merger
Agreement.
The Board of Directors of Jefferson considered a variety of factors in
evaluating and approving the Merger and the Merger Agreement, including (a) the
value of the consideration to be received by Jefferson's shareholders relative
to the book value and earnings per share of Jefferson Common Stock; (b) certain
information concerning the financial condition, results of operations and
business prospects of Jefferson and SouthTrust; (c) the marketability of
Jefferson Common Stock; (d) the competitive and regulatory environment for
financial institutions generally; (e) the fact that the Merger will enable
Jefferson shareholders to exchange their shares of Jefferson Common Stock for
shares of common stock of a larger combined entity, the stock of which is more
widely held and more actively traded and which historically has paid cash
dividends; (f) SouthTrust's ability to provide comprehensive financial services
in relevant markets; and (g) other pertinent information. The Board of
Directors of Jefferson did not assign any relevant weights to the above
factors, but it considered all of such factors to be material. The Board of
Directors believes that it appropriately addressed all of the relevant concerns
in the proposed transaction with SouthTrust, and it concluded that the terms of
the transaction with SouthTrust are fair to the shareholders of Jefferson from
a financial point of view. For these reasons, the Board of Directors of
Jefferson did not engage a financial advisor to issue an opinion that the
transaction is fair, from a financial point of view, to the shareholders of
Jefferson. Based on these factors, the Board of Directors of Jefferson
determined that the Merger was in the best interests of the shareholders of
Jefferson and approved the Merger Agreement.
THE MEMBERS OF THE BOARD OF DIRECTORS OF JEFFERSON HAVE UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND DETERMINED THAT THE MERGER IS FAIR, FROM A
FINANCIAL POINT OF VIEW, AND IS IN THE BEST INTERESTS OF JEFFERSON AND ITS
SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS OF JEFFERSON RECOMMENDS THAT
SHAREHOLDERS OF JEFFERSON VOTE IN FAVOR OF THE MERGER AGREEMENT.
SouthTrust is engaging in the transactions pursuant to the Merger
because the Merger is consistent with its expansion strategy within the
southeastern United States.
In addition to the foregoing, the Merger Agreement provides that the
Board of Directors of ST-Sub following the Merger shall consist of those
persons who are serving in such capacity immediately prior to the Effective
Time of the Merger, as well as those persons who may be designated in writing
by SouthTrust at or prior to the Effective Time of the Merger, and the officers
of ST-Sub shall be those persons who are serving in such capacity immediately
prior to the Effective Time of the Merger, as well as those persons who may be
designated in writing by SouthTrust at or prior to the Effective Time of the
Merger.
INTERESTS OF CERTAIN NAMED PERSONS IN THE MERGER
The Merger Agreement provides that, following the Effective Time of
the Merger, certain agreements and arrangements between Jefferson, the Bank and
certain of its officers and directors will continue, including certain deferred
compensation arrangements between the Bank and its directors, certain salary
continuation arrangements between the Bank and Ms. D'Auby H. Schiel, the Vice
Chairman of the Board of Directors, President and Chief Executive Officer of
Jefferson and the Chairman of the Board of Directors and Chief Executive
Officer of the Bank, and Mr. David J. Washer, a director of Jefferson and the
President and Cashier of the Bank, and certain incentive compensation
arrangements of certain of the officers and employees of Jefferson and the
Bank. With respect to the salary continuation arrangements, the Merger
Agreement provides that such arrangements shall be amended as of the Effective
Time of the Merger to provide that any payment required to be made thereunder
as a result of or in connection with any change of control provision contained
therein shall be deferred, in the case of Ms. Schiel, until
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<PAGE> 19
the end of the calendar month that occurs seven years after the Effective Time
of the Merger and, in the case of Mr. Washer, until the end of the calendar
month that occurs eleven years after the Effective Time of the Merger. With
respect to the incentive compensation arrangements of certain officers and
employees of Jefferson and the Bank, the Merger Agreement provides that such
arrangements shall be continued with respect to those persons employed by
SouthTrust or one of its affiliates for one year following the Effective Time
of the Merger, unless similar incentive arrangements of SouthTrust and its
affiliates with respect to such persons provide benefits at least equal to
those of Jefferson and the Bank, and in such event, such persons will be
provided benefits under the incentive arrangements of SouthTrust consistent
with those afforded comparable employees of SouthTrust and its affiliates.
The parties have agreed in the Merger Agreement that appropriate steps
shall be taken to terminate all employee benefit plans of Jefferson as of the
Effective Time of the Merger or as promptly as practicable thereafter,
including, without limitation, the Employee Stock Ownership Plan of Jefferson
(the "ESOP"). The Merger Agreement provides that in connection with the
termination of the ESOP, the trustee or trustees of the ESOP shall be directed
to sell such shares of SouthTrust Common Stock issued to the ESOP in connection
with the Merger as may be required in order for the trustee or trustees to
effect cash distributions to the participants of the ESOP. Following the
termination of all such employee benefit plans, SouthTrust has agreed to cover
the officers and employees of Jefferson who are employed by SouthTrust or one
of its affiliates under employee benefit plans of SouthTrust, including welfare
and fringe benefit plans, on the same basis as and subject to the same
conditions as are applicable to any newly-hired employee of SouthTrust;
provided, however, that (i) with respect to SouthTrust's group medical
insurance plan, SouthTrust shall credit each such employee for eligible
expenses incurred by such employee and his or her dependents (if applicable)
under Jefferson's group medical insurance plan during the current calendar year
for purposes of satisfying the deductible provisions under SouthTrust's plan
for such current year, and SouthTrust shall waive all waiting periods under
said plans for pre-existing conditions; and (ii) credit for each such
employee's past service with Jefferson prior to the Effective Time of the
Merger shall be given by SouthTrust to employees for purposes of: (1)
determining vacation and sick leave benefits and accruals, in accordance with
the established policies of SouthTrust; and (2) establishing eligibility for
participation in, and vesting under, SouthTrust's employee benefits plans
(including welfare and fringe benefit plans), and for purposes of determining
the scheduling of vacations and other determinations which are made based on
length of service; provided, however, such credit for past service shall not be
given to any such employee for purposes of establishing eligibility for
participation in the 1990 Discounted Stock Plan of SouthTrust.
SouthTrust has further agreed that for purposes of determining
eligibility to participate in, and vesting in accrued benefits under the
SouthTrust Corporation Employee's Profit Sharing Plan and the SouthTrust
Corporation Revised Retirement Income Plan (the "ST Retirement Plan"),
employment with Jefferson shall be credited as if it were employment with
SouthTrust, but such service shall not be credited for purposes of determining
benefit accrual under the ST Retirement Plan.
EFFECT OF MERGER ON JEFFERSON COMMON STOCK AND JEFFERSON OPTIONS; REDEMPTION OR
REPURCHASE MATTERS; OTHER MATTERS
At the Effective Time of the Merger, each outstanding share of
Jefferson Common Stock, other than shares of Jefferson Common Stock held by
shareholders who have dissented from the Merger, shares of Jefferson Common
Stock held in Jefferson's treasury and Qualifying Directors Shares, shall be
converted into the right to receive 2.967 shares of SouthTrust Common Stock,
which exchange ratio is subject to appropriate adjustment in the event of stock
splits and stock dividends effected by SouthTrust and may be supplemented by a
contingent cash payment in the event of certain occurrences. No fractional
shares of SouthTrust Common Stock will be issued in the Merger, and, in lieu
thereof, each holder of a share of Jefferson Common Stock that otherwise would
have been entitled to receive a fractional share of SouthTrust Common Stock
will be entitled to receive a cash payment in an amount equal to the product of
(i) the fractional interest of a share of SouthTrust Common Stock to which such
holder otherwise would have been entitled, and (ii) the last sales price of
such share of SouthTrust Common Stock as reported on NASDAQ on the last trading
day immediately preceding the Effective Time of the Merger. The Merger
Agreement provides that if the Effective Time of the Merger, following the
diligent and good faith effort of SouthTrust and Jefferson, occurs after
September 15, 1994, SouthTrust shall pay to the holders of the outstanding
Jefferson Common Stock an amount in cash equal to the cash dividends that would
have been declared and paid between January 1, 1994 and the Effective Time of
the Merger with respect to the SouthTrust Common Stock issuable in the Merger,
provided that the record dates of such dividends are prior to September 16,
1994, less all cash dividends payable by Jefferson in respect of the Jefferson
Common Stock with record dates on or before the Effective Time of the Merger.
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<PAGE> 20
The Merger Agreement provides that the Jefferson Options shall be
canceled as of the Effective Time of the Merger, and in exchange for such
cancellation, each holder of Jefferson Options shall receive such number of
shares of SouthTrust Common Stock as shall be produced by dividing 34,563 by
the aggregate number of shares of Jefferson Common Stock subject to all such
Jefferson Options and then multiplying such result by the number of shares of
Jefferson Common Stock subject to the Jefferson Options held by each such
holder.
In connection with the Merger, the 8% Preferred Stock of Jefferson
shall be redeemed at a redemption price not greater than the par value thereof,
plus all accrued but unpaid dividends thereon, and the Debentures of Jefferson
shall be repurchased at a purchase price not greater than the principal amount
thereof, plus all accrued but unpaid interest thereon. It is contemplated that
such redemptions and repurchases shall be effective as of the Effective Time of
the Merger, and to the extent that Jefferson does not have sufficient funds to
effect such transactions without adversely affecting its capital requirements,
SouthTrust has agreed in the Merger Agreement to provide such funds.
Because the exchange ratio of shares of SouthTrust Common Stock for
Jefferson Common Stock is fixed, it will not compensate Jefferson's
shareholders for decreases in the market price of SouthTrust Common Stock which
could occur before the Effective Time of the Merger. In the event the market
price of SouthTrust Common Stock decreases, the value of the SouthTrust Common
Stock to be received in the Merger in exchange for Jefferson Common Stock would
decrease. However, Jefferson is not obligated to consummate the Merger in the
event that the average last sales price of a share of SouthTrust Common Stock,
as reported by NASDAQ for the ten trading days immediately preceding the
Effective Time of the Merger, is less than $16.25 per share, unless SouthTrust
elects to adjust the exchange ratio so that the exchange ratio shall be equal
to the product of $56.00 divided by the last sales price of a share of
SouthTrust Common Stock as of the trading day immediately prior to the
Effective Time of the Merger. On ______________, 1994, the most recent date
practicable preceding the date of this Proxy Statement/Prospectus, the last
sales price of SouthTrust Common Stock was $____ per share. In the event the
market price of SouthTrust Common Stock increases, the value of the SouthTrust
Common Stock to be received in the Merger in exchange for Jefferson Common
Stock would increase. Jefferson's shareholders are advised to obtain current
market quotations for and information regarding SouthTrust Common Stock and
Jefferson Common Stock. No assurance can be given as to the market price of
SouthTrust Common Stock or the value of Jefferson Common Stock on the date of
the Effective Time of the Merger or as to the market price of SouthTrust Common
Stock thereafter.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective upon the effectiveness of appropriate
Articles of Merger relating thereto filed with the Secretary of State of
Mississippi. The Merger Agreement provides that the parties thereto will cause
such Articles of Merger to be filed after each of the conditions to
consummation of the Merger has been satisfied or waived. The Merger cannot
become effective until Jefferson's shareholders have approved the Merger
Agreement and all required regulatory approvals and actions have been obtained
and taken and any requisite waiting period shall have expired. Subject to
satisfaction of the conditions contained in the Merger Agreement, the parties
currently anticipate that the Merger will become effective on or about
September ___ 1994, although there can be no assurance as to whether or when
the Merger will become effective.
EXCHANGE OF STOCK CERTIFICATES
At the Effective Time of the Merger, SouthTrust will deliver the total
consideration to be paid by SouthTrust for the shares of Jefferson Common Stock
to such institution as SouthTrust may designate, which institution will act as
the exchange agent for the transaction (the "Exchange Agent"). As promptly as
practicable after the Effective Time of the Merger, the Exchange Agent shall
send a letter of transmittal to each former holder of record of shares of
Jefferson Common Stock for use in exchanging their certificates formerly
representing shares of Jefferson Common Stock for exchange and conversion in
accordance with the procedures provided for therein and in the Merger
Agreement. The letter of transmittal will contain detailed instructions
concerning the manner of executing and submitting such stock certificates. At
the Effective Time of the Merger, the holders of shares of Jefferson Common
Stock will cease to be shareholders of Jefferson and will have no voting or
other rights with respect to shares of Jefferson Common Stock, other than the
right to receive in the Merger shares of SouthTrust Common Stock upon surrender
of the stock certificates respecting their shares of Jefferson Common Stock.
As of the Effective Time of the Merger and except as otherwise indicated below,
all holders of shares of Jefferson Common Stock shall be deemed to be holders
of the shares of SouthTrust Common Stock into which such shares
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<PAGE> 21
of Jefferson Common Stock shall have been converted in the Merger, whether or
not they surrender the stock certificates representing their shares of
Jefferson Common Stock. Such holders shall be entitled to all dividends or
distributions in respect of shares of SouthTrust Common Stock where the record
date for the payment of such dividends or distributions occurs on or after the
Effective Time of the Merger; however, no such dividends or distributions shall
be paid to holders of any unsurrendered certificate or certificates
representing Jefferson Common Stock, and SouthTrust shall not be obligated to
deliver any of the consideration to which any holder of Jefferson Common Stock
is entitled as a result of the Merger or any cash payment in lieu of a
fractional interest in SouthTrust Common Stock until such holder surrenders the
certificate or certificates representing Jefferson Common Stock as provided for
in the Merger Agreement. Until the stock certificates evidencing the shares of
Jefferson Common Stock are surrendered pursuant to the Merger Agreement, no
stock certificates representing shares of SouthTrust Common Stock will be
delivered or remitted to such holders, and, until such holders become record
holders of SouthTrust Common Stock, such holders shall not be entitled to vote
the shares of SouthTrust Common Stock received in the Merger. In the event
that any holder of shares of Jefferson Common Stock is unable to deliver the
certificate which represents such holder's Jefferson Common Stock, SouthTrust,
in the absence of actual notice that any shares theretofore represented by any
such certificate have been acquired by a bona fide purchaser, may, in its
discretion, deliver to such holder the consideration contemplated by the Merger
Agreement and the amount of cash representing fractional shares of SouthTrust
Common Stock to which such holder is entitled in accordance with the provisions
of the Merger Agreement upon the presentation of all of the following: (i) an
affidavit or other evidence to the reasonable satisfaction of SouthTrust that
any such certificate has been lost, wrongfully taken or destroyed; (ii) such
security or indemnity as may be reasonably requested by SouthTrust to indemnify
and hold SouthTrust harmless; and (iii) evidence to the satisfaction of
SouthTrust that such holder is the owner of shares of Jefferson Common Stock
theretofore represented by each certificate claimed by such holder to be lost,
wrongfully taken or destroyed and that such holder is the person who would be
entitled to present each such certificate for exchange pursuant to the Merger
Agreement. In addition, holders of shares of Jefferson Common Stock will not
be entitled to receive any interest respecting any dividends or distributions
payable in respect of shares of SouthTrust Common Stock, and SouthTrust, after
the lapse of the appropriate time period and in accordance with the applicable
laws of escheat or abandoned property, may remit any unclaimed funds or
unclaimed stock certificates representing shares of SouthTrust Common Stock to
state officials under the applicable laws of escheat or abandoned property.
RESALE OF SOUTHTRUST COMMON STOCK RECEIVED IN THE MERGER
The shares of SouthTrust Common Stock to be issued pursuant to the
Merger Agreement have been registered under the Securities Act, thereby
allowing such shares to be sold without restriction by shareholders of
Jefferson who are not deemed to be "affiliates" (as that term is defined in the
rules under the Securities Act) of Jefferson and who do not become affiliates
of SouthTrust. The shares of SouthTrust Common Stock to be issued to
affiliates of Jefferson may be resold only pursuant to an effective
registration statement, pursuant to Rule 145 under the Securities Act (which,
among other things, permits the resale of securities subject to certain volume
limitations) or in transactions otherwise exempt from registration under the
Securities Act. SouthTrust will not be obligated and does not intend to
register its shares under the Securities Act for resale by shareholders who are
affiliates. Since the aggregate number of shares of SouthTrust Common Stock
issuable in the Merger is less than any applicable volume limitation under Rule
145, an affiliate of Jefferson who otherwise complies with Rule 145, and
subject to the undertaking described below, will be free to resell, during any
given three-month period, all of the shares of SouthTrust Common Stock received
by such affiliate in the Merger.
At or prior to the Effective Time of the Merger, each such person
deemed an affiliate of Jefferson will deliver to SouthTrust a letter agreement
pertaining to the limitations on the transferability of such affiliate's shares
of SouthTrust Common Stock acquired in the Merger, and whereby such affiliate
shall represent and warrant, among other things, that he or she shall not sell,
pledge, transfer, or otherwise dispose of such shares of SouthTrust Common
Stock in violation of the Securities Act or the rules and regulations
thereunder.
ACCOUNTING TREATMENT
The Merger will be accounted for by SouthTrust pursuant to the
purchase method of accounting. One effect of such accounting treatment is that
the earnings of Jefferson will be combined with the earnings of SouthTrust only
from and after the Effective Time of the Merger. Furthermore, such earnings of
Jefferson will, for purposes of the earnings or losses of SouthTrust, be
reduced by certain depreciation and amortization charges arising out of
purchase accounting adjustments.
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REGULATORY APPROVALS AND CERTAIN OTHER CONDITIONS TO THE MERGER; WAIVER AND
AMENDMENT
The Merger is subject to approval by the Federal Reserve Board.
Accordingly, assuming that all conditions to the Merger contained in the Merger
Agreement are satisfied or waived and that the Merger Agreement has not been
terminated, the Merger Agreement provides that the Merger shall be consummated
within ten days of the later to occur of (i) the approval of the transactions
pursuant to the Merger Agreement by all required regulatory authorities,
including the Federal Reserve Board, and the expiration of all requisite
waiting periods, and (ii) approval by the shareholders of Jefferson of the
Merger Agreement.
On or about May 9, 1994, ST-Sub filed with the Federal Reserve Board
an application seeking approval to merge Jefferson into ST-Sub. SouthTrust
received a letter dated May 24, 1994 from the Federal Reserve Board requesting
certain additional information in connection with the application. On or about
June 2, 1994, ST-Sub filed with the Federal Reserve Board a response providing
such additional information, and the Federal Reserve Board accepted the
application on June 13, 1994. It is anticipated that the application will be
approved on or around August 12, 1994. The Merger cannot be consummated for
thirty days after approval thereof by the Federal Reserve Board, and during
such period, the Justice Department may challenge the merger of Jefferson into
ST-Sub on antitrust grounds.
There can be no assurance that any applicable regulatory authority
will approve or take other required action with respect to the Merger or as to
the date of such regulatory approval or other action. SouthTrust and Jefferson
are not aware of any governmental approvals or actions that are required in
order to consummate the Merger except as described above. Should such other
approval or action be required, it is contemplated that SouthTrust and
Jefferson would seek such approval or action. There can be no assurance as to
whether or when any such other approval or action, if required, could be
obtained.
In addition to receipt of all necessary regulatory approvals and the
expiration of all required notice and waiting periods following the granting of
such approvals, and the approval of the Merger Agreement by the requisite vote
of the shareholders of Jefferson, consummation of the Merger is subject to the
satisfaction of certain other conditions on or before the Effective Time of the
Merger. Such additional conditions include, among others, the following:
(i) The Proxy Statement/Prospectus shall have been filed
with the Commission and shall have been cleared thereby or otherwise
authorized for mailing, and the Registration Statement shall have been
filed with and declared effective by the Commission and shall not be
the subject of any stop order or proceedings seeking any stop order;
(ii) The accuracy of the representations and warranties of
SouthTrust, ST-Sub and Jefferson, respectively, made in the Merger
Agreement and the performance, in all material respects, of their
respective obligations thereunder;
(iii) The absence of any fact, event or condition
pertaining to Jefferson which has had, or is likely to have, a
material adverse effect on the financial condition, results of
operations, or business of Jefferson or SouthTrust;
(iv) The absence of any court or administrative order or
statute which would prevent or enjoin the consummation of the Merger
Agreement or seeking a material amount of damages in connection with
the Merger Agreement;
(v) There shall not have been any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, by any Regulatory Authority (as
defined in the Merger Agreement) which, in connection with the grant
of any Consent (as defined in the Merger Agreement) by any Regulatory
Authority, imposes any materially adverse requirement upon SouthTrust
or its subsidiaries, including, without limitation, any requirement
that SouthTrust sell or dispose of any significant amount of the
assets of Jefferson or any other banking or other subsidiary of
SouthTrust, provided that, except for any such requirement relating to
the above-described sale or disposition of any significant assets of
Jefferson or any banking or other subsidiary of SouthTrust, no such
term or condition imposed by any Regulatory Authority in connection
with the grant of any Consent by any Regulatory Authority, shall be
deemed to be
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a materially adverse requirement unless it materially differs from
terms and conditions customarily imposed by any such entity in
connection with the acquisition of banks and bank holding companies
under similar circumstances;
(vi) Each holder of the Jefferson Options outstanding
immediately prior to the Effective Time of the Merger shall have
executed and delivered to SouthTrust such documents as SouthTrust,
with the advice of counsel, may deem necessary to evidence the
conversion of the Jefferson Options into rights with respect to shares
of SouthTrust Common Stock and the cancellation and termination of any
rights under the Jefferson Options;
(vii) The total number of shares of SouthTrust Common Stock
issuable in the Merger, including any shares of SouthTrust Common
Stock issuable with respect to the Jefferson Options, shall not exceed
294,584 shares in the aggregate;
(viii) The holders of not more than five percent (5%) of the
outstanding shares of Jefferson Common Stock shall have elected to
exercise their right to dissent from the Merger and demand payment in
cash for the fair or appraised value of their shares;
(ix) The average last sales price of one share of
SouthTrust Common Stock as reported by NASDAQ for the ten trading days
immediately preceding the Effective Time of the Merger shall be not
less than $16.25, subject to certain rights of SouthTrust to adjust
the exchange ratio; and
(x) Jefferson shall have received the tax opinion of
Heidelberg & Woodliff, P.A., counsel for Jefferson, to the effect,
among others, that the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code, and that no gain or loss
will be recognized by the shareholders of Jefferson to the extent that
they receive SouthTrust Common Stock in exchange for Jefferson Common
Stock in the Merger. See "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS."
At any time before the Effective Time of the Merger, any party to the
Merger Agreement may waive conditions contained therein to its own obligations,
to the extent that such obligations, agreements and conditions are intended for
its own benefit. In addition the Merger Agreement may be amended by written
instruments signed on behalf of each of the parties thereto.
TERMINATION
The Merger Agreement may be terminated at any time prior to the
Effective Time of the Merger: (i) by the mutual consent in writing of
SouthTrust and Jefferson; (ii) by either SouthTrust or Jefferson if the Merger
shall not have occurred on or prior to November 30, 1994, provided that the
failure to consummate the Merger on or before November 30, 1994 is not caused
by any breach of any of the representations, warranties, covenants or other
agreements contained in the Merger Agreement by the terminating party; (iii) by
either SouthTrust or Jefferson (provided that the terminating party is not then
in breach of any representation, warranty, covenant or other agreement
contained therein) in the event that any of the conditions precedent to the
obligations of the nonterminating party to consummate the Merger cannot be
satisfied or fulfilled; (iv) by SouthTrust if any fact, event or condition
pertaining to Jefferson exists that has, or is likely to have, a material
adverse effect upon the condition of Jefferson or would be materially adverse
to the interests of SouthTrust on a consolidated basis or would be of such
significance with respect to the business or economic benefits expected to be
obtained by SouthTrust pursuant to the Merger as to render inadvisable
consummation of the transactions pursuant to the Merger Agreement; or (v) by
Jefferson if any fact, event or condition exists that has, or is likely to
have, a material adverse effect upon the condition of SouthTrust on a
consolidated basis.
CERTAIN EXPENSES
The Merger Agreement provides that the parties thereto shall bear
their own expenses incurred in connection with consummating the transactions
contemplated thereby, except that if the Merger is not consummated because a
condition contained in the Merger Agreement is not satisfied or because
SouthTrust terminates the Merger Agreement, and if Jefferson has not breached
is representations or warranties, nor its covenants and agreements
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contained in the Merger Agreement, then SouthTrust shall reimburse Jefferson
for its reasonable and documented out-of-pocket costs and expenses which are
incurred by Jefferson in connection with the Merger and are payable (or have
been paid) to third parties. In addition, SouthTrust will pay the cost of an
audit in accordance with generally accepted accounting principles of the
financial statements of Jefferson and the Bank for the year ended December 31,
1993.
RIGHTS OF DISSENT AND APPRAISAL
A shareholder of Jefferson is, pursuant to Section 79-4-13.01 et seq.
of the Mississippi Business Corporation Act (the "Dissent Provisions"),
entitled to dissent from, and obtain payment of the fair value of his shares of
Jefferson Common Stock in the event of the consummation of the Merger pursuant
to the Merger Agreement. A shareholder entitled to dissent and obtain payment
for his shares under the Mississippi Business Corporation Act may not challenge
the corporate action creating his entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or Jefferson. The fair value of the
Jefferson Common Stock may differ from the consideration that a shareholder of
Jefferson is entitled to receive in the Merger. The following is a summary of
the Dissent Provisions, the full text of which is set forth as Exhibit B to
this Proxy Statement/Prospectus.
Under the Dissent Provisions, a record shareholder of Jefferson 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 Jefferson in writing of the name and address of each
person on whose behalf he asserts dissenters' rights. The rights of a partial
dissenter are determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders. A beneficial
shareholder of Jefferson may assert dissenters' rights as to shares held on his
behalf only if he submits to Jefferson the record shareholder's written consent
to the dissent not later than the time the beneficial shareholder asserts
dissenters' rights, and 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.
A shareholder of Jefferson who wishes to assert dissenters' rights
must deliver to Jefferson, before a vote is taken to approve the Merger
Agreement, written notice of his intent to demand payment for his shares of
Jefferson Common Stock if the Merger is effectuated and must not vote his
shares of Jefferson Common Stock in favor of the proposed action. A
shareholder of Jefferson who does not satisfy these requirements is not
entitled to payment for his shares under the Dissent Provisions. If the Merger
Agreement is authorized and approved at the Special Meeting, Jefferson will
deliver a written dissenters' notice that sets forth the various requirements
of dissent and is accompanied by a copy of the Dissent Provisions to all
shareholders who have satisfied these requirements. A shareholder of Jefferson
who is sent a dissenters' notice must demand payment, certify as to whether he
acquired beneficial ownership of his shares before the date of the first
announcement of the Merger to the news media and deposit his certificates
evidencing shares of Jefferson Common Stock in accordance with the terms of the
written dissenters' notice. A shareholder who fails to demand payment or
deposit his certificates in accordance with the terms of the written
dissenters' notice will not be entitled to payment under the Dissent
Provisions.
As soon as the Merger is effectuated or upon receipt of a payment
demand from a shareholder of Jefferson, ST-Sub, as the surviving corporation of
the Merger, shall pay each dissenter who has properly demanded payment,
certified his beneficial ownership and deposited his certificates the amount
that ST-Sub estimates to be the fair value of his shares plus accrued interest
thereon, accompanied by, among other things, certain financial statement
information, an explanation of ST-Sub's estimate of fair value and a copy of
the Dissent Provisions. A dissenter may notify ST-Sub of his estimate of the
fair value and interest due and demand payment of his estimate (less any
payment previously made by ST-Sub pursuant to the Dissent Provisions). A
dissenter waives his right to demand payment of his estimate unless he notifies
ST-Sub of his demand in writing within thirty days after ST-Sub made or offered
payment for his shares. Within sixty days of a shareholder's demand for the
payment of his estimate, ST-Sub shall either commence a judicial proceeding and
petition a court to determine the fair value of the shares and accrued
interest, or pay each dissenter whose demand remains unsettled the amount
demanded by the shareholder. The court may assess the costs, fees and expenses
of the proceeding against ST-Sub, or, if the court finds that all or some of
the dissenters acted arbitrarily, vexatiously or not in good faith, against
some or all of the dissenters.
The foregoing is only a summary of the Dissent Provisions. The full
text of such provisions is set forth as Exhibit B to this Proxy
Statement/Prospectus and each Jefferson shareholder is urged to read these
provisions carefully.
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<PAGE> 25
CONDUCT OF BUSINESS BY JEFFERSON PENDING THE MERGER
The Merger Agreement provides that, until the Effective Time of the
Merger, and except with the prior approval of SouthTrust, Jefferson will
conduct its business and engage in transactions only in the ordinary course,
consistent with past practice and prudent banking principles. The Merger
Agreement further provides that, until the Effective Time of the Merger, except
as required by law or regulation, Jefferson shall not without the prior
approval of SouthTrust, or unless otherwise expressly permitted in the Merger
Agreement, (A) change any provision of the Articles of Incorporation or Bylaws
of Jefferson; (B) except for the issuance of Jefferson Common Stock upon the
exercise of any options and in connection with the redemption of the 8%
Preferred Stock of Jefferson and the conversion of the Debentures, change the
number of shares of the authorized, issued or outstanding capital stock of
Jefferson, including any issuance, purchase, redemption, split, combination or
reclassification thereof, or issue or grant any option, warrant, call,
commitment, subscription, right or agreement to purchase relating to the
authorized or issued capital stock of Jefferson, or declare, set aside or pay
any dividend or other distribution with respect to the outstanding capital
stock of Jefferson; (C) incur any material liabilities or material obligations
(other than deposit liabilities and short-term borrowings in the ordinary
course of business), whether directly or by way of guaranty, including any
obligation for borrowed money, or whether evidenced by any note, bond,
debenture, or similar instrument, except in the ordinary course of business
consistent with past practice; (D) make any capital expenditures individually
in excess of $25,000, or in the aggregate in excess of $50,000 other than
pursuant to binding commitments existing on December 31, 1993 and disclosed in
a Disclosure Schedule delivered pursuant to the Merger Agreement and other than
expenditures necessary to maintain existing assets in good repair; (E) sell,
transfer, convey or otherwise dispose of any real property (including "other
real estate owned") or interest therein having a book value in excess of or in
exchange for consideration in excess of $5,000; (F) pay any bonuses to any
executive officer except pursuant to the terms of an enforceable written
employment agreement and except in a manner consistent with past practice,
enter into any new, or amend in any respect any existing, employment,
consulting, non-competition or independent contractor agreement with any
person; alter the terms of any existing incentive bonus or commission plan;
adopt any new or amend in any material respect any existing employee benefit
plan, except as may be required by law; grant any general increase in
compensation to its employees as a class or to its officers except for
non-executive officers in the ordinary course of business and consistent with
past practices and policies or except in accordance with the terms of an
enforceable written agreement; grant any material increases in fees or other
increases in compensation or in other benefits to any of its directors; or
effect any change in any material respect in retirement benefits to any class
of employees or officers, except as required by law; (G) enter into or extend
any agreement, lease or license relating to real property, personal property,
data processing or bankcard functions relating to Jefferson that involves an
aggregate of $25,000; or (H) acquire twenty percent (20%) or more of the assets
or equity securities of any person or acquire direct or indirect control of any
person, other than in connection with (1) foreclosures in the ordinary course
of business or (2) acquisitions of control by a banking subsidiary in a
fiduciary capacity.
Jefferson also has agreed in the Merger Agreement that it will not,
directly or indirectly, solicit or encourage, including by way of furnishing
information, any inquiries or the making of any proposal which may reasonably
be expected to lead to any takeover proposal with respect to Jefferson.
Jefferson must promptly advise SouthTrust orally and in writing of any such
inquiries or proposals received by Jefferson after the date of the Merger
Agreement. For purposes of the Merger Agreement, "takeover proposal" means any
proposal for a merger or other business combination involving Jefferson or for
the acquisition of a substantial equity interest in Jefferson or for the
acquisition of a substantial portion of the assets of Jefferson.
BUSINESS AND MANAGEMENT OF JEFFERSON FOLLOWING THE MERGER; PLANS FOR BUSINESS
OF JEFFERSON
Upon consummation of the Merger, Jefferson will be merged into ST-Sub,
with ST-Sub being the surviving corporation in the Merger (the surviving
corporation being sometimes referred to herein as the "Surviving Corporation").
As of the Effective Time of the Merger, it is anticipated that the Board of
Directors of the Surviving Corporation shall consist of those persons who are
serving as directors of ST-Sub as of the Effective Time of the Merger, and such
other persons as may be designated in writing by SouthTrust at or prior to the
Effective Time of the Merger. It is further anticipated that the officers of
the Surviving Corporation shall be those persons serving as officers of ST-Sub
as of the Effective Time of the Merger, and such other persons as may be
designated in writing by SouthTrust at or prior to the Effective Time of the
Merger.
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<PAGE> 26
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
THE FOLLOWING DISCUSSION IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO HOLDERS OF JEFFERSON COMMON STOCK WHO
ARE CITIZENS OF THE UNITED STATES. IT DOES NOT DISCUSS ALL THE TAX
CONSEQUENCES THAT MAY BE RELEVANT TO HOLDERS OF JEFFERSON COMMON STOCK ENTITLED
TO SPECIAL TREATMENT UNDER THE CODE (SUCH AS INSURANCE COMPANIES, DEALERS IN
SECURITIES, TAX-EXEMPT ORGANIZATIONS OR FOREIGN PERSONS) OR TO HOLDERS OF
JEFFERSON COMMON STOCK WHO ACQUIRED THEIR JEFFERSON COMMON STOCK AS
COMPENSATION. THE SUMMARY SET FORTH BELOW DOES NOT PURPORT TO BE A COMPLETE
ANALYSIS OF ALL POTENTIAL TAX EFFECTS OF THE TRANSACTIONS CONTEMPLATED BY THE
MERGER AGREEMENT OR THE MERGER ITSELF.
EACH HOLDER OF JEFFERSON COMMON STOCK IS URGED TO CONSULT HIS OR HER
OWN TAX AND FINANCIAL ADVISOR AS TO THE EFFECT OF SUCH FEDERAL INCOME TAX
CONSEQUENCES ON HIS OR HER OWN PARTICULAR FACTS AND CIRCUMSTANCES, AND ALSO AS
TO ANY STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES ARISING OUT OF THE
MERGER.
Neither SouthTrust, ST-Sub nor Jefferson has requested or will receive
an advance ruling from the Internal Revenue Service ("IRS") as to any of the
federal income tax effects to holders of Jefferson Common Stock of the Merger
or of any of the federal income tax effects to SouthTrust, ST-Sub or Jefferson
of the Merger. Instead, Jefferson will rely upon an opinion of Heidelberg &
Woodliff, P.A. as to the federal income tax consequences of the Merger to the
holders of Jefferson Common Stock. The opinion of Heidelberg & Woodliff, P.A.
is based entirely upon the Code, regulations now in effect thereunder, current
administrative rulings and practice, and judicial authority, all of which are
subject to change. The opinion of Heidelberg & Woodliff, P.A. is based upon
certain factual assumptions. One such assumption is that Jefferson will
transfer "substantially all" of its assets to ST-Sub within the meaning of
Section 368(a)(2)(D) of the Code. Unlike a ruling from the IRS, an opinion is
not binding on the IRS and there can be no assurance, and none is hereby given,
that the IRS will not take a position contrary to one or more positions
reflected herein or that the opinion will be upheld by the courts if challenged
by the IRS.
In the opinion of Heidelberg & Woodliff, P.A., which opinion is based
upon various representations and subject to various assumptions and
qualifications, the following federal income tax consequences to the holders of
Jefferson Common Stock will result from the Merger:
(i) The Merger will qualify as a reorganization within the meaning
of Sections 368(a)(1)(A) and 386(a)(2)(D) of the Code and ST-
Sub, Jefferson and SouthTrust each will be a party to the
reorganization.
(ii) No gain or loss will be recognized by the shareholders of
Jefferson upon the receipt of SouthTrust Common Stock solely
in exchange for their shares of Jefferson Common Stock.
(iii) The basis of the SouthTrust Common Stock to be received by the
Jefferson shareholders (including any fractional share
interest to which they may be entitled) will be the same as
the basis of the Jefferson Common Stock surrendered in the
exchange.
(iv) The holding period of the shares of SouthTrust Common Stock
(including any fractional share interests to which they may be
entitled) received by the shareholders of Jefferson will
include the period during which the Jefferson Common Stock
surrendered in exchange therefor was held, provided that the
shares of Jefferson Common Stock were held as capital assets
within the meaning of Section 1221 of the Code as of the
Effective Time.
(v) Jefferson shareholders who exercise dissenters' rights, and as
a result of which receive only cash, will be treated as having
received such cash as a distribution in redemption of their
Jefferson Common Stock, subject to the provisions and
limitations of Section 302 of the Code.
(vi) The payment of cash to a Jefferson shareholder in lieu of
issuing a fractional share interest in SouthTrust Common Stock
will be treated for federal income tax purposes as if the
fractional share actually was issued as part of the Merger and
then was redeemed by SouthTrust. This cash
23
<PAGE> 27
payment will be treated as having been received as a
distribution in full payment in exchange for the stock
redeemed as provided in Section 302(a) of the Code.
(vii) Each holder of a Jefferson Option who receives SouthTrust
Common Stock therefor in accordance with Section 2.2 of the
Merger Agreement will recognize ordinary income equal to the
fair market value of the SouthTrust Common Stock received in
connection therewith.
(viii) No gain or loss will be recognized by the holders of
Directors' Qualifying Shares upon the receipt of the original
purchase price paid for such Directors' Qualifying Shares.
The opinion of Heidelberg & Woodliff, P.A., is rendered solely with
respect to certain federal income tax consequences of the Merger under the
Code, and does not extend to the income or other tax consequences of the Merger
under the laws of any State or any political subdivision of any State; nor does
it extend to any tax effects or consequences of the Merger to SouthTrust or
ST-Sub other than those expressly stated in the opinion. Furthermore, no
opinion is expressed as to the federal or state tax treatment of the
transaction under any other provisions of the Code and regulations, or about
the tax treatment of any conditions existing at the time of, or effects
resulting from, the transaction that are not specifically covered by the
opinion.
DESCRIPTION OF SOUTHTRUST CAPITAL STOCK
GENERAL
The authorized capital stock of SouthTrust consists of 200,000,000
shares of common stock, par value $2.50 per share (referred to throughout this
Proxy Statement/Prospectus as "SouthTrust Common Stock"), and 5,000,000 shares
of Preferred Stock, par value $1.00 per share ("SouthTrust Preferred Stock").
As of June 30, 1994, 79,937,397 shares of SouthTrust Common Stock were issued
and outstanding, exclusive of shares held as treasury stock, and no shares of
SouthTrust Preferred Stock were outstanding. As of June 30, 1994,
approximately 1,314,914 shares of SouthTrust Common Stock were reserved for
employee benefit plans and in connection with a 1992 acquisition by
SouthTrust, and 178,272 shares were reserved for the conversion of convertible
debentures assumed in connection with a 1988 acquisition by SouthTrust. In
addition, 500,000 shares of SouthTrust Preferred Stock designated as Series A
Junior Participating Preferred Stock were reserved for issuance upon the
exercise of certain rights described below under "SouthTrust Common
Stock-Stockholder Rights Plan."
