<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-00193
[LETTERHEAD OF BFC]
February 2, 1996
TO THE SHAREHOLDERS OF
BANKERS FIRST CORPORATION:
You are cordially invited to attend a Special Meeting of the Shareholders
(the "Special Meeting") of Bankers First Corporation ("BFC") to be held on
March 12, 1996, at 9:00 a.m., local time, at the principal executive offices
of BFC at One 10th Street, Augusta, Georgia, notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Merger (the "Merger Agreement")
which provides for the merger (the "Merger") of BFC with and into a subsidiary
of SouthTrust Corporation ("SouthTrust"). Upon consummation of the Merger,
each share of BFC common stock issued and outstanding (except for certain
shares held by BFC or SouthTrust, or their respective subsidiaries, in each
case other than shares held in a fiduciary capacity or in satisfaction of debts
previously contracted) will be exchanged for 1.126 shares of SouthTrust common
stock (subject to possible adjustment as described in the accompanying Proxy
Statement/Prospectus), with cash being paid in lieu of issuing fractional
shares.
Enclosed are the (i) Notice of Special Meeting, (ii) Proxy
Statement/Prospectus, and (iii) Proxy for the Special Meeting. The Proxy
Statement/Prospectus describes in more detail the Merger Agreement and the
proposed Merger, including a description of the conditions to consummation of
the Merger and the effects of the Merger on the rights of BFC shareholders.
Please read these materials carefully and consider thoughtfully the information
set forth in them.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
CONSUMMATION OF THE MERGER CONTEMPLATED THEREBY, AND UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
It is important to understand that approval of the Merger Agreement will
require the affirmative vote of a majority of the votes entitled to be cast at
the Special Meeting by the holders of the issued and outstanding shares of BFC
common stock. Accordingly, whether or not you plan to attend the Special
Meeting, you are urged to complete, sign, and return promptly the enclosed
proxy card. If you attend the Special Meeting, you may vote in person if you
wish, even if you previously have returned your proxy card. The proposed
Merger is a significant step for BFC and your vote on this matter is of great
importance.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR APPROVAL OF
THE AGREEMENT BY MARKING THE ENCLOSED PROXY CARD "FOR" ITEM ONE.
We look forward to seeing you at the Special Meeting.
Sincerely,
/s/ H.M. OSTEEN, JR.
--------------------
H. M. OSTEEN, JR.
President and Chief Executive Officer
<PAGE> 2
BANKERS FIRST CORPORATION
ONE 10TH STREET
AUGUSTA, GEORGIA 30901
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a Special Meeting of Shareholders of Bankers
First Corporation, a Georgia corporation ("BFC"), will be held on March 12,
1996, at 9:00 a.m., local time, at the principal executive offices of BFC at
One 10th Street, Augusta, Georgia, for the following purposes (the "Special
Meeting"):
1. To consider and vote upon the Agreement and Plan of Merger
dated as of October 31, 1995, (the "Merger Agreement"), a copy of which is
annexed as Exhibit A to the accompanying Proxy Statement/Prospectus, by
and among BFC, SouthTrust Corporation, a Delaware corporation
("SouthTrust"), and SouthTrust of Georgia, Inc. ("ST-Sub"), a Georgia
corporation and wholly-owned subsidiary of SouthTrust, whereby BFC will be
merged with and into ST-Sub and the shareholders of BFC will receive 1.126
shares of common stock of SouthTrust (subject to possible adjustment in
the event of certain occurrences), 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 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 BFC
at the close of business on January 24, 1996, are entitled to notice of and to
vote at the Special Meeting and any adjournment thereof.
The meeting may be adjourned from time to time without notice other than
announcement at the meeting, or at any adjournment thereof, and any business
for which notice is hereby given may be transacted at any such adjournment.
A Proxy Card and a Proxy Statement/Prospectus for the Special Meeting are
enclosed.