Since SouthTrust is a holding company, the right of SouthTrust, and
hence the right of creditors and stockholders of SouthTrust, to participate in
any distribution of assets of any subsidiary (including SouthTrust Bank of
Alabama, N.A.) upon its liquidation or reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that claims of SouthTrust itself as a creditor of the subsidiary
may be recognized.
The following summary does not purport to be complete and is subject
in all respects to the applicable provisions of the General Corporation Law of
the State of Delaware and SouthTrust's Restated Certificate of Incorporation,
including the Certificate of Designation describing the Series A Junior
Participating Preferred Stock.
SOUTHTRUST COMMON STOCK
Dividend Rights
Holders of SouthTrust Common Stock are entitled to dividends when, as
and if declared by SouthTrust's Board of Directors out of funds legally
available therefor. Under Delaware law, SouthTrust may pay dividends out of
surplus (whether capital surplus or earned surplus) or net profits for the
fiscal year in which declared or for the preceding fiscal year, even if its
surplus accounts are in a deficit position. The sources of funds for payment
of dividends by SouthTrust are its subsidiaries. Because its primary
subsidiaries are banks, payments made by such subsidiaries to SouthTrust are
limited by law and regulations of the bank regulatory authorities. See "MARKET
AND DIVIDEND INFORMATION RESPECTING THE COMMON STOCK OF SOUTHTRUST AND
JEFFERSON."
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<PAGE> 28
Voting Rights and Other Matters
The holders of SouthTrust Common Stock are entitled to one vote per
share on all matters brought before the stockholders. The holders of
SouthTrust Common Stock do not have the right to cumulate their shares of
SouthTrust Common Stock in the election of directors. SouthTrust's Restated
Certificate of Incorporation provides that in the event of a transaction or a
series of transactions with an "Interested Stockholder" (generally defined as a
holder of more than 10% of the voting stock of SouthTrust or an affiliate of
such a holder) pursuant to which SouthTrust would be merged into or with
another corporation or securities of SouthTrust would be issued in a
transaction which would permit control of SouthTrust to pass to another entity,
or similar transactions having the same effect, approval of such transactions
requires the vote of the holders of 70% of the voting power of the outstanding
voting securities of SouthTrust, except in cases in which either certain price
criteria and procedural requirements are satisfied or the transaction is
recommended to the stockholders by a majority of the members of SouthTrust's
Board of Directors who are unaffiliated with the Interested Stockholder and who
were directors before the Interested Stockholder became an Interested
Stockholder.
Holders of SouthTrust Common Stock are not entitled to any preemptive
rights to subscribe for any additional securities which may be issued.
Liquidation Rights
In the event of liquidation, holders of the SouthTrust Common Stock
will be entitled to receive pro rata any assets distributable to stockholders
with respect to the shares held by them, after payment of indebtedness and such
preferential amounts as may be required to be paid to the holders of any
SouthTrust Preferred Stock hereafter issued by SouthTrust.
Provisions with Respect to Board of Directors
SouthTrust's Restated Certificate of Incorporation provides that the
members of SouthTrust's Board of Directors are divided into three classes as
nearly equal in number as possible. Each class is elected for a three-year
term. At each annual meeting of stockholders of SouthTrust, one-third of the
members of SouthTrust's Board of Directors will be elected for a three-year
term, and the other directors will remain in office until their three-year
terms expire. Therefore, control of SouthTrust's Board of Directors cannot be
changed in one year, and at least two annual meetings must be held before a
majority of the members of SouthTrust's Board of Directors can be changed.
Special Vote Requirements for Certain Amendments to Restated Certificate of
Incorporation
The General Corporation Law of the State of Delaware and the Restated
Certificate of Incorporation and Bylaws of SouthTrust provide that, because the
Board of Directors of SouthTrust is classified, a director, or SouthTrust's
entire Board of Directors, may be removed by the stockholders only for cause.
The Restated Certificate of Incorporation and Bylaws of SouthTrust also provide
that the affirmative vote of the holders of at least 70% of the voting power of
the outstanding capital stock entitled to vote for the election of directors is
required to remove a director or the entire Board of Directors from office.
Certain portions of the Restated Certificate of Incorporation of SouthTrust
described in certain of the preceding paragraphs, including those related to
business combinations and the classified Board of Directors, may be amended
only by the affirmative vote of the holders of 70% of the voting power of the
outstanding voting stock of SouthTrust.
Possible Effects of Special Provisions
Certain of the provisions contained in the Restated Certificate of
Incorporation and Bylaws of SouthTrust described above have the effect of
making it more difficult to change SouthTrust's Board of Directors, and may
make SouthTrust's Board of Directors less responsive to stockholder control.
These provisions also may tend to discourage attempts by third parties to
acquire SouthTrust because of the additional time and expense involved and a
greater possibility of failure, and, as a result, may adversely affect the
price that a potential purchaser would be willing to pay for the capital stock
of SouthTrust, thereby reducing the amount a stockholder might realize in, for
example, a tender offer for the capital stock of SouthTrust.
25
<PAGE> 29
Stockholder Rights Plan
On February 22, 1989, the Board of Directors of SouthTrust declared a
dividend to holders of SouthTrust Common Stock of record on March 6, 1989 (the
"Record Date") of one right (a "Right"; collectively, the "Rights") for, and to
be attached to, each share of SouthTrust Common Stock outstanding on the Record
Date. Each Right entitles the holder thereof to purchase from SouthTrust one
one-hundredth of a share of SouthTrust Preferred Stock designated as the Series
A Junior Participating Preferred Stock ("Series A Preferred Stock") at a
purchase price of $75.00 (the "Purchase Price"). Such resolutions also provide
that as long as the Rights are attached to shares of SouthTrust Common Stock as
provided in the Rights Agreement referred to below, the appropriate number of
Rights shall be issued with each share of SouthTrust Common Stock issued after
March 6, 1989. The number of rights attached to or to be issued with each
share of SouthTrust Common Stock as well as the redemption price for each such
Right, were appropriately decreased as a result of a three-for-two stock split
effected by SouthTrust on January 24, 1992, and a three-for-two stock split
effected by SouthTrust on May 19, 1993. Accordingly, at the present time
four-ninths of a right is attached to each share of SouthTrust Common Stock and
four-ninths of a right will be issued with each share of SouthTrust Common
Stock exchanged in the merger for Jefferson Common Stock.
The Rights will expire on February 22, 1999 unless redeemed earlier
and will not be exercisable or transferable separately from the shares of
SouthTrust Common Stock until the close of business on the Distribution Date,
which will occur on the earlier of (i) the tenth day following a public
announcement that a person (an "Acquiring Person") or any associate or
affiliate of an Acquiring Person has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of the outstanding SouthTrust
Common Stock (the "Stock Acquisition Date"); or (ii) the tenth day following
commencement of a tender or exchange offer which would result in the ownership
of 20% or more of the outstanding SouthTrust Common Stock; or (iii) the tenth
day after SouthTrust's Board of Directors declares, upon a determination by at
least a majority of SouthTrust's Disinterested Directors, that a person, alone
or with affiliates and associates (an "Adverse Person"), has become the
beneficial owner of a substantial amount (not to be less than 10%) of
outstanding SouthTrust Common Stock and that such person's ownership either is
intended to cause SouthTrust to take action adverse to its long-term interests
or may cause a material adverse impact on SouthTrust to the detriment of
SouthTrust's stockholders.
In the event that (i) SouthTrust's Board of Directors determines that
a person is an Adverse Person; (ii) SouthTrust is the surviving corporation in
a merger with an Acquiring Person and SouthTrust's Common Stock remains
outstanding and unchanged and is not exchanged for securities of the Acquiring
Person or other property; (iii) an Acquiring Person receives a financial
benefit or advantage, through certain self-dealing transactions involving
SouthTrust, greater than that received by other stockholders of SouthTrust or
that which would have resulted from arms-length negotiations; (iv) a person
becomes the beneficial owner of 30% or more of the outstanding SouthTrust
Common Stock (except pursuant to a "Fair Offer" as determined by the
Disinterested Directors); or (v) while there is an Acquiring Person, an event
involving SouthTrust or any of its subsidiaries occurs which results in the
Acquiring Person's proportionate ownership interest being increased by more
than 1%, each holder of a Right will have the right to receive, upon payment of
the Purchase Price, in lieu of Series A Preferred Stock, a number of shares of
SouthTrust Common Stock (or, in certain circumstances, cash or other property)
having a value equal to twice the Purchase Price. Rights are not exercisable
following the occurrence of any of the events set forth in this paragraph until
the expiration of the period during which the Rights may be redeemed by
SouthTrust as described below. Notwithstanding the foregoing, after the
occurrence of any of the events set forth in this paragraph, Rights that are
(or, under certain circumstances, Rights that were) beneficially owned by an
Acquiring Person or an Adverse Person will be null and void.
Unless the Rights are redeemed earlier, if, after the Distribution
Date, SouthTrust is acquired in a merger or other business combination in which
SouthTrust is not the surviving corporation or in which SouthTrust Common Stock
is changed into or exchanged for securities of any other person or other
property (other than a merger which follows a Fair Offer) or 50% or more of the
assets or earning power of SouthTrust and its subsidiaries (taken as a whole)
are sold or transferred, the Rights Agreement provides that each holder of
record of a Right will from and after that time have the right to receive, upon
payment of the Purchase Price, that number of shares of common stock of the
acquiring company which has value equal to twice the Purchase Price.
At any time until ten days following the Stock Acquisition Date
(subject to certain provisions requiring action by a majority of the
Disinterested Directors, as defined in the Rights Agreement), SouthTrust may
redeem the Rights in whole, but not in part, at a price of $0.01 per Right.
Prior to the Distribution Date, SouthTrust may, except with respect to the
Purchase Price, redemption price or date of expiration of the Rights, amend the
Rights
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<PAGE> 30
in any manner. At any time after the Distribution Date, SouthTrust may amend
the Rights in any manner that does not adversely affect the interest of holders
of the Rights as such.
The Rights have certain anti-takeover effects and may adversely affect
a third party's attempt to acquire SouthTrust. The Rights will cause
substantial dilution to a person or group that attempts to acquire SouthTrust.
The Rights should not interfere with any merger or other business combination
approved by SouthTrust's Board of Directors since, among other things, the
Board of Directors may, at its option, under certain circumstances, redeem all
but not less than all of the then outstanding Rights at the redemption price,
as discussed below.
The foregoing description of the Rights and the Series A Preferred
Stock does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement between SouthTrust and Mellon Bank, N.A., as
Rights Agent, and the Certificate of Designation for the Series A Preferred
Stock, copies of each of which are filed as exhibits to the Registration
Statement of which this Proxy Statement/Prospectus forms a part.
Transfer Agent
The transfer agent for SouthTrust Common Stock is Mellon Securities
Trust Company.
SOUTHTRUST PREFERRED STOCK
General
Under SouthTrust's Restated Certificate of Incorporation, the Board of
Directors is authorized without further stockholder action to provide for the
issuance of up to 5,000,000 shares of SouthTrust Preferred Stock, in one or
more series, by adoption of a resolution or resolutions providing for the
issuance of such series and determining the relative rights and preferences of
the shares of any such series with respect to the rate of dividend, call
provisions, payments on liquidation, sinking fund provisions, conversion
privileges and voting rights and whether the shares shall be cumulative,
non-cumulative or partially cumulative. The holders of SouthTrust Preferred
Stock would not have any preemptive right to subscribe for any shares issued by
SouthTrust. It is not possible to state the actual effect of the authorization
and issuance of SouthTrust Preferred Stock upon the rights of holders of
SouthTrust Common Stock unless and until SouthTrust's Board of Directors
determines the price and specific rights of the holders of a series of
SouthTrust Preferred Stock. Such effects might include, however, (i)
restrictions on dividends on SouthTrust Common Stock if dividends on SouthTrust
Preferred Stock have not been paid; (ii) dilution of the voting power of
SouthTrust Common Stock to the extent that SouthTrust Preferred Stock has
voting rights, or that any SouthTrust Preferred Stock series is convertible
into SouthTrust Common Stock; (iii) dilution of the equity interest of
SouthTrust Common Stock unless the SouthTrust Preferred Stock is redeemed by
SouthTrust; and (iv) SouthTrust Common Stock not being entitled to share in
SouthTrust's assets upon liquidation until satisfaction of any liquidation
preference granted SouthTrust Preferred Stock. While the ability of SouthTrust
to issue SouthTrust Preferred Stock is, in the judgment of SouthTrust's Board
of Directors, desirable in order to provide flexibility in connection with
possible acquisitions and other corporate purposes, its issuance could impede
an attempt by a third party to acquire a majority of the outstanding voting
stock of SouthTrust.
Series A Junior Participating Preferred Stock
In connection with the adoption of the Stockholder Rights Plan
described above, SouthTrust's Board of Directors designated 500,000 shares of
SouthTrust's authorized but unissued SouthTrust Preferred Stock as Series A
Junior Participating Preferred Stock (which has been previously referred to as
the "Series A Preferred Stock"). The terms of the Series A Preferred Stock are
such that one share of Series A Preferred Stock will be approximately
equivalent in terms of dividend and voting rights, before adjustment for the
three-for-two stock split effected on January 24, 1992 and a further
three-for-two stock split effective on May 19, 1993, to 100 shares of
SouthTrust Common Stock. No shares of Series A Preferred Stock have been
issued as of the date of this Proxy Statement/Prospectus.
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<PAGE> 31
MARKET AND DIVIDEND INFORMATION RESPECTING THE
COMMON STOCK OF SOUTHTRUST AND JEFFERSON
COMPARATIVE STOCK PRICES PER SHARE
The following table sets forth certain information as to the high and
low last sales price per share of SouthTrust Common Stock for the calendar
quarters indicated. The information listed below with respect to the high and
low last sales prices for SouthTrust Common Stock was obtained from NASDAQ (all
adjusted to reflect a three-for-two stock split effective on January 24, 1992
and a three-for-two split effective on May 19, 1993), and reflects interdealer
prices, without retail markup, markdown or commissions, and may not represent
actual transactions.
<TABLE>
<CAPTION>
SouthTrust
Common Stock
--------------------
High Low
---- ---
<S> <C> <C> <C>
1992:
First Quarter . . . . . . . . . 17 3/8 14 1/8
Second Quarter . . . . . . . . . 17 1/8 15
Third Quarter . . . . . . . . . 18 1/8 15 1/2
Fourth Quarter . . . . . . . . . 17 15 3/8
1993:
First Quarter . . . . . . . . . 21 1/8 16 3/4
Second Quarter . . . . . . . . . 22 1/8 18
Third Quarter . . . . . . . . . 21 1/8 18 1/2
Fourth Quarter . . . . . . . . 19 5/8 17 1/4
1994:
First Quarter . . . . . . . . . 19 3/8 18 1/4
Second Quarter . . . . . . . . . 22 18 1/4
Third Quarter
(through August ___, 1994) . . __ __
</TABLE>
Shares of Jefferson Common Stock are not actively traded, and such
trading activity, as it occurs, takes place in privately negotiated
transactions. During the last two years, the sales price of all shares of
Jefferson Common Stock of which Jefferson had knowledge was $25.00 per share.
The last sale of Jefferson Common Stock of which Jefferson had knowledge
occurred on or about August 13, 1993, at a price of $25.00 per share.
On April 22, 1994 and April 26, 1994 (the trading days immediately
before and after the public announcement of the proposed Merger), the last
sales prices of SouthTrust Common Stock, as obtained from NASDAQ, were $19 3/8
and $19, respectively; and on _______________ __, 1994, the last sales price of
SouthTrust Common Stock as obtained from NASDAQ was $___.
DIVIDENDS
Jefferson has not paid cash dividends in the past and currently does
not expect to pay dividends prior to the Effective Time of the Merger. The
following table sets forth the cash dividends per share declared on SouthTrust
Common Stock during the periods indicated (adjusted to reflect a three-for-two
stock split effective on January 24, 1992 and a three-for-two stock split
effective on May 19, 1993):
28
<PAGE> 32
<TABLE>
<CAPTION>
Dividends Declared
per share of
SouthTrust Common Stock
-----------------------
<S> <C>
1992:
First Quarter . . . . . . . . . . . . . . . $ 0.13
Second Quarter . . . . . . . . . . . . . . 0.13
Third Quarter . . . . . . . . . . . . . . . 0.13
Fourth Quarter . . . . . . . . . . . . . . 0.13
1993:
First Quarter . . . . . . . . . . . . . . . $ 0.15
Second Quarter . . . . . . . . . . . . . . 0.15
Third Quarter . . . . . . . . . . . . . . . 0.15
Fourth Quarter . . . . . . . . . . . . . . 0.15
1994:
First Quarter . . . . . . . . . . . . . . . $ 0.17
Second Quarter . . . . . . . . . . . . . . 0.17
Third Quarter . . . . . . . . . . . . . . . 0.17
</TABLE>
Dividends paid by SouthTrust on the SouthTrust Common Stock are at the
discretion of SouthTrust's Board of Directors and depend upon the restrictions
on the payment of dividends by banks as described below, SouthTrust's earnings
and financial condition and other relevant factors. The current policy of
SouthTrust is to pay dividends on a quarterly basis. Subject to an evaluation
of its earnings and financial condition and other factors, including the
restrictions on the payment of dividends by banks described below, SouthTrust
anticipates that it will continue to pay regular quarterly dividends with
respect to the SouthTrust Common Stock.
There are certain limitations on the payment of dividends to
SouthTrust and Jefferson by each of their respective subsidiary banks. The
amount of dividends that each subsidiary national bank of SouthTrust may
declare in one year, without approval of the OCC, is the sum of the bank's net
profits for that year and its retained net profits for the preceding two years.
Under the rules of the OCC, the calculation of net profits is more restrictive
under certain circumstances. The banking authorities in the states where
SouthTrust owns state-chartered banks also regulate the payment of dividends by
banks organized in such states. Under the Alabama Banking Code, a state bank
may not declare or pay a dividend in excess of 90% of the net earnings of such
bank until the surplus of the bank is equal to at least 20% of its capital, and
thereafter the prior written approval of the Superintendent of Banks is
required if the total of all dividends declared by the bank in any calendar
year exceeds the total of its net earnings for that year combined with its
retained net earnings for the preceding two years. No dividends, withdrawals
or transfers may be made from the bank's surplus without prior written approval
of the Superintendent of Banks.
Under Title 81 of the Mississippi Code of 1972 (the "Mississippi
Banking Code"), no state bank may declare or pay any dividend upon its common
stock unless it has received the written approval of the Commissioner of
Banking and Consumer Finance.
Under the Florida Banking Code, a state bank may not declare or pay a
dividend in excess of 80% of the net earnings of such bank until the surplus is
equal to the amount of common stock. If the amount of the surplus is equal to
the amount of common stock, the bank may pay out an amount equal to the current
year plus the prior two years undistributed earnings.
Under the Financial Institutions Code of Georgia, a bank shall not pay
dividends when it is insolvent, or would be rendered insolvent, and dividends
may only be paid out of retained earnings and when the bank has paid-in capital
and appropriated retained earnings, in combination, equal to at least 20% of
its capital stock.
Under the North Carolina Banking Code, a state chartered bank with
common stock in excess of $15,000 may not declare a dividend until the surplus
is equal to at least 50% of the amount of common stock.
The South Carolina Banking Code provides that, before a state
chartered bank can pay a dividend, approval must be obtained from the South
Carolina Commissioner of Banking.
29
<PAGE> 33
Under the Tennessee Banking Code, a state bank may not declare
dividends in excess of 90% of the net earnings during the past year until the
surplus is equal to the amount of common stock.
Under the foregoing laws and regulations, at June 30, 1994,
approximately $280.4 million was available for payment of dividends to
SouthTrust by its bank subsidiaries.
SHAREHOLDERS
As of December 31, 1993, there were approximately 86 holders of record
of Jefferson Common Stock.
COMPARISON OF THE COMMON STOCK
OF
SOUTHTRUST AND JEFFERSON
The rights of Jefferson's shareholders are governed by the Articles of
Incorporation of Jefferson, as amended, the Bylaws of Jefferson and the laws of
the State of Mississippi. The rights of SouthTrust shareholders are governed
by the Restated Certificate of Incorporation of SouthTrust, the Bylaws of
SouthTrust and the laws of the State of Delaware. After the Merger becomes
effective, the rights of Jefferson's shareholders who become SouthTrust
shareholders will be governed by the laws of the State of Delaware and by
SouthTrust's Restated Certificate of Incorporation and Bylaws. The following
summary of the rights of the holders of shares of SouthTrust Common Stock and
the holders of shares of Jefferson Common Stock is qualified in its entirety by
reference to the Restated Certificate of Incorporation and Bylaws of
SouthTrust, the Articles of Incorporation and Bylaws of Jefferson, the General
Corporation Law of the State of Delaware, and the Mississippi Business
Corporation Act.
DIVIDENDS
The sources of funds for payments of dividends by SouthTrust and
Jefferson are their subsidiaries. Because the primary subsidiaries of
SouthTrust and Jefferson are financial institutions, payments made by such
subsidiaries to SouthTrust and Jefferson to their shareholders are limited by
law and regulations of the bank regulatory authorities. See "DESCRIPTION OF
SOUTHTRUST CAPITAL STOCK--SouthTrust Common Stock-Dividend Rights" and "MARKET
AND DIVIDEND INFORMATION RESPECTING THE COMMON STOCK OF SOUTHTRUST AND
JEFFERSON" for information concerning the effect of such limitations on
SouthTrust's and Jefferson's ability to pay dividends. The General Corporation
Law of the State of Delaware provides that, subject to any restrictions in the
corporation's certificate of incorporation, dividends may be declared from the
corporation's surplus or, if there is no surplus, from its net profits for the
fiscal year in which the dividend is declared and the preceding fiscal year.
Dividends may not be declared, however, if the corporation's capital has been
diminished to an amount less than the aggregate amount of all capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. The Mississippi Business
Corporation Act provides that no distribution, including dividend
distributions, may be made if, after giving it effect, the corporation would
not be able to pay its debts as they become due in the usual course of
business, or the corporation's total assets would be less than the sum of its
total liabilities plus the amount that would be needed, if the corporation were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of shareholders who have superior preferential rights
upon dissolution.
VOTING RIGHTS AND OTHER MATTERS
The holders of shares of Jefferson Common Stock and the holders of
shares of SouthTrust Common Stock are each entitled to one vote per share on
all matters brought before the shareholders. The holders of shares of
SouthTrust Common Stock do not have the right to cumulate their votes in the
election of directors, but according to the Articles of Incorporation and
Bylaws of Jefferson, the shareholders of Jefferson Common Stock shall be
allowed to cumulate their votes. The absence of cumulative voting reduces the
likelihood that the holders of a minority interest in a corporation will be
able to obtain representation on the board of directors of that corporation.
The Bylaws of Jefferson also provide that transferees of shares of Jefferson
Common Stock that are transferred on the books of Jefferson within ten days
next preceding the date set for a meeting shall not be entitled to notice of,
or to vote at, the meeting.
30
<PAGE> 34
The Restated Certificate of Incorporation of SouthTrust provides that
in the event of a transaction or a series of transactions with an Interested
Stockholder (generally defined as a holder of more than 10% of the voting stock
of SouthTrust or an affiliate of such a holder) pursuant to which SouthTrust
would be merged into or with another corporation or securities of SouthTrust
would be issued in a transaction which would permit control of SouthTrust to
pass to another entity, or similar transactions having the same effect,
approval of such transaction requires the vote of the holders of 70% of the
outstanding voting securities of SouthTrust, except in cases in which either
certain price criteria and procedural requirements are satisfied or the
transaction is recommended to the shareholders by a majority of the members of
the Board of Directors of SouthTrust who are unaffiliated with the Interested
Stockholder and who were directors before the Interested Stockholder became an
Interested Stockholder.
SouthTrust is subject to Section 203 of the Delaware General
Corporation Law. That section generally provides that a corporation may not
engage in a business combination, except with extraordinary corporate approval,
with any person deemed to be an "interested stockholder" for a period of three
years following the date that the stockholder became an interested stockholder.
An "interested stockholder" is defined as any person who directly or indirectly
owns 15% or more of the outstanding voting stock of the corporation within the
three-year period beginning immediately prior to the date on which such
determination is made. The extraordinary corporate approval must consist of
board approval prior to the time the person became an interested stockholder or
approval of the transaction by the board of directors and at least two-thirds
of the outstanding voting stock which is not owned by the interested
stockholder; in the absence of such approval, the interested stockholder must
own at least 85% of the voting stock of the corporation. Mississippi has
enacted similar provisions, but such provisions do not apply to state bank
holding companies authorized by the appropriate regulatory authority to be
owned by any state or national bank or bank holding company.
The effect of the business combination and affiliated transactions
provisions, respectively, is to make more difficult the acquisition of majority
control of a corporation or the use of its assets to finance such acquisition.
The Bylaws of SouthTrust provide that the members of the Board of
Directors are to be divided into three classes, which classes are as nearly
equal in number as possible. Each class has been elected for a three-year
term. At each annual meeting of shareholders, one-third of the members of the
Board of Directors will be elected for a three-year term, and the other
directors will remain in office. Therefore, control of the Board of Directors
cannot be changed in one year, and at least two annual meetings must be held
before a majority of the members of the Board of Directors can be changed. But
for this provision in the Bylaws, all directors would stand for election at
each annual meeting. The Bylaws of Jefferson provide that the directors of
Jefferson shall hold one-year terms.
Delaware law provides (unless otherwise provided in a corporation's
charter or bylaws), that a director, or the entire Board of Directors, may be
removed by the stockholders with or without cause by vote of the holders of a
majority of the shares of capital stock of the corporation then entitled to
vote on the election of directors. The Restated Certificate of Incorporation
and Bylaws of SouthTrust provide, however, that the affirmative vote of the
holders of at least 70% of the voting power of the outstanding capital stock
entitled to vote for the election of directors is required to remove a director
or the entire Board of Directors from office and such removal may be effected
only for cause. The vacancy created by any such removal shall then be filled
by a majority vote of the directors then in office and the successor director
so elected shall fill the unexpired term of the director removed from office.
The Mississippi Business Corporation Act also permits the removal of one or
more directors with or without cause (unless the articles of incorporation
provide that directors may be removed only for cause), but if cumulative voting
is authorized, a director may not be removed if the number of votes sufficient
to elect him under cumulative voting is voted against his removal.
The Bylaws of SouthTrust and the Articles of Incorporation of
Jefferson provide that vacancies on the Board of Directors caused by the death
or resignation of a director or the creation of a new directorship may be
filled by the remaining directors. A person selected by the remaining
directors to fill a vacancy will serve until the annual meeting of shareholders
at which the term of the class of directors to which he has been appointed
expires. Therefore, in the case of SouthTrust if a director who was recently
elected to a three-year term resigns, the remaining directors will be able to
select a person to serve the remainder of that three-year term, and such person
will not be required to stand for election until the third annual meeting of
stockholders after his appointment.
Under the General Corporation Law of the State of Delaware (unless
otherwise provided in the certificate of incorporation), any action required or
permitted to be taken by the stockholders of a corporation may be taken without
a meeting and without a stockholder vote if a written consent is signed by the
holders of the shares of
31
<PAGE> 35
outstanding stock having the requisite number of votes that would be necessary
to authorize such action at a meeting of stockholders at which all shares
entitled to vote thereon were present and voted. Under the Restated
Certificate of Incorporation of SouthTrust, action by the written consent of
the stockholders is prohibited. Further, under the Restated Certificate of
Incorporation and Bylaws of SouthTrust, the stockholders are not permitted to
call a special meeting of stockholders or to require that the Board of
Directors call such a meeting. Under the Mississippi Business Corporation Act,
any action required or permitted to be taken by the shareholders of a
corporation may be taken without a meeting if a written consent is signed by
all of the shareholders of entitled to vote on the action.
The portions of the Restated Certificate of Incorporation of
SouthTrust described in certain of the preceding paragraphs may be amended only
by the affirmative vote of the holders of 70% of the outstanding voting stock
of SouthTrust. The Bylaws of Jefferson may be amended or repealed, or a new
set of Bylaws may be adopted, by a vote of the majority of the Board of
Directors present to vote on the question of the amendment, repeal or adoption
of the Bylaws.
The provisions contained in the Restated Certificate of Incorporation
and Bylaws of SouthTrust described above have the effect of making it more
difficult to change the Board of Directors, and may make the Board of Directors
less responsive to shareholder control. Those provisions also may tend to
discourage attempts by third parties to acquire SouthTrust because of the
additional time and expense involved and a greater possibility of failure.
This also can affect the price that a potential purchaser would be willing to
pay for the stock of SouthTrust, thereby reducing the amount a stockholder
might realize in, for example, a tender offer for the stock of SouthTrust.
RIGHTS ON LIQUIDATION
In the event of liquidation, the holders of SouthTrust Common Stock
and the holders of Jefferson Common Stock will be entitled to receive pro rata
any assets distributable to shareholders with respect to the shares held by
them, after payment of indebtedness and such preferential amounts as may be
required to be paid to the holders of any preferred stock presently outstanding
or hereafter issued by either corporation.
PREEMPTIVE RIGHTS
The holders of SouthTrust Common Stock and Jefferson Common Stock do
not have any preemptive rights to purchase additional shares of any class of
securities, including common stock, of SouthTrust or Jefferson, respectively,
which may hereafter be issued.
REPORTS TO STOCKHOLDERS
The SouthTrust Common Stock is registered under the Exchange Act, and,
therefore, SouthTrust is required to provide annual reports containing audited
financial statements to shareholders and to file other reports with the
Commission and solicit proxies in accordance with the rules of the Commission.
SouthTrust also provides reports to its shareholders on an interim basis
containing unaudited financial information. The Jefferson Common Stock is not
registered under the Exchange Act. Jefferson does not provide its shareholders
with annual reports containing audited financial statements of Jefferson.
STOCKHOLDERS' RIGHTS PLAN
As described above under the caption "DESCRIPTION OF SOUTHTRUST
CAPITAL STOCK - SouthTrust Common Stock - Stockholder Rights Plan," presently
attached to each share of SouthTrust Common Stock is four-ninths of a Right
issued pursuant to the Rights Agreement described under such caption.
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<PAGE> 36
SUPERVISION AND REGULATION
Bank Holding Company Regulation
Both SouthTrust and Jefferson are bank holding companies within the
meaning of the Bank Holding Company Act of 1956, as amended (the "Holding
Company Act"), and are registered with the Federal Reserve Board. Their
banking subsidiaries are subject to restrictions under federal law which limit
the transfer of funds by the subsidiary banks to their respective holding
companies and nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases. Such transfers by any subsidiary
bank to its holding company or any non-banking subsidiary are limited in amount
to 10% of the subsidiary bank's capital and surplus and, with respect to
SouthTrust and all such nonbanking subsidiaries, to an aggregate of 20% of such
bank's capital and surplus. Furthermore, such loans and extensions of credit
are required to be secured in specified amounts. The Holding Company Act also
prohibits, subject to certain exceptions, a bank holding company from engaging
in or acquiring direct or indirect control of more than 5% of the voting stock
of any company engaged in non-banking activities. An exception to this
prohibition is for activities expressly found by the Federal Reserve Board to
be so closely related to banking or managing or controlling banks as to be a
proper incident thereto.
As bank holding companies, SouthTrust and Jefferson are required to
file with the Federal Reserve Board semi-annual reports and such additional
information as the Federal Reserve Board may require. The Federal Reserve
Board may also make examinations of SouthTrust and Jefferson and each of their
subsidiaries.
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. Furthermore, 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
SouthTrust or Jefferson or related to FDIC assistance provided to a subsidiary
in danger of default -- the other banking subsidiaries of SouthTrust or
Jefferson may be assessed for the FDIC's loss, subject to certain exceptions.
Various federal and state statutory provisions limit the amount of
dividends the subsidiary banks can pay to their holding companies without
regulatory approval. The approval of the OCC is required for any dividend by a
national bank to its holding company if the total of all dividends declared by
such bank in any calendar year would exceed the total of its net profits, as
defined by the OCC, for that year combined with its retained net profits for
the preceding two years less any required transfers to surplus or a fund for
the retirement of any preferred stock. Comparable prohibitions on the
declaration of dividends are imposed by the Alabama Banking Code, the Florida
Banking Code, the North Carolina Banking Code, the South Carolina Banking Code,
the Tennessee Banking Code, the Financial Institutions Code of Georgia and the
Mississippi Banking Code. In addition, a national bank may not pay a dividend
in an amount greater than its net profits then on hand after deducting its loan
losses and bad debts. For this purpose, bad debts are defined to include,
generally, the principal amount of loans which are in arrears with respect to
interest by six months or more or are past due as to payment of principal (in
each case to the extent that such debts are in excess of the reserve for
possible credit losses). Under the foregoing laws and regulations, at June 30,
1994, approximately $280.4 million was available for payment of dividends to
SouthTrust by its bank subsidiaries. The payment of dividends to Jefferson by
the Bank is subject to the discretion of the Department. The payment of
dividends by any bank also may be affected by other factors, such as the
maintenance of adequate capital for such subsidiary bank. In addition to the
foregoing restrictions, the Federal Reserve Board has the power to prohibit
dividends by bank holding companies if their actions constitute unsafe or
unsound practices. The Federal Reserve Board has issued a policy statement on
the payment of cash dividends by bank holding companies, which expresses the
Federal Reserve Board's view that a bank holding company experiencing earnings
weaknesses should not pay cash dividends that exceed its net income or that
could only be funded in ways that weaken the bank holding company's financial
health, such as by borrowing. Furthermore, the OCC also has authority to
prohibit the payment of dividends by a national bank when it determines such
payment to be an unsafe and unsound banking practice.
Capital Guidelines
The Federal Reserve Board has issued final risk-based capital
guidelines for bank holding companies and member banks. The guidelines, which
became effective in March 1989, were phased in over four years and, as of
January 1, 1993, were final. Under the guidelines, the minimum ratio of
capital to risk-weighted assets
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<PAGE> 37
(including certain off-balance sheet items, such as standby letters of credit)
is 8%. To be considered a "well capitalized" bank or bank holding company
under the guidelines, a bank or bank holding company must have a total
risk-based capital ratio in excess of 10%. At June 30, 1994, SouthTrust and
all of SouthTrust's subsidiary banks were sufficiently capitalized to be
considered "well capitalized." See "SUPERVISION AND REGULATION - Recent
Legislation." At least half of the total capital is to be comprised of common
equity, retained earnings and a limited amount of perpetual preferred stock,
after subtracting goodwill and certain other adjustments ("Tier 1 capital").
The remainder may consist of perpetual debt, mandatory convertible debt
securities, a limited amount of subordinated debt, other preferred stock not
qualifying for Tier 1 capital and a limited amount of loan loss reserves ("Tier
2 capital"). SouthTrust's national banking subsidiaries are subject to similar
capital requirements adopted by OCC, and its state non-member bank subsidiaries
are subject to similar capital requirements adopted by the FDIC. In addition,
the Federal Reserve Board, the OCC and the FDIC have adopted a minimum leverage
ratio (Tier 1 capital to total assets) of 3%. Generally, banking organizations
are expected to operate well above the minimum required capital level of 3%
unless they meet certain specified criteria, including that they have the
highest regulatory ratings. Most banking organizations are required to
maintain a leverage ratio of 3% plus an additional cushion of at least 1% to
2%. The guidelines also provide that banking organizations experiencing
internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory levels without
significant reliance upon intangible assets.
The following table sets forth the various regulatory capital ratios
of each of SouthTrust and Jefferson as of the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------
SOUTHTRUST 1993 1992
---------- ---- ----
<S> <C> <C>
REGULATORY CAPITAL RATIOS:
Tier 1 risk-based capital* . . . . . . . . . . . . . . 8.55% 8.67%
Total risk-based capital* . . . . . . . . . . . . . . . 12.39 12.18
Leverage ratio* . . . . . . . . . . . . . . . . . . . . 6.51 6.48
YEAR ENDED
DECEMBER 31,
--------------------------
JEFFERSON 1993 1992
--------- ---- ----
REGULATORY CAPITAL RATIOS:
Tier 1 risk-based capital* . . . . . . . . . . . . . . 7.00% 5.62%
Total risk-based capital* . . . . . . . . . . . . . . . 10.34 9.40
Leverage ratio* . . . . . . . . . . . . . . . . . . . . 3.90 3.43
- ---------------------
</TABLE>
* Under the risk-based and leverage capital guidelines, regulatory required
minimums are 4% and 8% for Tier 1 and Total Capital ratios, respectively. The
leverage ratio must be maintained at a level generally considered to be in
excess of 3%.
Under the Financial Institutions Reform, Recovery and Enforcement Act
of 1989 ("FIRREA"), failure to meet the capital guidelines could subject a
banking institution to a variety of enforcement remedies available to federal
regulatory authorities, including the termination of deposit insurance by the
FDIC.
Recent Legislation
In December 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") became law. FDICIA substantially revised
the depository institution regulatory and funding provisions of the Federal
Deposit Insurance Act and made revisions to several other federal banking
statutes.
Among other things, FDICIA requires the federal banking regulators to
take prompt corrective action in respect of depository institutions that do not
meet minimum capital requirements. FDICIA establishes five capital tiers:
"well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized" and "critically undercapitalized." A
depository institution is well capitalized if it significantly exceeds the
minimum level required by regulation for each relevant capital measure,
adequately capitalized if it meets each such measure,
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<PAGE> 38
undercapitalized if it fails to meet any such measure, significantly
undercapitalized if it is significantly below such measure and critically
undercapitalized if it fails to meet any critical capital level set forth in
regulations. The critically undercapitalized level occurs where tangible
equity is less than 2% of total tangible assets or less than 65% of the minimum
leverage ratio to be prescribed by regulation (except to the extent that 2%
would be higher than such 65% level). A depository institution may be deemed
to be in a capitalization category that is lower than is indicated by its
actual capital position if it receives an unsatisfactory examination rating.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions also became subject
to restrictions on borrowing from the Federal Reserve System, effective
December 19, 1993. In addition, undercapitalized depository institutions are
subject to growth limitations and are required to submit capital restoration
plans. A depository institution's holding company must guarantee the capital
plan, up to an amount equal to the lesser of 5% of the depository institution's
assets at the time it becomes undercapitalized or the amount of the capital
deficiency when the institution fails to comply with the plan. The federal
banking agencies may not accept a capital plan without determining, among other
things, that the plan is based on realistic assumptions and is likely to
succeed in restoring the depository institution's capital. If a depository
institution fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject
to a number of requirements and restrictions, including orders to sell
sufficient voting stock to become adequately capitalized, requirements to
reduce total assets and cessation of receipt of deposits from correspondent
banks. Critically undercapitalized depository institutions are subject to
appointment of a receiver or conservator.
FDICIA required the federal banking agencies to develop, within one
year of the date of enactment, uniform accounting standards and requirements
that are consistent with, or no less stringent than, generally accepted
accounting principles. The federal banking agencies also were required by
FDICIA to develop a method for insured depository institutions to provide
supplemental disclosure of contingent liabilities and the estimated fair market
value of assets and liabilities, to the extent feasible and practicable, for
any balance sheet, financial statement, report or condition or other report
required to be filed with a federal banking agency. FDICIA required that, no
later than December 1, 1993, the federal banking agencies prescribe new safety
and soundness standards.
FDICIA provides authority for special assessments against insured
deposits and for the development of a general risk-based deposit insurance
assessment system. The risk-based insurance assessment system would be used to
calculate a depository institution's semiannual deposit insurance assessment
based on the probability (as defined in the statute) that the deposit insurance
fund will incur a loss with respect to the institution. In accordance with
FDICIA, on September 15, 1992, the FDIC approved a transitional risk-based
insurance premium system and an increase in the deposit insurance premium for
commercial banks and thrifts to an average of 25.4 basis points, effective
January 1, 1993.
Effective with fiscal years beginning after December 31, 1992, each
insured institution having over $500 million in total assets is required to
submit to the FDIC and make available to the public an annual report on the
institution's financial condition and management's responsibility and
assessment of the internal controls over financial reporting. The
institution's independent public accountant will be required to audit and
attest to certain of the statements made in that annual report.
FDICIA amended prior law with respect to the acceptance of brokered
deposits by insured depository institutions to permit only a "well capitalized"
(as defined in the statute as significantly exceeding each relevant minimum
capital level) depository institution to accept brokered deposits without prior
regulatory approval. A depository institution which has a capital level
category of "undercapitalized" may not accept brokered deposits without prior
regulatory approval. FDICIA also established new uniform disclosure
requirements for the interest rates and terms of deposits accounts.
FDICIA also contains various provisions related to an institution's
interest rate risk. Under certain circumstances, an institution may be
required to provide additional capital or maintain higher capital levels to
address interest rate risks.
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<PAGE> 39
The foregoing necessarily is a general description of certain
provisions of FDICIA and does not purport to be complete. Several of the
provisions of FDICIA are being implemented through the adoption of regulations
by various federal banking agencies. FDICIA is not expected to have a material
effect on the results of operations of SouthTrust or Jefferson.
Certain Pending Legislation
The United States House of Representatives recently approved a bill
that provides for the phasing-in of full, nationwide interstate banking. The
bill, which is expected to be voted on in the near future by the United States
Senate, would, within certain parameters and phase-in or transitional periods,
permit bank holding companies beginning in 1997 to acquire banks located
anywhere in the nation without regard to the location of the bank holding
company. Furthermore, additional bills may be introduced in the future in the
Congress and state legislatures to alter the structure, regulation and
competitive relationships of financial institutions. It cannot be predicted
whether or in what form any of these proposals will be adopted or the extent to
which the respective businesses of SouthTrust and Jefferson may be affected
thereby.
CERTAIN INFORMATION CONCERNING THE
BUSINESS OF JEFFERSON AND THE BANK
GENERAL
Jefferson was organized in 1980 as a bank holding company to hold
substantially all of the outstanding capital stock of the Bank. The Bank is a
state banking corporation which was organized under the laws of the State of
Mississippi with the primary purpose of serving the banking needs of the
residents of Harrison County and Jackson County, Mississippi and surrounding
areas. Since its organization, the Bank has provided most traditional
commercial banking services including interest and non-interest bearing
checking and savings accounts, commercial, mortgage and installment loans and
certificates of deposit.
Biloxi is the second largest city in Harrison County, Mississippi.
Harrison County and Jackson County have an aggregate population of
approximately 296,000 persons. The economy of the county is primarily based on
military and governmental related facilities, tourism, gaming facilities, port
facilitated activities and industrial complexes.
As of June 30, 1994, the Bank had total deposits of approximately
$38.2 million and total loans of approximately $22.7 million.
As of June 30, 1994, the Bank employed approximately 47 persons. The
Bank believes that its relations with its employees are good.
Market Data With Respect to Jefferson Common Stock
There is not an established trading market in the shares of Jefferson
Common Stock, and the trading that occurs in the shares of Jefferson Common
Stock is inactive and is effected in privately negotiated transactions. During
the last two years, the sales price of all shares of Jefferson Common Stock of
which Jefferson had knowledge was $25.00 per share. The last sale of shares of
Jefferson Common Stock of which Jefferson had knowledge occurred on or around
August 13, 1993 at a sales price of $25.00 per share. Jefferson has not paid
any cash dividend since its inception.
36
<PAGE> 40
SELECTED FINANCIAL DATA OF JEFFERSON
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
------------------- -----------------------------------------------------------
(In Thousands) 1994 1993 1993 1992 1991 1990 1989
--------- -------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Interest Income $ 1,325 $ 1,068 $ 2,427 $ 1,693 $ 1,281 $ 1,243 $ 1,104
Provision for Loan Losses 22 46 94 96 63 134 7
Net Income (Loss) 242 254 454 232 76 125 (64)
Per Share Data:
Net Income (Loss) 2.63 2.89 5.15 2.64 0.86 1.43 (0.74)
Cash Dividends - - - - - - -
Total Average Stockholders'
Equity 2,240 1,693 1,798 1,443 1,275 1,161 1,116
Total Average Assets 44,865 33,400 36,529 30,702 30,206 31,122 29,783
Ratios:
Average Equity to Assets 4.99% 5.07% 4.92% 4.70% 4.22% 3.73% 3.75%
Return on Average Equity 21.61% 30.00% 25.28% 16.08% 5.93% 10.73% (5.79)%
Return on Average Assets 1.08% 1.52% 1.24% 0.76% 0.25% 0.40% (0.22)%
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements of Jefferson and related Notes appearing
elsewhere in this Proxy Statement/Prospectus.
RESULTS OF OPERATIONS
Net income for the six months ended June 30, 1994, was $242,435, a
decrease of $11,612 (4.57%) from net income of $254,047 for the six months
ended June 30, 1993. The primary factors contributing to the changes from 1993
to 1994 were an increase in net interest income of $257,063, a decrease in
other operating income of $57,557, and an increase in other operating expenses
of $227,293.
Net income for 1993 was $454,498, an increase of $222,503 (95.91%)
from 1992. Net income for 1992 was $231,995, an increase of $156,392 (206.86%)
from 1991. The primary factor contributing to the significant increase in net
income from 1992 to 1993 was the increase in net interest income, which
increased by $733,607 (43.33%) from 1992 to 1993 and by $412,427 (32.20%) from
1991 to 1992.
NET INTEREST INCOME
Net interest income, the major component of net income for Jefferson,
is a measure of how management has balanced interest rate sensitive assets and
liabilities and represents the difference between interest income and interest
expense.
Net interest income for the six months ended June 30, 1994, was
$1,325,536, an increase of $257,603 (24.12%) from 1993. Net interest income
for the six months ended June 30, 1993 was $1,067,933. The increase in net
interest income was due to an increase in interest income of $282,852 (18.64%),
net of an increase in interest expense of $25,249 (5.62%).
The increase in interest income was due to an increase in average
earning assets, when comparing the first six months of 1994 to 1993, and
continued earnings from loan fees and discounts from mortgage loans originated
for funding by third parties. Interest expense increased due to an increase in
interest bearing deposits when comparing the first six months of 1994 to 1993.
37
<PAGE> 41
Net interest income for 1993 was $2,426,804, an increase of $733,607
(43.33%) from 1992. Net interest income for 1992 was $1,693,197, an increase
of $412,427 (32.20%) from 1991. Net interest income for 1991 was $1,280,770.
The increases in net interest income were due to decreases in interest expense
for both 1993 and 1992 and due to an increase in interest income for 1993.
Interest income increased by $611,872 (22.49%) from 1992 to 1993.
This increase was primarily due to an increase in average earning assets of
approximately $5,300,000 (19.98%) from 1992 to 1993, while the yield on earning
assets remained fairly stable, increasing from 10.31% in 1992 to 10.52% in
1993. Interest income decreased by $65,476 (2.35%) from 1991 to 1992 due to
the fact that earning assets remained fairly stable while the yield on earning
assets decreased from 10.75% in 1991 to 10.31% in 1992.
Interest expense decreased by $121,735 (11.85%) from 1992 to 1993 and
decreased by $477,903 (31.75%) from 1991 to 1992. These decreases reflected the
decline in short term interest rates during the period. The average rate paid
on deposit accounts was 3.28% in 1993, 4.18% in 1992, and 6.13% in 1991. The
average balances of interest bearing deposits increased by 12.22% from 1992 to
1993 and decreased by 1.33% from 1991 to 1992.
Yields on earning assets remained relatively stable from 1991 through
1993 in spite of the decline in short term interest rates. The decline in
rates is reflected by the decline in yields on investments and Federal funds
sold. However, yields on average loans, which includes interest and fees on
loans, increased from 12.30% in 1992 to 14.03% in 1993. The increase in loan
yields, as well as the overall level of loan yield, is significantly influenced
by the effect of earnings from fees and discounts on mortgage loans that
Jefferson originates for funding by third parties. The volume of these
mortgage originations has remained high and has continued to increase due to
the effect of the casino industry on the housing market on the Mississippi Gulf
Coast. A summary of the effect of these mortgage loans on interest and fees on
loans follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
--------------- ------------ --------------
<S> <C> <C> <C>
Fees and discounts on mortgage
loans originated for funding
by third parties $ 754 $ 402 $ 192
Other interest and fees on
loans 2,045 1,779 1,877
--------------- ------------ --------------
Total interest and fees on
loans $ 2,799 $ 2,181 $ 2,069
=============== ============ ==============
</TABLE>
Table 1, which follows, presents an analysis of the components of net
interest income.
38
<PAGE> 42
AVERAGE BALANCES AND INTEREST RATES, INTEREST YIELD/RATES ON FULLY TAXABLE
EQUIVALENT BASIS
(TABLE 1)
The following table details average balances of interest-earning assets and
interest-bearing liabilities, the fully taxable equivalent amount of interest
earned/paid thereon, and the fully taxable equivalent yield/rate for each of
the three years ended December 31, 1993.
<TABLE>
<CAPTION>
1993 1992 1991
------------------------------ -------------------------- -------------------------
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
------------------------------ -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
(In thousands)
Loans, net of unearned
income $ 19,948 $ 2,799 14.03% $17,730 $2,181 12.30% $16,715 $ 2,069 12.38%
Trading securities 1,122 57 5.04% 516 30 5.75% - - -%
Investment securities 5,081 313 6.16% 5,502 423 7.69% 7,580 622 8.20%
Federal funds sold 5,513 163 2.96% 2,643 86 3.25% 1,621 95 5.87%
---------- ------- ----- ------- ------ ----- ------- ------- -----
Total interest-earning
assets 31,664 3,332 10.52% 26,391 2,720 10.31% 25,916 2,786 10.75%
Reserve for possible
loan losses (327) (223) (240)
Other assets 5,192 4,534 4,530
---------- ------- -------
Total assets $ 36,529 $30,702 $30,206
========== ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Savings deposits $ 3,981 $ 119 2.98% $ 2,952 $ 95 3.23% $ 2,264 $ 120 5.29%
Interest-bearing
demand deposits 8,311 225 2.71% 6,163 206 3.34% 5,343 262 4.91%
Time deposits 12,052 455 3.77% 12,577 605 4.81% 14,378 967 6.72%
---------- ------- ----- ------- ------ ----- ------- ------- -----
Total deposits 24,344 799 3.28% 21,692 906 4.18% 21,985 1,349 6.13%
Notes payable 886 56 6.37% 1,059 71 6.66% 1,160 106 9.17%
Debentures 500 50 10.00% 500 50 10.00% 500 50 10.00%
---------- ------- ----- ------- ------ ----- ------- ------- -----
Total interest-bearing
liabilities 25,730 905 3.52% 23,251 1,027 4.42% 23,645 1,505 6.37%
------- ------ -------
Demand deposits 8,361 5,573 4,841
Other liabilities 640 435 445
Stockholders' equity 1,798 1,443 1,275
---------- ------- -------
Total liabilities and
stockholders'
equity $ 36,529 $30,702 $30,206
========== ======= =======
Net interest income $ 2,427 $1,693 $ 1,281
======= ====== =======
Net interest margin 7.66% 6.42% 4.94%
Net interest spread 7.00% 5.89% 4.38%
</TABLE>
39
<PAGE> 43
RESERVE AND PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses was $93,604 in 1993, $95,658 in
1992, and $62,896 in 1991. Table 2, "Reserve for Possible Loan Losses",
summarizes information concerning the reserve for possible loan losses for the
five years ended December 31, 1993. Management's estimate of the reserve for
possible loan losses and the provision for possible loan losses is based on
evaluation of collectibility of loans, past loan loss experience, changes in
the nature and volume of the loan portfolio, current economic conditions that
may affect a borrower's ability to pay, review of specific problem loans, and
the relationship of the reserve for possible loan losses to outstanding loans.
The provisions for possible loan losses for 1991 through 1993 have reflected
the increases in Jefferson's loan portfolio.
RESERVE FOR POSSIBLE LOAN LOSSES
(Table 2)
(In Thousands)
The following table summarizes information concerning the allowance for loan
losses:
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Loans Outstanding - Year End $ 22,337 $ 18,373 $ 16,522 $ 18,142 $ 16,138
============ ============ ============ ============ ============
Average Net Loans - During Year $ 19,948 $ 17,730 $ 16,715 $ 17,022 $ 15,354
============ ============ ============ ============ ============
Balance-Beginning of Year $ 273 $ 170 $ 254 $ 135 $ 286
Provision Charged to Expense 94 96 63 134 7
Recoveries on Loans Previously
Charged off 7 17 28 10 6
Loans Charged Off (1) (10) (175) (25) (164)
------------ ------------ ------------ ------------ ------------
Balance - End of Year $ 373 $ 273 $ 170 $ 254 $ 135
============ ============ ============ ============ ============
For the Period:
Net charge-offs (recoveries) as %
of average loans (0.03)% (0.04)% 0.88% 0.09% 1.03%
Provision for loan losses as a % of net
charge-offs --% --% 42.87% 906.42% 4.14%
Provision for loan losses as a % of net
average loans 0.47% 0.54% 0.38% 0.79% 0.04%
Period End:
Reserve as a % of net loans 1.67% 1.49% 1.03% 1.40% 0.84%
Reserve as a % of non-performing loans
and loans more than 90 days past due 401.08% 250.46% 110.39% 198.44% 1,350.00%
</TABLE>
NON-INTEREST INCOME
Non-interest income was $152,370 and $209,927, respectively, for the
six months ended June 30, 1994 and 1993. This represents a decrease of $57,557
(27.42%) from 1993 to 1994. For the six months ended June 30, 1993, Jefferson
reported combined gains on trading and investment securities of $71,040 but
reported losses on the liquidation of its trading portfolio of $60,444 for the
six months ended June 30, 1994. Other income increased in 1994, due to income
of $46,024 generated by ATM machines placed in casinos during the end of 1993.
40
<PAGE> 44
Non-interest income remained stable from 1992 to 1993 and increased by
14.29% from 1991 to 1992. Service charges on deposit accounts represent the
major component of non-interest income. Jefferson also recorded gains on the
sales of investment securities for 1993, 1992 and 1991. In addition, Jefferson
engaged in trading activities for certain U.S. Treasury securities in 1992 and
1993, recording losses in both years. Due to the lack of expertise in the
trading area, Jefferson liquidated its trading portfolio in early 1994 at a
loss of $60,444.
Table 3, which follows, presents an analysis of the components of
non-interest income.
NON-INTEREST INCOME
(Table 3)
The following table presents an analysis of non-interest income for 1993, 1992
and 1991 together with the amount and percent change from the prior year for
1993 and 1992:
<TABLE>
<CAPTION>
Change From Prior Year
---------------------------------------
Year Ended 12/31 1993 1992
------------------------------ ----------------- ------------------
1993 1992 1991 Amount % Amount %
--------- -------- --------- -------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts $ 266 $ 263 $ 238 $ 3 0.93% $ 25 10.56%
Credit insurance income 19 20 27 (1) (4.83)% (7) (26.84)%
Customer service fees and
other income 60 50 23 10 22.03% 27 118.08%
Loss on trading securities (23) (4) 0 (19) -- (4) --
Gain on investment securities 54 44 38 10 22.74% 6 14.07%
-------- ------- ------ ------- ------- ------- -------
Total non-interest income $ 376 $ 373 $ 326 $ 3 0.82% $ 47 14.29%
======== ======= ====== ======= ======= ======= =======
</TABLE>
NON-INTEREST EXPENSE
Non-interest expense was $1,065,355 and $838,062, respectively, for
the six months ended June 30, 1994 and 1993. This represents an increase of
$227,293 (27.12%) from 1993 to 1994. The primary factor in the increase was an
increase of $143,474 (32.29%) in salaries and employee benefits as a result of
increased salary expense.
Non-interest expense increased by $383,503 (23.72%) from 1992 to 1993
and increased by $174,291 (12.08%) from 1991 to 1992.
The 1993 increase was primarily the result of an increase of $319,309
(40.07%) in salaries and employee benefits. Salaries increased by approximately
$188,000 from 1992 to 1993. In addition, Jefferson made a $100,000
contribution of treasury stock to the Employee Stock Option Plan in 1993, which
is reflected in retirement plan expense for 1993. The 1992 increase is
primarily the result of an increase of $121,586 (18.01%) in salaries and
employee benefits, reflecting an increase in salaries from 1991 to 1992.
Equipment and data processing expenses decreased by $46,449 (23.34%)
from 1992 to 1993 due to the fact that certain data processing equipment was
fully depreciated at December 31, 1992.
Table 4, which follows, presents an analysis of the components of
non-interest expense.
41
<PAGE> 45
NON-INTEREST EXPENSE
(Table 4)
The following table presents an analysis of non-interest expense for 1993, 1992
and 1991 together with the amount and percent change from the prior year for
1993 and 1992:
<TABLE>
<CAPTION>
Change From Prior Year
-----------------------------------------
Year Ended 12/31 1993 1992
------------------------------ ------------------ -------------------
1993 1992 1991 Amount % Amount %
-------- --------- -------- ------- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and employee benefits $ 1,116 $ 797 $ 675 $ 319 40.07% $ 122 18.01%
Occupancy expense 105 112 112 (7) (6.66)% -- 0.36%
Equipment and data processing
expense 153 199 212 (46) (23.34)% (13) (5.98)%
Regulatory insurance and fees 69 62 60 7 11.23% 2 1.91%
Other expenses:
Advertising and promotion 72 55 48 17 30.63% 7 14.20%
Amortization 19 19 19 - - - -
General insurance 38 24 51 14 58.91% (27) (58.85)%
Other real estate expenses
and charges 73 47 16 26 53.75% 31 197.91%
Postage 31 26 25 5 21.20% 1 4.60%
Professional fees 30 38 21 (8) (20.17)% 17 81.59%
Supplies 91 63 56 28 44.36% 7 12.54%
Telephone 47 37 32 10 26.13% 5 15.56%
Other 156 138 115 18 13.94% 23 19.41%
-------- --------- -------- ------- ------- --------- -------
Total other expenses 557 447 383 110 24.90% 64 16.66%
-------- --------- -------- ------- ------- --------- -------
Total non-interest expense $ 2,000 $ 1,617 $ 1,442 $ 383 23.72% $ 175 12.08%
======== ========= ======== ======= ======= ========= =======
</TABLE>
INCOME TAXES
Jefferson adopted Statement of Financial Standards No. 109 (SFAS 109)
"Accounting for Income Taxes" for the year ended December 31, 1993. The
adoption of SFAS 109 did not have a material effect on net income or on
previously reported operations. Under the liability method specified by SFAS
109, deferred tax assets and liabilities are determined based on the
differences between the financial statement basis and income tax basis of
assets and liabilities as measured by the enacted rates which are expected to
be in effect when these differences reverse.
Income tax expense was $230,500 (an effective rate of 32.51%) in 1993,
$109,000 (an effective rate of 30.83%) in 1992, and $18,500 (an effective rate
of 18.20%) in 1991. Refer to note 11 of the consolidated financial statements
for a reconciliation of the difference between "expected" and actual income tax
expense.
FINANCIAL CONDITION
Total assets were $42,272,845 at June 30, 1994, and $43,700,228 at
December 31, 1993. This represents a decrease of $1,427,383 (3.27%) for the
period. Total deposits decreased by $1,469,595 from December 31, 1993 to June
30, 1994. Investments increased by $2,068,709, cash and due from banks
increased by $1,698,751 and Federal funds sold decreased by $5,600,000.
Stockholders' equity was $2,358,928 (5.58% to total assets) at June 30, 1994.
Total assets were $43,700,228 at December 31, 1993, and were
$32,767,738 at December 31, 1992. This represents an increase of $10,932,490
(33.36%) from 1992 to 1993. Average assets increased from approximately
$30,702,000 in 1992 to approximately $36,529,000 in 1993. The significant
growth, which primarily occurred during the latter part of 1993, was due, in
part, to the effect of the casino industry in expanding the Gulf Coast economy.
42
<PAGE> 46
The growth is reflected by an increase in year end deposits of
approximately $10,461,000 from 1992 to 1993. These funds were used to increase
investment and trading securities by approximately $4,400,000, loans by
approximately $4,000,000 and Federal funds sold by approximately $1,900,000 at
year end.
LOANS
Loans comprise the major portion of earning assets of Jefferson,
representing 63.00% and 67.18%, respectively, of average earning assets for
1993 and 1992. Loans, net of unearned income, amounted to $22,337,423 and
$18,373,150 at December 31, 1993 and 1992 and represented 51.11% and 56.07% of
total assets. The increase in net loans at year end from 1992 to 1993 was
$3,964,273 (21.58%) and reflected strong loan demand as a result of the economy
on the Mississippi Gulf Coast. Jefferson continues to actively pursue quality
loans as a means to enhance yield on earning assets.
A summary of the loan portfolio at December 31, follows (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
--------------- ------------ --------------
<S> <C> <C> <C>
Residential real estate $ 8,248 $ 6,592 $ 5,550
Commercial, financial and
agricultural 4,807 3,870 3,788
Non-residential real estate 3,310 4,186 3,187
Construction and land
development 3,259 1,675 2,083
Consumer, individual and other 2,958 2,404 2,134
--------------- ------------ --------------
22,582 18,727 16,742
Unearned income 245 354 220
--------------- ------------ --------------
Total loans, net of unearned
income $ 22,337 $ 18,373 $ 16,522
=============== ============ ==============
</TABLE>
A summary of loan interest rate sensitivity at December 31, 1993 follows (in
thousands):
<TABLE>
<S> <C>
Fixed rate loan maturity:
Three months or less $ 2,452
Over three through twelve months 6,323
Over one through five years 6,034
Over five years 1,504
-------------
16,313
Variable rate loans repricing in three
months or less 6,269
-------------
Total gross loans $ 22,582
=============
</TABLE>
NON-PERFORMING ASSETS
Non-performing assets have decreased significantly as Jefferson has
disposed of parcels of other real estate owned. In addition, Jefferson's loan
portfolio continues to perform without significant past due and non-accrual
loan problems. Table 5, which follows, summarizes Jefferson's non-performing
assets and loans past due 90 days or more and accruing as of December 31 for
the last five years (in thousands).
43
<PAGE> 47
NON-PERFORMING ASSETS
(Table 5)
(In Thousands)
The following table summarizes Jefferson's non-performing assets and loans past
due 90 days or more and accruing as of December 31 for the last five years.
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Non-Accrual Loans $ 16 $ 95 $ 94 $ 92 $ 10
Other Real Estate Owned 123 290 541 359 526
Accruing Loans 90 Days or More Past
Due 77 14 60 36 0
------------ ------------ ------------ ------------ ------------
Total Non-Performing Assets and
Accruing Loans 90 Days or More
Past Due $ 216 $ 399 $ 695 $ 487 $ 536
============ ============ ============ ============ ============
Provision for Loan Losses $ 94 $ 96 $ 63 $ 134 $ 7
============ ============ ============ ============ ============
Net (Charge-offs) Recoveries $ 6 $ 7 $ (147) $ (15) $ (158)
============ ============ ============ ============ ============
</TABLE>
TRADING SECURITIES
In 1992, Jefferson began trading activity in U.S. Treasury securities
and recorded losses of $22,860 and $3,561, respectively, on trading securities
in 1993 and 1992. Due to the development of an increasing interest rate
environment in the latter part of 1993 and early in 1994, management recognized
that Jefferson did not have the expertise to participate in trading activities.
As a result, Jefferson liquidated its trading portfolio in March 1994, and
recognized a loss of $60,444 on this liquidation.
Trading securities were $2,948,100 at December 31, 1993. This
represented an increase of $973,289 (49.29%) over December 31, 1992. Trading
securities at December 31, 1993, consisted of 4.75% U.S. Treasury securities
maturing in 1998.
INVESTMENT SECURITIES
Investment securities amounted to $7,537,007 at December 31, 1993, an
increase by $3,452,522 (84.53%) from December 31, 1992. However, the average
balance of investment securities decreased by 7.65% in 1993 when compared to
1992. The change in the year end balances, as compared to average balances,
reflects management's recognition in the latter part of 1993 that the
investment strategy needed to refocus on long term quality investments, rather
that to attempt to generate investment trading gains. In addition, Jefferson
experienced significant deposit growth in the latter part of 1993, and a
portion of these funds were used to purchase investment securities.
A summary of the book value of investment securities at December 31,
follows (in thousands):
<TABLE>
<CAPTION>
1993 1992
----------------- -----------------
<S> <C> <C>
U.S. Treasury $ 3,172 $ 500
U.S. Government agencies and corporations 2,249 491
Mortgage backed investments 2,116 2,993
Other - 100
----------------- -----------------
$ 7,537 $ 4,084
================= =================
</TABLE>
44
<PAGE> 48
The following is a summary of book values, yields and maturities on
investment securities at December 31, 1993 (in thousands):
<TABLE>
<CAPTION>
Book
Value Yield
----------------- -----------------
<S> <C> <C> <C>
Fixed rate:
U.S. Treasury:
Within one year $ 1,172 3.35%
Over one through five years 2,000 4.12%
Mortgage-backed 146 8.40%
----------------- ====
$ 3,318
=================
Book
Value
-------
Variable rate:
U.S. Government Agencies
and corporations $ 2,249
Mortgage-backed 1,970
-------
$ 4,219
=======
</TABLE>
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain
Investment Securities." SFAS 115 is effective for fiscal years beginning after
December 15, 1993, and requires that debt and equity securities be classified
into one of three categories: held-to-maturity, available-for-sale or trading.
Investments classified as available-for-sale or trading are to be recorded at
their fair value. Unrealized gains and losses for trading investments shall be
included in current earnings, net of applicable income taxes. Unrealized gains
and losses for available-for-sale investments shall be excluded from earnings
and reported as a separate component of stockholders' equity, net of applicable
income taxes.
Jefferson had not implemented SFAS 115 as of December 31, 1993, and
management had not determined the impact that the implementation of SFAS 115
would have on Jefferson's consolidated financial statements. However, a
comparison of recorded book values and market values at December 31, 1993, as
disclosed in note 2 to the consolidated financial statements indicates that the
effect of SFAS 115 at December 31, 1993, would not be significant.
FEDERAL FUNDS SOLD
Federal funds sold represent short-term investments of excess funds
and funds reserved for anticipated liquidity needs. The average balance of
Federal funds sold increased by approximately $2,870,000 (108.60%) from 1992 to
1993. The year end balance of Federal funds sold increased from $4,200,000 in
1992 to $6,100,000 in 1993. These figures reflect the growth of deposits in
1993, including the significant growth of deposits in the last quarter of 1993.
DEPOSITS
As the primary source of funds for Jefferson, average total deposits
increased by approximately $5,400,000 (19.95%) in 1993 and by approximately
$400,000 (1.64%) in 1992. Year end deposits at December 31, 1993, were
45
<PAGE> 49
$39,672,946, an increase of $10,461,496 (35.81%) from December 31, 1992. The
primary growth in deposits came in the last quarter of 1993, as the average
balance of deposits was approximately $32,700,000 for the month of September
1993, and was approximately $39,800,000 for the month of December 1993.
The average balance of non-interest bearing demand deposits increased
by approximately $2,800,000 (50.02%) from 1992 to 1993, and the year end
balance of non-interest bearing demand deposits increased by $5,678,564
(87.69%) from 1992 to 1993, as Jefferson picked up accounts related to the
expanding casino industry.
Time deposits of $100,000 or more were 9.76% and 11.01%, respectively,
of total deposits at December 31, 1993 and 1992.
A summary of the daily average balance of deposits follows (in
thousands):
<TABLE>
<CAPTION>
1993 1992 1991
--------------- ------------ --------------
<S> <C> <C> <C>
Non-interest bearing demand $ 8,361 $ 5,573 $ 4,841
Interest bearing demand 8,311 6,163 5,343
Savings 3,981 2,952 2,264
Time 12,052 12,577 14,378
--------------- ------------ --------------
$ 32,705 $ 27,265 $ 26,826
=============== ============ ==============
</TABLE>
Maturities of time deposits of $100,000 or more at December 31, 1993 are as
follows (in thousands):
<TABLE>
<S> <C>
Three months or less $ 2,030
Over three through twelve months 1,657
Over one through five years 184
--------------
$ 3,871
==============
</TABLE>
NOTES PAYABLE AND DEBENTURES
Notes payable and debentures represented original funding sources for
Jefferson in its formation and acquisition of its banking subsidiary. At the
present time, Jefferson does not anticipate any need for additional long term
borrowing. Jefferson has a $100,000 line of credit with a commercial bank that
can be used, if necessary, to meet short-term cash needs.
Notes payable balances decreased by $287,820 in 1993, $128,773 in
1992, and $86,773 in 1991. The $500,000 debentures which mature in 1999 are
mandatorily convertible into common shares of Jefferson.
LIQUIDITY
Liquidity for a financial institution can be expressed in terms of
maintaining sufficient funds available to meet both expected and unanticipated
obligations in a cost effective manner. Adequate liquidity allows Jefferson to
meet the demands of both borrowers and depositors on a timely basis, as well as
to pursue other investment and business opportunities as they arise. Thus,
liquidity is maintained through Jefferson's ability to convert assets into cash
through investing certain funds on a short-term basis, manage the maturities of
liabilities and generate funds on a short-term basis, including the attraction
of new deposits.
The consolidated statements of cash flows can be used to review
Jefferson's cash flows from operating, investing, and financing activities.
Cash and due from banks increased by $358,717 in 1993 to $2,406,242 at December
31, 1993. Net cash provided by operating activities was $980,589 in 1993 and
included net income of $454,498 adjusted for various noncash charges to income.
Net cash used by investing activities was $10,785,302, reflecting increased
investments, increased lending, and additional investment in short-term Federal
funds sold. Net cash provided by financing activities was $10,163,430 and
reflects the increase in deposits in 1993.
46
<PAGE> 50
No trends in the sources or uses of cash by Jefferson are expected to
have an adverse impact on Jefferson's liquidity position. Management believes
that the level of liquidity is sufficient to meet current and future liquidity
requirements.
On a long-term basis, the ability of Jefferson (on a separate company
basis) to pay its expenses, retire its debt and pay future dividends is
dependent on dividends and income tax benefits paid to Jefferson by its banking
subsidiary. The banking subsidiary is also subject to capital maintenance
requirements imposed by regulatory authorities. The banking subsidiary was in
compliance with all such requirements at December 31, 1993, and management
anticipates that such requirements will continue to be met while funding
Jefferson through the payment of dividends and income tax benefits.
CAPITAL
The assessment of capital adequacy is dependant on several factors
including asset quality, earnings trends, liquidity, and economic conditions.
Management continually monitors current and projected capital adequacy
positions. Maintaining adequate capital levels is integral to provide stability
to Jefferson.
Stockholders' equity was $2,120,699 (4.85% of total assets) at
December 31, 1993, as compared to $1,566,201 (4.78% of total assets) at
December 31, 1992. During 1993, net income added $454,498 to stockholders'
equity. Net income for 1993 reflects an expense of $100,000 related to the
contribution of treasury stock by Jefferson to the Employee Stock Ownership
Plan. This issuance of treasury stock also added $100,000 to stockholders'
equity during 1993. No dividends were paid in 1993, and no dividends have been
paid by Jefferson since its inception.
Under risk-based capital guidelines adopted by the Federal Reserve
Board, large bank holding companies with consolidated assets exceeding $150
million are required to maintain minimum ratios of capital to risk weighted
assets. The rules require a risk-based capital ratio of 8%, at least one-half
of which capital must be comprised of "Core" or Tier I capital elements,
including common equity, retained earnings, and a limited amount of the
allowance for the allowance for loan losses. In addition, the guidelines also
establish minimum leverage ratios requiring that banking organizations maintain
Tier I capital of at least 3% of average assets. Jefferson's consolidated
assets are significantly less than $150 million, and, as a result, Jefferson is
not subject to the general risk-based capital guidelines.
The FDIC, which is the Federal agency regulating state chartered
commercial banks, has also established capital guidelines for commercial banks.
The guidelines established by the FDIC, which are applicable to Jefferson's
banking subsidiary, are generally similar to those established by the Federal
Reserve Board for bank holding companies.
Jefferson and its banking subsidiary have capital ratios in excess of
regulatory guidelines and management expects that these ratios will continue to
be maintained above minimum required levels.
The following table illustrates Jefferson's and its banking
subsidiary's capital ratios at December 31:
<TABLE>
<CAPTION>
1993 1992
-------------- -------------
<S> <C> <C>
First Jefferson Corporation:
Tier I risk based capital ratio 7.00% 5.62%
Tier II risk based capital ratio 10.34% 9.40%
Leverage ratio 3.90% 3.43%
1993 1992
-------------- -------------
The Jefferson Bank:
Tier I risk based capital ratio 12.98% 12.70%
Tier II risk based capital ratio 14.29% 13.97%
Leverage ratio 6.96% 7.75%
</TABLE>
47
<PAGE> 51
BENEFICIAL OWNERSHIP OF JEFFERSON COMMON STOCK AND PREFERRED STOCK
Jefferson is authorized under its Articles of Incorporation to issue
1,000,000 shares of Jefferson Common Stock. As of the Record Date, Jefferson
had issued and outstanding 88,438 shares (exclusive of 21,602 shares of
Jefferson Common Stock which may be acquired pursuant to options or warrants) of
Jefferson Common Stock and 66,640 shares (exclusive of 9,000 shares of the 8%
Preferred Stock which may be acquired pursuant to options or warrants) of 8%
Preferred Stock. The following table sets forth information as of the Record
Date with respect to those persons known by Jefferson to be the beneficial
owners of more than 5% of the outstanding shares of Jefferson Common Stock or 8%
Preferred Stock, and as to shares of Jefferson Common Stock or 8% Preferred
Stock beneficially owned by the directors of Jefferson individually and by all
officers and directors of Jefferson as a group. Management of Jefferson knows
of no other persons, other than those set forth in the following table, who own
beneficially more than 5% of the outstanding shares of Jefferson Common Stock or
8% Preferred Stock as of the date of this Proxy Statement/Prospectus. See "THE
MERGER-Background of the Merger; Reasons for Merger; Recommendation of the Board
of Directors of Jefferson."
<TABLE>
<CAPTION>
AMOUNT AND NATURE AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF BENEFICIAL PERCENT
OWNERSHIP(1) OF CLASS OWNERSHIP(1) OF OF CLASS OF
NAME AND ADDRESS OF OF JEFFERSON OF JEFFERSON PREFERRED STOCK PREFERRED STOCK
BENEFICIAL OWNER COMMON STOCK COMMON STOCK OF JEFFERSON OF JEFFERSON
- -------------------- ---------------- -------------- ------------------ --------------
<S> <C> <C> <C> <C>
5% SHAREHOLDERS:
Gene Warr(2) 36,686 38.6% 25,610 36.8%
1562 Beach Blvd.
Gulfport, MS 39501
D'Auby H. Schiel(3) 19,186 20.2% 15,268 21.9%
P.O. Box 1182
Ocean Springs, MS 39564
William J. Meyer(4) 18,465 19.4% 12,197 17.5%
3910 Atkinson Road
Biloxi, MS 39530
The Jefferson Bank 6,308 7.1% -0- -0-
Employee Stock Ownership Stock
Bonus Plan
c/o D'Auby H. Schiel
& Gene Warr, Trustees
854 Howard Avenue
Biloxi, Mississippi 39530
DIRECTORS:
Edwin H. Saylor 1,200 1.4% -0- -0-
460 Saylor Drive
Biloxi, MS 39531
Victor B. Pringle, Jr. 1,010 1.1% 460 0.7%
1117 Forrest Avenue
Biloxi, MS 39530
David J. Washer 905 1.0% 846 1.3%
1895 Southern Ave.
Biloxi, MS 39531
Harry J. Schmidt, Jr. 5 0.005% -0- -0-
944 W. Beach Blvd.
Biloxi, MS 39530
</TABLE>
48
<PAGE> 52
<TABLE>
<S> <C> <C> <C> <C>
All directors and executive
officers of Jefferson as a
group (7 persons) 77,457 71.5% 54,381 71.9%
====== ==== ====== ====
</TABLE>
_________________
(1) Includes all shares held directly as well as by spouses and minor
children over which shares the named individuals or group of
individuals exercise sole or shared voting or investment power. Also
includes all shares that such person has the right to acquire within
sixty days after the date of this Proxy Statement/Prospectus. For
purposes of computing the percentages of outstanding shares held by
each person named above, shares which such person has the right to
acquire within sixty days after the date of this Proxy
Statement/Prospectus are deemed to be outstanding, but are not deemed
to be outstanding for the purpose of computing the percentage ownership
of any other person.
(2) Mr. Warr is a director of Jefferson. Mr. Warr's share ownership is
comprised of 30,062 shares of Jefferson Common Stock which he owns,
6,624 shares of Jefferson Common Stock which he has the right to
acquire through the exercise of Jefferson Options, 22,610 shares of
8% Preferred Stock which he owns and 3,000 shares of 8% Preferred
Stock which he has the right to acquire through the exercise of
Jefferson Options.
(3) Ms. Schiel is a director of Jefferson. Ms. Schiel's share ownership is
comprised of 12,562 shares of Jefferson Common Stock which she owns,
6,624 shares of Jefferson Common Stock which she has the right to
acquire through the exercise of Jefferson Options, 12,268 shares of 8%
Preferred Stock which she owns and 3,000 shares of 8% Preferred Stock
which she has the right to acquire through the exercise of Jefferson
Options.
(4) Mr. Meyer is a director of Jefferson. Mr. Meyer's share ownership is
comprised of 11,841 shares of Jefferson Common Stock which he owns,
6,624 shares of Jefferson Common Stock which he has the right to
acquire through the exercise of Jefferson Options, 9,197 shares of
8% Preferred Stock which he owns and 3,000 shares of 8% Preferred
Stock which he has the right to acquire through the exercise of
Jefferson Options.