By Order of the Board of Directors
/s/ J. RANDAL HALL
------------------
J. RANDAL HALL
Secretary
Augusta, Georgia
February 2, 1996
WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING OR NOT, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY SO THAT BFC 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> 3
PROXY STATEMENT/PROSPECTUS
PROXY STATEMENT OF
BANKERS FIRST CORPORATION
FOR A SPECIAL MEETING OF ITS SHAREHOLDERS
TO BE HELD MARCH 12, 1996
___________________________________________________________
THIS PROXY STATEMENT INCLUDES THE PROSPECTUS OF
SOUTHTRUST CORPORATION
RELATING TO UP TO 5,880,579 SHARES OF COMMON STOCK
(PAR VALUE $2.50 PER SHARE)
TO BE ISSUED IN CONNECTION WITH A PROPOSED MERGER OF
BANKERS FIRST CORPORATION INTO SOUTHTRUST OF
GEORGIA, INC., A WHOLLY-OWNED SUBSIDIARY OF
SOUTHTRUST CORPORATION
___________________________________________________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE 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 ("SOUTHTRUST") OR BANKERS FIRST
CORPORATION ("BFC"). 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 OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF. ALL INFORMATION CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS RELATING TO SOUTHTRUST AND ITS
SUBSIDIARIES HAS BEEN SUPPLIED BY SOUTHTRUST AND ALL INFORMATION RELATING TO
BFC AND ITS SUBSIDIARIES HAS BEEN SUPPLIED BY BFC.
THIS PROXY STATEMENT/PROSPECTUS AND THE ACCOMPANYING FORM OF PROXY ARE
FIRST BEING MAILED TO SHAREHOLDERS OF BFC ON OR ABOUT FEBRUARY 2, 1996.
_________________________________________________
THE SECURITIES OF SOUTHTRUST 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 OR BANK DEPOSITS,
ARE NOT 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 February 2, 1996.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Description of SouthTrust Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Pro Forma Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Market and Dividend Information Respecting the Common Stock of SouthTrust and BFC . . . . . . . . . . . . . . . . . . 51
Comparison of the Common Stock of SouthTrust and BFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Supervision and Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Certain Information Concerning the Business of BFC and the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Beneficial Ownership of BFC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Incorporation of Certain Documents By Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Exhibit A - Agreement and Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Opinion of The Robinson-Humphrey Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
AVAILABLE INFORMATION
SouthTrust and BFC are subject to the informational requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith file reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information 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 Citicorp Center, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661-2511. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
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. THE DOCUMENTS RELATING
TO SOUTHTRUST (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH EXHIBITS ARE NOT
SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH 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.
THE DOCUMENTS RELATING TO BFC (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH
EXHIBITS ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS) ARE
AVAILABLE WITHOUT CHARGE UPON REQUEST FROM GLENN W. PETERS, BANKERS FIRST
CORPORATION, ONE 10TH STREET, AUGUSTA, GEORGIA 30901 TELEPHONE (706) 849-3200.
PERSONS REQUESTING COPIES OF EXHIBITS TO SUCH DOCUMENTS THAT ARE NOT
SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS WILL BE CHARGED THE
COSTS OF REPRODUCTION AND MAILING. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MARCH 5, 1996. SEE
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
2
<PAGE> 5
INTRODUCTION
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of
Common Stock, par value $.01 per share ("BFC Common Stock"), of Bankers First
Corporation, a Georgia corporation ("BFC"), in connection with the solicitation
of proxies by the Board of Directors of BFC for use at a special meeting of
shareholders of BFC to be held on March 12, 1996, at 9:00 a.m., local time,
at the principal executive offices of BFC at One 10th Street, Augusta, Georgia,
and at any 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 October 31, 1995 (the "Merger
Agreement") among BFC, SouthTrust Corporation, a Delaware corporation
("SouthTrust"), and SouthTrust of Georgia, Inc., a Georgia corporation and a
wholly-owned subsidiary of SouthTrust ("ST- Sub"), providing for the merger of
BFC into ST-Sub (the "Merger") and the exchange in the Merger of each
outstanding share of BFC Common Stock for 1.126 shares of common stock, par
value $2.50 per share, of SouthTrust ("SouthTrust Common Stock"), as the same
may be adjusted pursuant to the terms of the Merger Agreement (the "Exchange
Ratio"). See "THE MERGER -- Effect of Merger on BFC Common Stock"; "-- Effect
of Merger on BFC Stock Options"; and "-- Possible Exchange Ratio Adjustment."