LEGAL MATTERS
Certain legal matters in connection with the SouthTrust Common Stock
being offered hereby will be passed upon by Bradley, Arant, Rose & White, 1400
Park Place Tower, 2001 Park Place, Birmingham, Alabama, counsel for
SouthTrust. As of December 31, 1993 the partners and associates of the firm of
Bradley, Arant, Rose & White beneficially owned approximately 2,130,000 shares
of SouthTrust Common Stock.
EXPERTS
The consolidated financial statements of SouthTrust and subsidiaries
incorporated by reference in this Proxy Statement/Prospectus and elsewhere in
the Registration Statement, have been audited by Arthur Andersen & Co.,
independent public accountants, for the periods indicated in their reports
thereon and are incorporated herein by reference in reliance upon the authority
of said firm as experts in giving said reports.
The consolidated statements of condition of Jefferson as of December
31, 1993 and 1992, and the consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1993, included in this Proxy Statement/Prospectus have been included herein
in reliance on the report of Shearer, Taylor & Co., P.A., independent
accountants, given on authority of that firm as experts in accounting and
auditing.
Representatives of Shearer, Taylor & Co, P.A. are expected to be
present at the Special Meeting with the opportunity to make a statement if they
desire to do so and to respond to appropriate questions.
ADDITIONAL INFORMATION
OTHER BUSINESS
The Board of Directors of Jefferson does not know of any matter to be
brought before the Special Meeting other than as described in the Notice of
Special Meeting accompanying this Proxy Statement/Prospectus. If any other
matter comes before the Special Meeting, it is the intention of the persons
named in the accompanying proxy to vote the proxy in accordance with their best
judgment with respect to such other matters.
49
<PAGE> 53
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by SouthTrust with the Commission are
incorporated by reference herein:
SouthTrust's Annual Report on Form 10-K for the year ended
December 31, 1993 (including therein SouthTrust's Proxy
Statement for its Annual Meeting of Stockholders held April
21, 1993) (Commission File No. 0-3613); and
SouthTrust's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1994 and June 30, 1994 (Commission File No. 0-
3613).
All documents filed by SouthTrust pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to final adjournment of the Special Meeting,
shall be deemed to be incorporated by reference into this Proxy
Statement/Prospectus from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
The audited financial statements of SouthTrust incorporated herein by
reference should only be read in conjunction with the discussion of consummated
and pending acquisitions set forth under the caption "SUMMARY - Parties to the
Merger - SouthTrust."
Copies of all documents with respect to SouthTrust incorporated by
reference (not including exhibits to the documents incorporated by reference
unless such exhibits are specifically incorporated into the documents
incorporated by reference) will be provided without charge to each person to
whom a copy of this Proxy Statement/Prospectus is delivered upon written or
oral request. Requests for such copies should be directed to Mr. Aubrey D.
Barnard, Secretary, SouthTrust Corporation, 420 North 20th Street, Birmingham,
Alabama 35203, telephone number (205) 254-5000.
50
<PAGE> 54
INDEX TO THE FINANCIAL STATEMENTS
OF FIRST JEFFERSON CORPORATION
AND THE JEFFERSON BANK
<TABLE>
<CAPTION>
Caption Page
- ------- ----
<S> <C>
Unaudited Consolidated Financial Statements
Consolidated Statements of Condition June 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Statements of Income for the six months ended June 30, 1994 and 1993 . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Stockholders' Equity for the six months ended June 30, 1994 and 1993 . . . . . . . . . F-4
Consolidated Statements of Cash Flows for the six months ended June 30, 1994 and 1993 . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8
Consolidated Financial Statements:
Report of Independent Certified Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9
Consolidated Statements of Condition December 31, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . F-10
Consolidated Statements of Income for the three years ended December 31, 1993, 1992 and 1991 . . . . . . . . . . . F-11
Consolidated Statements of Stockholders' Equity for the three years ended December 31, 1993, 1992 and 1991 . . . . F-13
Consolidated Statements of Cash Flows for the three years ended December 31, 1993, 1992 and 1991 . . . . . . . . . F-15
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-17
</TABLE>
F-1
<PAGE> 55
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Unaudited Consolidated Statements of Condition
June 30, 1994 and 1993
<TABLE>
<CAPTION>
Assets 1994 1993
---- ----
<S> <C> <C>
Cash and due from banks $ 4,104,993 $ 3,306,749
Federal funds sold 500,000 4,500,000
Trading securities - -
Securities available for resale 1,956,884 -
Investment securities 10,596,932 4,590,064
Loans 22,967,989 20,934,516
Unearned income (238,909) (327,582)
Reserve for possible loan losses (393,195) (322,801)
---------- ----------
Net loans 22,335,885 20,284,133
---------- ----------
Bank premises and equipment 1,223,125 1,004,080
Accrued interest receivable 239,068 153,938
Other assets 1,315,958 1,067,350
---------- ----------
$ 42,272,845 $ 34,906,314
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest bearing $ 11,431,710 $ 7,184,676
Interest bearing 26,771,641 23,907,918
---------- ----------
Total deposits 38,203,351 31,092,594
Notes payable 741,500 917,547
Debentures 500,000 500,000
Accrued interest payable 117,453 105,565
Other liabilities 262,996 367,728
---------- ----------
Total liabilities 39,798,300 32,983,434
---------- ----------
Minority interest in subsidiary 115,617 102,632
Stockholders' equity:
8% non-cumulative, non-voting preferred stock
of $5 par value. Authorized 80,000 shares;
issued and outstanding 66,640 shares 333,200 333,200
Common stock of $1 par value. Authorized
1,000,000 shares; issued 99,120 shares 99,120 99,120
Additional paid-in capital 963,133 940,642
Retained earnings 1,174,667 731,781
Market valuation for securities available
for sale, net of income taxes (4,206) -
---------- ----------
2,565,914 2,104,743
Treasury stock, at cost, 10,682 and
14,682 shares (206,986) (284,495)
---------- ----------
Net stockholders' equity 2,358,928 1,820,248
---------- ----------
$ 42,272,845 $ 34,906,314
========== ==========
</TABLE>
F-2
<PAGE> 56
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Unaudited Consolidated Statements of Income
Six Months Ended June 30, 1994 and 1993
1994 1993
---- ----
Interest income:
Interest and fees on loans $1,418,483 $1,274,620
Trading securities 24,230 24,478
Taxable investment securities 235,065 146,058
Federal funds sold 122,330 72,100
--------- ---------
Total interest income 1,800,108 1,517,256
--------- ---------
Interest expense:
Deposits 424,914 394,722
Debentures 25,000 25,000
Other borrowings 24,658 29,601
--------- ---------
Total interest expense 474,572 449,323
--------- ---------
Net interest income 1,325,536 1,067,933
Provision for possible loan losses 21,858 46,417
--------- ---------
Net interest income after provision
for possible loan losses 1,303,678 1,021,516
--------- ---------
Other operating income:
Service charges on deposit accounts 139,892 120,630
Gain (loss) on trading securities (60,444) 27,828
Gain on sales of investment securities - 43,212
Credit insurance income 6,392 9,303
Other income 66,530 8,954
--------- ---------
Total other operating income 152,370 209,927
--------- ---------
Other operating expenses:
Salaries and employee benefits 587,816 444,342
Net occupancy expenses 61,826 49,162
Equipment and data processing expenses 82,894 65,653
Regulatory insurance and fees 41,898 33,194
Other expenses 290,921 245,711
--------- ---------
Total other operating expenses 1,065,355 838,062
--------- ---------
Income before income taxes and
minority interest 390,693 393,381
Income taxes 137,300 127,800
Minority interest in earnings of subsidiary 10,958 11,534
--------- ---------
Net income $ 242,435 $ 254,047
========= =========
Earnings per share:
Primary $ 2.63 $ 2.89
Fully diluted 2.32 2.51
==== ====
F-3
<PAGE> 57
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Unaudited Consolidated Statements of Stockholders' Equity
Six Months Ended June 30, 1994 and 1993
<TABLE>
<CAPTION>
Preferred Common
stock stock
--------- ------
<S> <C> <C>
January 1, 1993 $ 333,200 $ 99,120
Net income - -
--------- --------
June 30, 1993 $ 333,200 $ 99,120
========= ========
January 1, 1994 $ 333,200 $ 99,120
Decrease in market value of securities
available for sale, net of income taxes - -
Net income - -
--------- --------
June 30, 1994 $ 333,200 $ 99,120
========= ========
</TABLE>
F-4
<PAGE> 58
<TABLE>
<CAPTION>
Market valuation
Additional for securities Net
paid-in Retained available for sale, Treasury stockholders'
capital earnings net of income taxes stock equity
- ---------- -------- ------------------- -------- -------------
<S> <C> <C> <C> <C>
$940,642 $ 477,734 $ - $(284,495) $1,566,201
- 254,047 - - 254,047
-------- ---------- ------- --------- ----------
$940,642 $ 731,781 $ - $(284,495) $1,820,248
======== ========== ======= ========= ==========
$963,133 $ 932,232 $ - $(206,986) $2,120,699
- - (4,206) - (4,206)
- 242,435 - - 242,435
-------- ---------- ------- --------- ----------
$963,133 $1,174,667 $(4,206) $(206,986) $2,358,928
======== ========== ======= ========= ==========
</TABLE>
F-5
<PAGE> 59
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Unaudited Consolidated Statements of Cash Flows
Six Months Ended June 30, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 242,435 $ 254,047
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 66,637 54,965
Provision for possible loan losses 21,858 46,417
Gain on sales of investment securities - (43,212)
(Gain) loss on trading securities 60,444 (27,828)
Writedowns of other real estate 26,136 38,190
Minority interest in earnings 10,958 11,534
(Increase) decrease in accrued
interest receivable (9,489) 38,522
Increase (decrease) in:
Accrued interest payable 30,811 11,821
Income taxes payable (141,999) 63,388
Other, net (111,797) 27,185
----------- -----------
Net cash provided by operating
activities 195,994 475,029
----------- -----------
Cash flows from investing activities:
Purchases of trading securities - (9,977,631)
Sales of trading securities 2,887,656 11,980,270
Purchases of investment securities (5,927,803) (2,193,781)
Sales of investment securities - 1,149,720
Maturities of investment securities 924,076 593,966
Net (increase) decrease in:
Federal funds sold 5,600,000 (300,000)
Loans (393,077) (2,337,790)
Bank premises and equipment (124,000) (28,462)
Other, net 22,500 118,532
----------- -----------
Net cash provided by (used in)
investing activities 2,989,352 (995,176)
----------- -----------
</TABLE>
(Continued)
F-6
<PAGE> 60
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Unaudited Consolidated Statements of Cash Flows
Six Months Ended June 30, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Cash flows from financing activities:
Net increase (decrease) in:
Non-interest bearing deposits $ (722,869) $ 708,661
Money market, NOW and savings deposits (874,828) 1,635,188
Certificates of deposit 128,102 (462,705)
Principal payments on notes payable (85,000) (101,773)
Proceeds from notes payable 68,000 -
----------- -----------
Net cash provided by (used in)
financing activities (1,486,595) 1,779,371
----------- -----------
Net increase in cash and due
from banks 1,698,751 1,259,224
Cash and due from banks at January 1 2,406,242 2,047,525
----------- ----------
Cash and due from banks at December 31 $4,104,993 $3,306,749
========== ==========
</TABLE>
F-7
<PAGE> 61
FIRST JEFFERSON CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
Six Months Ended June 30, 1994 and 1993
Summary of Significant Accounting Policies
The accompanying Unaudited Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for interim periods are not necessarily indicative of the results
that may be expected for the entire year. For further information refer to
the audited consolidated financial statements and notes thereto included
elsewhere herein.
F-8
<PAGE> 62
Report of Independent Certified Public Accountants
The Board of Directors
First Jefferson Corporation
Biloxi, Mississippi
We have audited the accompanying consolidated statement of condition of First
Jefferson Corporation and Subsidiary as of December 31, 1993, and the related
consolidated statements of income, stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
resonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1993 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of First Jefferson Corporation and Subsidiary as of December 31, 1993, and the
results of their consolidated operations and their consolidated cash flows for
the year then ended in conformity with generally accepted accounting
principles.
We did not audit the consolidated financial statements as of and for the year
ended December 31, 1992, and for the year ended December 31, 1991, and,
accordingly, we do not express an opinion on them.
/s/ Shearer, Taylor & Co., P.A.
Jackson, Mississippi
June 17, 1994
F-9
<PAGE> 63
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Consolidated Statements of Condition
December 31, 1993 and 1992
<TABLE>
<CAPTION>
Assets 1993 1992
---- ----
<S> <C> <C>
Cash and due from banks (note 15) $ 2,406,242 $ 2,047,525
Federal funds sold 6,100,000 4,200,000
Trading securities 2,948,100 1,974,811
Investment securities, market value of
$7,618,176 and $4,162,753 (note 2) 7,537,007 4,084,485
Loans (note 3) 22,582,233 18,726,714
Unearned income (244,810) (353,564)
Reserve for possible loan losses (note 4) (372,757) (273,450)
----------- -----------
Net loans 21,964,666 18,099,700
----------- -----------
Bank premises and equipment (note 5) 1,156,310 1,021,131
Accrued interest receivable 229,579 192,460
Other assets (notes 6, 10, and 11) 1,358,324 1,147,626
----------- -----------
$43,700,228 $32,767,738
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Deposits (note 7) $39,672,946 $29,211,450
Notes payable (note 8) 731,500 1,019,320
Debentures (note 9) 500,000 500,000
Accrued interest payable 86,642 93,744
Other liabilities (notes 10 and 11) 483,782 285,925
----------- -----------
Total liabilities 41,474,870 31,110,439
----------- -----------
Minority interest in subsidiary 104,659 91,098
Stockholders' equity (notes 8, 9, 10, 12 and 15):
8% non-cumulative, non-voting preferred stock
of $5 par value. Authorized 80,000 shares;
issued and outstanding 66,640 shares 333,200 333,200
Common stock of $1 par value. Authorized
1,000,000 shares; issued 99,120 shares 99,120 99,120
Additional paid-in capital 963,133 940,642
Retained earnings 932,232 477,734
----------- -----------
2,327,685 1,850,696
Treasury stock, at cost, 10,682 and
14,682 shares (note 10) (206,986) (284,495)
----------- -----------
Net stockholders' equity 2,120,699 1,566,201
----------- -----------
$43,700,228 $32,767,738
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE> 64
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Consolidated Statements of Income
Years Ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $2,799,510 $2,181,477 $2,068,845
Trading securities 56,502 29,697 -
Taxable investment securities 312,752 423,348 621,828
Federal funds sold 163,454 85,824 95,149
---------- ---------- ----------
Total interest income 3,332,218 2,720,346 2,785,822
---------- ---------- ----------
Interest expense:
Time deposits of $100,000 or more 97,773 105,886 257,961
Other deposits 701,144 800,673 1,090,712
Debentures 50,000 50,000 50,000
Other borrowings 56,497 70,590 106,379
---------- ---------- ----------
Total interest expense 905,414 1,027,149 1,505,052
---------- ---------- ----------
Net interest income 2,426,804 1,693,197 1,280,770
Provision for possible loan losses
(note 4) 93,604 95,658 62,896
---------- ---------- ----------
Net interest income after
provision for possible
loan losses 2,333,200 1,597,539 1,217,874
---------- ---------- ----------
Other operating income:
Service charges on deposit accounts 265,711 263,263 238,113
Loss on trading securities (22,860) (3,561) -
Gain on sales of investment securities 53,771 43,808 38,405
Credit insurance income 18,672 19,619 26,818
Other income 60,397 49,491 22,694
---------- ---------- ----------
Total other operating income 375,691 372,620 326,030
---------- ---------- ----------
Other operating expenses:
Salaries and employee benefits
(note 10) 1,116,165 796,856 675,270
Net occupancy expenses 104,923 112,415 112,008
Equipment and data processing expenses 152,524 198,973 211,620
Regulatory insurance and fees 68,697 61,759 60,599
Other expenses 557,777 446,580 382,795
---------- ---------- ----------
Total other operating expenses 2,000,086 1,616,583 1,442,292
---------- ---------- ----------
Income before income taxes
and minority interest 708,805 353,576 101,612
---------- ---------- ----------
</TABLE>
(Continued)
F-11
<PAGE> 65
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Consolidated Statements of Income
Years Ended December 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Income before income taxes
and minority interest $708,805 $353,576 $101,612
Income taxes (note 11) 230,500 109,000 18,500
Minority interest in earnings of
subsidiary 23,807 12,581 7,509
-------- -------- -------
Net income $454,498 $231,995 $75,603
======== ======== =======
Earnings per share (note 13):
Primary:
As previously reported $ 5.15 $ 2.83 $ 1.07
Effect of prior period adjustment - (.19) (.21)
-------- -------- -------
As restated $ 5.15 $ 2.64 $ .86
======== ======== =======
Fully diluted:
As previously reported $ 4.52 $ 2.61 $ 1.07
Effect of prior period adjustment - (.15) (.21)
-------- -------- -------
As restated $ 4.52 $ 2.46 $ .86
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE> 66
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 1993, 1992, and 1991
<TABLE>
<CAPTION>
Preferred Common
stock stock
--------- --------
<S> <C> <C>
January 1, 1991, as previously reported $333,200 $ 99,120
Prior period adjustment (note 16) - -
-------- --------
January 1, 1991, as restated $333,200 99,120
-------- --------
Reduction of obligations of Employee Stock
Ownership Plan - -
Net income for 1991, as previously reported - -
Effect of prior period adjustment (note 16) - -
-------- --------
Net Income as restated - -
-------- --------
December 31, 1991 333,200 99,120
-------- --------
Reduction of obligations of Employee Stock
Ownership Plan - -
Net income for 1992, as previously reported - -
Effect of prior period adjustment (note 16) - -
-------- --------
Net income as restated - -
-------- --------
December 31, 1992 333,200 99,120
-------- --------
Net income for 1993 - -
Issuance of 4,000 shares of treasury
stock (note 10) - -
-------- --------
December 31, 1993 $333,200 $ 99,120
======== ========
</TABLE>
F-13
<PAGE> 67
<TABLE>
<CAPTION>
ADDITIONAL OBLIGATIONS OF NET
PAID-IN RETAINED EMPLOYEE STOCK TREASURY STOCKHOLDERS'
CAPITAL EARNINGS OWNERSHIP PLAN STOCK EQUITY
--------- -------- -------------- ---------- ------------
<S> <C> <C> <C> <C>
$940,642 $245,325 $(28,571) $(284,495) $ 1,305,221
- (75,189) - - (75,189)
-------- -------- -------- --------- -----------
940,642 170,136 (28,571) (284,495) 1,230,032
-------- -------- -------- --------- -----------
- - 14,285 - 14,285
- 94,221 - - 94,221
- (18,618) - - (18,618)
-------- -------- -------- --------- -----------
- 75,603 - - 75,603
-------- -------- -------- --------- -----------
940,642 245,739 (14,286) (284,495) 1,319,920
-------- -------- -------- --------- -----------
- - 14,286 - 14,286
- 248,644 - - 248,644
- (16,649) - - (16,649)
-------- -------- -------- --------- -----------
- 231,995 - - 231,995
-------- -------- -------- --------- -----------
940,642 477,734 - (284,495) 1,566,201
-------- -------- -------- --------- -----------
- 454,498 - - 454,498
22,491 - - 77,509 100,000
-------- -------- -------- --------- -----------
$963,133 $932,232 $ - $ (206,986) $ 2,120,699
======== ======== ========= ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-14
<PAGE> 68
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 454,498 $ 231,995 $ 75,603
Adjustments to reconcile net
income to cash provided by
operating activities:
Depreciation and amortization 114,221 178,220 179,278
Provision for possible loan
losses 93,604 95,658 62,896
Gain on sales of investment
securities (53,771) (43,808) (38,405)
Loss on trading securities 22,860 3,561 -
Writedowns of other real estate 43,987 49,956 12,400
Contribution of treasury stock
to ESOP 100,000 - -
Minority interest in earnings 23,807 12,581 7,509
Deferred income taxes 10,450 44,600 17,000
(Increase) decrease in accrued
interest receivable (37,119) 55,260 34,654
Increase (decrease) in:
Accrued interest payable (7,102) (35,363) (110,296)
Income taxes payable 133,483 58,193 (6,998)
Other, net 81,671 90,410 (120,069)
----------- ----------- ---------
Net cash provided by operating
activities 980,589 741,263 113,572
----------- ----------- ---------
Cash flows from investing activities:
Net increase in Federal funds sold (1,900,000) (2,800,000) (600,000)
Purchases of trading securities (24,973,482) (10,063,155) -
Sales of trading securities 23,977,333 8,084,783 -
Purchases of investment securities (6,845,511) (3,603,350) (2,541,524)
Sales of investment securities 1,588,257 2,779,002 2,550,000
Maturities of investment securities 1,874,336 4,071,768 356,024
Net (increase) decrease in loans (4,059,496) (1,845,459) 1,223,465
Net increase in bank premises and
equipment (230,496) (103,146) (38,469)
Life insurance premiums paid (426,489) (15,681) (15,033)
Sales of other real estate and
other assets 210,246 203,866 246,996
----------- ----------- ---------
Net cash provided by
(used in) investing
activities (10,785,302) (3,291,372) 1,181,459
----------- ----------- ---------
</TABLE>
(Continued)
F-15
<PAGE> 69
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Net increase (decrease) in:
Non-interest bearing deposits $ 5,678,564 $ 921,676 $ 897,429
Money market, NOW and savings deposits 4,715,825 2,478,108 973,712
Certificates of deposit 67,107 (664,684) (2,580,894)
Principal payments on notes payable (287,820) (188,773) (256,773)
Proceeds from notes payable - 60,000 170,000
Dividends paid to minority interest (10,246) (9,766) (7,063)
--------- ---------- ----------
Net cash provided by (used in)
financing activities 10,163,430 2,596,561 (803,589)
---------- --------- ----------
Net increase in cash and due
from banks 358,717 46,452 491,442
Cash and due from banks at January 1 2,047,525 2,001,073 1,509,631
Cash and due from banks at December 31 $ 2,406,242 $ 2,047,525 $ 2,001,073
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-16
<PAGE> 70
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1: Summary of Significant Accounting and Reporting Polices
The accounting and reporting policies of First Jefferson Corporation (the
Company) which materially affect the determination of financial position and
results of operations conform to generally accepted accounting principles
and general practices within the banking industry. A summary of these
significant accounting and reporting policies is presented below.
Organization and Operations
The Company is a one-bank holding company that owns 96.38% of the common
stock of The Jefferson Bank (the Bank) of Biloxi, Mississippi. The Bank is
a commercial bank and provides a full range of banking services through its
offices in Harrison County, Mississippi. As a state chartered commercial
bank, the Bank is subject to Federal and state regulations and undergoes
periodic examinations by those regulatory authorities.
Principles of Consolidation
The consolidated financial statements of First Jefferson Corporation include
the accounts of the Company and its subsidiary, The Jefferson Bank. All
significant intercompany balances and transactions have been eliminated in
consolidation.
Trading Securities
Trading account securities are carried at fair value. Fair values for the
Company's trading account assets are based on quoted market prices where
available. If quoted market prices are not available, fair values are based
on quoted market prices of comparable instruments. Gains or losses on the
sale of trading account securities (based on the adjusted cost of the
securities sold) and adjustments to fair value are reported currently as
other income.
Investment Securities
Investment securities are those securities which the Company has the ability
and intent to hold to maturity. These securities are stated at cost
adjusted for amortization of premium and accretion of discount using a
method that approximates the level yield method. Management periodically
reviews its investment securities portfolio, and at its discretion, certain
securities are sold, or transferred to the trading account, if they do not
correspond to the Company's investment strategy. Gains or losses from the
sale of these investment securities are computed from the adjusted cost of
the specific security sold.
(Continued)
F-17
<PAGE> 71
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1: (Continued)
In May, 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting For Certain
Investments in Debt and Equity Securities". SFAS 115 is effective for
fiscal years beginning after December 15, 1993, and requires that debt and
equity securities be classified into one of three categories:
held-to-maturity, available-for-sale, or trading. Investments classified as
available-for-sale or trading are to be recorded at their fair value.
Unrealized gains and losses for trading investments shall be included in
current earnings, net of applicable income taxes. Unrealized gains and
losses for available-for-sale investments shall be excluded from earnings and
reported as a separate component of stockholders' equity, net of applicable
income taxes. The Company has not determined the impact that the
implementation of SFAS 115 will have on its consolidated financial
statements.
Loans
Loans are stated at the principal amount outstanding. Unearned income on
installment loans is recognized as income using a method that approximates
the interest method. Interest on all other loans is calculated by using the
simple interest method on daily balances of the principal amount
outstanding. The Bank's policy regarding recognition of loan fee income and
origination costs is in compliance with Statement of Financial Accounting
Standards No. 91, which requires that fees be deferred and that costs be
capitalized and amortized over the lives of the respective loans.
The Bank discontinues the accrual of interest on loans and recognizes income
only as received when, in the judgment of management, the collection of
interest, but not necessarily principal, is doubtful.
Reserve for Possible Loan Losses
The Bank provides for possible loan losses on the reserve method.
Accordingly, all loan losses are charged to the reserve for possible loan
losses and all recoveries are credited to it. The reserve for possible loan
losses is based on the evaluation of the collectibility of loans, past loan
loss experience and other factors which, in management's judgment, deserve
consideration in estimating possible loan losses. Such other factors
considered by management include changes in the nature and volume of the
loan portfolio, current economic conditions that may affect a borrower's
ability to pay, review of specific problem loans, and the relationship of
the reserve for possible loan losses to outstanding loans.
(Continued)
F-18
<PAGE> 72
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1: (Continued)
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated depreciation
and amortization. Provisions for depreciation and amortization are computed
principally using the straight-line method and charged to operating expenses
over the estimated useful lives of the assets. Costs of major additions and
improvements are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred.
Other Real Estate
Other real estate acquired through partial or total satisfaction of loans is
carried at the lower of market or the recorded loan balance at date of
acquisition (foreclosure). Any loss incurred at the date of acquisition is
charged to the reserve for possible loan losses. Gains or losses incurred
subsequent to the date of acquisition are reported in current operations.
Related operating income and expenses are reported in current operations.
Amortization
The Company's costs in excess of equity in net Bank assets acquired are
being amortized over forty years using the straight-line method.
Income Taxes
The Company and the Bank file consolidated income tax returns. The Company
adopted Statement of Financial Accounting Standards No. 109 (SFAS 109),
"Accounting for Income Taxes", for the year ended December 31, 1993. The
adoption of SFAS 109 did not have a material effect on net income. Under
the liability method specified by SFAS 109, deferred tax assets and
liabilities are determined based on the differences between the financial
statement basis and income tax basis of assets and liabilities as measured
by the enacted rates which are expected to be in effect when these
differences reverse. Deferred income tax expense (benefit) is the result of
changes in deferred tax assets and liabilities.
(Continued)
F-19
<PAGE> 73
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1: (Continued)
Statements of Cash Flows
In the accompanying consolidated statements of cash flows, the Company and
subsidiary have defined cash equivalents as those amounts included in the
consolidated statement of condition caption "Cash and Due from Banks". The
following supplemental disclosures are made related to the consolidated
statements of cash flows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Interest paid $ 912,516 $1,062,512 $ 1,615,348
Federal income taxes
paid 87,000 6,200 8,500
Other real estate
acquired in noncash
foreclosures 101,000 - 242,000
========= ========== ===========
</TABLE>
Note 2: Investment Securities
A summary of investment securities at book value and market value at
December 31, follows:
<TABLE>
<CAPTION> Gross unrealized
Book ----------------------- Market
value Gain Loss value
----------- -------- -------- ----------
<S> <C> <C> <C> <C>
December 31, 1993:
U.S. Treasury $ 3,172,349 $ - $ 9,795 $3,162,554
U.S. Government agencies
and corporations 2,248,750 6,875 625 2,255,000
Mortgage backed investments 2,115,908 84,944 230 2,200,622
----------- -------- -------- ----------
$ 7,537,007 $ 91,819 $ 10,650 7,618,176
=========== ======== ======== ==========
December 31, 1992:
U.S. Treasury $ 500,318 $ - $ 6 $ 500,312
U.S. Government agencies
and corporations 490,595 - 1,845 488,750
Mortgage backed investments 2,993,572 99,181 19,062 3,073,691
Other 100,000 - - 100,000
----------- -------- -------- ----------
$ 4,084,485 $ 99,181 $ 20,913 $4,162,753
=========== ======== ======== ==========
</TABLE>
(Continued)
F-20
<PAGE> 74
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 2: (Continued)
The following is a summary, by contractual maturity date, of the future
maturities of investment securities at December 31, 1993. Actual maturities
may differ from contractual maturities because borrowers have the right to
call or prepay certain obligations with, or without, call or prepayment
penalties.
<TABLE>
<CAPTION>
Book Market
value value
----------- -----------
<S> <C> <C>
One year or less $ 1,172,505 $ 1,167,085
Over one through five years 2,749,844 2,746,719
Over five through ten years 1,498,750 1,503,750
Mortgage backed securities 2,115,908 2,200,622
----------- -----------
$ 7,537,007 $ 7,618,176
=========== ===========
</TABLE>
Investment securities having a book value of approximately $3,545,000 and
$2,383,000 and a market value of approximately $3,595,000 and $2,430,000
at December 31, 1993 and 1992, respectively, were pledged to secure public
and trust deposits, short-term borrowings and for other purposes required
or permitted by law.
The following is a summary of gross realized gains and losses on
investment security transactions:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Gross realized gains $53,771 $44,834 $ 38,405
Gross realized losses - (1,026) -
------- -------- --------
$53,771 $ 43,808 $ 38,405
======= ======== ========
</TABLE>
Note 3: Loans
The Bank's loan portfolio includes commercial, consumer and residential loans
primarily in and around the Bank's market area of Harrison County,
Mississippi. The composition of the Bank's loan portfolio at December 31,
1993 and 1992, follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Residential real estate $ 8,248,448 $ 6,592,300
Commercial, financial
and agricultural 4,807,309 3,869,908
Non-residential real estate 3,309,507 4,185,596
Construction and land
development 3,259,241 1,674,540
Consumer, individual and
other 2,957,728 2,404,370
------------ ------------
$ 22,582,233 $ 18,726,714
============ ============
</TABLE>
(Continued)
F-21
<PAGE> 75
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3: (Continued)
The Bank has made, and expects to continue to make, in the ordinary course of
business, loans to directors and executive officers of the Company and Bank
and their affiliates. In the opinion of management, these transactions were
made on substantially the same terms as those prevailing at the time for
comparable transactions with other persons and did not involve more than
normal risk of collectibility or contain other unfavorable features.
Activity of loans to directors, executive officers and their affiliates for
the year ended December 31, 1993, follows:
<TABLE>
<S> <C>
Principal outstanding at January 1 $673,602
Advances 99,637
Repayments (198,548)
---------
Principal outstanding at December 31 $ 574,691
=========
</TABLE>
Note 4: Reserve for Possible Loan Losses
Transactions in the reserve for possible loan losses are summarized as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- -------- --------
<S> <C> <C> <C>
Balance at January 1 $273,450 $ 170,132 $ 253,942
Loans charged-off (897) (10,177) (174,810)
Recoveries 6,600 17,837 28,104
--------- -------- --------
Net (charge-offs)
recoveries 5,703 7,660 (146,706)
--------- -------- --------
Provision for possible loan
losses 93,604 95,658 62,896
--------- -------- --------
Balance at December 31 $ 372,757 $273,450 $170,132
========= ======== ========
</TABLE>
Note 5: Bank Premises and Equipment
A summary of bank premises and equipment follows:
<TABLE>
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
Land $ 277,775 $ 277,775
Buildings 995,335 941,247
Furniture, fixtures and equipment 1,453,358 1,277,431
----------- -----------
2,726,468 2,496,453
Less accumulated depreciation (1,570,158) (1,475,322)
----------- -----------
$ 1,156,310 $ 1,021,131
=========== ===========
</TABLE>
(Continued)
F-22
<PAGE> 76
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 5: (Continued)
Depreciation expense amounted to $95,317, $159,316 and $160,374 for the
years ended December 31, 1993, 1992 and 1991.
Note 6: Other Assets
A summary of other assets follows:
<TABLE>
<CAPTION>
1993 1992
--------- ----------
<S> <C> <C>
Company's cost in excess of equity in
net Bank assets acquired, less
accumulated amortization of $231,296
and $212,392 $ 524,805 $ 543,709
Cash surrender value of life insurance 531,668 107,659
Other real estate 122,572 289,610
Deferred income tax 147,025 157,475
Other assets 32,254 49,173
---------- ----------
$1,358,324 $1,147,626
========== ==========
</TABLE>
Note 7: Deposits
The following is a summary of deposits at December 31, 1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
----------- ----------
<S> <C> <C>
Non-interest bearing $12,154,579 $6,476,015
Interest bearing:
Money market accounts 5,232,304 4,979,504
NOW accounts 5,297,892 2,179,580
Savings accounts 4,643,265 3,298,552
Time deposits of $100,000 or more 3,870,623 3,215,580
Other time deposits 8,474,283 9,062,219
----------- -----------
Total interest bearing 27,518,367 22,735,435
----------- -----------
Total deposits $39,672,946 $29,211,450
=========== ===========
</TABLE>
F-23
<PAGE> 77
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 8: Notes Payable
A summary of notes payable follows:
<TABLE>
<CAPTION>
1993 1992
------ ------
<S> <C> <C>
Note payable to a commercial bank with
interest payable semi-annually at 1/4%
above the lender's prime rate; secured
by 106,799 common shares of the Bank;
minimum annual principal payments are
as follows:
Year Amount
---- ------
1994 $110,000
1995 125,000
1996 135,000
1997 150,000
1998 131,000 $651,000 $806,000
=======
Line of credit with a commercial bank
for $100,000; repayment is due
annually on July 20; interest payable
semi-annually at 1/4% above the lender's
prime rate; secured by the 106,799
common shares of the Bank currently held
by the lender as collateral for another
note payable 12,500 50,000
Note payable to a commercial bank with
interest payable semi-annually at 1%
above the lender's prime rate; due on
demand with a maturity date of April 10,
1994; secured by 9,000 shares of the
common stock of the Company, 9,000 shares
of the preferred stock of the Company and
6,899 shares of the Bank's common stock
and continuing guaranties of certain
directors of the Company 68,000 119,000
</TABLE>
(Continued)
F-24
<PAGE> 78
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 8: (Continued)
<TABLE>
<CAPTION>
1993 1992
--------- ----------
<S> <C> <C>
Note payable to the Resolution Trust
Corporation as receiver for a savings
bank; interest payable semi-annually
at the lender's prime rate; secured
by 5,682 shares of treasury stock;
principal balance paid in full
during 1993 $ - $ 44,320
--------- ----------
$ 731,500 $1,019,320
========= ==========
</TABLE>
Future maturities of the Company's notes payable at December 31,1993, are as
follows:
<TABLE>
<S> <C>
1994 $ 190,500
1995 125,000
1996 135,000
1997 150,000
1998 131,000
-------
$ 731,500
=======
</TABLE>
There are various debt covenants relating to loans from commercial banks
which require the Company and the Bank to maintain certain capital,
operating and reserve ratios, and require prior approval for merger,
issuance of additional stock or redemption of outstanding stock. At
December 31, 1993, the Company and the Bank were substantially in compliance
with these debt covenants.
Note 9: Debentures
The Company has outstanding debentures totaling $500,000 at December 31,
1993 and 1992, which are mandatorily convertible into common stock of the
Company upon their maturity at December 31, 1999. The number of shares of
common stock that will be issued upon conversion of the debentures is
calculated by dividing the face amount of the debentures by a divisor,
calculated by multiplying 1.55 times the Company's book value per common
share at the date of conversion. The debentures bear interest at 10%,
payable semi-annually on January 15 and July 15. The debentures are
subordinated to the rights of other creditors of the Company.
F-25
<PAGE> 79
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 10: Employee Benefit Plans
The Bank has an Employee Stock Ownership Plan (ESOP) covering
substantially all full-time employees of the Bank. The ESOP owns 6,308
shares of common stock of the Company at December 31, 1993, as its
primary asset. During 1993, the Company, at the discretion of the
Company's Board of Directors, contributed 4,000 shares of its treasury
stock to the ESOP. This contribution was valued at the appraised value
of the stock as of December 31, 1992 of $25 per share. Contributions
to this plan amounted to $100,000 in 1993, $16,000 in 1992 and $16,000
in 1991.
The Bank also has non-qualified deferred retirement agreements for the
benefit of certain officers and directors. The Bank has also
purchased life insurance policies on the covered individuals to assist
in funding these retirement benefits. The following is a summary of
expense under these agreements.
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Retirement expense $ 52,042 $ 43,563 $ 39,803
Life insurance premiums paid 426,489 15,681 15,033
Increase in cash value of life
insurance (424,009) (16,165) (15,801)
--------- --------- ---------
Net expense $ 54,522 $ 43,079 $ 39,035
========= ========= =========
</TABLE>
Other assets include cash value of life insurance of $531,668 and
$107,659 at December 31, 1993 and 1992. Other liabilities include
deferred compensation payable of $152,839 and $124,797 at December 31,
1993 and 1992.
As discussed in note 16 to the consolidated financial statements,
certain prior period adjustments were recorded in 1993 to correct the
recording of deferred retirement expense and cash value of life
insurance.
Note 11: Income Taxes
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Current income taxes $ 220,050 $ 64,400 $ 1,500
Deferred income taxes 10,450 44,600 17,000
--------- --------- ---------
$ 230,500 $ 109,000 $ 18,500
========= ========= =========
</TABLE>
(Continued)
F-26
<PAGE> 80
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 11: (Continued)
The differences between actual income tax expense and expected tax expense
are summarized as follows:
1993 1992 1991
---- ---- ----
Amounts computed using the
statutory rate on income
before income taxes $ 241,000 $ 120,200 $ 34,600
Increase (decrease)
resulting from:
Tax exempt loan income,
net of disallowed
interest deduction (21,500) (22,600) (19,800)
Goodwill amortization 6,400 6,400 6,400
Net life insurance expense 4,000 2,500 2,400
Net operating loss
carryforward - - (6,300)
Other, net 600 2,500 1,200
-------- -------- -------
$ 230,500 $ 109,000 $ 18,500
======== ======== =======
The Company and subsidiary adopted SFAS 109 in 1993. The adoption of SFAS 109
did not have a material effect on net income for 1993. Deferred income tax
information for 1992 and 1991, has been presented using the liability method
as required by FASB 109. The use of the liability method did not change
income tax expense presented for 1992 and 1991, after restatements to correct
previously recorded income taxes, as discussed in note 16 to the consolidated
financial statements.
Components of deferred income tax expense (benefit) are as follows:
1993 1992 1991
---- ---- ----
Provision for loan losses $ (33,700) $ (31,400) $ 25,500
Depreciation 6,900 (21,000) (33,100)
Deferred retirement expense (10,900) (8,000) (6,700)
Other real estate 17,200 100,800 11,400
Concessionary interest 35,200 2,600 2,300
Writedown of trading
securities (6,600) (1,200) -
Cash to accrual conversion 1,300 1,300 16,000
Other, net 1,050 1,500 1,600
-------- -------- -------
$ 10,450 $ 44,600 $ 17,000
======== ======== =======
(Continued)
F-27
<PAGE> 81
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 11: (Continued)
The components of the recorded net deferred tax asset, included in other
assets, at December 31, 1993 and 1992, consist of the following:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Reserve for possible loan losses $ 95,200 $ 61,500
Depreciation (31,300) (24,400)
Deferred retirement expense 53,300 42,400
Other real estate 23,700 40,900
Concessionary interest 18,700 53,900
Writedown of trading securities 7,800 1,200
Cash to accrual conversion (17,800) (16,500)
Other, net (2,575) (1,525)
--------- ---------
$147,025 $ 157,475
========= =========
</TABLE>
Other liabilities include income taxes payable of $188,881 and $56,598 at
December 31, 1993 and 1992.
Note 12: Non Qualified Stock Options
On February 20, 1985, the Company granted non qualified stock options to
certain officers and directors for the purchase of common and preferred
stock. One series of options was granted to purchase 12,602 common shares of
the Company at $26.00 per share. The second series of options was granted
to purchase 9,000 "units" of Company stock at $20.00 per "unit". A "unit" is
defined as one share of common and one share of $5.00 par value preferred
stock. The options are exercisable at the discretion of the holders. Since
the grant of the options did not result in an option price that was less
than the value of the stock at the grant date, no expense was recorded
regarding these options.
Note 13: Earnings Per Share
Primary earnings per share calculations are based on the weighted average
number of shares outstanding during each year. The treasury method is used
to compute the effect of stock options on the weighted average number of
shares outstanding. Since there is no established market for the Company's
common stock, the appraised value of the Company's stock, owned by the
ESOP, was used in the application of the treasury method.
(Continued)
F-28
<PAGE> 82
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 13: (Continued)
The weighted average number of shares outstanding, used to compute primary
earnings per share, was determined as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------ ------- ------
<S> <C> <C> <C>
Common stock - weighted
average number of shares
outstanding 84,613 84,438 84,438
Option to purchase 9,000
units, consisting of one
share of preferred stock
and one share of common
stock per unit - the
assumed price of the common
stock option is
$15.00 per share 3,600 3,600 3,375
Option to purchase 12,602
common shares at $26.00
per share - no effect on
share equivalents since the
option price exceeded the
ESOP appraisal price - - -
------ ------- ------
88,213 88,038 87,813
====== ======= ======
</TABLE>
Fully diluted earnings per share is based on the assumed conversion of the
Company's debentures which are mandatorily convertible upon maturity at
December 31, 1999. The effect of this conversion would be anti-dilutive in
1991, and as a result, fully diluted earnings per share equals primary
earnings per share. Earnings used in the computation of fully diluted
earnings per share in 1993 and 1992 have been adjusted to give effect to
interest expense on these debentures, net of income taxes. The weighted
average number of shares outstanding, used to compute fully diluted earnings
per share was 107,813 in 1993 and 107,638 in 1992.
Note 14: Commitments and Contingencies
The Company, in the normal course of business, is a defendant in certain
legal claims. Management and legal counsel are of the opinion that these
actions will not have a material effect on the Company's consolidated
financial position.
(Continued)
F-29
<PAGE> 83
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 14: (Continued)
The consolidated financial statements do not reflect various commitments and
contingent liabilities which arise in the normal course of business and which
involve elements of credit risk, interest rate risk and liquidity risk. The
Bank makes commitments to extend credit and issues standby and commercial
letters of credit in the normal course of business to fulfill the financing
needs of its customers.
Commitments to extend credit are agreements to lend money to customers
pursuant to certain specified conditions and generally have fixed expiration
dates or other termination clauses. Since many of these commitments are
expected to expire without being drawn upon, the total commitment amounts do
not necessarily represent future cash requirements. When making these
commitments, the Bank applies the same credit policies and standards as it
does in the normal lending process. Collateral is obtained based upon the
Bank's assessment of a customer's credit worthiness.
Standby and commercial letters of credit are conditional commitments issued
by the Bank to guarantee the performance of a customer to a third party.
When issuing letters of credit, the Bank applies the same credit policies and
standards as it does in the normal lending process. Collateral is obtained
based upon the Bank's assessment of a customer's credit worthiness.
The maximum credit exposure in the event of nonperformance for loan
commitments and standby letters of credit is represented by the contract
amount of the instruments.
A summary of commitments and contingent liabilities at December 31, 1993, is
as follows:
<TABLE>
<S> <C>
Commitments to extend credit $1,506,000
Standby letters of credit 230,000
----------
$1,736,000
==========
</TABLE>
Note 15: Regulatory Matters
Federal banking regulations require that the Bank maintain certain cash
reserves based on a percent of deposits. This requirement was approximately
$165,000 at December 31, 1993.
The ability of the Company to service its debt and to pay future dividends is
dependent upon dividends to be paid to the Company by the Bank. The Bank is
subject to dividend restrictions as imposed by Federal and state regulatory
authorities. These restrictions are not anticipated to have a material
effect on the ability of the Bank to pay dividends to the Company.
(Continued)
F-30
<PAGE> 84
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 15: (Continued)
The Bank is required to maintain minimum amounts of capital to average assets
and to average "risk weighted assets", as defined and determined by banking
regulators. The Bank's regulatory capital was in excess of minimum capital
levels required by regulatory authorities at December 31, 1993.
Note 16: Prior Period Adjustment
During 1993, the Company retroactively restated its 1992 and 1991 financial
statements to correct certain accounting errors. The following is a summary
of the net effect of these adjustments:
<TABLE>
<CAPTION>
Effect on Previously Reported
-------------------------------------
January 1, 1991 Net Income
Retained -----------------------
Earnings 1992 1991
----------- --------- ---------
<S> <C> <C> <C>
Correction of accrual for
deferred retirement expense
and correction of cash
value of life insurance $ (15,212) $ (17,889) $ (13,855)
Correction of recognition of
deferred gain on property
sales refinanced by the Bank (36,657) (7,389) (20,533)
Income tax provision (25,195) 8,014 14,773
Minority interest 1,875 615 997
--------- --------- ---------
$ (75,189) $ (16,649) $ (18,618)
========== ========= =========
</TABLE>
Note 17: Summarized Financial Information of First Jefferson Corporation
Summarized financial information of First Jefferson Corporation (parent
company only) is as follows:
<TABLE>
<CAPTION>
STATEMENTS OF CONDITION
ASSETS 1993 1992
---------- -----------
<S> <C> <C>
Cash $ 47,842 $ 127,782
Investments in subsidiary 3,314,479 2,971,920
Other assets 33,900 32,823
--------- ----------
$3,396,221 $ 3,132,525
========= ==========
</TABLE>
(Continued)
F-31
<PAGE> 85
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 17: (Continued)
- ----------------------
STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Liabilities and Stockholders' Equity
Notes payable $ 731,500 $ 1,019,320
Debentures 500,000 500,000
Other Liabilities 44,022 47,004
Stockholders' equity 2,120,699 1,566,201
--------- ---------
$ 3,396,221 $ 3,132,525
========= =========
</TABLE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Income:
Dividends received from
subsidiary $ 273,119 $ 260,335 $ 188,278
Equity in undistributed
earnings of subsidiary 361,463 75,030 11,894
Other income 575 - -
--------- --------- ---------
Total income 635,157 335,365 200,172
--------- --------- ---------
Expenses:
Interest 106,497 120,590 154,748
ESOP contribution 100,000 - -
Other expenses 55,662 28,780 32,321
---------- --------- --------
Total expenses 262,159 149,370 187,069
---------- --------- --------
Income before
income taxes 372,998 185,995 13,103
Income tax benefit 81,500 46,000 62,500
--------- -------- --------
Net income $ 454,498 $ 231,995 $ 75,603
========= ========= ========
</TABLE>
(Continued)
F-32
<PAGE> 86
FIRST JEFFERSON CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 17: (Continued)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income $ 454,498 $ 231,995 $ 75,603
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Equity in undistributed
earnings of subsidiary (361,463) (75,030) (11,894)
Amortization 18,904 18,904 18,904
Contribution of treasury
stock to ESOP 100,000 - -
Deferred income taxes 1,000 800 (1,000)
(Increase) decrease in:
Dividends due from
subsidiary bank - - 79,030
Due from subsidiary (1,077) (2,583) 46,760
Decrease in accrued
interest payable (3,982) (3,762) (47,229)
------- ------- -------
Net cash provided
by operating
activities 207,880 170,324 160,174
------- ------- -------
Cash flows from financing
activities:
Principal payments on
notes payable (287,820) (188,773) (256,773)
Proceeds from notes
payable - 60,000 170,000
------- -------- -------
Net cash used in
financing
activities (287,820) (128,773) (86,773)
------- ------- -------
Net increase
(decrease)
in cash (79,940) 41,551 73,401
Cash at January 1 127,782 86,231 12,830
------- ------- -------
Cash at December 31 $ 47,842 $ 127,782 $ 86,231
======= ======= =======
</TABLE>
F-33
<PAGE> 87
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
OF
SOUTHTRUST OF MISSISSIPPI, INC.
AND
FIRST JEFFERSON CORPORATION
JOINED IN BY
SOUTHTRUST CORPORATION
A-1
<PAGE> 88
ARTICLE I
THE MERGER
Section 1.1 Consummation of Merger; Closing Date . . . . . . . . . . . 2
Section 1.2 Effect of Merger . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Further Assurances . . . . . . . . . . . . . . . . . . . . 3
Section 1.4 Directors and Officers . . . . . . . . . . . . . . . . . . 3
ARTICLE II
CONVERSION OF CONSTITUENTS' CAPITAL SHARES
Section 2.1 Manner of Conversion of Company Shares . . . . . . . . . . 3
Section 2.2 Company Stock Options and Related Matters . . . . . . . . . 5
Section 2.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Capital Stock of ST-Sub . . . . . . . . . . . . . . . . . . 6
Section 2.5 Effectuating Conversion . . . . . . . . . . . . . . . . . 6
Section 2.6 Laws of Escheat . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Corporate Organization . . . . . . . . . . . . . . . . . . 8
Section 3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.3 Financial Statements; Filings. . . . . . . . . . . . . . . 10
Section 3.4 Loan Portfolio . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.5 Certain Loans and Related Matters. . . . . . . . . . . . . 12
Section 3.6 Authority; No Violation. . . . . . . . . . . . . . . . . . 12
Section 3.7 Consents and Approvals . . . . . . . . . . . . . . . . . . 13
Section 3.8 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.9 Absence of Certain Changes or Events . . . . . . . . . . . 14
Section 3.10 Legal Proceedings; Etc . . . . . . . . . . . . . . . . . . 14
Section 3.11 Taxes and Tax Returns. . . . . . . . . . . . . . . . . . . 14
Section 3.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 15
Section 3.13 Title and Related Matters. . . . . . . . . . . . . . . . . 16
Section 3.14 Real Estate. . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.15 Environmental Matters. . . . . . . . . . . . . . . . . . . 18
Section 3.16 Commitments and Contracts. . . . . . . . . . . . . . . . . 20
Section 3.17 Regulatory Matters . . . . . . . . . . . . . . . . . . . . 20
Section 3.18 Registration Obligations . . . . . . . . . . . . . . . . . 20
Section 3.19 State Takeover Laws. . . . . . . . . . . . . . . . . . . . 21
Section 3.20 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.21 Labor. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.22 Compliance with Laws . . . . . . . . . . . . . . . . . . . 21
Section 3.23 Transactions with Management . . . . . . . . . . . . . . . 22
Section 3.24 Accounting, Tax, Regulatory Matters. . . . . . . . . . . . 22
Section 3.25 Proxy Materials. . . . . . . . . . . . . . . . . . . . . . 22
Section 3.26 Deposit Insurance. . . . . . . . . . . . . . . . . . . . . 22
Section 3.27 Untrue Statements and Omissions. . . . . . . . . . . . . . 22
A-2
<PAGE> 89
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
SOUTHTRUST AND ST-SUB
Section 4.1 Organization and Related Matters of SouthTrust . . . . . . 23
Section 4.2 Organization and Related Matters of ST-Sub . . . . . . . . 23
Section 4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.4 Authorization. . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.5 Financial Statements . . . . . . . . . . . . . . . . . . . 25
Section 4.6 Absence of Certain Changes or Events . . . . . . . . . . . 25
Section 4.7 Legal Proceedings, Etc . . . . . . . . . . . . . . . . . . 25
Section 4.8 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.9 Consents and Approvals . . . . . . . . . . . . . . . . . . 26
Section 4.10 Proxy Materials. . . . . . . . . . . . . . . . . . . . . . 26
Section 4.11 No Broker's or Finder's Fees . . . . . . . . . . . . . . . 26
Section 4.12 Untrue Statements and Omissions. . . . . . . . . . . . . . 26
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of the Business of the Company . . . . . . . . . . 26
Section 5.2 Current Information . . . . . . . . . . . . . . . . . . . 28
Section 5.3 Access to Properties; Personnel and Records . . . . . . . 29
Section 5.4 Approval of the Company Shareholders . . . . . . . . . . . 30
Section 5.5 No Other Bids. . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.6 Notice of Deadlines. . . . . . . . . . . . . . . . . . . . 30
Section 5.7 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.8 Maintenance of Properties. . . . . . . . . . . . . . . . . 31
Section 5.9 Environmental Audits . . . . . . . . . . . . . . . . . . . 31
Section 5.10 Title Insurance. . . . . . . . . . . . . . . . . . . . . . 31
Section 5.11 Surveys. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.12 Compliance Matters . . . . . . . . . . . . . . . . . . . . 31
Section 5.13 Exemption Under Anti-Takeover Statutes . . . . . . . . . . 31
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
Section 6.1 Best Efforts; Cooperation . . . . . . . . . . . . . . . . 32
Section 6.2 Regulatory Matters . . . . . . . . . . . . . . . . . . . . 32
Section 6.3 Other Matters. . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.4 Indemnification. . . . . . . . . . . . . . . . . . . . . . 33
Section 6.5 Current Information. . . . . . . . . . . . . . . . . . . . 34
Section 6.6 Registration Statement . . . . . . . . . . . . . . . . . . 34
Section 6.7 Reservation of Shares. . . . . . . . . . . . . . . . . . . 34
Section 6.8 Consideration. . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.9 Certain Company Indebtedness . . . . . . . . . . . . . . . 34
Section 6.10 Audit of Company Financial Statements. . . . . . . . . . . 35
Section 6.11 Redemption of Preferred Stock. . . . . . . . . . . . . . . 35
Section 6.12 Redemption or Repurchase of Debentures . . . . . . . . . . 35
Section 6.13 Directors Deferred Compensation Arrangement. . . . . . . . 35
Section 6.14 Salary Continuation Arrangements . . . . . . . . . . . . . 35
A-3
<PAGE> 90
Section 6.15 Company Incentive Programs . . . . . . . . . . . . . . . . 36
ARTICLE VII
MUTUAL CONDITIONS TO CLOSING
Section 7.1 Shareholder Approval . . . . . . . . . . . . . . . . . . . 36
Section 7.2 Regulatory Approvals . . . . . . . . . . . . . . . . . . . 36
Section 7.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.4 Proxy Statement and Registration Statement . . . . . . . . 37
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF SOUTHTRUST AND ST-SUB
Section 8.1 Representations and Warranties . . . . . . . . . . . . . . 37
Section 8.2 Performance of Obligations . . . . . . . . . . . . . . . . 37
Section 8.3 Certificate Representing Satisfaction of Conditions. . . . 37
Section 8.4 Absence of Adverse Facts . . . . . . . . . . . . . . . . . 37
Section 8.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 38
Section 8.6 Consents Under Agreements. . . . . . . . . . . . . . . . . 38
Section 8.7 Material Condition . . . . . . . . . . . . . . . . . . . . 38
Section 8.8 Matters Relating to Employment Agreements. . . . . . . . . 38
Section 8.9 Exercise of Company Options; Acknowledgment
of Option Conversion . . . . . . . . . . . . . . . . . . 38
Section 8.10 SouthTrust Shares Issuable in the Merger . . . . . . . . . 39
Section 8.11 Dissenters . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.12 Redemption and/or Repurchase
of Preferred Stock and Debentures . . . . . . . . . . . 39
Section 8.13 Certification of Claims. . . . . . . . . . . . . . . . . . 39
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE COMPANY
Section 9.1 Representations and Warranties . . . . . . . . . . . . . . 39
Section 9.2 Performance of Obligations . . . . . . . . . . . . . . . . 39
Section 9.3 Certificate Representing Satisfaction of Conditions. . . . 39
Section 9.4 Absence of Adverse Facts . . . . . . . . . . . . . . . . . 39
Section 9.5 Consents Under Agreements. . . . . . . . . . . . . . . . . 40
Section 9.6 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 40
Section 9.7 SouthTrust Shares. . . . . . . . . . . . . . . . . . . . . 40
Section 9.8 Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.9 Price of SouthTrust Shares . . . . . . . . . . . . . . . . 40
ARTICLE X
TERMINATION, WAIVER AND AMENDMENT
Section 10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . 42
Section 10.3 Amendments . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.4 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.5 Non-Survival of Representations and Warranties . . . . . . 42
A-4
<PAGE> 91
ARTICLE XI
DEFINITION
ARTICLE XII
MISCELLANEOUS
Section 12.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 43
Section 12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 12.3 Severability . . . . . . . . . . . . . . . . . . . . . . . 44
Section 12.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . 45
Section 12.5 Captions . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.8 Persons Bound; No Assignment . . . . . . . . . . . . . . . 45
Section 12.9 Exhibits and Schedules . . . . . . . . . . . . . . . . . . 45
Section 12.10 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.11 Construction of Terms . . . . . . . . . . . . . . . . . . 46
A-5
<PAGE> 92
AGREEMENT AND PLAN OF MERGER
OF
SOUTHTRUST OF MISSISSIPPI, INC.
AND
FIRST JEFFERSON CORPORATION
JOINED IN BY
SOUTHTRUST CORPORATION
This AGREEMENT AND PLAN OF MERGER, dated as of the 25th day of
April, 1994 (this "Agreement"), by and between SouthTrust of Mississippi, Inc.,
a Mississippi corporation ("ST-Sub"), and First Jefferson Corporation, a
Mississippi corporation and a registered bank holding company (the "Company"),
and joined in by SouthTrust Corporation, a Delaware corporation ("SouthTrust").
WITNESSETH THAT:
WHEREAS, the respective Boards of Directors of ST-Sub and the
Company deem it in the best interests of ST-Sub and of Company, respectively,
and of their respective shareholders, that ST-Sub and Company merge pursuant to
this Agreement in a transaction that qualifies as a reorganization pursuant to
Section 368 of the Internal Revenue Code of 1986 (the "Code") (the "Merger");
WHEREAS, the Boards of Directors of ST-Sub and the Company
have approved this Agreement and have directed that this Agreement be submitted
to their respective shareholders for approval and adoption in accordance with
the laws of the State of Mississippi and the United States;
WHEREAS, SouthTrust, the sole shareholder of ST-Sub, will
deliver, or cause to be delivered, to the shareholders of the Company the
consideration to be paid pursuant to the Merger in accordance with the terms of
this Agreement; and
WHEREAS, the Company currently owns 96.384% of the issued and
outstanding capital stock of The Jefferson Bank, a Mississippi banking
corporation ("Jefferson Bank").
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations, warranties and agreements herein contained,
the parties agree that the Company will be merged with and into ST-Sub and that
the terms and conditions of the Merger, the mode of carrying the Merger into
effect, including the manner of converting the shares of common stock of the
Company, par value $1.00 per share, into shares of common stock of SouthTrust,
par value of $2.50 per share, shall be as hereinafter set forth.
ARTICLE I
THE MERGER
Section 1.1 Consummation of Merger; Closing Date. (a) Subject to
the provisions hereof, the Company shall be merged with and into ST-Sub (which
has heretofore and shall hereinafter be referred to as the "Merger") pursuant
to Article 11 of the Mississippi Business Corporation Act, and ST-Sub shall be
the surviving corporation (sometimes hereinafter referred to as "Surviving
Corporation" when reference is made to it after the Effective Time of the
Merger (as defined below)). The Merger shall become effective on the date and
at the time on which the Articles of Merger have been duly filed with the
Secretary of State of Mississippi, unless a later date is specified in such
Articles of Merger (such time is hereinafter referred to as the "Effective Time
of the Merger"). Subject to the terms and conditions hereof, unless otherwise
agreed upon by SouthTrust and the Company, the Effective Time of the Merger
shall occur on the 10th business day following the later to occur of (i) the
effective date (including expiration of any applicable waiting period) of the
last required Consent (as defined below) of any Regulatory Authority (as
defined below) having authority over the transactions contemplated under the
Merger
A-6
<PAGE> 93
Agreement and (ii) the date on which the shareholders of the Company, to the
extent that their approval is required by applicable law, approve the
transactions contemplated by this Agreement. As used in this Agreement,
"Consent" shall mean a consent, approval or authorization, waiver, clearance,
exemption or similar affirmation by any person or entity pursuant to any
contract, permit, law, regulation or order, and "Regulatory Authorities" shall
mean, collectively, the Federal Trade Commission (the "FTC"), the United States
Department of Justice (the "Justice Department"), the Board of Governors of the
Federal Reserve System (the "FRB"), the Mississippi Department of Banking and
Finance (the "Mississippi Department"), the Office of Thrift Supervision (the
"OTS"), the Office of the Comptroller of the Currency (the "OCC"), the Federal
Deposit Insurance Corporation (the "FDIC"), and all state regulatory agencies
having jurisdiction over the parties and their respective bank subsidiaries,
the National Association of Securities Dealers, Inc., all national securities
exchanges and the Securities and Exchange Commission (the "SEC").
(b) The closing of the Merger (the "Closing")
shall take place at the principal offices of the Company at 10:00 a.m. local
time on the day that the Effective Time of the Merger occurs, or such other
date and time and place as the parties hereto may agree (the "Closing Date").
Subject to the provisions of this Agreement, at the Closing there shall be
delivered to each of the parties hereto the opinions, certificates and other
documents and instruments required to be so delivered pursuant to this
Agreement.
(c) The location of the home office of the
Surviving Corporation shall be located at 845 Howard Avenue, Biloxi,
Mississippi 39533.
Section 1.2 Effect of Merger. (a) At the Effective Time of the
Merger, the Company shall be merged with and into ST-Sub and the separate
existence of the Company shall cease. The Articles of Incorporation and Bylaws
of ST-Sub, as in effect on the date hereof and as otherwise amended prior to
the Effective Time of the Merger, shall be the Articles of Incorporation and
the Bylaws of the Surviving Corporation until further amended as provided
therein and in accordance with applicable law. The Surviving Corporation shall
have all the rights, privileges, immunities and powers and shall be subject to
all the duties and liabilities of a corporation organized under the laws of the
State of Mississippi and shall thereupon and thereafter possess all other
privileges, immunities and franchises of a private, as well as of a public
nature, of each of the constituent corporations. All property (real, personal
and mixed) and all debts on whatever account, including subscriptions to
shares, and all choses in action, all and every other interest, of or belonging
to or due to each of the constituent corporations so merged shall be taken and
deemed to be transferred to and vested in the Surviving Corporation without
further act or deed. The title to any real estate, or any interest therein,
vested in any of the constituent corporations shall not revert or be in any way
impaired by reason of the Merger. The Surviving Corporation shall thenceforth
be responsible and liable for all the liabilities and obligations of each of
the constituent corporations so merged and any claim existing or action or
proceeding pending by or against either of the constituent corporations may be
prosecuted as if the Merger had not taken place or the Surviving Corporation
may be substituted in its place. Neither the rights of creditors nor any liens
upon the property of any constituent corporation shall be impaired by the
Merger.
Section 1.3 Further Assurances. From and after the Effective
Time of the Merger, as and when requested by the Surviving Corporation, the
officers and directors of the Company last in office shall execute and deliver
or cause to be executed and delivered in the name of the Company such deeds and
other instruments and take or cause to be taken such further or other actions
as shall be necessary in order to vest or perfect in or confirm of record or
otherwise to the Surviving Corporation title to and possession of all of the
property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of the Company.
Section 1.4 Directors and Officers. From and after the Effective
Time of the Merger, the directors of the Surviving Corporation shall be those
persons theretofore serving as directors of ST-Sub and the officers of the
Surviving Corporation shall be those persons who are serving in such capacity
immediately prior to the Effective Time of the Merger, and such additional
persons, in each case, as SouthTrust, at or prior to the Effective Time of the
Merger, shall designate in writing.
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ARTICLE II
CONVERSION OF CONSTITUENTS' CAPITAL SHARES
Section 2.1 Manner of Conversion of Company Shares. Subject to
the provisions hereof, as of the Effective Time of the Merger and by virtue of
the Merger and without any further action on the part of the holder of any
shares of common stock of the Company, par value $1.00 (the "Company Shares"):
(a) All Company Shares which are held by the Company as
treasury stock, if any, shall be canceled and retired
and no consideration shall be paid or delivered in
exchange therefor.
(b) All Company Shares held by each person as qualifying
director's shares and subject to those certain Stock
Sale and Repurchase Agreements, as described in more
detail in Disclosure Schedule 2.1(b) of the Agreement,
shall be repurchased by the Surviving Corporation
(and, by virtue of executing the Agreement, the
Company consents to such repurchase) in exchange for
a purchase price of $1.00 per share in cash.
(c) Subject to the terms and conditions of this Agreement,
including, without limitation, Section 2.3 hereof and
except with regard to Dissenting Company Shares (as
hereinafter defined) and qualifying director's shares
(as described in Section 2.1(b) above, each Company
Share outstanding immediately prior to the Effective
Time of the Merger shall be converted into the right
to receive 2.967 shares of common stock of SouthTrust
(and the rights associated therewith issued pursuant
to a Rights Agreement dated February 22, 1989
between SouthTrust and Mellon Bank, N.A.) (together,
the "SouthTrust Shares") (such fraction, as may be
adjusted, as provided herein, being hereinafter
referred to as the "Conversion Ratio") and, provided
that the Effective Time of the Merger, following a
diligent and good faith effort by SouthTrust and the
Company to consummate the transactions contemplated
by this Agreement, occurs after September 15, 1994,
each Company Share outstanding immediately prior to
the Effective Time of the Merger shall be converted
into the right to receive, in addition to the SouthTrust
Shares described above, such amount per share in cash
or its equivalent as shall be produced by (i)
multiplying the per share amount of all cash dividends
declared and paid by SouthTrust between January 1,
1994 and the Effective Time of the Merger (provided
that the record dates of such dividends are prior to
September 16, 1994) by 2.967, (ii) dividing the
resulting amount by the number of Company Shares
outstanding immediately prior to the Effective Time
of the Merger and (iii) reducing such per share amount
by the per share amount of any dividend payable (in
accordance with the provisions of this Agreement,
including, without limitation, Section 5.1(b)(ii)
hereof) in cash or its equivalent with respect to the
Company Shares where the record date of any such
dividend is on or before the Effective Time of the
Merger (the "Contingent Per Share Cash Amount"). The
Conversion Ratio, including the number of SouthTrust
Shares issuable in the Merger, shall be subject to an
appropriate adjustment in the event of any stock split,
reverse stock split, dividend payable in SouthTrust
Shares, reclassification or similar distribution
whereby SouthTrust issues SouthTrust Shares or any
securities convertible into or exchangeable for
SouthTrust Shares without receiving any consideration
in exchange therefor, provided that the record date of
such transaction is a date after the date of the
Agreement and prior to the Effective Time of the
Merger.
(d) Each outstanding Company Share, the holder of which
has demanded and perfected his demand for payment of
the "fair or appraised" value of such share in
accordance with Article 13 of the Mississippi Business
Corporation Act (the "Dissent Provisions"), to the
extent applicable, and has not effectively withdrawn
or lost his right to such appraisal (the "Dissenting
Company Shares"), shall not be converted into or
represent a right to receive the SouthTrust Shares and
the Contingent Per Share Cash Amount issuable in the
Merger but the holder thereof shall be entitled only
to such rights as are granted by the Dissent
Provisions. The Company shall give SouthTrust prompt
notice upon receipt by the Company of any written
objection to the Merger and any written demands for
payment
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of the fair or appraised value of Company Shares, and
of withdrawals of such demands, and any other instruments
provided to the Company pursuant to the Dissent Provisions
(any shareholder duly making such demand being hereinafter
called a "Dissenting Shareholder"). Each Dissenting
Shareholder who becomes entitled, pursuant to the Dissent
Provisions, to payment of fair value for any Company Shares
held by such Dissenting Shareholder shall receive payment
therefor from the Surviving Corporation (but only after the
amount thereof shall have been agreed upon or at the times
and in the amounts required by the Dissent Provisions) and
all of such Dissenting Shareholder's Company Shares shall be
canceled. Neither the Company nor the Surviving Corporation
shall, except with the prior written consent of SouthTrust,
voluntarily make any payment with respect to, or settle or
offer to settle, any demand for payment by any Dissenting
Shareholder. If any Dissenting Shareholder shall have failed
to perfect or shall have effectively withdrawn or lost such
right to demand payment of fair or appraised value, Company
Shares held by such Dissenting Shareholder shall thereupon be
deemed to have been converted into the right to receive the
consideration to be issued in the Merger as provided by this
Agreement.
Section 2.2 Company Stock Options and Related Matters. As of the
Effective Time of the Merger, each holder of any right to purchase Company
Shares and shares of preferred stock of the Company evidenced by option
agreements of the Company (the "Company Options"), which agreements are more
fully described on Disclosure Schedule 2.2 hereto and are outstanding as of the
Effective Time of the Merger, shall have executed an instrument, substantially
in the form annexed hereto as Exhibit 2.2, pursuant to which each such holder
shall have canceled and terminated all Company Options held by such holder, and
in exchange therefor, SouthTrust shall issue to each holder of each such
Company Option such number of SouthTrust Shares as shall be produced by
dividing 34,563 SouthTrust Shares by the aggregate number of Company Shares
subject to all such Company Options and then multiplying such result by the
number of Company Shares subject to each Company Option held by each such
holder.
Section 2.3 Fractional Shares. Notwithstanding any other
provision of this Agreement, each holder of Company Shares and each holder of
Company Options converted pursuant to the Merger, who would otherwise have been
entitled to receive a fraction of a SouthTrust Share (after taking into account
all certificates delivered by such holder), shall receive, in lieu thereof,
cash (without interest) in an amount equal to such fractional part of such
SouthTrust Share, multiplied by the market value of one SouthTrust Share at the
Effective Time of the Merger. The market value of one SouthTrust Share at the
Effective Time of the Merger shall be the last sales price of such SouthTrust
Shares, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System-National Market System ("NASDAQ") on the last
business day preceding the Effective Time of the Merger, or, if the SouthTrust
Shares hereafter become listed for trading on any national securities exchange
registered under the Securities Exchange Act of 1934, the last sale price of
such SouthTrust Shares on the applicable date as reported on the principal
securities exchange on which the SouthTrust Shares are then listed for trading.
No such holder will be entitled to dividends, voting rights or any other rights
as a shareholder in respect of any fractional share.
Section 2.4 Capital Stock of ST-Sub. The shares of common stock,
par value $____, of ST-Sub issued and outstanding immediately prior to the
Effective Time of the Merger shall remain outstanding and unchanged after the
Merger and shall thereafter constitute all of the issued and outstanding shares
of capital stock of the Surviving Corporation.
Section 2.5 Effectuating Conversion (a) As soon as practicable
following the Closing Date, SouthTrust, on behalf of ST-Sub, shall send or
cause to be sent to each former holder of record of Company Shares transmittal
materials (the "Letter of Transmittal") for use in exchanging their
certificates formerly representing Company Shares for the consideration
provided for in this Agreement. The Letter of Transmittal will contain
instructions with respect to the surrender of certificates representing Company
Shares and the receipt of the consideration contemplated by this Agreement and
will require each holder of Company Shares to demonstrate good and marketable
title to such Company Shares, free and clear of all liens, claims and
encumbrances. Amounts that would have been payable to Dissenting Shareholders
for Company Shares but for the fact of their dissent in accordance with the
provisions of Section 2.1(d) hereof, shall be administered in accordance with
the Dissent Provisions.
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(b) At the Effective Time of the Merger, the stock
transfer books of the Company shall be closed as to holders of Company Shares
immediately prior to the Effective Time of the Merger and no transfer of
Company Shares by any such holder shall thereafter be made or recognized and
each outstanding certificate formerly representing Company Shares shall,
without any action on the part of any holder thereof, no longer represent
Company Shares. If, after the Effective Time of the Merger, certificates are
properly presented to SouthTrust, such certificates shall be exchanged for the
consideration contemplated by this Agreement into which Company Shares
represented thereby were converted in the Merger.
(c) In the event that any holder of Company Shares is
unable to deliver the certificate which represents such holder's Company
Shares, SouthTrust, in the absence of actual notice that any Company Shares
theretofore represented by any such certificate have been acquired by a bona
fide purchaser, may, in its discretion, deliver to such holder the
consideration contemplated by this Agreement and the amount of cash
representing fractional SouthTrust Shares to which such holder is entitled in
accordance with the provisions of this Agreement upon the presentation of all
of the following:
(i) An affidavit or other evidence to
the reasonable satisfaction of
SouthTrust that any such certificate
has been lost, wrongfully taken or
destroyed;
(ii) Such security or indemnity as may be
reasonably requested by SouthTrust to
indemnify and hold SouthTrust
harmless; and
(iii) Evidence to the satisfaction of
SouthTrust that such holder is the
owner of Company Shares theretofore
represented by each certificate
claimed by such holder to be lost,
wrongfully taken or destroyed and
that such holder is the person who
would be entitled to present each
such certificate for exchange
pursuant to this Agreement.
(d) In the event that the delivery of the consideration
contemplated by this Agreement and the amount of cash representing fractional
SouthTrust Shares are to be made to a person other than the person in whose
name any certificate representing Company Shares surrendered is registered,
such certificate so surrendered shall be properly endorsed (or accompanied by
an appropriate instrument of transfer), with the signature(s) appropriately
guaranteed, and otherwise in proper form for transfer, and the person
requesting such delivery shall pay any transfer or other taxes required by
reason of the delivery to a person other than the registered holder of such
certificate surrendered or establish to the satisfaction of SouthTrust that
such tax has been paid or is not applicable.
(e) From and after the Effective Time of the Merger,
SouthTrust shall be entitled to treat any certificates representing Company
Shares that have not been surrendered for exchange as evidencing ownership only
of the merger consideration into which such Company Shares have been converted.
No holder of Company Shares shall be entitled to receive any dividends or
distributions declared or made with respect to the SouthTrust Shares with a
record date before the Effective Time of the Merger. Neither the consideration
contemplated by the Merger, any amount of cash representing fractional
SouthTrust Shares nor any dividend or other distribution with respect to
SouthTrust Shares where the record date thereof is on or after the Effective
Time of the Merger shall be paid to the holder of any unsurrendered certificate
or certificates representing Company Shares, and SouthTrust shall not be
obligated to deliver any of the consideration contemplated by the Merger, any
amount of cash representing fractional SouthTrust Shares or any such dividend
or other distribution with respect to SouthTrust Shares until such holder shall
surrender the certificate or certificates representing Company Shares as
provided for by the Agreement. Subject to applicable laws, following surrender
of any such certificate or certificates, there shall be paid to the holder of
the certificate or certificates then representing SouthTrust Shares issued in
the Merger, without interest at the time of such surrender, the consideration
contemplated by this Agreement, the amount of any cash representing fractional
SouthTrust Shares and the amount of any dividends or other distributions with
respect to SouthTrust Shares to which such holder is entitled as a holder of
SouthTrust Shares.
Section 2.6 Laws of Escheat. If any of the consideration due or
other payments to be paid or delivered to the holders of Company Shares is not
paid or delivered within the time period specified by any applicable laws
concerning abandoned property, escheat or similar laws, and if such failure to
pay or deliver such
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consideration occurs or arises out of the fact that such property is not
claimed by the proper owner thereof, SouthTrust shall be entitled to dispose of
any such consideration or other payments in accordance with applicable laws
concerning abandoned property, escheat or similar laws. Any other provision of
this Agreement notwithstanding, none of the Company, SouthTrust, ST-Sub, nor
any other person acting on their behalf shall be liable to a holder of Company
Shares for any amount paid or property delivered in good faith to a public
official pursuant to and in accordance with any applicable abandoned property,
escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to ST-Sub and SouthTrust as
follows as of the date hereof and as of all times up to and including the
Effective Time of the Merger (except as otherwise provided):
Section 3.1 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 such business is now being conducted, and the Company is duly
licensed or qualified to do business in Mississippi and elsewhere where the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it make such qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect (as hereinafter defined) on the business, assets,
operations, financial condition or results of operations (such business,
assets, operations, financial condition or results of operations hereinafter
collectively referred to as the "Condition") of the Company on a consolidated
basis. The Company is duly registered as a bank holding company under the Bank
Holding Act of 1956, as amended. True and correct copies of the Articles of
Incorporation of the Company and the Bylaws of the Company, each as amended to
the date hereof, have been delivered to SouthTrust.
(b) Jefferson Bank is a state banking corporation duly
organized, validly existing and in good standing under the laws of Mississippi.
Jefferson Bank has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as such business is now
being conducted, and Jefferson Bank 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, except where the failure to
be so licensed or qualified would not have a Material Adverse Effect on the
Condition of the Bank. True and correct copies of the Articles of
Incorporation and the Bylaws of Jefferson Bank, as amended to the date hereof,
have been delivered to SouthTrust.
(c) Each of the Company, Jefferson Bank and their
respective subsidiaries has in effect all federal, state, local and foreign
governmental, regulatory and other authorizations, permits and licenses
necessary for each of them to own or lease its properties and assets and to
carry on its business as now conducted, the absence of which, either
individually or in the aggregate, would have a Material Adverse Effect on the
Condition of the Company on a consolidated basis.
(d) Except for Jefferson Bank, and except for the
corporations set forth in Disclosure Schedule 3.1(d), which, as of the date of
this Agreement, are not actively engaged in the conduct of any business, the
Company does not own any capital stock of any subsidiary, and Jefferson Bank
does not own any capital stock of any subsidiary; the Company and Jefferson
Bank do not have any interest in any partnership or joint venture; for purposes
of this Agreement, a "subsidiary" means any corporation or other entity of
which the party referred to beneficially owns, controls, or has the power to
vote, directly or indirectly, more than 5% of the outstanding equity
securities.
(e) The minute books of the Company, Jefferson Bank and
their respective subsidiaries contain complete and accurate records in all
material respects of all meetings and other corporate actions held or taken by
their respective shareholders and Boards of Directors (including all committees
thereof).