The 1.126 shares of SouthTrust Common Stock for which each share of
BFC Common Stock may be exchanged in the Merger had an aggregate market value,
based upon the last sales price of SouthTrust Common Stock on February 1,
1996, of $29.49. See "DESCRIPTION OF SOUTHTRUST CAPITAL STOCK--SouthTrust
Common Stock" and "MARKET AND DIVIDEND INFORMATION RESPECTING THE COMMON STOCK
OF SOUTHTRUST AND BFC." Because the number of shares of SouthTrust Common
Stock to be received for each share of BFC Common Stock in the Merger is fixed,
a change in the market price of SouthTrust Common Stock before the Merger would
affect the value of the SouthTrust Common Stock to be received in the Merger in
exchange for each share of BFC Common Stock. The Merger Agreement, however,
provides that (i) if the average of the last sales prices of SouthTrust Common
Stock as reported on the Nasdaq National Market ("Nasdaq") for the ten
consecutive full trading days ending at the close of trading (the "Average
Closing Price") on the date on which the approval of the Federal Reserve Board
is received (the "Determination Date") is less than $21.675, and if the
quotient obtained by dividing the Average Closing Price on such date by $25.50
(the "Acquiror Ratio") shall be less than the quotient obtained by dividing the
weighted average of the closing prices of certain bank holding companies as
listed in Section 10.1 of the Merger Agreement (the "Index Group") on the
Determination Date by the weighted average closing prices of the Index Group on
October 30, 1995 and subtracting 0.15 from this quotient (the "Index Ratio"),
or (ii) if the Average Closing Price on the Determination Date is less than
$19.125, then BFC will have the right to terminate the Merger Agreement unless
SouthTrust elects to adjust the Exchange Ratio in the manner described under
"THE MERGER-- Possible Exchange Ratio Adjustment." No fractional shares of
SouthTrust Common Stock will be issued in the Merger, and, in lieu thereof,
each holder of shares of BFC 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 one share
of SouthTrust Common Stock at the Effective Time of the Merger (as defined
below), as reported by Nasdaq.
The Merger Agreement also contemplates that, at the Effective Time of
the Merger, each award, option, or other right to purchase or acquire shares of
BFC Common Stock pursuant to stock options, stock appreciation rights, or stock
awards ("BFC Rights") granted by BFC under the BFC Stock Plans (as defined in
the Merger Agreement) which are outstanding at the Effective Time of the
Merger, whether or not exercisable, will be converted into and become rights
with respect to SouthTrust Common Stock on a basis adjusted to reflect the
Exchange Ratio. See "THE MERGER -- Effect of Merger on BFC Stock Options."
Subject to the approval of the Merger Agreement by the shareholders of
BFC and the satisfaction or waiver of all conditions contained in the Merger
Agreement, the Merger will become effective upon the filing of an
3
<PAGE> 6
appropriate Certificate of Merger with the Secretary of State of the State of
Georgia (the "Effective Time of the Merger").
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. See "THE MERGER."
VOTING AT THE SPECIAL MEETING
The Board of Directors of BFC has fixed the close of business on
January 24, 1996 as the record date (the "Record Date") for the determination
of holders of shares of BFC Common Stock entitled to notice of and to vote at
the Special Meeting. On the Record Date, BFC had outstanding 4,784,323 shares
of BFC Common Stock, which constituted the only outstanding class of capital
stock of BFC entitled to notice of and to vote at the Special Meeting. The
presence, in person or by proxy, of the holders of a majority of the
outstanding shares of BFC 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 BFC Common Stock entitled to
vote thereon is required to approve the Merger Agreement. Each holder of
record of shares of BFC 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, BFC directors and executive officers (a total
of 15 persons) beneficially owned a total of 629,815 shares of BFC Common Stock
(exclusive of 369,981 shares of BFC Common Stock which may be acquired by such
persons pursuant to options exercisable within 60 days of the Record Date),
representing approximately 13.16% of the shares of BFC Common Stock entitled to
vote at the Special Meeting. All such directors and officers have informed BFC
that, as of the date of the Proxy Statement/Prospectus, they intend to vote for
approval of the Merger Agreement.