Section 3.2 Capitalization. (a) The authorized capital stock of
the Company consists of 1,000,000 shares of common stock, par value $1.00
(hereinbefore and hereinafter referred to as "Company Shares"), 99,120 shares
of which as of the date hereof are issued (10,682 of which are held in the
treasury of the Company and 800
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of which are subject to the Repurchase Agreement described in Section 2.1(b) of
this Agreement), and 80,000 shares of 8% Non-Cumulative Preferred Stock, par
value $5.00 (the "Preferred Stock"), 66,640 shares of which as of the date
hereof are issued and outstanding. All of the issued and outstanding Company
Shares have been duly authorized and validly issued and all such shares are
fully paid and nonassessable. As of the date hereof, there are no outstanding
options, warrants, commitments, or other rights or instruments to purchase or
acquire any shares of capital stock of the Company, or any securities or rights
convertible into or exchangeable for shares of capital stock of the Company,
except for the Company Options described in Section 2.2 hereof and the 10%
Convertible Subordinated Debentures due December 31, 1999 of the Company
described in Section 6.12 hereof.
(b) The authorized capital stock of Jefferson Bank
consists of 141,500 shares of common stock, par value of $5.00, 120,581 shares
of which as of the date hereof are issued and outstanding (the "Jefferson Bank
Shares"). All of the issued and outstanding Jefferson Bank Shares have been
duly authorized and validly issued and all such shares are fully paid and
nonassessable. As of the date hereof, there are no outstanding options,
warrants, commitments or other rights or instruments to purchase or acquire any
shares of capital stock of Jefferson Bank, or any securities or rights
convertible into or exchangeable for shares of capital stock of Jefferson Bank.
(c) Except as may be limited or required by applicable
laws relating to Mississippi state banking corporations, 116,221 shares,
representing 96.384% of the issued and outstanding shares of capital stock of
Jefferson Bank:
(i) are owned by the Company; and
(ii) are so owned free and clear of all liens and
encumbrances and adverse claims thereto, except as set forth
in Disclosure Schedule 3.2(c).
(d) 4,360 shares, representing 3.616% of the issued and
outstanding capital stock of Jefferson Bank are owned by the individuals and
entities in the relative amounts set forth and described in Disclosure Schedule
3.2(d) hereto.
(e) As of the date hereof, there are issued and
outstanding 10% Convertible Subordinated Debentures due December 31, 1999 of
the Company in the principal amount of $500,000, which Debentures are
mandatorily convertible at maturity into such number of Company Shares as shall
result from dividing the principal amount of each such Debenture by the product
of the then book value of one (1) Company Share, multiplied by 1.55.
Section 3.3 Financial Statements; Filings.
(a) Jefferson Bank has previously delivered to SouthTrust
copies of the Call Reports of Jefferson Bank as of and for the years ended
December 31, 1993, 1992 and 1991 and the Call Reports of Jefferson Bank as of
and for the period ended March 31, 1994, and Jefferson Bank shall deliver to
SouthTrust, as soon as practicable following the preparation of additional Call
Reports for each subsequent calendar quarter (or other reporting period) or
year of Jefferson Bank, the Call Reports of Jefferson Bank as of and for each
such subsequent calendar quarter (or other reporting period) or year (such Call
Reports, unless otherwise indicated, being hereinafter referred to collectively
as the "Call Reports of Jefferson Bank").
(b) The Company has previously delivered to SouthTrust
copies of the Annual Report of Bank Holding Companies on Form FR Y-6 of the
Company as of and for the years ended December 31, 1993, 1992 and 1991 and the
Company shall deliver to SouthTrust, as soon as practicable following the
preparation of additional reports for each subsequent reporting period of the
Company, copies of the Report of Parent Company Only Financial Statements for
One Bank Holding Companies on Form FR Y-9SP as of and for such subsequent
period (such reports, unless otherwise indicated, being hereinafter referred to
collectively as the "Call Reports of the Company").
(c) The Company has previously delivered to SouthTrust
copies of the financial statements (parent only) of the Company as of and for
the years ended December 31, 1993, 1992 and 1991, and the Company shall deliver
to SouthTrust, as soon as practicable following the preparation of additional
financial statements (parent only) of the Company for each subsequent year of
the Company, the financial statements (parent only) of the Company as of and
for such subsequent year (such financial statements (parent only), unless
otherwise indicated, being hereinafter referred to collectively as the "Parent
Financial Statements of the Company").
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(d) Each of the Call Reports of the Company, each of the
Parent Financial Statements of the Company, and each of the Call Reports of
Jefferson Bank (including the related notes, where applicable) have been or
will be prepared in all material respects in accordance with generally accepted
accounting principles or regulatory accounting principles, whichever is
applicable, which principles have been or will be consistently applied during
the periods involved, except as otherwise noted therein and except for the fact
that the Call Reports of the Company and the Call Reports of the Bank are not
accompanied by notes, and the books and records of the Company and Jefferson
Bank have been, are being, and will be maintained in all material respects in
accordance with applicable legal and accounting requirements and reflect only
actual transactions. Each of the Call Reports of the Company, each of the
Parent Financial Statements of the Company, and each of the Call Reports of
Jefferson Bank (including the related notes, where applicable) fairly present
or will fairly present the financial position of the Company on a consolidated
basis, except that the Parent Financial Statements of the Company are not
consolidated, and the financial position of Jefferson Bank (as the case may be)
as of the respective dates thereof, and fairly present or will fairly present
the results of operations of the Company on a consolidated basis, except that
the Parent Financial Statements of the Company are not consolidated, and the
results of operations of Jefferson Bank (as the case may be) for the respective
periods therein set forth.
(e) To the extent not prohibited by law, the Company has
heretofore delivered or made available, or caused to be delivered or made
available, to SouthTrust all reports and filings made or required to be made by
the Company, Jefferson Bank or any of their respective subsidiaries with the
Regulatory Authorities, and will from time to time hereafter furnish, or cause
Jefferson Bank to furnish to SouthTrust, upon filing or furnishing the same to
the Regulatory Authorities, all such reports and filings made after the date
hereof with the Regulatory Authorities. As of the respective dates of such
reports and filings, all such reports and filings did not and shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(f) Since December 31, 1993, none of the Company,
Jefferson Bank or any of their respective subsidiaries has incurred any
obligation or liability (contingent or otherwise) that has or might reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect on the Condition of the Company on a consolidated basis, except
obligations and liabilities (i) which are accrued or reserved against in the
Call Reports of the Company, the Parent Financial Statements of the Company, or
the Call Reports of Jefferson Bank, or reflected in the notes (if any), or (ii)
which were incurred after December 31, 1993, in the ordinary course of business
consistent with past practices. Since December 31, 1993, neither the Company
nor Jefferson Bank have incurred or paid any obligation or liability which
would be material to the Condition of the Company on a consolidated basis,
except as may have been incurred or paid in the ordinary course of business,
consistent with past practices.
Section 3.4 Loan Portfolio. Except as set forth in Disclosure
Schedule 3.4, (i) all evidences of indebtedness in original principal amount in
excess of $10,000 reflected as assets in the Parent Financial Statements of the
Company, the Call Reports of the Company and the Call Reports of Jefferson Bank
as of and for the year ended December 31, 1993 and the period ended March 31,
1994 were as of such dates in all respects the binding obligations of the
respective obligors named therein in accordance with their respective terms,
and (ii) in the reasonable and good faith opinion of the Company and the Bank,
which opinion is based upon, among other matters, generally accepted or
regulatory accounting principles, whichever is applicable, as described in
Section 3.3(d) above, and procedures and standards relating to the
establishment and maintenance of allowances for loan losses customary in the
banking industry, the allowances for possible loan losses shown on the Call
Reports of the Company, and the Call Reports of Jefferson Bank as of and for
the year ended December 31, 1993 and the period ended March 31, 1994 were, and
the allowance for possible loan losses to be shown on the Call Reports of the
Company, and the Call Reports of Jefferson Bank as of any date subsequent to
the execution of this Agreement will be, as of such dates, adequate to provide
for possible losses, net of recoveries relating to loans previously charged
off, in respect of loans outstanding (including accrued interest receivable) of
the Company and Jefferson Bank and other extensions of credit (including
letters of credit or commitments to make loans or extend credit).
Section 3.5 Certain Loans and Related Matters. Except as set
forth in Disclosure Schedule 3.5, and in the case of Section 3.5(iv) below, to
the knowledge of the Company and the Bank, none of the Company, Jefferson Bank
or any of their respective subsidiaries are parties to any written or oral: (i)
loan agreement, note or borrowing arrangement, other than credit card loans and
other loans the unpaid balance of which does not exceed
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$10,000 per loan, under the terms of which the obligor is sixty (60) days
delinquent in payment of principal or interest or in default of any other
provision as of the date hereof; (ii) loan agreement, note or borrowing
arrangement which has been classified or, in the exercise of reasonable
diligence by the Company, Jefferson Bank, their respective subsidiaries or any
Regulatory Authority, should have been classified as "substandard," "doubtful,"
"loss," "other loans especially mentioned", "other assets especially mentioned"
or any comparable classifications by such persons; (iii) loan agreement, note
or borrowing arrangement, including any loan guaranty, with any director or
executive officer of the Company, Jefferson Bank or any of their respective
subsidiaries or any ten percent (10%) shareholder of the Company, or any
person, corporation or enterprise controlling, controlled by or under common
control with any of the foregoing; or (iv) loan agreement, note or borrowing
arrangement that the Company and the Bank is in violation of any law,
regulation or rule applicable to the Company, Jefferson Bank or any of their
respective subsidiaries including, but not limited to, those promulgated,
interpreted or enforced by any of the Regulatory Authorities and which
violation could have a Material Adverse Effect on the Condition of the Company
on a consolidated basis. As of the date of any Call Report of the Company, any
Parent Financial Statement of the Company and any Call Report of Jefferson Bank
subsequent to the execution of this Agreement, including the date of the Call
Reports of the Company, the Parent Financial Statements of the Company and the
Call Reports of Jefferson Bank that immediately precede the Effective Time of
the Merger, there shall not have been any material increase in the loan
agreements, notes or borrowing arrangements described in (i) through (iv) above
and Disclosure Schedule 3.5.
Section 3.6 Authority; No Violation. (a) The Company has full
corporate power and authority to execute and deliver this Agreement and,
subject to the approval of the shareholders of the Company and to the receipt
of the Consents of the Regulatory Authorities, to consummate the transactions
contemplated hereby. The Board of Directors of the Company has duly and
validly approved this Agreement and the transactions contemplated hereby, has
authorized the execution and delivery of this Agreement, has directed that this
Agreement and the transactions contemplated hereby be submitted to the
Company's shareholders for approval at a meeting of such shareholders and,
except for the adoption of such Agreement by its shareholders, no other
corporate proceedings on the part of the Company are necessary to consummate
the transactions so contemplated. This Agreement, when duly and validly
executed by the Company and delivered by the Company, will constitute a valid
and binding obligation of the Company, and, subject to its terms and
conditions, will be enforceable against the Company, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought.
(b) Neither the execution and delivery of this Agreement
by the Company nor the consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with any of the terms or
provisions hereof, will (i) violate any provision of the Articles of
Incorporation or Bylaws of the Company or the Articles of Incorporation or
Bylaws of Jefferson Bank, (ii) assuming that the Consents of the Regulatory
Authorities and approvals referred to herein are duly obtained, violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Company, Jefferson Bank or any of their respective
subsidiaries or any of their respective properties or assets, or (iii) violate,
conflict with, result in a breach of any provisions of, 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, accelerate the performance
required by or result in the creation of any lien, security interest, charge or
other encumbrance upon any of the respective properties or assets of the
Company, Jefferson Bank or any of their respective subsidiaries under, any of
the terms, conditions or provisions of any material note, bond, mortgage,
indenture, deed of trust, license, permit, lease, agreement or other instrument
or obligation to which the Company, Jefferson Bank or any of their respective
subsidiaries is a party, or by which any of them or any of their respective
properties or assets may be bound or affected.
Section 3.7 Consents and Approvals. Except for (i) the filing by
the Company with the SEC of a proxy statement of the Company relating to the
meeting of the shareholders of the Company at which the Merger is to be
considered (the "Proxy Statement"), which Proxy Statement shall be part of a
Registration Statement on Form S-4 (the "Registration Statement") to be filed
with the SEC by SouthTrust; (ii) the Consents of the FRB and the Mississippi
Department; (iii) approval of this Agreement by the shareholders of ST-Sub and
the Company; (iv) filing of Articles of Merger with the State of Mississippi;
and (v) as set forth in Disclosure Schedule 3.7, no
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Consents of any person are necessary in connection with the execution and
delivery by the Company of this Agreement, and the consummation by the Company
of the Merger and the other transactions contemplated hereby.
Section 3.8 Broker's Fees. None of the Company, Jefferson Bank
or any of their respective subsidiaries, 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.
Section 3.9 Absence of Certain Changes or Events. Since December
31, 1993, there has not been (i) any declaration, payment or setting aside of
any dividend or distribution (whether in cash, stock or property) in respect of
the Company Shares or (ii) any change or any event involving a prospective
change in the Condition of the Company on a consolidated basis which has had,
or is reasonably likely to have, a Material Adverse Effect on the Condition of
the Company on a consolidated basis or on the Company, Jefferson Bank or any of
their respective subsidiaries generally, including, without limitation any
change in the administration or supervisory standing or rating of the Company,
Jefferson Bank or any of their respective subsidiaries with any Regulatory
Authority, and no fact or condition exists as of the date hereof which might
reasonably be expected to cause any such event or change in the future.
Section 3.10 Legal Proceedings; Etc. Except as set forth in
Disclosure Schedule 3.10, none of the Company, Jefferson Bank or any of their
respective subsidiaries is a party to any, and there are no pending or, to the
knowledge of the Company, Jefferson Bank and their respective subsidiaries,
threatened, judicial, administrative, arbitral or other proceedings, claims,
actions, causes of action or governmental investigations against the Company,
Jefferson Bank or any of their respective subsidiaries challenging the validity
of the transactions contemplated by this Agreement and, to the knowledge of the
Company, Jefferson Bank and their respective subsidiaries as of the date
hereof, there is no material proceeding, claim, action or governmental
investigation against the Company, Jefferson Bank or any of their respective
subsidiaries; no judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator is
outstanding against the Company, Jefferson Bank or any of their respective
subsidiaries which has a Material Adverse Effect on the Condition of the
Company on a consolidated basis; there is no default by the Company, Jefferson
Bank or any of their respective subsidiaries under any material contract or
agreement to which the Company, Jefferson Bank or any of their respective
subsidiaries is a party; and none of the Company, Jefferson Bank or any of
their respective subsidiaries is a party to any agreement, order or memorandum
in writing by or with any Regulatory Authority restricting the operations of
the Company, Jefferson Bank or any of their respective subsidiaries and none of
the Company, Jefferson Bank or any of their respective subsidiaries has been
advised by any Regulatory Authority that any such Regulatory Authority is
contemplating issuing or requesting the issuance of any such order or
memorandum in the future.
Section 3.11 Taxes and Tax Returns. (a) The Company has
previously delivered or made available to SouthTrust copies of the federal
income tax returns of the Company and, if consolidated returns do not exist for
all periods, of Jefferson Bank and each of their respective subsidiaries, for
the years December 31, 1993, 1992, 1991 and 1990 and all schedules and exhibits
thereto, and, to the knowledge of the Company, Jefferson Bank and their
respective subsidiaries, such returns (other than the returns for 1991 and
1992) have not been examined by the Internal Revenue Service. Except as
reflected in Disclosure Schedule 3.11, the Company, Jefferson Bank and their
respective subsidiaries have duly filed in correct form all federal, state and
local information returns and tax returns required to be filed by either of
them on or prior to the date hereof, and the Company, Jefferson Bank and their
respective subsidiaries have duly paid or made adequate provisions for the
payment of all material taxes and other governmental charges which have been
incurred or are due or claimed to be due from either of them by any federal,
state or local taxing authorities (including, without limitation, those due in
respect of the properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls of the Company, Jefferson Bank and
their respective subsidiaries) other than taxes and other charges which (i)(A)
are not yet delinquent or (B) are being contested in good faith or (ii) have
not been finally determined. Except as set forth in Disclosure Schedule 3.11,
the amounts set forth as liabilities for taxes on the Call Reports of the
Company, the Parent Financial Statements of the Company and the Call Reports of
Jefferson Bank are sufficient, in the aggregate, for the payment of all unpaid
federal, state and local taxes (including any interest or penalties thereon),
whether or not disputed or accrued for the periods then ended, and have been
computed in accordance with generally accepted accounting principles. Neither
the Company nor any of its subsidiaries is responsible for the taxes of any
other person other than the
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Company and its subsidiaries, under treasury Regulation 1.1502-6 or any similar
provision of federal, state or foreign law.
(b) (i) Proper and accurate amounts have been withheld by
the Company, Jefferson Bank and their respective subsidiaries from their
employees and others for all prior periods in compliance in all material
respects with the tax withholding provisions of all applicable federal, state
and local laws and regulations, and proper due diligence steps have been taken
in connection with back-up withholding, (ii) federal, state and local returns
have been filed by the Company, Jefferson Bank and their respective
subsidiaries for all periods for which returns were due with respect to income
tax withholding, Social Security and unemployment taxes and (iii) the amounts
shown on such returns to be due and payable have been paid in full or adequate
provision therefor has been included by either the Company or Jefferson Bank in
The Call Reports of the Company, the Parent Financial Statements of the Company
or the Call Reports of Jefferson Bank, as the case may be.
Section 3.12 Employee Benefit Plans. (a) None of the Company,
Jefferson Bank or any of their respective subsidiaries has or maintains any
"employee benefit plan," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), except as described in
Disclosure Schedule 3.12(a).
(b) None of the Company, Jefferson Bank or any of their
respective subsidiaries (or any pension plan maintained by either of them) has
incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") or
the Internal Revenue Service with respect to any pension plan qualified under
Section 401 of the Code, except liabilities to the PBGC pursuant to Section
4007 of ERISA, all which have been fully paid. No reportable event under
Section 4043(b) of ERISA (including events waived by PBGC regulation) has
occurred with respect to any such pension plan.
(c) None of the Company, Jefferson Bank or any of their
respective subsidiaries has incurred any material liability under Section 4201
of ERISA for a complete or partial withdrawal from, or agreed to participate
in, any multi-employer plan as such term is defined in Section 3(37) of ERISA.
(d) All "employee benefit plans," as defined in Section
3(3) of ERISA, that are maintained by the Company, Jefferson Bank and their
respective subsidiaries comply in both form and operation in all material
respects with ERISA and all provisions of the Code that are applicable, or
intended to be applicable, to such "employee benefit plans." None of the
Company, Jefferson Bank or any of their respective subsidiaries has any
material liability under any such "employee benefit plan" that is not reflected
in the Call Reports of the Company, the Parent Financial Statements of the
Company or the Call Reports of Jefferson Bank.
(e) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under Section 408
of ERISA) has occurred with respect to any employee benefit plan maintained by
the Company, Jefferson Bank or any of their respective subsidiaries (i) which
would result in the imposition, directly or indirectly, of a material excise
tax under Section 4975 of the Code or a material civil penalty under Section
502(i) of ERISA, or (ii) the correction of which would have a Material Adverse
Effect on the Condition of the Company, Jefferson Bank or any of their
respective subsidiaries; and, to the best knowledge of the Company, Jefferson
Bank and their respective subsidiaries no actions have occurred which could
result in the imposition of a penalty under any section or provision of ERISA.
(f) No employee benefit plan which is a defined benefit
pension plan has any "unfunded current liability," as that term is defined in
Section 302(d)(8)(A) of ERISA, and the present fair market value of the assets
of any such plan exceeds the plan's "benefit liabilities," as that term is
defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements.
(g) All reporting or disclosure requirements applicable
to any such "employee benefit plan" under ERISA or the Code have been met on a
timely basis.
(h) All employee benefit loans, programs or practices
maintained by the Company, Jefferson Bank or any of their respective
subsidiaries that are not employee benefit plans as defined in Section 3(3) of
ERISA comply in both form and operation in all material respects with all laws
applicable thereto.
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(i) Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any officer or employee of the Company, Jefferson Bank or any of their
respective subsidiaries under any benefit plan or otherwise, (ii) materially
increase any benefits otherwise payable under any benefit plan or (iii) result
in any acceleration of the time of payment or vesting of any such benefits to
any material extent, except as set forth in Disclosure Schedule 3.12(i) with
respect to those payments and benefits described therein.
Section 3.13 Title and Related Matters. (a) Except as set forth
in Disclosure Schedule 3.13(a), the Company, Jefferson Bank and their
respective subsidiaries have good title, and as to owned real property, have
good and marketable title in fee simple absolute, to all assets and properties,
real or personal, tangible or intangible, reflected as owned by or carried
under the name of either of them on the Call Reports of the Company, the Parent
Financial Statements of the Company, or the Call Reports of Jefferson Bank or
acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of for fair value in the ordinary course of
business since December 31, 1993), free and clear of all liens, encumbrances,
mortgages, security interests, restrictions, pledges or claims, except for (i)
those liens, encumbrances, mortgages, security interests, restrictions, pledges
or claims reflected in the Call Reports of the Company, the Parent Financial
Statements of the Company and the Call Reports of Jefferson Bank or incurred in
the ordinary course of business after December 31, 1993, (ii) statutory liens
for amounts not yet delinquent or which are being contested in good faith, and
(iii) liens, encumbrances, mortgages, security interests, pledges, claims and
title imperfections that are not in the aggregate material to the Condition of
the Company on a consolidated basis.
(b) All agreements pursuant to which the Company,
Jefferson Bank or any of their respective subsidiaries leases, subleases or
licenses material real or material personal properties from others are valid,
binding and enforceable in accordance with their respective terms, and there is
not, under any of such leases or licenses, any existing default or event of
default, or any event which with notice or lapse of time, or both, would
constitute a default or force majeure, or provide the basis for any other claim
of excusable delay or nonperformance, except for defaults which individually or
in the aggregate would not have a Material Adverse Effect on the Condition of
the Company on a consolidated basis.
(c) Exclusive of "other real estate owned" (i.e., real
estate owned, acquired by foreclosure or voluntary deed in lieu of foreclosure
or other similar process) (i) all of the buildings, structures and fixtures
owned, leased or subleased by the Company, Jefferson Bank and their respective
subsidiaries are in good operating condition and repair, subject only to
ordinary wear and tear and/or minor defects which do not interfere with the
continued use thereof in the conduct of normal operations, and (ii) all of the
material personal properties owned, leased or subleased by the Company,
Jefferson Bank and their respective subsidiaries are in good operating
condition and repair, subject only to ordinary wear and tear and/or minor
defects which do not interfere with the continued use thereof in the conduct of
normal operations.
Section 3.14 Real Estate. (a) Disclosure Schedule 3.14(a)
identifies and sets forth a complete legal description for each parcel of real
estate or interest therein owned, leased or subleased by the Company, Jefferson
Bank or any of their respective subsidiaries or in which the Company, Jefferson
Bank or any of their respective subsidiaries has any ownership or leasehold
interest.
(b) Disclosure Schedule 3.14(b) lists or otherwise describes
each and every written or oral lease or sublease under which the Company,
Jefferson Bank or any of their respective subsidiaries is the lessee of any
real property and which relates in any manner to the operation of the
businesses of the Company, Jefferson Bank or any of their respective
subsidiaries. All rentals due under such leases have been paid and there
exists no material default under the terms of any lease and no event has
occurred which, upon the passage of time or giving of notice, or both, would
result in any event of default or prevent the Company, Jefferson Bank or any of
their respective subsidiaries, as appropriate, from exercising and obtaining
the benefits of any options or other rights contained therein, except for
defaults which individually or in the aggregate would not have a Material
Adverse Effect on the Condition of the Company on a consolidated basis. Except
as set forth in Disclosure Schedule 3.14(b), the Company, Jefferson Bank and
their respective subsidiaries have all right, title and interest as a lessee
under the terms of each lease or sublease, free and clear of all liens, claims
or encumbrances (other than the rights of the lessor), and all such leases are
valid and in full force and effect. The Company, Jefferson Bank and their
respective subsidiaries have the right under each such lease and sublease to
occupy, use, possess, and control all property
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leased or subleased by the Company, Jefferson Bank and their respective
subsidiaries and, as of the Effective Time of the Merger, shall have the right
to transfer each lease or sublease pursuant to this Agreement.
(c) None of the Company, Jefferson Bank or any of their
respective subsidiaries has violated, or is currently in violation of, any law,
regulation or ordinance relating to the ownership or use of the real estate and
real estate interests described in Disclosure Schedules 3.14(a) and 3.14(b)
including, but not limited to any law, regulation or ordinance relating to
zoning, building, occupancy, environmental or comparable matter which
individually or in the aggregate would have a Material Adverse Effect on the
Condition of the Company on a consolidated basis.
(d) As to each parcel of real property owned or used by
the Company, Jefferson Bank or any of their respective subsidiaries, none of
the Company, Jefferson Bank or any of their respective subsidiaries has
received notice of any pending or, to the knowledge of the Company, Jefferson
Bank and their respective subsidiaries threatened condemnation proceedings,
litigation proceedings or mechanics or materialmen's liens.
Section 3.15 Environmental Matters.
(a) Except as set forth in Disclosure Schedule 3.15, each
of the Company, Jefferson Bank, their respective subsidiaries, the
Participation Facilities (as defined below), and the Loan Properties (as
defined below) are, and have been, in compliance with all applicable laws,
rules, regulations, standards and requirements of the United States
Environmental Protection Agency and all state and local agencies with
jurisdiction over pollution or protection of the environment, except for
violations which, individually or in the aggregate, including those set forth
in Disclosure Schedule 3.15, will not have a Material Adverse Effect on the
Condition of the Company on a consolidated basis.
(b) There is no litigation pending or, to the knowledge
of the Company, Jefferson Bank and their respective subsidiaries, except as set
forth in Disclosure Schedule 3.15, threatened before any court, governmental
agency or board or other forum in which the Company, Jefferson Bank or any of
their respective subsidiaries or any Participation Facility has been or, with
respect to threatened litigation, may be, named as defendant (i) for alleged
noncompliance (including by any predecessor), with any Environmental Law (as
defined below) or (ii) relating to the release into the environment of any
Hazardous Material (as defined below) or oil, whether or not occurring or on a
site owned, leased or operated by the Company, Jefferson Bank or any of their
respective subsidiaries or any Participation Facility, except for such
litigation pending or threatened (including those set forth in Disclosure
Schedule 3.15), that will not, individually or in the aggregate, have a
Material Adverse Effect on the Condition of the Company on a consolidated
basis.
(c) There is no litigation pending or, to the knowledge
of the Company, Jefferson Bank and their respective subsidiaries, except as set
forth in Disclosure Schedule 3.15, threatened before any court, governmental
agency or board or other forum in which any Loan Property (or the Company,
Jefferson Bank or any of their respective subsidiaries in respect of such Loan
Property) has been or, with respect to threatened litigation, may be, named as
a defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material or oil, whether or
not occurring at, on or involving a Loan Property, except for such litigation
pending or threatened (including those set forth in Disclosure Schedule 3.15),
that will not individually or in the aggregate, have a Material Adverse Effect
on the Condition of the Company on a consolidated basis.
(d) To the knowledge of the Company, Jefferson Bank and
their respective subsidiaries, there is no reasonable basis for any litigation
of a type described in Sections 3.15(b) or 3.15(c) of this Agreement, except as
set forth in Disclosure Schedule 3.15 and except as will not have, individually
or in the aggregate, including those set forth in Disclosure Schedule 3.15, a
Material Adverse Effect on the Condition of the Company on a consolidated
basis.
(e) During the period of (i) ownership or operation by
the Company, Jefferson Bank or any of their respective subsidiaries of any of
their respective current properties, (ii) participation by the Company,
Jefferson Bank or any of their respective subsidiaries in the management of any
Participation Facility, or (iii) holding by the Company, Jefferson Bank or any
of their respective subsidiaries of a security interest in any Loan Property,
there have been no releases of Hazardous Material or oil in, on, under or
affecting such properties, except
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where such releases have not and will not, individually or in the aggregate,
have a Material Adverse Effect on the Condition of the Company on a
consolidated basis.
(f) Prior to the period of (i) ownership or operation by
the Company, Jefferson Bank or any of their respective subsidiaries of any of
their respective current properties, (ii) participation by the Company,
Jefferson Bank or any of their respective subsidiaries in the management of any
Participation Facility, or (iii) holding by the Company, Jefferson Bank or any
of their respective subsidiaries of a security interest in any Loan Property,
to the knowledge of the Company, Jefferson Bank and their respective
subsidiaries, there were no releases of Hazardous Material or oil in, on, under
or affecting any such property, Participation Facility or Loan Property, except
where such releases have not and will not, individually or in the aggregate,
have a Material Adverse Effect on the Condition of the Company on a
consolidated basis.
(g) "Environmental Law" means any federal, state, local
or foreign law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction or
agreement with any regulatory agency relating to (i) the protection,
preservation or restoration of the environment (including, without limitation,
air, water vapor, surface water, groundwater, drinking water supply, surface
soil, subsurface soil, plant and animal life or any other natural resource),
and/or (ii) the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of any
substance presently listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated, whether by type or by
substance as a component; "Loan Property" means any property owned by the
Company, Jefferson Bank or any of their respective subsidiaries, or in which
the Company, Jefferson Bank or any of their respective subsidiaries holds a
security interest, and, where required by the context, includes the owner or
operator of such property, but only with respect to such property; "Hazardous
Material" means any pollutant, contaminant, or hazardous substance within the
meaning of the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq., or any similar federal, state
or local law; and "Participation Facility" means any facility in which the
Company, Jefferson Bank or any of their respective subsidiaries participate in
the management and, where required by the context, includes the owner or
operator of such facility, but only with respect to such facility.
Section 3.16 Commitments and Contracts. Except as set forth in
Disclosure Schedule 3.16, none of the Company, Jefferson Bank or any of their
respective subsidiaries is a party or subject to any of the following (whether
written or oral, express or implied):
(a) Any employment contract or understanding (including
any understandings or obligations with respect to severance or termination pay
liabilities or fringe benefits) with any present or former officer, director,
employee, including in any such person's capacity as a consultant (other than
those which either are terminable at will without any further amount being
payable thereunder or as a result of such termination by the Company, Jefferson
Bank or any of their respective subsidiaries);
(b) Any labor contract or agreement with any labor union;
(c) Any contract covenants which limit the ability of the
Company, Jefferson Bank or any of their respective subsidiaries to compete in
any line of business or which involve any restriction of the geographical area
in which the Company, Jefferson Bank or any of their respective subsidiaries
may carry on its business (other than as may be required by law or applicable
regulatory authorities);
(d) Any lease (other than real estate leases described on
Disclosure Schedule 3.14(b)) or other agreements or contracts with annual
payments aggregating $5,000 or more; or
(e) Any other contract or agreement which would be
required to be disclosed in reports filed by the Company with the SEC, the FRB
or the Mississippi Department and which has not been so disclosed.
Section 3.17 Regulatory Matters. None of the Company, Jefferson
Bank or any of their respective subsidiaries has agreed to take any action or
has any knowledge of any fact or has agreed to any circumstance that would
materially impede or delay receipt of any Consents of any Regulatory
Authorities referred to in this Agreement including, matters relating to the
Community Reinvestment Act and protests thereunder.
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Section 3.18 Registration Obligations. None of the Company,
Jefferson Bank or any of their respective subsidiaries is under any obligation,
contingent or otherwise, which will survive the Merger to register any of its
securities under the Securities Act of 1933 or any state securities laws.
Section 3.19 State Takeover Laws. This Agreement and the
transactions contemplated hereby are not subject to or restricted by any
applicable state anti-takeover statute.
Section 3.20 Insurance. The Company and Jefferson Bank are
presently insured, and during each of the past three calendar years have been
insured, for reasonable amounts against such risks as companies or institutions
engaged in a similar business would, in accordance with good business practice,
customarily be insured. To the knowledge of the Company, Jefferson Bank and
their respective subsidiaries, the policies of fire, theft, liability and other
insurance maintained with respect to the assets or businesses of the Company,
Jefferson Bank and their respective subsidiaries provide adequate coverage
against loss, and the fidelity bonds in effect as to which the Company,
Jefferson Bank or any of their respective subsidiaries is named an insured are
sufficient for their purpose. Such policies of insurance are listed and
described in Disclosure Schedule 3.20.
Section 3.21 Labor. No work stoppage involving the Company,
Jefferson Bank or any of their respective subsidiaries is pending as of the
date hereof or, to the knowledge of the Company, Jefferson Bank and their
respective subsidiaries, threatened. None of the Company, Jefferson Bank or
any of their respective subsidiaries is involved in, or, to the knowledge of
the Company, Jefferson Bank and their respective subsidiaries, threatened with
or affected by, any proceeding asserting that the Company, Jefferson Bank or
any of their respective subsidiaries has committed an unfair labor practice or
any labor dispute, arbitration, lawsuit or administrative proceeding which
might reasonably be expected to have a Material Adverse Effect on the Condition
of the Company on a consolidated basis. No union represents or claims to
represent any employees of the Company, Jefferson Bank or any of their
respective subsidiaries, and, to the knowledge of the Company, Jefferson Bank
and their respective subsidiaries, no labor union is attempting to organize
employees of the Company, Jefferson Bank or any of their respective
subsidiaries.
Section 3.22 Compliance with Laws. Each of the Company, Jefferson
Bank and their respective subsidiaries has conducted its business in accordance
with all applicable federal, foreign, state and local laws, regulations and
orders, and each is in compliance with such laws, regulations and orders,
except for such violations or non-compliance, which when taken together as a
whole, will not have a Material Adverse Effect on the Condition of the Company
on a consolidated basis. Except as disclosed in Disclosure Schedule 3.22, none
of the Company, Jefferson Bank or any of their respective subsidiaries:
(a) Is in violation of any laws, orders or permits
applicable to its business or the employees or agents
or representatives conducting its business, except
for violations which individually or in the aggregate
do not have and will not have a Material Adverse
Effect on the Condition of the Company on a
consolidated basis; and
(b) Has received a notification or communication from any
agency or department of federal, state or local
government or the Regulatory Authorities or the staff
thereof (i) asserting that the Company, Jefferson
Bank or any of their respective subsidiaries is not
in compliance with any laws or orders which such
governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably
likely to have a Material Adverse Effect on the
Condition of the Company on a consolidated basis,
(ii) threatening to revoke any permit, the revocation
of which is reasonably likely to have a Material
Adverse Effect on the Condition of the Company on a
consolidated basis, (iii) requiring the Company,
Jefferson Bank or any of their respective
subsidiaries to enter into any cease and desist
order, formal agreement, commitment or memorandum of
understanding, or to adopt any resolutions or similar
undertakings, or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit
in any manner, the operations of the Company,
Jefferson Bank or any of their respective
subsidiaries, including, without limitation, any
restrictions on the payment of dividends that are
more restrictive than those imposed by applicable
statute or regulation on institutions similarly
situated to that of the Company and Jefferson Bank.
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Section 3.23 Transactions with Management. Except for (a)
deposits, all of which are on terms and conditions comparable to those made
available to other customers of Jefferson Bank at the time such deposits were
entered into, (b) the agreements listed on Disclosure Schedule 3.16, and (c)
the items described on Disclosure Schedule 3.23, there are no contracts with or
commitments to present or former stockholders, directors, officers or employees
involving the expenditure of more than $1,000 as to any one individual,
including, with respect to any business directly or indirectly controlled by
any such person, or $5,000 for all such contracts for commitments in the
aggregate for all such individuals.
Section 3.24 Accounting, Tax, Regulatory Matters. Neither the
Company nor Jefferson Bank has agreed to take any action, or has knowledge of
any fact or has agreed to any circumstance that would (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying as a
reorganization within the meaning of Section 368 of the Code, or (ii)
materially impede or delay receipt of any Consent from any Regulatory Authority
referred to in the Agreement.
Section 3.25 Proxy Materials. None of the information relating to
the Company, Jefferson Bank or any of their respective subsidiaries to be
included in the Proxy Statement which is to be mailed to the shareholders of
the Company in connection with the solicitation of their approval of this
Agreement will, at the time such Proxy Statement is mailed or at the time of
the meeting of shareholders to which such Proxy Statement relates, be false or
misleading with respect to any material fact, or omit to state any material
fact, necessary in order to make a statement therein not false or misleading.
The legal responsibility for the contents of such Proxy Statement (other than
information supplied by SouthTrust concerning SouthTrust or any of its
subsidiaries) shall be and remain with the Company, Jefferson Bank and their
respective subsidiaries.
Section 3.26 Deposit Insurance. The deposit accounts of Jefferson
Bank are insured by the Bank Insurance Fund in accordance with the provisions
of the Federal Deposit Insurance Act (the "Act"); Jefferson Bank has paid all
regular premiums and special assessments and filed all reports required under
the Act.
Section 3.27 Untrue Statements and Omissions. No representation
or warranty contained in Article III of this Agreement or in the Disclosure
Schedules of the Company contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
SOUTHTRUST AND ST-SUB
SouthTrust and ST-Sub hereby represent and warrant to the Company as
follows as of the date hereof and also on the Effective Time of the Merger
(except as otherwise provided):
Section 4.1 Organization and Related Matters of SouthTrust. (a)
SouthTrust is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. SouthTrust has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as now conducted, or as proposed to be conducted pursuant
to this Agreement, and SouthTrust is licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by SouthTrust,
or the character or location of the properties and assets owned or leased by
SouthTrust makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified (or steps necessary to cure such
failure) would not have a Material Adverse Effect on the Condition of
SouthTrust on a consolidated basis. SouthTrust is duly registered as a bank
holding company under the Bank Holding Act of 1956, as amended. True and
correct copies of the Restated Certificate of Incorporation of SouthTrust and
the Bylaws of SouthTrust, each as amended to the date hereof, have been made
available to the Company.
(b) SouthTrust has in effect all federal, state, local
and foreign governmental, regulatory and other authorizations, permits and
licenses necessary for it to own or lease its properties and assets and to
carry on its business as now conducted, the absence of which, either
individually or in the aggregate, would have a Material Adverse Effect on the
Condition of SouthTrust on a consolidated basis.
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(c) The minute books of SouthTrust contain complete and
accurate records in all material respects of all meetings and other corporate
actions held or taken by the shareholders and Boards of Directors of
SouthTrust.
Section 4.2 Organization and Related Matters of ST-Sub. (a)
ST-Sub is, or as of the Effective Time of the Merger will be a corporation duly
organized, validly existing and in good standing under the laws of the State of
Mississippi. ST-Sub has, or will have, as of the Effective Time of the Merger,
the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as now conducted, or as proposed to be
conducted pursuant to this Agreement, and ST-Sub is or will be licensed or
qualified to do business in each jurisdiction which the nature of the business
conducted or to be conducted by ST-Sub, or the character or location or the
properties and assets owned or leased by ST-Sub make such licensing or
qualification necessary, except where the failure to be so licensed or
qualified (or steps necessary to cure such failure) would not have a Material
Adverse Effect on the Condition of SouthTrust on a consolidated basis. True
and correct copies of the Certificate or Articles of Incorporation and Bylaws
of ST-Sub, as each may be amended to the date hereof, will be made available to
the Company.
(b) ST-Sub, as of the Effective Time of the Merger, will
have in effect all federal, state, local and foreign governmental, regulatory
or other authorizations, permits and licenses necessary for it to own or lease
its properties and assets and to carry on its business as proposed to be
conducted, the absence of which, either individually or in the aggregate, would
have a Material Adverse Effect on the Condition of SouthTrust on a consolidated
basis.
(c) As of the Effective Time of the Merger, the minute
books of ST-Sub will contain complete and accurate records in all material
respects of all meetings and other corporate actions held or taken by the
shareholders and Board of Directors of ST-Sub.
Section 4.3 Capitalization. As of December 31, 1993, the
authorized capital stock of SouthTrust consisted of 100,000,000 shares of
common stock, par value $2.50 per share, 79,425,781 shares (which includes the
rights associated with such shares pursuant to that certain Rights Agreement
dated as of February 22, 1989 between SouthTrust and Mellon Bank, N.A.) of
which are issued and outstanding (exclusive of any such shares held in the
treasury of SouthTrust as of the date hereof), and 5,000,000 shares of
preferred stock, par value $1.00 per share, none of which is issued and
outstanding as of the date hereof. All issued and outstanding SouthTrust
Shares have been duly authorized and validly issued, and all such shares are
fully paid and nonassessable. Between December 31, 1993 and the date of this
Agreement, SouthTrust has not effected a transaction of the type described in
the last sentence of Section 2.1(c) of this Agreement.
Section 4.4 Authorization. The execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby and in any related agreements, have been or, as of the
Effective Time of the Merger, will have been duly authorized by the Boards of
Directors of SouthTrust and ST-Sub, and no other corporate proceedings on the
part of SouthTrust or ST-Sub are or will be necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement is the
valid and binding obligation of SouthTrust and ST-Sub enforceable against each
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
may be brought. Neither the execution, delivery or performance of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
violate any provision of the Restated Certificate of Incorporation or Bylaws of
SouthTrust or the Articles or Certificate of Incorporation or Bylaws of ST-Sub
or, (ii) to SouthTrust's knowledge and assuming that any necessary Consents are
duly obtained, (A) violate, conflict with, result in a breach of any provisions
of, 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,
accelerate the performance required by or result in the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of SouthTrust or ST-Sub under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
permit, lease, agreement or other instrument or obligation to which SouthTrust
or ST-Sub is a party, or by which SouthTrust or ST-Sub or any of their
respective properties or assets may be bound or affected, (B) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to SouthTrust or ST-Sub or any of their respective
material properties or assets, except for (X) such conflicts, breaches or
defaults
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as are set forth in Disclosure Schedule 4.4; and (Y) with respect to (B) and
(C) above, such as individually or in the aggregate will not have a Material
Adverse Effect on the Condition of SouthTrust on a consolidated basis.
Section 4.5 Financial Statements. (a) SouthTrust has made
available to the Company copies of the consolidated financial statements of
SouthTrust as of and for the years ended December 31, 1993, 1992 and 1991, and
SouthTrust will make available to the Company, as soon as practicable following
the preparation of additional consolidated financial statements for each
subsequent calendar quarter or year of SouthTrust, the consolidated financial
statements of SouthTrust as of and for such subsequent calendar quarter or year
(such consolidated financial statements, unless otherwise indicated, being
hereinafter referred to collectively as the "Financial Statements of
SouthTrust").
(b) Each of the Financial Statements of SouthTrust
(including the related notes) have been or will be prepared in all material
respects in accordance with generally accepted accounting principles, which
principles have been or will be consistently applied during the periods
involved, except as otherwise noted therein, and the books and records of
SouthTrust have been, are being, and will be maintained in all material
respects in accordance with applicable legal and accounting requirements and
reflect only the actual transactions. Each of the Financial Statements of
SouthTrust (including the related notes) fairly presents or will fairly present
the consolidated financial position of SouthTrust as of the respective dates
thereof and fairly presents or will fairly present the results of operations of
SouthTrust for the respective periods therein set forth.
(c) Since December 31, 1993, SouthTrust has not incurred
any obligation or liability (contingent or otherwise) that has or might
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Condition of SouthTrust on a consolidated basis, except
obligations and liabilities (i) which are accrued or reserved against in the
Financial Statements of SouthTrust or reflected in the notes thereto, and (ii)
which were incurred after December 31, 1993 in the ordinary course of business
consistent with past practices. Since December 31, 1993, and except for the
matters described in (i) and (ii) above, SouthTrust has not incurred or paid
any obligation or liability which would be material to the Condition of
SouthTrust on a consolidated basis.
Section 4.6 Absence of Certain Changes or Events. Since December
31, 1993, there has not been any material adverse change in the Condition of
SouthTrust on a consolidated basis, and to the knowledge of SouthTrust, no fact
or condition exists which might reasonably be expected to cause such a material
adverse change in the future.
Section 4.7 Legal Proceedings, Etc. Except as set forth on
Disclosure Schedule 4.7 hereto, SouthTrust is not a party to any, and there are
no pending, or, to the knowledge of SouthTrust, threatened, legal,
administrative, arbitrary or other proceedings, claims, actions, causes of
action or governmental investigations of any nature against SouthTrust
challenging the validity or propriety of the transactions contemplated by this
Agreement or which would be required to be reported by SouthTrust pursuant to
Item 103 of Regulation S-K promulgated by the SEC.
Section 4.8 Insurance. SouthTrust has in effect insurance
coverage with insurers which, in respect of amounts, premiums, types and risks
insured, constitutes reasonably adequate coverage against all risks customarily
insured against by institutions comparable in size and operation to SouthTrust.
Section 4.9 Consents and Approvals. Except for (i) the Consents
of the Regulatory Authorities; (ii) approval of this Agreement by the
respective shareholders of ST-Sub and the Company; (iii) filing of Articles of
Merger with the State of Mississippi; and (iv) as previously disclosed, no
consents or approvals by, or filings or registrations with, any third party or
any public body, agency or authority are necessary in connection with the
execution and delivery by SouthTrust and ST-Sub or, to the knowledge of
SouthTrust, by the Company of this Agreement, and the consummation of the
Merger and the other transactions contemplated hereby.
Section 4.10 Proxy Materials. None of the information relating
solely to SouthTrust or any of its subsidiaries to be included or incorporated
by reference in the Proxy Statement which is to be mailed to the shareholders
of the Company in connection with the solicitation of their approval of this
Agreement will, at the time such Proxy Statement is mailed or at the time of
the meeting of shareholders of the Company to which such Proxy Statement
relates, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make a statement therein not
false or misleading. The legal responsibility for the contents of
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the information supplied by SouthTrust and relating solely to SouthTrust which
is either included or incorporated by reference in the Proxy Statement shall be
and remain with SouthTrust.
Section 4.11 No Broker's or Finder's Fees. Neither SouthTrust nor
ST-Sub or any of their subsidiaries, affiliates or employers has employed any
broker or finder or incurred any liability for any broker's fees, commissions
or finder's fees in connection with this Agreement or the consummation of any
of the transactions contemplated herein.
Section 4.12 Untrue Statements and Omissions. No representation
or warranty contained in Article IV of this Agreement or in the Disclosure
Schedules of SouthTrust or ST-Sub contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of the Business of the Company. (a) During
the period from the date of this Agreement to the Effective Time of the Merger,
the Company shall, and shall cause Jefferson Bank and each direct or indirect
subsidiary to, (i) conduct its business in the usual, regular and ordinary
course consistent with past practice and prudent banking principles, (ii) use
its best efforts to maintain and preserve intact its business organization,
employees, goodwill with customers and advantageous business relationships and
retain the services of its officers and key employees, and (iii) except as
required by law or regulation, take no action which would adversely affect or
delay the ability of the Company or SouthTrust to obtain any Consent from any
Regulatory Authorities or other approvals required for the consummation of the
transactions contemplated hereby or to perform its covenants and agreements
under this Agreement.
(b) During the period from the date of this Agreement to
the Effective Time of the Merger, except as required by law or regulation, the
Company shall not, and it shall not permit Jefferson Bank or any of their
respective subsidiaries, without the prior written consent of SouthTrust, to:
(i) change, delete or add any provision of or to
the Articles of Incorporation or Bylaws of
the Company, Jefferson Bank or any of their
respective subsidiaries, except that the
Articles of Incorporation of Jefferson Bank
may be amended to change the number of
authorized (but not the number of issued and
outstanding) Jefferson Bank Shares;
(ii) except for the issuance of Company Shares
pursuant to the terms of the Company Options,
change the number of shares of the authorized,
issued or outstanding capital stock of the
Company, including any issuance, purchase,
redemption, split, combination or
reclassification thereof, or issue or grant
any option, warrant, call, commitment,
subscription, right or agreement to purchase
relating to the authorized or issued capital
stock of the Company, declare, set aside or
pay any dividend or other distribution with
respect to the outstanding capital stock of
the Company;
(iii) incur any material liabilities or material
obligations (other than deposit liabilities
and short-term borrowings in the ordinary
course of business), whether directly or by
way of guaranty, including any obligation
for borrowed money, or whether evidenced by
any note, bond, debenture, or similar
instrument, except in the ordinary course of
business consistent with past practice;
(iv) make any capital expenditures individually in
excess of $25,000, or in the aggregate in
excess of $50,000 other than pursuant to
binding commitments existing on December 31,
1993 and disclosed in a Disclosure Schedule
delivered pursuant to Article III of this
Agreement or in the annexed Disclosure
Schedule
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5.1(b)(iv) and other than expenditures
necessary to maintain existing assets in good
repair;
(v) sell, transfer, convey or otherwise dispose of
any real property (including "other real estate
owned") or interest therein having a fair
market value or a book value in excess of or
in exchange for consideration in excess of
$5,000;
(vi) pay any bonuses to any executive officer except
pursuant to the terms of an enforceable written
employment agreement; enter into any new, or
amend in any respect any existing, employment,
consulting, non-competition or independent
contractor agreement with any person; alter
the terms of any existing incentive bonus or
commission plan; adopt any new or amend in any
material respect any existing employee benefit
plan, except as may be required by law; grant
any general increase in compensation to its
employees as a class or to its officers except
for non-executive officers in the ordinary
course of business and consistent with past
practices and policies or except in accordance
with the terms of an enforceable written
agreement; grant any material increases in
fees or other increases in compensation or in
other benefits to any of its directors; or
effect any change in any material respect in
retirement benefits to any class of employees
or officers, except as required by law;
(vii) enter into or extend any agreement, lease or
license relating to real property, personal
property, data processing or bankcard
functions relating to the Company, Jefferson
Bank or any of their respective subsidiaries
that involves an aggregate of $25,000; or
(viii) acquire twenty percent (20%) or more of the
assets or equity securities of any person or
acquire direct or indirect control of any
person, other than in connection with (A) any
internal reorganization or consolidation
involving existing subsidiaries of the Company
or Jefferson Bank which has been approved in
advance in writing by SouthTrust, (B)
foreclosures in the ordinary course of
business, (C) acquisitions of control by a
banking subsidiary in a fiduciary capacity or
(D) the creation of new subsidiaries organized
to conduct and continue activities otherwise
permitted by this Agreement.
Section 5.2 Current Information. During the period from the date
of this Agreement to the Effective Time of the Merger or the time of
termination or abandonment of this Agreement, the Company will cause one or
more of its designated representatives to confer on a regular and frequent
basis with representatives of SouthTrust and to report the general status of
the ongoing operations of the Company. The Company will promptly notify
SouthTrust of any material change in the normal course of business or the
operations or the properties of the Company, Jefferson Bank or any of their
respective subsidiaries, any governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated)
affecting the Company, Jefferson Bank or their respective subsidiaries, the
institution or the threat of material litigation, claims, threats or causes of
action involving the Company, Jefferson Bank or any of their respective
subsidiaries, and will keep SouthTrust fully informed of such events. The
Company will furnish to SouthTrust, promptly after the preparation and/or
receipt by the Company thereof, copies of its unaudited periodic financial
statements and call reports for the applicable periods then ended, and such
financial statements and call reports shall, upon delivery to SouthTrust, be
treated, for purposes of Section 3.3 hereof, as among the Call Reports of the
Company, the Parent Financial Statements of the Company and the Call Reports of
Jefferson Bank.
Section 5.3 Access to Properties; Personnel and Records. (a) So
long as this Agreement shall remain in effect, the Company, Jefferson Bank and
their respective subsidiaries, shall permit SouthTrust or its agents full
access, during normal business hours, to the properties of the Company,
Jefferson Bank and their respective subsidiaries, and shall disclose and make
available (together with the right to copy) to SouthTrust and to its internal
auditors, loan review officers, attorneys, accountants and other
representatives, all books, papers and records relating to the assets, stock,
properties, operations, obligations and liabilities of the Company, Jefferson
Bank or their respective subsidiaries, including all books of account
(including the general ledger), tax records, minute books
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of directors' and shareholders' meetings, organizational documents, bylaws,
contracts and agreements, filings with any regulatory agency, examination
reports, correspondence with regulatory or taxing authorities, documents
relating to assets, titles, abstracts, appraisals, consultant's reports, plans
affecting employees, securities transfer records and stockholder lists, and any
other assets, business activities or prospects in which SouthTrust may have a
reasonable interest, and the Company, Jefferson Bank and their respective
subsidiaries shall use their reasonable best efforts to provide SouthTrust and
its representatives access to the work papers of the Company's, Jefferson
Bank's and their respective subsidiaries' accountants. The Company, Jefferson
Bank and their respective subsidiaries shall not be required to provide access
to or to disclose information where such access or disclosure would violate or
prejudice the rights of any customer, would contravene any law, rule,
regulation, order or judgment or would violate any confidentiality agreement;
provided that the Company, Jefferson Bank and their respective subsidiaries
shall cooperate with SouthTrust in seeking to obtain Consents from appropriate
parties under whose rights or authority access is otherwise restricted. The
foregoing rights granted to SouthTrust shall not, whether or not and regardless
of the extent to which the same are exercised, affect the representations and
warranties made in this Agreement by the Company, Jefferson Bank or their
respective subsidiaries.
(b) All information furnished by the parties hereto
pursuant to this Agreement shall be treated as the sole property of the party
providing such information until the consummation of the Merger contemplated
hereby and, if such transaction shall not occur, the party receiving the
information shall return to the party which furnished such information, all
documents or other materials containing, reflecting or referring to such
information, shall use its best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. The obligation to keep such
information confidential shall continue for two (2) years from the date the
proposed transactions are abandoned but shall not apply to (i) any information
which (A) the party receiving the information was already in possession of
prior to disclosure thereof by the party furnishing the information, (B) was
then available to the public, or (C) became available to the public through no
fault of the party receiving the information; or (ii) disclosures pursuant to a
legal requirement or in accordance with an order of a court of competent
jurisdiction or regulatory agency; provided that the party which is the subject
of any such legal requirement or order shall use its best efforts to give the
other party at least ten (10) business days prior notice thereof. Each party
hereto acknowledges and agrees that a breach of any of their respective
obligations under this Section 5.3 would cause the other irreparable harm for
which there is no adequate remedy at law, and that, accordingly, each is
entitled to injunctive and other equitable relief for the enforcement thereof
in addition to damages or any other relief available at law.
Section 5.4 Approval of the Company Shareholders. The Company
will take all steps necessary under applicable laws to call, give notice of,
convene and hold a meeting of its shareholders at such time as may be mutually
agreed to by the parties for the purpose of approving this Agreement and the
transactions contemplated hereby and for such other purposes consistent with
the complete performance of this Agreement as may be necessary or desirable.
The Board of Directors of the Company will recommend to its shareholders the
approval of this Agreement and the transactions contemplated hereby and the
Company will use its best efforts to obtain the necessary approvals by its
shareholders of this Agreement and the transactions contemplated hereby.
Section 5.5 No Other Bids. The Company, acting through any
director or officer or other agent shall not now, nor shall it knowingly permit
any of its subsidiaries to, nor shall it authorize or knowingly permit any
officer, director or employee of, or any investment banker, attorney,
accountant or other representative retained by the Company, Jefferson Bank or
any of their respective subsidiaries, to solicit or encourage, including by way
of furnishing information, any inquiries or the making of any proposal which
may reasonably be expected to lead to any takeover proposal with respect to the
Company, Jefferson Bank or any of their respective subsidiaries. The Company
shall promptly advise SouthTrust orally and in writing of any such inquiries or
proposals received by the Company, Jefferson Bank or any of their respective
subsidiaries after the date hereof. As used in this Section 5.5, "takeover
proposal" shall mean any proposal for a merger or other business combination
involving the Company, Jefferson Bank or any of their respective subsidiaries
or for the acquisition of a significant equity interest in the Company,
Jefferson Bank or any of their respective subsidiaries or for the acquisition
of a significant portion of the assets of the Company, Jefferson Bank or any of
their respective subsidiaries.
Section 5.6 Notice of Deadlines. The Company shall notify
SouthTrust in writing of any deadline to exercise an extension or termination
of any material lease, agreement or license (including specifically real
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property leases and data processing agreements) to which the Company, Jefferson
Bank or any of their respective subsidiaries is a party, at least ten (10) days
prior to such deadline.
Section 5.7 Affiliates. At least thirty (30) days prior to the
Effective Time of the Merger, the Company shall deliver to SouthTrust a letter
identifying all persons who are, at the time this Agreement is submitted for
approval to the shareholders of the Company, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act of 1933. The Company shall use
all reasonable efforts to cause each person named in the letter delivered by it
to deliver to SouthTrust, at or prior to the Effective Time of the Merger, a
written agreement, providing that such person will not sell, pledge, transfer,
or otherwise dispose of the Company Shares held by such person except as
contemplated by such agreement or by this Agreement and will not sell, pledge,
transfer, or otherwise dispose of the SouthTrust Shares to be received by such
person upon consummation of the Merger except in compliance with applicable
provisions of the Securities Act of 1933.
Section 5.8 Maintenance of Properties. The Company, Jefferson
Bank and their respective subsidiaries will maintain their respective
properties and assets in satisfactory condition and repair for the purposes for
which they are intended, ordinary wear and tear excepted.
Section 5.9 Environmental Audits. At the election of SouthTrust,
and at SouthTrust's own expense, SouthTrust, prior to the Effective Time of the
Merger, may procure, with respect to each parcel of real property that the
Company, Jefferson Bank or any of their respective subsidiaries owns, leases or
subleases, an environmental audit, which audit shall be reasonably acceptable
to and shall be conducted by a firm reasonably acceptable to SouthTrust.
Section 5.10 Title Insurance. At the election of SouthTrust, and
at SouthTrust's own expense, SouthTrust, prior to the Effective Time of the
Merger, may procure, with respect to each parcel of real property that the
Company, Jefferson Bank or any of their respective subsidiaries owns, leases or
subleases, owner's title insurance issued in such amounts and by such insurance
company reasonably acceptable to SouthTrust, which policy shall be free of all
material exceptions to SouthTrust's reasonable satisfaction.
Section 5.11 Surveys. At the election of SouthTrust, and at
SouthTrust's own expense, SouthTrust may procure, with respect to each parcel
of real property as to which a title insurance policy is to be procured
pursuant to Section 5.10, a survey of such real property, which survey shall be
reasonably acceptable to and shall be prepared by a licensed surveyor
reasonably acceptable to SouthTrust, disclosing the locations of all
improvements, easements, sidewalks, roadways, utility lines and other matters
customarily shown on such surveys and showing access affirmatively to public
streets and roads and providing the legal description of the property in a form
suitable for recording and insuring the title thereof (the "Survey"). The
Survey shall not disclose any survey defect or encroachment from or onto such
real property that has not been cured or insured over prior to the Effective
Time of the Merger.
Section 5.12 Compliance Matters. Prior to the Effective Time of
the Merger, the Company shall take, or cause to be taken, all steps reasonably
requested by SouthTrust to cure any deficiencies in regulatory compliance by
the Company, Jefferson Bank or any of their respective subsidiaries, including
compliance with Regulations Z and CC of the FRB); provided that neither
SouthTrust nor ST-Sub shall be responsible for discovering or have any
obligation to disclose the existence of such defects to the Company nor shall
SouthTrust or ST-Sub have any liability resulting from such deficiencies or
attempts to cure them.
Section 5.13 Exemption Under Anti-Takeover Statutes. Prior to the
Effective Time of the Merger, the Company will use its best efforts to take all
steps required to exempt the transactions contemplated by this Agreement from
any applicable state anti-takeover law.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
Section 6.1 Best Efforts; Cooperation. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its best
efforts promptly to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations, or otherwise, including
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attempting to obtain all necessary Consents, to consummate and make effective,
as soon as practicable, the transactions contemplated by this Agreement.
Section 6.2 Regulatory Matters. (a) Following the execution and
delivery of this Agreement, SouthTrust and the Company shall cause to be
prepared and filed all required applications and filings with the Regulatory
Authorities which are necessary or contemplated for the obtaining of the
Consents of the Regulatory Authorities or consummation of the Merger. Such
applications and filings shall be in such form as may be prescribed by the
respective government agencies and shall contain such information as they may
require. The parties hereto will cooperate with each other and use their best
efforts to prepare and execute all necessary documentation, to effect all
necessary or contemplated filings and to obtain all necessary or contemplated
permits, consents, approvals, rulings and authorizations of government agencies
and third parties which are necessary or contemplated to consummate the
transactions contemplated by this Agreement, including, without limitation,
those required or contemplated from the Regulatory Authorities, and the
shareholders of the Company. Each of the parties shall have the right to
review and approve in advance, which approval shall not be unreasonably
withheld, any filing made with, or written material submitted to, any
government agencies in connection with the transactions contemplated by this
Agreement.
(b) Each party hereto will furnish the other party with
all information concerning itself, its subsidiaries, directors, trustees,
officers, shareholders and depositors, as applicable, and such other matters as
may be necessary or advisable in connection with any statement or application
made by or on behalf of any such party to any governmental body in connection
with the transactions, applications or filings contemplated by this Agreement.
Upon request, the parties hereto will promptly furnish each other with copies
of written communications received by them or their respective subsidiaries
from, or delivered by any of the foregoing to, any governmental body in respect
of the transactions contemplated hereby.
Section 6.3 Other Matters. (a) The parties acknowledge that
nothing in this Agreement shall be construed as constituting an employment
agreement between SouthTrust or any of its affiliates and any officer or
employee of the Company, Jefferson Bank or any of their respective subsidiaries
or an obligation on the part of SouthTrust or any of its affiliates to employ
any such officers or employees.
(b) Subject to Section 6.3(c) hereof, the parties agree
that appropriate steps shall be taken to terminate all employee benefit plans
of the Company and its affiliates, including, without limitation, the Employee
Stock Ownership Plan of the Company (the "ESOP"), as of the Effective Time of
the Merger or as promptly as practicable thereafter. Prior to termination of
the ESOP, the Company shall take all appropriate steps, including amending the
ESOP, to cause the ESOP to comply with all applicable laws. Following the
termination of all such plans, and subject to Section 6.3(c) hereof, SouthTrust
agrees that the officers and employees of the Company and its affiliates who
the Surviving Corporation and its affiliates employs or continues to employ, as
the case may be, after the Effective Time of the Merger shall be eligible to
participate in SouthTrust's employee benefit plans, including welfare and
fringe benefit plans on the same basis as and subject to the same conditions as
are applicable to any newly- hired employee of SouthTrust; provided, however,
that:
(i) with respect to SouthTrust's group medical
insurance plan, SouthTrust shall credit each such employee for
eligible expenses incurred by such employee and his or her
dependents (if applicable) under the group medical insurance
plan of the Company and/or its affiliates during the current
calendar year for purposes of satisfying the deductible
provisions under SouthTrust's plan for such current year, and
SouthTrust shall waive all waiting periods under said plans
for pre-existing conditions; and
(ii) credit for each such employee's past service
with the Company and/or its affiliates prior to the Effective
Time of the Merger ("Past Service Credit") shall be given by
SouthTrust to employees for purposes of:
(1) determining vacation and sick leave
benefits and accruals, in accordance with the
established policies of SouthTrust;
(2) establishing eligibility for
participation in and vesting under SouthTrust's
employee benefit plans (including welfare and fringe
benefit plans), and for purposes of determining the
scheduling of vacations and other determinations
which are
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made based on length of service; provided, however,
notwithstanding anything contained in this Agreement
to the contrary, past service credit shall not be
given to any such employee for purposes of
establishing eligibility for participation in the
1990 Discounted Stock Plan of SouthTrust.
(c) The parties further agree that the ESOP will be terminated as
of the Effective Time of the Merger, which termination shall be conditioned on
the transactions contemplated by the Agreement being consummated. The parties
agree that in connection with the termination of the ESOP, the trustee or
trustees of the ESOP shall be directed to sell such of the SouthTrust Shares
issued as may be required in order for the trustee or trustees to effect
distributions from the ESOP. From and after January 1 following the Effective
Time of the Merger, for purposes of determining eligibility to participate in,
and vesting in accrued benefits under both the SouthTrust Profit Sharing Plan
and the SouthTrust Corporation Revised Retirement Income Plan (the "ST
Retirement Plan"), employment by the Company shall be credited as if it were
employment by SouthTrust, but such service shall not be credited for purposes
of determining benefit accrual under the ST Retirement Plan.
Section 6.4 Indemnification. The Company agrees to indemnify,
defend and hold harmless SouthTrust and its subsidiaries, and each of their
respective present and former officers, directors, employees and agents, from
and against all losses, expenses, claims, damages or liabilities to which any
of them may become subject under applicable laws (including, but not limited
to, the Securities Act of 1933 or the Securities Exchange Act of 1934), and
will reimburse each of them for any legal, accounting or other expenses
reasonably incurred in connection with investigating or defending any such
actions, insofar as such losses, expenses, claims, damages or liabilities arise
out of or are based upon any untrue statement or untrue statement of material
fact contained in the Registration Statement, the Proxy Statement or any
application for the approval of the transactions contemplated by this Agreement
filed with any Regulatory Authority or arise out of or are based upon the
omission or alleged omission to state therein a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made not misleading.
Section 6.5 Current Information. During the period from the date
of this Agreement to the Effective Time of the Merger or the time of
termination or abandonment hereunder, SouthTrust will cause one or more of its
designated representatives to confer on a regular and frequent basis with the
Company and to report with respect to the general status and the ongoing
operations of SouthTrust.
Section 6.6 Registration Statement. SouthTrust shall cause the
Registration Statement to be filed and shall use its best efforts to cause such
Registration Statement to be declared effective under the Securities Act of
1933, which Registration Statement, at the time it becomes effective, and at
the Effective Time of the Merger, shall in all material respects conform to the
requirements of the Securities Act of 1933 and the general rules and
regulations of the SEC under the Securities Act of 1933. The Registration
Statement shall include the form of Proxy Statement for the meeting of the
Company's shareholders to be held for the purpose of having such shareholders
vote upon the approval of this Agreement. The Company will furnish to
SouthTrust the information required to be included in the Registration
Statement with respect to its business and affairs before it is filed with the
SEC and again before any amendments are filed. SouthTrust shall take all
actions required to qualify or obtain exemptions from such qualifications for
the SouthTrust Shares to be issued in connection with the transactions
contemplated by this Agreement under applicable state blue sky securities laws,
as appropriate.
Section 6.7 Reservation of Shares. SouthTrust shall reserve for
issuance such number of SouthTrust Shares as shall be necessary to pay the
consideration contemplated in this Agreement. If at any time the aggregate
number of SouthTrust Shares remaining unissued (or in treasury) shall not be
sufficient to meet such obligation, SouthTrust shall take all appropriate
actions to increase the amount of its authorized common stock.
Section 6.8 Consideration. SouthTrust shall issue the SouthTrust
Shares and the Option Consideration as and when the same shall be required to
be issued pursuant to this Agreement and otherwise deliver or cause to be
delivered the Merger consideration contemplated by this Agreement.
Section 6.9 Certain Company Indebtedness. As of the Effective
Time of the Merger, SouthTrust shall pay the outstanding indebtedness of the
Company (the "Company Indebtedness") in the principal amount of $731,500 owed
to Trustmark National Bank, Jackson, Mississippi as evidenced by those certain
Promissory Notes dated October 7, 1981 and July 20, 1993 between the Company
and such bank. Notwithstanding the foregoing, SouthTrust may elect not to pay
as of the Effective Time of the Merger the Company Indebtedness and the
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Company Indebtedness will become an obligation of ST-Sub as a result of the
Merger, provided, however, that if the Company Indebtedness is not paid as of
the Effective Time of the Merger, the parties hereto shall have obtained all
necessary consents under the Promissory Notes described above in order to
consummate the Merger.
Section 6.10 Audit of Company Financial Statements. The parties
acknowledge and agree that the financial statements of the Company and the
financial statements of the Bank for the year ended December 31, 1993 will be
required to be audited in accordance with generally accepted accounting
principles in order to be included in the SouthTrust Registration Statement.
SouthTrust and the Company agree that up to $25,000 of the cost of such an
audit will be borne and paid by SouthTrust. In addition, SouthTrust and the
Company agree that if the current certified public accountant of the Company is
unwilling or will not agree to perform such audit for a fee not to exceed
$25,000, SouthTrust shall be responsible for any further negotiations, as well
as any fees or costs in excess of $25,000, with such certified public
accountant or any other certified public accountant.
Section 6.11 Redemption of Preferred Stock. Following the receipt
of the last required Consent of all Regulatory Authorities, the Company will
take appropriate steps to call for redemption all of the then outstanding 8%
Non-Cumulative Preferred Stock of the Company, par value $5.00 per share (the
"Preferred Stock"), at a redemption price not greater than the par value of
each share of Preferred Stock, plus accrued but unpaid dividends, which shares
of Preferred Stock shall be redeemed by the Company effective as of the
Effective Time of the Merger.
Section 6.12 Redemption or Repurchase of Debentures. Following
the receipt of the last required Consent of all Regulatory Authorities, the
Company will take appropriate steps to call for redemption or repurchase all of
the then outstanding 10% Convertible Subordinated Debentures due December 31,
1999 of the Company (the "Debentures") at a price not greater than the face
value (or principal amount) thereof, plus accrued but unpaid interest, which
Debentures shall be redeemed or repurchased by the Company effective as of the
Effective Time of the Merger.
Section 6.13 Directors Deferred Compensation Arrangement. The
deferred compensation arrangements among the Company, Jefferson Bank and their
respective directors, including associated life insurance, in effect as of the
date hereof and as listed and described in Disclosure Schedule 6.13 hereto
shall continue in full force and effect following the Merger.
Section 6.14 Salary Continuation Arrangements. The respective
salary continuation arrangements between the Company and David Washer and
D'Auby Schiel, including associated disability and life insurance, in effect as
of the date hereof and as listed and described in Disclosure Schedule 6.14
hereto shall continue in full force and effect following the Merger, provided,
however, that such salary continuation arrangements shall be amended as of the
date of the Effective Time of the Merger to provide that any payment required
to be made thereunder as a result of or in connection with any change of
control provisions contained therein shall be deferred, in the case of D'Auby
Schiel, until the end of the calendar month that occurs seven (7) years after
the Effective Time of the Merger and, in the case of David Washer, until the
end of the calendar month that occurs eleven (11) years after the Effective
Time of the Merger.
Section 6.15 Company Incentive Programs. The incentive
compensation arrangements of officers and employees of the Company and
Jefferson Bank in effect as of the date hereof and as listed and described in
Disclosure Schedule 6.15 hereto (the "Company Incentive Programs"), (provided
SouthTrust or an affiliate of SouthTrust elects to employ officers and
employees participating in such Company Incentive Programs immediately
following the Effective Time of the Merger), will be maintained by SouthTrust
and ST-Sub for a period of one (1) year after the Effective Time of the Merger
unless the incentive compensation arrangements of SouthTrust or its affiliates
that are available for comparable employees and executives of SouthTrust or its
affiliates (the "SouthTrust Incentive Programs") provide benefits at least
equal to those provided by the Company Incentive Programs, and, in such event,
the Company Incentive Programs shall be terminated as of the Effective Time of
the Merger, and those officers and employees of the Company or Jefferson Bank
who SouthTrust or an affiliate of SouthTrust elects to employ immediately
following the Effective Time of the Merger shall be afforded benefits under the
SouthTrust Incentive Programs consistent with those afforded comparable
executives and employees of SouthTrust or its affiliates.
Section 6.16 Funding of Redemption or Repurchase of Preferred
Stock and Debentures. As of the Effective Time, and provided that the Company
does not possess as of such date sufficient capital, surplus and
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undivided profits (or sufficient cash flow) to redeem and repurchase the
Preferred Stock and the Debentures of the Company, as contemplated by Sections
6.11 and 6.12 hereof, without causing the capital, surplus and undivided
profits of the Company remaining thereafter to be an amount less than that
required by the Regulatory Authorities, SouthTrust shall advance to the Company
sufficient funds to permit the Company to redeem and repurchase the Preferred
Stock and the Debentures, as contemplated by Sections 6.11 and 6.12 hereof, and
to permit the Surviving Corporation, after giving effect to such redemption and
repurchase, to maintain such amount of capital, surplus and undivided profits
as shall equal the minimum amount required by the Regulatory Authorities.
ARTICLE VII
MUTUAL CONDITIONS TO CLOSING
The obligations of SouthTrust and ST-Sub, on the one hand, and the
Company, on the other hand, to consummate the transactions provided for herein
shall be subject to the satisfaction of the following conditions, unless waived
as hereinafter provided for:
Section 7.1 Shareholder Approval. The Merger shall have been
approved by the requisite vote of the shareholders of the Company and the sole
shareholder of ST-Sub.
Section 7.2 Regulatory Approvals. All necessary Consents of the
Regulatory Authorities shall have been obtained and all notice and waiting
periods required by law to pass after receipt of such Consents shall have
passed, and all conditions to consummation of the Merger set forth in such
Consents shall have been satisfied.
Section 7.3 Litigation. There shall be no actual or threatened
causes of action, investigations or proceedings (i) challenging the validity or
legality of this Agreement or the consummation of the transactions contemplated
by this Agreement, or (ii) seeking damages in connection with the transactions
contemplated by this Agreement, or (iii) seeking to restrain or invalidate the
transactions contemplated by this Agreement, which, in the case of (i) through
(iii), and in the reasonable judgment of either SouthTrust or the Company,
based upon advice of counsel, would have a material adverse effect with respect
to the interests of SouthTrust or the Company, as the case may be.
Section 7.4 Proxy Statement and Registration Statement. The
Registration Statement shall have been declared effective by the SEC, no stop
order suspending the effectiveness of the Registration Statement shall have
been issued, no action, suit, proceeding or investigation by the SEC to suspend
the effectiveness of the Registration Statement shall have been initiated, and
SouthTrust shall have received all state securities laws, or "Blue Sky" permits
or other authorizations, or confirmations as to the availability of exemptions
from registration requirements, as may be necessary to issue the SouthTrust
Shares pursuant to the terms of this Agreement.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF SOUTHTRUST AND ST-SUB
The obligations of SouthTrust and ST-Sub to consummate the Merger are
subject to the fulfillment of each of the following conditions, unless waived
as hereinafter provided for:
Section 8.1 Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement and in any
certificate or document delivered pursuant hereto shall be true and correct in
all material respects as of the date of this Agreement and as of all times up
to and including the Effective Time of the Merger (as though made on and as of
the Effective Time of the Merger except to the extent such representations and
warranties are by their express provisions made as of a specified date and
except for changes therein contemplated by this Agreement).
Section 8.2 Performance of Obligations. The Company shall have
performed all covenants, obligations and agreements required to be performed by
it under this Agreement prior to the Effective Time of the Merger.
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Section 8.3 Certificate Representing Satisfaction of Conditions.
The Company shall have delivered to SouthTrust and ST-Sub a certificate dated
as of the Closing Date as to the satisfaction of the matters described in
Sections 8.1 and 8.2 hereof, and such certificate shall be deemed to constitute
additional representations, warranties, covenants, and agreements of the
Company under Article III of this Agreement.
Section 8.4 Absence of Adverse Facts. There shall have been no
determination by SouthTrust that any fact, event or condition exists or has
occurred that, in the judgment of SouthTrust, (a) would have a Material Adverse
Effect on, or which may be foreseen to have a Material Adverse Effect on, the
Condition of the Company on a consolidated basis or the consummation of the
transactions contemplated by this Agreement, (b) would be of such significance
with respect to the business or economic benefits expected to be obtained by
SouthTrust pursuant to this Agreement as to render inadvisable the consummation
of the transactions pursuant to this Agreement, (c) would be materially adverse
to the interests of SouthTrust on a consolidated basis or (d) would render the
Merger or the other transactions contemplated by this Agreement impractical
because of any state of war, national emergency, banking moratorium or general
suspension of trading on NASDAQ, the New York Stock Exchange, Inc. or other
national securities exchange.
Section 8.5 Opinion of Counsel. SouthTrust shall have received
an opinion of counsel from Heidelberg & Woodliff, P.A. or other counsel to the
Company acceptable to SouthTrust in substantially the form set forth in Exhibit
8.5 hereof.
Section 8.6 Consents Under Agreements. The Company shall have
obtained the consent or approval of each person (other than the Consents of the
Regulatory Authorities) whose consent or approval shall be required in order to
permit the succession by the Surviving Corporation to any obligation, right or
interest of the Company under any loan or credit agreement, note, mortgage,
indenture, lease, license, or other agreement or instrument, except those for
which failure to obtain such consents and approvals would not in the opinion of
SouthTrust, individually or in the aggregate, have a material adverse effect on
the Surviving Corporation or upon the consummation of the transactions
contemplated by this Agreement.
Section 8.7 Material Condition. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger by any Regulatory Authority which, in
connection with the grant of any Consent by any Regulatory Authority, imposes,
in the judgment of SouthTrust, any material adverse requirement upon SouthTrust
or its subsidiaries, including, without limitation, any requirement that
SouthTrust sell or dispose of any significant amount of the assets of the
Company or any other banking or other subsidiary of SouthTrust, provided that,
except for any such requirement relating to the above-described sale or
disposition of any significant assets of the Company or any banking or other
subsidiary of SouthTrust, no such term or condition imposed by any Regulatory
Authority in connection with the grant of any Consent by any Regulatory
Authority shall be deemed to be a material adverse requirement unless it
materially differs from terms and conditions customarily imposed by any such
entity in connection with the acquisition of banks and bank and holding
companies under similar circumstances.
Section 8.8 Matters Relating to Employment Agreements. Except as
otherwise provided in Article VI hereof, all employment agreements between the
Company, Jefferson Bank, any of their respective subsidiaries and any executive
or employee thereof, which, as of the Effective Time of the Merger, are in full
force and effect, shall be terminated in their entirety as of the Effective
Time of the Merger.