As of November 30, 1995, 328,195 shares of BFC Common Stock had been
allocated to the accounts of participants in the Employee Stock Ownership Plan
("ESOP") of BFC and 57,422 shares of BFC Common Stock had not yet been
allocated to the accounts of such participants. The ESOP provides that each
participant has the right to direct the Trustee of the ESOP, SouthTrust Estate
and Trust Company of Georgia, National Association ("ST-Trust"), as to the
manner in which shares of BFC Common Stock allocated to his or her account are
to be voted. Under the ESOP, ST-Trust has the authority to vote the shares of
BFC Common Stock held pursuant to the ESOP which have not been allocated to the
participants' accounts. ST-Trust has informed BFC that, as of the date of the
Proxy Statement/Prospectus, ST-Trust intends to vote the unallocated shares of
BFC Common Stock for approval of the Merger Agreement.
The Robinson-Humphrey Company, Inc. ("Robinson-Humphrey") has rendered
its opinion to the Board of Directors of BFC dated October 31, 1995, and
updated as of February 2, 1996 stating that, in its opinion, the Exchange
Ratio is fair from a financial point of view to the shareholders of BFC. See
"SUMMARY -- The Merger - Opinion of Financial Advisor" and "THE MERGER --
Opinion of Financial Advisor."
THE BOARD OF DIRECTORS OF BFC RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE MERGER AGREEMENT. SEE "THE MERGER -- BACKGROUND AND REASONS
FOR THE MERGER."
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. 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 BFC 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
itself revoke a proxy.
In addition to the use of the mail, proxies may be solicited by
telephone, telegraph or personally by the directors, officers and employees of
BFC, who will receive no extra compensation for their services. In addition to
such solicitations, Morrow & Co., a proxy solicitation firm, will assist BFC
in soliciting proxies for the Special Meeting and will be paid a fee of
$6,000.00 plus out-of-pocket expenses. The expenses of such solicitation will
be paid by BFC. BFC 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 BFC
Common Stock.
4
<PAGE> 7
SHAREHOLDERS ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
5
<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 BFC, 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, and engaged in a full range of banking services from more
than 430 banking locations in Alabama, Florida, Georgia, Mississippi, North
Carolina, South Carolina and Tennessee. SouthTrust, through its bank-related
subsidiaries, also offers a range of other services, including mortgage banking
services, data processing services and securities brokerage services. As of
September 30, 1995, SouthTrust had consolidated total assets of approximately
$20.0 billion, which ranked it as the largest bank holding company
headquartered in Alabama. The largest bank subsidiary of SouthTrust is
SouthTrust Bank of Alabama, N.A., the oldest predecessor of which was
incorporated in 1887, and which had approximately $10.9 billion in total assets
as of September 30, 1995. Of SouthTrust's approximately $20.0 billion in
assets as of September 30, 1995, approximately $10.9 billion were in Alabama,
approximately $4.0 billion were in Georgia and approximately $3.7 billion were
in Florida.
SouthTrust has pursued a strategy of acquiring banks and financial
institutions in or near major metropolitan or growth markets in Florida,
Georgia, North Carolina, Mississippi, South Carolina and Tennessee. The
purpose of this strategy is to give SouthTrust business development
opportunities in metropolitan markets with favorable prospects for population
and per capita income growth.
Through the first three quarters of 1995, SouthTrust effected
acquisitions of seven financial institutions, with total assets of
approximately $713.0 million. The following table presents certain information
as of September 30, 1995 with respect to transactions 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>
Bankers First Corporation Augusta, Georgia $ 1,061.0 $ 769.3 $ 885.3
Citizens Bank of Macclenny Macclenny, Florida 84.0 72.4 53.1
FFE Financial Corp. Englewood, Florida 140.6 120.6 99.1
First State Bank of Florida Deltona, Florida 88.4 81.7 61.3
</TABLE>
__________________________
*Net of unearned income
SouthTrust anticipates that the acquisition of BFC and the pending
acquisition of Citizens Bank of Macclenny each will be accounted for as a
pooling of interests, and that the pending acquisitions of FFE Financial Corp.
and First State Bank of Florida each will be accounted for pursuant to the
purchase method of accounting. 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 BFC Common Stock in the
Merger.
6
<PAGE> 9
The principal executive offices of SouthTrust are located at 420 North
20th Street, Birmingham, Alabama 35203, and its telephone number is (205)
254-5000.