Section 8.9 Exercise of Company Options; Acknowledgment of Option
Conversion. The Company Options shall have been exercised in the manner
contemplated by Section 2.2 hereof and each holder of a Company Option
outstanding immediately prior to the Effective Time of the Merger shall have
executed and delivered to SouthTrust the instrument contemplated by Section 2.2
hereof.
Section 8.10 SouthTrust Shares Issuable in the Merger. The total
number of SouthTrust Shares issuable in the Merger, and including the total
number of SouthTrust Shares issuable in connection with the exercise of any
Company Option or the conversion of any securities or rights convertible into
or exchangeable for Company Shares, shall not exceed 294,584 SouthTrust Shares
in the aggregate.
Section 8.11 Dissenters. The holders of not more than five
percent (5%) of the outstanding Company Shares shall have elected to exercise
their right to dissent from the Merger and demand payment in cash for the fair
or appraised value of their shares.
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Section 8.12 Redemption and/or Repurchase of Preferred Stock and
Debentures. The Company shall have redeemed and/or repurchased the Preferred
Stock and Debentures of the Company in accordance with Sections 6.11, 6.12 and
6.16 hereof.
Section 8.13 Certification of Claims. The Company shall have
delivered a certificate to SouthTrust that the Company is not aware of any
pending or threatened claim under the directors and officers insurance policy
or the fidelity bond coverage of the Company.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligation of the Company to consummate the Merger as contemplated
herein is subject to each of the following conditions, unless waived as
hereinafter provided for:
Section 9.1 Representations and Warranties. The representations
and warranties of SouthTrust and ST-Sub contained in this Agreement or in any
certificate or document delivered pursuant to the provisions hereof will be
true and correct as of the Effective Time of the Merger (as though made on and
as of the Effective Time of the Merger).
Section 9.2 Performance of Obligations. SouthTrust and ST-Sub
shall have performed all covenants, obligations and agreements required to be
performed by them and under this Agreement prior to the Effective Time of the
Merger.
Section 9.3 Certificate Representing Satisfaction of Conditions.
SouthTrust and ST-Sub shall have delivered to SouthTrust and ST-Sub a
certificate dated as of the Effective Time of the Merger as to the satisfaction
of the matters described in Sections 9.1 and 9.2 hereof, and such certificate
shall be deemed to constitute additional representations, warranties,
covenants, and agreements of SouthTrust and ST-Sub under Article IV of this
Agreement.
Section 9.4 Absence of Adverse Facts. There shall have been no
determination by the Company that any fact, event or condition exists or has
occurred that, in the judgment of the Company, (a) would have a Material
Adverse Effect on, or which may be foreseen to have a Material Adverse Effect
on, the Condition of SouthTrust on a consolidated basis or the consummation of
the transactions contemplated by this Agreement, or (b) would render the Merger
or the other transactions contemplated by this Agreement impractical because of
any state of war, national emergency, banking moratorium, or a general
suspension of trading on NASDAQ, the New York Stock Exchange, Inc. or other
national securities exchange.
Section 9.5 Consents Under Agreements. SouthTrust and ST-Sub
shall have obtained the consent or approval of each person (other than the
Consents of Regulatory Authorities) whose consent or approval shall be required
in connection with the transactions contemplated hereby under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument, except those for which failure to obtain such consents and
approvals would not, in the judgment of the Company, individually or in the
aggregate, have a material adverse effect upon the consummation of the
transactions contemplated hereby.
Section 9.6 Opinion of Counsel. The Company shall have received
the opinion of Bradley, Arant, Rose & White, counsel to SouthTrust, dated the
Effective Time of the Merger, to the effect set forth in Exhibit 9.6 hereof.
Section 9.7 SouthTrust Shares. The SouthTrust Shares to be
issued in connection herewith shall be duly authorized and validly issued and,
fully paid and nonassessable, issued free of preemptive rights and free and
clear of all liens and encumbrances created by or through SouthTrust.
Section 9.8 Tax Opinion. The Company shall have received an
opinion of Heidelberg & Woodliff, P.A. or the Company's independent public
accountants, on or before the date on which the Proxy Statement of the Company
is to be mailed to holders of Company Shares, to the effect, among others, that
the Merger will constitute a reorganization within the meaning of Section 368
of the Code and that no gain or loss will be recognized by the
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shareholders of the Company to the extent that they receive SouthTrust Shares
in exchange for their Company Shares in the Merger.
Section 9.9 Price of SouthTrust Shares. If the average of the
last sales price of a share of SouthTrust common stock as reported by NASDAQ
for the last ten (10) trading days immediately prior to the Effective Time of
the Merger, is less than $16.25, provided, however, that, SouthTrust, at
SouthTrust's option and discretion, may satisfy this condition by increasing
the Conversion Ratio to the product of $56.00 divided by the last sales price
of SouthTrust common stock as reported by NASDAQ on the trading day immediately
preceding the Effective Time of the Merger.
ARTICLE X
TERMINATION, WAIVER AND AMENDMENT
Section 10.1 Termination. This Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time of the Merger:
(a) by the mutual consent in writing of SouthTrust and
the Company; or
(b) by SouthTrust or the Company if the Merger shall not
have occurred on or prior to November 30, 1994, provided that the failure to
consummate the Merger on or before such date is not caused by any breach of any
of the representations, warranties, covenants or other agreements contained
herein by the party electing to terminate pursuant to this Section 10.1(b);
(c) by SouthTrust or the Company (provided that the
terminating party is not then in breach of any representation, warranty,
covenant or other agreement contained herein) in the event that any of the
conditions precedent to the obligations of the nonterminating party to
consummate the Merger cannot be satisfied or fulfilled;
(d) by SouthTrust if: (i) SouthTrust shall have
determined that any fact, event or condition exists that, in the judgment of
SouthTrust, (A) is materially at variance with any warranty or representation
of the Company, Jefferson Bank or any of their respective subsidiaries set
forth in the Agreement or is a material breach of any covenant or agreement of
the Company, Jefferson Bank or any of their respective subsidiaries contained
in the Agreement, (B) has a Material Adverse Effect or can be reasonably
foreseen to have a Material Adverse Effect upon the Condition of the Company on
a consolidated basis or upon the consummation of the transactions contemplated
by the Agreement, (C) pertains to the Company, Jefferson Bank or any of their
respective subsidiaries and would be materially adverse to the interests of
SouthTrust and ST-Sub on a consolidated basis, (D) pertains to the Company,
Jefferson Bank or any of their respective subsidiaries and would be of such
significance with respect to the business or economic benefits expected to be
obtained by SouthTrust under this Agreement so as to render inadvisable
consummation of the transactions contemplated by the Agreement, (E) renders the
Merger or the other transactions contemplated by this Agreement impractical
because of any state of war, national emergency, banking moratorium or general
suspension of trading on NASDAQ, the New York Stock Exchange, Inc. or any other
national securities exchange; or (ii) there shall be any litigation or threat
of litigation (A) challenging the validity or legality of this Agreement or the
consummation of the transactions contemplated by this Agreement, (B) seeking
damages in connection with the consummation of the transactions contemplated by
this Agreement or (C) seeking to restrain or invalidate the consummation of the
transactions contemplated by this Agreement.
(e) by the Company if (i) the Company shall have
determined that any fact, event or condition exists that, in the judgment of
the Company, (A) is materially at variance with any warranty or representation
of SouthTrust or ST-Sub contained in the Agreement or is a material breach of
any covenant or agreement of SouthTrust of ST-Sub contained in the Agreement,
(B) has a material adverse effect or can be reasonably seen to have a material
adverse effect upon the consummation of the transactions contemplated by the
Agreement, (ii) there shall be any litigation or threat of litigation (A)
challenging the validity or legality of this Agreement or the consummation of
the transactions contemplated by this Agreement, (B) seeking damages in
connection with the consummation of the transactions contemplated by this
Agreement or (C) seeking to restrain or invalidate the consummation of
transactions contemplated by this Agreement, or (iii) the Company shall have
determined that any fact, event or condition exists that, in the judgment of
the Company, would render the Merger and the other
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transactions contemplated by this Agreement impractical because of any state of
war, national emergency, banking moratorium or general suspension of trading on
NASDAQ, the New York Stock Exchange, Inc. or other national securities
exchange.
Section 10.2 Effect of Termination. In the event of the
termination and abandonment of this Agreement, it shall terminate and become
void, without liability on behalf of any party, and have no effect, except as
otherwise provided herein.
Section 10.3 Amendments. To the extent permitted by law, this
Agreement may be amended by a subsequent writing signed by each of SouthTrust,
ST-Sub and the Company.
Section 10.4 Waivers. Subject to Section 12.10 hereof, prior to
or at the Effective Time of the Merger, SouthTrust and ST-Sub, on the one hand,
and the Company, on the other hand, shall have the right to waive any default
in the performance of any term of this Agreement by the other, to waive or
extend the time for the compliance or fulfillment by the other of any and all
of the other's obligations under this Agreement and to waive any or all of the
conditions to its obligations under this Agreement, except any condition,
which, if not satisfied, would result in the violation of any law or any
applicable governmental regulation.
Section 10.5 Non-Survival of Representations and Warranties. No
representations, warranties, covenants or agreements in this Agreement or in
any instrument delivered by SouthTrust, ST-Sub or the Company shall survive the
Merger; provided, however, that any representation or warranty in any
agreement, contract, report, opinion, undertaking or other document or
instrument delivered hereunder in whole or in part by any person other than
SouthTrust, ST-Sub, the Company or Jefferson Bank (or directors and officers
thereof in their capacities as such) shall not so terminate and shall not be so
extinguished; and provided further, that no representation or warranty of
SouthTrust, ST-Sub, the Company or Jefferson Bank contained herein shall be
deemed to be terminated or extinguished so as to deprive SouthTrust or ST-Sub,
on the one hand, and the Company or Jefferson Bank, on the other hand, of any
defense at law or in equity which any of them otherwise would have to any claim
against them by any person, including, without limitation, any shareholder or
former shareholder of either party. No representation or warranty in this
Agreement shall be affected or deemed waived by reason of the fact that
SouthTrust, ST-Sub, the Company or Jefferson Bank and/or its representatives
knew or should have known that any such representation or warranty was, is,
might be or might have been inaccurate in any respect.
ARTICLE XI
DEFINITION
As used in this Agreement, "Material Adverse Effect" shall
mean an event, change or occurrence which either alone or when aggregated with
other events, changes and occurrences has resulted, or might reasonably be
expected to result, in a reduction of ten percent (10%) or more in the
shareholders' equity (consolidated, if appropriate) from the amount reflected
in, in the case of the Company, the Call Reports of the Company for the fiscal
year ended December 31, 1993, in the case of Jefferson Bank, the Call Reports
of Jefferson Bank for the fiscal year ended December 31, 1993, and, in the case
of SouthTrust, the Financial Statements of SouthTrust for the fiscal year ended
December 31, 1993, provided that Material Adverse Effect shall not be deemed to
include the impact of (i) changes in any code, law, ordinance, regulation,
reporting or licensing requirement, rule or statute, including, without
limitation, those promulgated, interpreted or enforced by any of the Regulatory
Authorities, of general applicability or interpretations thereof by courts or
governmental authorities, or (ii) changes in generally accepted accounting
principles or regulatory accounting principles generally applicable to banks
and their holding companies.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement among SouthTrust, ST-Sub and
the Company with respect to the transactions contemplated hereunder and this
Agreement supersedes all prior arrangements or understandings with respect
thereto, whether
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written or oral, including that certain letter respecting the preliminary
understanding between the parties dated March 15, 1994. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors. Nothing in this Agreement,
expressed or implied, is intended to confer upon any person, firm, corporation
or entity, other than the parties hereto and their respective successors, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
Section 12.2 Notices. All notices or other communications which
are required or permitted hereunder shall be in writing and sufficient if
delivered personally or sent by first class or registered or certified mail,
postage prepaid, telegram or telex or other facsimile transmission addressed as
follows:
If to the Company:
First Jefferson Corporation
854 Howard Avenue
Post Office Box 1419
Biloxi, Mississippi
Attention: D'Auby Schiel
Fax (601) 374-3217
with a copy to:
Heidelberg & Woodliff, P.A.
14th Floor Capital Towers
125 South Congress Street
Jackson, Mississippi 39201
Attention: Anson B. Chunn, Esq.
Fax (601) 353-2961
If to ST-Sub or SouthTrust, then to:
SouthTrust Corporation
420 North 20th Street
Birmingham, Alabama 35203
Attention: Mr. Frederick W. Murray, Jr.
Fax (205) 254-5022
with a copy to:
Bradley, Arant, Rose & White
1400 Park Place Tower
2001 Park Place
Birmingham, Alabama 35203
Attention: C. Larimore Whitaker, Esq.
Fax (205) 252-0264
All such notices or other communications shall be deemed to
have been delivered (i) upon receipt when delivery is made by hand, (ii) on the
third (3rd) business day after deposit in the United States mail when delivery
is made by first class, registered or certified mail, and (iii) upon
transmission when made by telegram, telex or other facsimile transmission if
evidenced by a sender transmission completed confirmation.
Section 12.3 Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other competent authority to be invalid, void or unenforceable
or against public or regulatory policy, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall remain in full
force and effect and in no way shall be affected, impaired or invalidated, if,
but only if, pursuant to such remaining terms, provisions, covenants and
restrictions the Merger may be consummated
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in substantially the same manner as set forth in this Agreement as of the later
of the date this Agreement was executed or last amended.
Section 12.4 Costs and Expenses. Except as provided in Section
6.10 hereof, expenses incurred by the Company on the one hand and SouthTrust on
the other hand, in connection with or related to the authorization, preparation
and execution of this Agreement, the solicitation of shareholder approval and
all other matters related to the closing of the transactions contemplated
hereby, including all fees and expenses of agents, representatives, counsel and
accountants employed by either such party or its affiliates, shall be borne
solely and entirely by the party which has incurred same. Notwithstanding the
foregoing, if the Merger provided for herein is not consummated because a
condition is not satisfied or because SouthTrust terminates this Agreement, and
if the Company has not breached its representations and warranties, nor its
covenants and agreements contained herein, then SouthTrust agrees to reimburse
the Company for its reasonable and documented out-of-pocket costs and expenses
which are incurred by it in connection with the Merger and are payable (or have
been paid) to third parties.
Section 12.5 Captions. The captions as to contents of particular
articles, sections or paragraphs contained in this Agreement and the table of
contents hereto are inserted only for convenience and are in no way to be
construed as part of this Agreement or as a limitation on the scope of the
particular articles, sections or paragraphs to which they refer.
Section 12.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document with the same force
and effect as though all parties had executed the same document.
Section 12.7 Governing Law. This Agreement is made and shall be
governed by and construed in accordance with the laws of the State of
Mississippi without respect to its conflicts of laws principles.
Section 12.8 Persons Bound; No Assignment. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors, distributees, and assigns, but notwithstanding the
foregoing, this Agreement may not be assigned by any party hereto unless the
prior written consent of the other parties is first obtained (other than by
ST-Sub to another affiliate of SouthTrust).
Section 12.9 Exhibits and Schedules. Each of the exhibits and
schedules attached hereto is an integral part of this Agreement and shall be
applicable as if set forth in full at the point in the Agreement where
reference to it is made.
Section 12.10 Waiver. The waiver by any party of the performance of
any agreement, covenant, condition or warranty contained herein shall not
invalidate this Agreement, nor shall it be considered a waiver of any other
agreement, covenant, condition or warranty contained in this Agreement. A
waiver by any party of the time for performing any act shall not be deemed a
waiver of the time for performing any other act or an act required to be
performed at a later time. The exercise of any remedy provided by law, equity
or otherwise and the provisions in this Agreement for any remedy shall not
exclude any other remedy unless it is expressly excluded. The waiver of any
provision of this Agreement must be signed by the party or parties against whom
enforcement of the waiver is sought. This Agreement and any exhibit,
memorandum or schedule hereto or delivered in connection herewith may be
amended only by a writing signed on behalf of each party hereto.
Section 12.11 Construction of Terms. Whenever used in this
Agreement, the singular number shall include the plural and the plural the
singular. Pronouns of one gender shall include all genders. Accounting terms
used and not otherwise defined in this Agreement have the meanings determined
by, and all calculations with respect to accounting or financial matters unless
otherwise provided for herein, shall be computed in accordance with generally
accepted accounting principles, consistently applied. References herein to
articles, sections, paragraphs, subparagraphs or the like shall refer to the
corresponding articles, sections, paragraphs, subparagraphs or the like of this
Agreement. The words "hereof", "herein", and terms of similar import shall
refer to this entire Agreement. Unless the context clearly requires otherwise,
the use of the terms "including", "included", "such as", or terms of similar
meaning, shall not be construed to imply the exclusion of any other particular
elements.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered, and their respective seals hereunto affixed, by
their officers thereunto duly authorized, and have caused this Agreement to be
dated as of the date and year first above written.
[CORPORATE SEAL]
FIRST JEFFERSON CORPORATION
By: /s/ D'AUBY H. SCHIEL
----------------------------
ATTEST: Its Chief Executive Officer
/s/ VICTOR B. PRINGLE, JR.
- --------------------------
Its Secretary
[CORPORATE SEAL]
SOUTHTRUST OF MISSISSIPPI, INC.
By: /s/ ALTON E. YOTHER
----------------------------
ATTEST: Its Senior Vice President
/s/ A.D. BARNARD
- --------------------------
Its Secretary
[CORPORATE SEAL]
SOUTHTRUST CORPORATION
By: /s/ ALTON E. YOTHER
----------------------------
ATTEST: Its Senior Vice President
/s/ A.D. BARNARD
- --------------------------
Its Secretary
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<PAGE> 125
AGREEMENT AND PLAN OR MERGER
OF SOUTHTRUST OF MISSISSIPPI, INC.
WITH FIRST JEFFERSON CORPORATION
LIST OF DISCLOSURE SCHEDULES
________________________________________________________
Disclosure Schedule 2.1(b)
Disclosure Schedule 2.2
Disclosure Schedule 3.1(d)
Disclosure Schedule 3.2(c)
Disclosure Schedule 3.2(d)
Disclosure Schedule 3.4
Disclosure Schedule 3.5
Disclosure Schedule 3.5
Disclosure Schedule 3.7
Disclosure Schedule 3.10
Disclosure Schedule 3.11
Disclosure Schedule 3.12(a)
Disclosure Schedule 3.12(i)
Disclosure Schedule 3.13(a)
Disclosure Schedule 3.14(a)
Disclosure Schedule 3.14(b)
Disclosure Schedule 3.15
Disclosure Schedule 3.16
Disclosure Schedule 3.20
Disclosure Schedule 3.22
Disclosure Schedule 3.23
Disclosure Schedule 4.4
Disclosure Schedule 4.7
Disclosure Schedule 5.1(b)(iv)
Disclosure Schedule 6.13
Disclosure Schedule 6.14
Disclosure Schedule 6.15
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EXHIBIT B
ARTICLE 13
DISSENTERS' RIGHTS
SUBARTICLE A. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
79-4-13.01 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 actions:
(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:
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(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;
(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
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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
(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 79-13.22(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 uncertified 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:
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(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.
(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.
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(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, 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 asses 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 benefitted.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation and the Bylaws of
Registrant provide that Registrant shall indemnify its officers,
directors, employees and agents to the extent permitted by the General
Corporation Law of the State of Delaware, which permits a corporation to
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, against expenses (including attorney's fees),
judgments, fines and settlements incurred by him in connection with any
such suit or proceeding, if he acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation, and, in the case of a derivative action on behalf of the
corporation, if he not be adjudged to be liable for negligence or
misconduct.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this Registration
Statement:
2 Agreement and Plan of Merger between SouthTrust of Mississippi,
Inc. and First Jefferson Corporation, joined in by SouthTrust
Corporation (included as Exhibit A to the Proxy
Statement/Prospectus filed as part of this Registration Statement).
* 4(a) Certificate of Adoption of Resolutions designating Series A
Junior Participating Preferred Stock, adopted February 22, 1989,
which was filed as Exhibit 1 to SouthTrust Corporation's
Registration Statement on Form 8- A (File No. 1-3613).
* 4(b) Stockholders' Rights Agreement, dated as of February 22, 1989,
between SouthTrust Corporation and Mellon Bank, N.A., Rights
Agent, which was filed as Exhibit 1 to SouthTrust Corporation's
Registration Statement on Form 8-A (File No. 1-3613).
* 4(c) Indenture, dated as of May 1, 1987 between SouthTrust Corporation
and National Westminster Bank USA, which was filed as Exhibit
4(a) to SouthTrust Corporation's Registration Statement on
Form S-3 (Registration No. 33-13637).
* 4(d) Subordinated Indenture, dated as of May 1, 1992, between
SouthTrust Corporation and Chemical Bank, which was filed as
Exhibit 4(1)(ii) to the Registration Statement on Form S-3 of
SouthTrust Corporation (Registration No. 33-44857).
* 4(e) Composite Restated Bylaws of SouthTrust Corporation, as amended
through October 13, 1989, which was filed as Exhibit 4(m) to the
Registration Statement on Form S-3 of SouthTrust Corporation
(Registration No. 33-50107).
* 4(f) Composite Restated Certificate of Incorporation of SouthTrust
Corporation, as amended through June 2, 1993, which was filed
as Exhibit 4(k) to the Registration Statement on Form S-3 of
SouthTrust Corporation (Registration No. 33-50107).
5 Opinion of Bradley, Arant, Rose & White as to the legality of the
securities being registered.
8 Opinion of Heidelberg & Woodliff, P.A. regarding certain tax
matters.
23(a) Consent of Arthur Andersen & Co.
23(b) Consent of Shearer, Taylor & Co., P.A.
23(c) Consent of Bradley, Arant, Rose & White (included in Exhibit 5).
23(d) Consent of Heidelberg & Woodliff, P.A.
24 Powers of Attorney.
______________________________________
* Incorporated by reference.
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ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement.
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1993;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to
the plan or distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of 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 of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) (1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
Registration Statement, by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form
with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the
other items of the applicable form.
(2) The registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii)
that purports to meet the requirements of Section 10(a)(3) of
the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used
until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933,
each such post- effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to
II-2
<PAGE> 133
a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of 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> 134
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
Birmingham, State of Alabama, on August 5, 1994.
SOUTHTRUST CORPORATION
By: /s/ WALLACE D. MALONE, JR.
-------------------------------------
Its Chairman of the Board of
Directors and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ WALLACE D. MALONE, JR. Chairman, Chief Executive August 5, 1994
- ------------------------------------------- Officer, Director
Wallace D. Malone, Jr.
President, Chief Operating August __, 1994
- ------------------------------------------- Officer, Director
Roy W. Gilbert, Jr.
/s/ AUBREY D. BARNARD Secretary, Treasurer and August 5, 1994
- ------------------------------------------- Controller (Principal
Aubrey D. Barnard Accounting and
Financial Officer)
Director August __, 1994
- -------------------------------------------
H. Allen Franklin
Director August __, 1994
- -------------------------------------------
Herbert Stockham
* Director August 5, 1994
- -------------------------------------------
Bill L. Harbert
* Director August 5, 1994
- -------------------------------------------
T. W. Mitchell
* Director August 5, 1994
- -------------------------------------------
William C. Hulsey
</TABLE>
II-4
<PAGE> 135
<TABLE>
<S> <C> <C>
* Director August 5, 1994
- -------------------------------------------
John M. Bradford
* Director August 5, 1994
- -------------------------------------------
Wm. Kendrick Upchurch, Jr.
* Director August 5, 1994
- -------------------------------------------
Charles G. Taylor
Director August __, 1994
- -------------------------------------------
Allen J. Keesler, Jr.
* /s/ WILLIAM L. PRATER August 5, 1994
- -------------------------------------------
William L. Prater
as Attorney-in-fact
</TABLE>
II-5
<PAGE> 136
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
PAGE IN
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION FILING
--------- ----------- ----------
<C> <C> <C>
2 Agreement and Plan of Merger between SouthTrust of Mississippi, Inc. and First Jefferson
Corporation, joined in by SouthTrust Corporation (included as Exhibit A to the
Proxy Statement/Prospectus filed as part of this Registration Statement).
* 4(a) Certificate of Adoption of Resolutions designating Series A Junior Participating Preferred
Stock, adopted February 22, 1989, which was filed as Exhibit 1 to SouthTrust Corporation's
Registration Statement on Form 8-A (File No. 1-3613).
* 4(b) Stockholders' Rights Agreement, dated as of February 22, 1989, between SouthTrust Corporation
and Mellon Bank, N.A., Rights Agent, which was filed as Exhibit 1 to SouthTrust Corporation's
Registration Statement on Form 8-A (File No. 1-3613).
* 4(c) Indenture, dated as of May 1, 1987 between SouthTrust Corporation and National Westminster Bank
USA, which was filed as Exhibit 4(a) to SouthTrust Corporation's Registration Statement on
Form S-3 (Registration No. 33-13637).
* 4(d) Subordinated Indenture, dated as of May 1, 1992, between SouthTrust Corporation and Chemical Bank,
which was filed as Exhibit 4(1)(ii) to the Registration Statement on Form S-3 of SouthTrust Corporation
(Registration No. 33-44857).
* 4(e) Composite Restated Bylaws of SouthTrust Corporation, as amended through October 13, 1989, which was
filed as Exhibit 4(m) to the Registration Statement on Form S-3 of SouthTrust Corporation (Registration
No. 33-50107).
* 4(f) Composite Restated Certificate of Incorporation of SouthTrust Corporation, as amended through June 2, 1993,
which was filed as Exhibit 4(k) to the Registration Statement on Form S-3 of SouthTrust Corporation
(Registration No. 33-50107).
5 Opinion of Bradley, Arant, Rose & White as to the legality of the securities being registered.
8 Opinion of Heidelberg & Woodliff, P.A. regarding certain tax matters.
23(a) Consent of Arthur Andersen & Co.
23(b) Consent of Shearer, Taylor & Co., P.A.
23(c) Consent of Bradley, Arant, Rose & White (included in Exhibit 5).
23(d) Consent of Heidelberg & Woodliff, P.A.
24 Powers of Attorney.
</TABLE>
______________________________________
* Incorporated by reference.
II-6
<PAGE> 1
EXHIBIT 5
August 8, 1994
SouthTrust Corporation
420 North 20th Street
Birmingham, Alabama 35203
Gentlemen:
In our capacity as counsel for SouthTrust Corporation, a Delaware
corporation ("SouthTrust"), we have examined the Registration Statement on Form
S-4 (the "Registration Statement"), in form as proposed to be filed by
SouthTrust with the Securities and Exchange Commission under the provisions of
the Securities Act of 1933, as amended, on August 8, 1994, relating to the
proposed merger (the "Merger") of First Jefferson Corporation ("Jefferson")
with SouthTrust of Mississippi, Inc., a Mississippi corporation and
wholly-owned subsidiary of SouthTrust, and the issuance of up to 294,584 shares
of Common Stock, par value $2.50 per share (the "Shares"), and associated rights
to purchase 1/100 of one share of Series A Junior Participating Preferred Stock
(the "Rights") in connection with the Merger. Pursuant to the Merger, each
holder of shares of common stock of Jefferson will receive Shares and Rights.
In this connection, we have examined such records, documents and proceedings as
we have deemed relevant and necessary as a basis for the opinions expressed
herein.
Upon the basis of the foregoing, we are of the opinion that:
(i) The Shares and Rights to be offered under the Registration
Statement, to the extent actually issued pursuant to the Merger, have been duly
and validly authorized and issued and will be fully paid and nonassessable; and
(ii) Under the laws of the State of Delaware, no personal liability
attaches to the ownership of the Shares and Rights of SouthTrust.
<PAGE> 2
SouthTrust Corporation
August 8, 1994
Page 2
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the above-referenced Registration
Statement. In addition, we hereby consent to the inclusion of the statements
made in reference to our firm under the caption "LEGAL MATTERS" in the Proxy
Statement/Prospectus, which is a part of the Registration Statement.
Very truly yours,
/s/ Bradley, Arant, Rose & White
<PAGE> 1
EXHIBIT 8
(LOGO)
HEIDELBERG & WOODLIFF, P.A.
Attorneys at Law
August 5, 1994
First Jefferson Corporation
854 Howard Avenue
Biloxi, Mississippi 39633
RE: Merger of First Jefferson Corporation ("Jefferson") into SouthTrust of
Mississippi, Inc. ("ST Sub")
Gentlemen:
You have requested our opinion as to certain federal income tax consequences
incident to the proposed merger of Jefferson into ST Sub pursuant to that
certain Agreement and Plan of Merger ("Agreement"), dated as of April 25, 1994,
by and among SouthTrust Corporation ("SouthTrust"), Jefferson and ST Sub as
described in the Registration Statement on Form S-4, Registration Number ______
("Registration Statement"), and the final Prospectus/Proxy Statement
("Prospectus") constituting part of the Registration Statement. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
such terms in the Prospectus.
In rendering this opinion, we have examined only the Agreement and the
Prospectus. We have examined applicable federal income tax provisions of the
Internal Revenue Code of 1986, as amended ("Code"), and regulatory and case law
related thereto. We have made no other examination, and our opinion is
accordingly limited by the scope of our review. We have relied without
investigation upon statements of fact, representations and warranties set forth
in the Agreement and the Prospectus, and we have not independently verified
such matters. In addition, in rendering this opinion we have made certain
assumptions as set forth below.
a. We assume that the merger will take place as described in the
Agreement and the Prospectus, and that the merger will comply with all
provisions of the Mississippi Business Corporation Act.
b. We assume that the fair market value of SouthTrust Stock
received by each Jefferson shareholder will be approximately equal to the fair
market value of the Jefferson Common Stock surrendered in the exchange.
<PAGE> 2
(LOGO)
Heidelberg & Woodliff, PA
First Jefferson Corporation
August 5, 1994
Page 2
c. We assume that there is no plan or intention by the
shareholders of Jefferson to sell, exchange or otherwise dispose of their stock
in SouthTrust received as a result of the merger and that such shareholders,
considered in the aggregate, will receive and retain a sufficient interest in
SouthTrust for a sufficient period of time to satisfy the judicial "continuity
of interest" requirement applicable with respect to reorganizations.
d. We assume that SouthTrust is in control of ST Sub within the
meaning of Code Section 368(c).
e. We assume that following the merger, ST Sub will not issue
additional shares of its stock that would result in SouthTrust losing control
of ST Sub within the meaning of Section 368(c) of the Internal Revenue Code.
f. We assume that SouthTrust has no plan or intention to
reacquire any of its stock issued in the merger.
g. We assume that SouthTrust has no plan or intention to
liquidate ST Sub, to merge ST Sub with or into another corporation, to sell or
otherwise dispose of the stock of ST Sub, or to cause ST Sub to sell or
otherwise dispose of any of the assets of Jefferson acquired in the
transaction, except for dispositions made in the ordinary course of business.
h. We assume that following the merger, ST Sub will continue the
historic business of Jefferson.
i. We assume there is no inter-corporate indebtedness existing
between SouthTrust and Jefferson or between ST Sub and Jefferson that was
issued, acquired, or will be settled at a discount.
j. We assume that ST Sub will acquire substantially all of the
assets of Jefferson within the meaning of Code Section 368 (a)(2)(D).
Based upon and subject to the foregoing, and further subject to the
qualifications and limitations set forth below, we are of the opinion that:
1. The Merger will constitute a reorganization within the meaning
of Sections 368 (a)(1)(A) and 368(a)(2)(D) of the Code.
<PAGE> 3
(LOGO)
HEIDELBERG & WOODLIFF, P.A.
First Jefferson Corporation
August 5, 1994
Page 3
2. No gain or loss will be recognized by a stockholder of
Jefferson upon the exchange of Jefferson Common Stock solely for shares of
SouthTrust Common Stock.
3. The basis of the SouthTrust Common Stock to be received by the
Jefferson shareholders (including any fractional share interest to which they
may be entitled) will be same as the basis of the Jefferson Common Stock
surrendered in the exchange.
4. The holding period of the shares of SouthTrust Common Stock
(including any fractional share interest to which they may be entitled)
received by the shareholders of Jefferson will include the period during which
the Jefferson Common Stock surrendered in exchange therefor was held, provided
that the shares of Jefferson Common Stock were held as capital assets within the
meaning of Section 1221 of the Code as of the Effective Time.
5. Jefferson shareholders who exercise dissenters' rights, and as
a result of which receive only cash, will be treated as having received such
cash as a distribution in redemption of their Jefferson Common Stock, subject
to the provisions and limitations of Section 302 of the Code.
6. The payment of cash to a Jefferson shareholder in lieu of
issuing a fractional share interest in SouthTrust Common Stock will be treated
for federal income tax purposes as if the fractional share actually was issued
as part of the Merger and then was redeemed by SouthTrust. This cash payment
will be treated as having been received as a distribution in full payment and
exchange for the stock redeemed as provided in Section 302(a) of the Code.
7. Each holder of a Jefferson Option who receives SouthTrust
Common Stock therefore in accordance with Section 2.2 of the Agreement will
recognize ordinary income equal to the fair market value of the SouthTrust
Common Stock received in connection therewith.
8. No gain or loss will be recognized by the holders of
Directors' Qualifying Shares upon the receipt of the original purchase price
paid for such Directors' Qualifying Shares.
<PAGE> 4
(LOGO)
HEIDELBERG & WOODLIFF, P.A.
First Jefferson Corporation
August 5, 1994
Page 4
9. Jefferson, SouthTrust and ST Sub each will be a "Party to a
Reorganization" within the meaning of Section 368(b) of the Code.
Our opinions herein contained are subject to the following qualifications:
(i) The opinions expressed in this letter are based upon the applicable
laws, regulations and ordinances in effect as of the date of this letter. In
delivering this letter to you, we are not undertaking to apprise you either of
any transactions, events or occurrences taking place after the date of this
letter of which we may acquire any knowledge or any change in any applicable
laws taking place after the date of this letter which may affect our opinions
set forth herein.
(ii) We are members of the Bar of the State of Mississippi and do not purport
to be experts upon, or to express any opinion herein concerning, any laws other
than the laws of the State of Mississippi and federal law of the United States
of America. This opinion is limited to matters arising under and governed by
the provisions of the Code relating to federal income tax and applicable
regulatory provisions of the Code relating to federal income tax and applicable
regulatory and case law promulgated thereunder or pursuant thereto. We
expressly decline to render any opinion as to the effect of state, local or
other tax or other laws.
(iii) Our opinion is limited to the specific opinions expressed above, and
no other opinions are intended or should they be inferred.
(iv) This opinion is rendered as of the date hereof and is solely for the
benefit of the addressees and not for the benefit of any other person or entity.
The opinion may not be relied upon by any person for any other purpose without
our prior written consent.
Yours very truly,
HEIDELBERG & WOODLIFF, P.A.
/s/ Elizabeth King
- ------------------
Elizabeth King
KRL/gm
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement (Form S-4 for the registration of
294,584 shares of the Company's $2.50 par value common stock, in connection
with the merger agreement between SouthTrust Corporation and First Jefferson
Corporation) of our report dated February 4, 1994 incorporated by reference in
SouthTrust Corporation's Form 10-K for the year ended December 31, 1993 and to
all references to our Firm included in or made a part of this Registration
Statement.
/s/ Arthur Andersen & Co.
Birmingham, Alabama
August 5, 1994
<PAGE> 1
EXHIBIT 23(b)
SHEARER
TAYLOR
& CO.
A Professional Association
We issued our report dated June 17, 1994, accompanying the consolidated
financial statements of First Jefferson Corporation and Subsidiary contained in
the Proxy Statement/Prospectus on Form S-4 of SouthTrust Corporation. We
consent to the use of the aforementioned report in the Proxy
Statement/Prospectus and to the use of our name as it appears under the caption
"Experts."
/s/ Shearer, Taylor & Co. P.A.
- -----------------------------
Jackson, Mississippi
August 8, 1994
<PAGE> 1
EXHIBIT 23(d)
CONSENT OF HEIDELBERG & WOODLIFF, P.A.
We hereby consent to the reference to our law firm under the captions "The
Merger-Regulatory Approvals and Certain Other Conditions to the Merger; Waiver
and Amendment" and "Certain Federal Income Tax Considerations" in the
Prospectus/Proxy Statement constituting part of this Registration Statement on
Form S-4 filed by SouthTrust Corporation.
Heidelberg & Woodliff, P.A.
By: /s/ Leigh H. Patterson
----------------------
Dated: August 5, 1994
<PAGE> 1
EXHIBIT 24
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints Aubrey D. Barnard
and William L. Prater, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a registration
statement of SouthTrust Corporation on Form S-4 in connection with the
acquisition of First Jefferson Corporation and relating to the registration of
shares of SouthTrust common stock, par value $2.50 per share, including all
amendments to such registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 5th day of August, 1994.
/s/ WILLIAM C. HULSEY
------------------------------------------------------
William C. Hulsey
Director
<PAGE> 2
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints Aubrey D. Barnard
and William L. Prater, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a registration
statement of SouthTrust Corporation on Form S-4 in connection with the
acquisition of First Jefferson Corporation and relating to the registration of
shares of SouthTrust common stock, par value $2.50 per share, including all
amendments to such registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 5th day of August, 1994.
/s/ T.W. MITCHELL
----------------------------------------------------
T.W. Mitchell
Director
<PAGE> 3
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints Aubrey D. Barnard
and William L. Prater, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a registration
statement of SouthTrust Corporation on Form S-4 in connection with the
acquisition of First Jefferson Corporation and relating to the registration of
shares of SouthTrust common stock, par value $2.50 per share, including all
amendments to such registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 5th day of August, 1994.
/s/ CHARLES G. TAYLOR
-------------------------------------------------------
Charles G. Taylor
Director
<PAGE> 4
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints Aubrey D. Barnard
and William L. Prater, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a registration
statement of SouthTrust Corporation on Form S-4 in connection with the
acquisition of First Jefferson Corporation and relating to the registration of
shares of SouthTrust common stock, par value $2.50 per share, including all
amendments to such registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 5th day of August, 1994.
/s/ BILL L. HARBERT
--------------------------------------------------------------
Bill L. Harbert
Director
<PAGE> 5
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints Aubrey D. Barnard
and William L. Prater, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a registration
statement of SouthTrust Corporation on Form S-4 in connection with the
acquisition of First Jefferson Corporation and relating to the registration of
shares of SouthTrust common stock, par value $2.50 per share, including all
amendments to such registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 5th day of August, 1994.
/s/ JOHN M. BRADFORD
-------------------------------------------------------------
John M. Bradford
Director
<PAGE> 6
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director
whose signature appears below hereby constitutes and appoints Aubrey D. Barnard
and William L. Prater, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign a registration
statement of SouthTrust Corporation on Form S-4 in connection with the
acquisition of First Jefferson Corporation and relating to the registration of
shares of SouthTrust common stock, par value $2.50 per share, including all
amendments to such registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and with any state securities commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Dated as of this 5th day of August, 1994.
/s/ W.K. UPCHURCH, JR.
-----------------------------------------------------------
W.K. Upchurch, Jr.
Director