BFC and the Bank
BFC was organized in September 1983 at the direction of the Board of
Directors of Bankers First Savings Bank, FSB (formerly Bankers First Federal
Savings and Loan Association) (the "Bank") for the purpose of becoming a
holding company to hold all of the outstanding stock of the Bank. The Bank is
a federal stock savings bank and a wholly-owned subsidiary of BFC. BFC is
primarily engaged in the business of directing, planning and coordinating the
business activities of the Bank.
The Bank was chartered under the name of Bankers First Federal Savings
and Loan Association in 1924 as a mutual savings and loan association, offering
home mortgage loans and savings accounts, primarily serving the Augusta,
Georgia area. The Bank converted from mutual to stock form in April 1984, in
connection with the organization of BFC. The Bank now operates 18 full-service
offices, six deposit branches and 27 automated teller machines, serving
customers primarily in the Augusta, Georgia metropolitan area. The Bank is a
member of the Federal Home Loan Bank System, and its savings deposits are
insured by the Savings Association Insurance Fund ("SAIF") of the Federal
Deposit Insurance Corporation ("FDIC"). The Bank is subject to comprehensive
regulation, examination and supervision by the Office of Thrift Supervision
("OTS") and the FDIC. See "CERTAIN INFORMATION CONCERNING THE BUSINESS OF BFC
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 the purchase, refinancing or
construction of residential real estate. The Bank also engages in making
commercial real estate, construction, acquisition and development, Small
Business Administration ("SBA"), commercial business, home equity and consumer
loans. The Bank also invests in securities and mortgage-backed obligations.
The principal sources of funds for the Bank's lending and investment
activities are time deposits, savings accounts and transaction accounts. In
addition to deposits, the Bank obtains funds from loan principal repayments,
proceeds from sales of loans, mortgage-backed securities and investments,
advances from the Federal Home Loan Bank of Atlanta, and the sale of securities
under agreements to repurchase. The Bank's principal expenses are interest
paid on deposits, borrowings and operating expenses.
The Bank's primary market area for loans and deposits is the Augusta,
Georgia metropolitan area, whose population approximated 280,000 in December
1995. Included among the counties in the Augusta, Georgia metropolitan area
are Richmond and Columbia counties.
BFC and the Bank maintain their principal executive offices at One
10th Street, Augusta, Georgia, and the telephone number at such office is (706)
849-3200.
SouthTrust of Georgia, Inc.
ST-Sub, a Georgia corporation, is a wholly-owned subsidiary of
SouthTrust. It owns the bank subsidiaries of SouthTrust that are located in
Georgia, including SouthTrust Bank of Georgia, National Association
("ST-Bank").
SPECIAL MEETING
The Special Meeting will be held at 9:00 a.m., local time, on
Tuesday, March 12, 1996, at the principal executive offices of BFC at One 10th
Street, Augusta, Georgia, to consider and vote upon the approval of the Merger
Agreement. Only holders of record of shares of BFC Common Stock as of the
close of business on January 24, 1996 will be entitled to notice of and to
vote at the Special Meeting, including any adjournment thereof.
7
<PAGE> 10
THE MERGER
Terms of the Merger
Subject to approval of the Merger Agreement by the shareholders of BFC
at the Special Meeting, the receipt of required regulatory approval, and
satisfaction of other conditions, BFC will be merged into ST-Sub pursuant to
the Merger Agreement. At the Effective Time of the Merger, each issued and
outstanding share of BFC Common Stock (excluding shares held by any BFC Company
(as defined in the Merger Agreement) or any SouthTrust Company (as defined in
the Merger Agreement), in each case other than in a fiduciary capacity or as a
result of debts previously contracted) will cease to be outstanding and shall
be converted into and exchanged for the right to receive 1.126 shares of
SouthTrust Common Stock, as the same may be adjusted pursuant to the terms of
the Merger Agreement. See "THE MERGER -- Effect of Merger on BFC Common
Stock."
If the average of the last sales prices of SouthTrust Common Stock as
reported on Nasdaq for the ten consecutive full trading days ending at the
close of trading (the "Average Closing Price") on the date on which the consent
of the Federal Reserve Board is received (the "Determination Date") is less
than $21.675, and if the quotient obtained by dividing the Average Closing
Price on such date by $25.50 (the "Acquiror Ratio") shall be less than the
quotient obtained by dividing the weighted average of the closing prices of
certain bank holding companies as listed in Section 10.1 of the Merger
Agreement (the "Index Group") on the Determination Date by the weighted average
closing prices of the Index Group on October 30, 1995 and subtracting 0.15 from
this quotient (the "Index Ratio") or if the Average Closing Price on the
Determination Date is less than $19.125, then BFC will have the right to
terminate the Agreement unless SouthTrust elects to adjust the Exchange Ratio
in the manner described under "THE MERGER -- Possible Exchange Ratio
Adjustment."
As the Exchange Ratio may be increased at the option of SouthTrust as
discussed in the preceding paragraph, the Exchange Ratio may not be
definitively determined until just prior to the Effective Time of the Merger.
Based upon the last sales price of SouthTrust Common Stock on February 1, 1996
(the last trading day immediately prior to the date of this Proxy
Statement/Prospectus), which last sales price is $26.1875, the Exchange Ratio
would remain 1.126. In the event that SouthTrust has the right to adjust the
Exchange Ratio but chooses not to exercise such right, then BFC is entitled, at
its option upon approval by a majority of its Board of Directors, to terminate
the Merger Agreement.
The Exchange Ratio, including the number of shares of SouthTrust
Common Stock issuable in the Merger, is also subject to appropriate adjustment
in the event of certain stock splits, stock dividends, reclassifications or
similar distributions effected by SouthTrust.
No fractional shares of SouthTrust Common Stock will be issued in the
Merger, and, in lieu thereof, each holder of shares of BFC 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 SouthTrust Common Stock on Nasdaq on the last trading day
preceding the Effective Time.
All rights with respect to shares of BFC Common Stock issuable
pursuant to the exercise of stock options ("BFC Options") granted by BFC under
stock option plans of BFC (the "BFC Stock Option Plans"), and held by each
participant thereunder, shall be converted into, as of the Effective Time of
the Merger, the right of the holders thereof to receive shares of SouthTrust
Common Stock. See "THE MERGER -- Effect of Merger on BFC Stock Options."
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 BFC Common Stock a letter of transmittal for use in exchanging
their stock certificates formerly representing such BFC Common Stock for the
right to receive certificates representing the appropriate number of shares of
SouthTrust Common Stock plus a cash payment for any fractional shares. BFC
SHAREHOLDERS SHOULD NOT SURRENDER THEIR CERTIFICATES FOR EXCHANGE UNTIL THEY
RECEIVE SUCH LETTER OF TRANSMITTAL AND INSTRUCTIONS. See "THE MERGER --
Exchange of Stock Certificates."
8
<PAGE> 11
Vote Required
The affirmative vote of the holders of a majority of the outstanding
shares of BFC Common Stock is required to approve the Merger Agreement.
Directors and executive officers of BFC, and their affiliates, owned, as of the
Record Date, directly or indirectly, 629,815 shares of BFC Common Stock
(exclusive of 369,981 shares of BFC Common Stock which may be acquired by such
persons pursuant to options exercisable within 60 days of the Record Date),
constituting approximately 13.16% of the shares of BFC Common Stock outstanding
on the Record Date for the Special Meeting. It is anticipated that all of such
shares will be voted for approval of the Merger Agreement.
Background of and Reasons for the Merger; Recommendations of the Board of
Directors of BFC
The Board of Directors of BFC believes that the Merger Agreement and
the Merger are in the best interests of BFC and its shareholders. THE BFC
DIRECTORS UNANIMOUSLY RECOMMEND THAT BFC SHAREHOLDERS VOTE FOR APPROVAL OF THE
MERGER AGREEMENT. In unanimously approving the Merger Agreement, BFC's
directors considered, among other things, BFC's and SouthTrust's financial
conditions, the financial terms and the income tax consequences of the Merger,
the likelihood of the Merger being approved by regulatory authorities without
undue conditions or delay, legal advice concerning the proposed Merger, the
views of The Robinson-Humphrey Company, Inc. ("Robinson-Humphrey") as to the
fairness of the Exchange Ratio, from a financial point of view, to the
shareholders of BFC, and in general the fairness of the terms of the Merger to
BFC shareholders.
SouthTrust is engaging in the transactions pursuant to the Merger
Agreement because the Merger is consistent with its expansion strategy within
the southeastern United States and because the acquisition of BFC and the Bank
will augment SouthTrust's existing market share in Georgia and enhance its
competitive position in such market.
See "THE MERGER -- Background of and Reasons for the Merger."
Opinion of Financial Advisor
Robinson-Humphrey has rendered opinions to BFC that, based on and
subject to the procedures, matters, and limitations described in its opinion
and such other matters as it considered relevant, as of the date of its
opinions, the Exchange Ratio is fair, from a financial point of view, to the
shareholders of BFC. The opinion of Robinson-Humphrey dated as of the date of
this Proxy Statement is attached as Exhibit C to this Proxy
Statement/Prospectus. BFC shareholders are urged to read the opinion in its
entirety for a description of the procedures followed, matters considered, and
limitations on the reviews undertaken in connection therewith. See "THE MERGER
- -- Opinion of Financial Advisor."
Interests of Certain Named Persons in the Merger
Certain members of BFC's management and Board of Directors may be
deemed to have interests in the Merger in addition to their interests, if any,
as shareholders of BFC generally. Among those interests are certain employment
and change in control agreements that provide for severance pay and other
benefits upon the occurrence of a merger or other change in control and
agreements by SouthTrust to indemnify directors, officers, employees and agents
of BFC and its subsidiaries from and after the Merger against certain
liabilities arising prior to the Merger to the full extent permitted under
Georgia law and BFC's Articles of Incorporation and Bylaws. SouthTrust has
also generally agreed to use its reasonable efforts to maintain BFC's existing
directors' and officers' liability insurance policy for six years after the
Merger, subject to certain limitations.
See "THE MERGER -- Interests of Certain Named Persons in the Merger"
and "THE MERGER -- Business and Management of BFC Following the Merger; Plans
for Business of BFC."
Effective Time of the Merger
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Time of the Merger will occur on the date and at the
time that the Certificate of Merger becomes effective with the Georgia
Secretary of State. Unless otherwise agreed upon by BFC and SouthTrust, and
subject to the conditions to the
9
<PAGE> 12
obligations of the parties to effect the Merger, the parties have agreed to use
their reasonable efforts to cause the Effective Time of the Merger to occur as
soon as practicable following the last to occur of (i) the effective date
(including the expiration of any applicable waiting period) of the last consent
of any regulatory authority required for the Merger and (ii) the date on which
the shareholders of BFC approve the matters relating to the Merger Agreement
required to be approved by such shareholders by applicable law. See "THE
MERGER -- Effective Time of the Merger" and "THE MERGER -- Regulatory Approvals
and Certain Other Conditions to Consummation of the Merger; Waiver and
Amendment."
NO ASSURANCE CAN BE PROVIDED THAT THE NECESSARY SHAREHOLDER AND
REGULATORY APPROVALS CAN BE OBTAINED OR THAT THE OTHER CONDITIONS PRECEDENT TO
THE MERGER CAN OR WILL BE SATISFIED. BFC AND SOUTHTRUST ANTICIPATE THAT ALL
CONDITIONS TO THE CONSUMMATION OF THE MERGER WILL BE SATISFIED SO THAT THE
MERGER CAN BE CONSUMMATED ON MARCH 15, 1996. HOWEVER, DELAYS IN THE
CONSUMMATION OF THE MERGER COULD OCCUR.
Regulatory Approvals and Certain Other Conditions to the Merger; Waiver and
Amendment
The respective obligations of SouthTrust and BFC 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
BFC's shareholders, and (iii) certain other conditions customary in
transactions of this kind.
Consummation of the Merger is subject to receipt of the prior approval
by the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") under the Bank Holding Company Act. The Bank Holding Company Act
prohibits the Federal Reserve Board from approving the Merger (i) if such
transaction would result in a monopoly or be in furtherance of any combination
or conspiracy to monopolize or to attempt to monopolize the business of banking
in any part of the United States, or (ii) if the effect of such transaction in
any section of the country may be substantially to lessen competition or to
tend to create a monopoly, or if it would in any other manner be a restraint of
trade, unless the relevant regulatory agency finds that the anti-competitive
effects of such merger are clearly outweighed by the public interest and by the
probable effect of the transaction in meeting the convenience and needs of the
communities to be served. Under the Bank Holding Company Act, the Federal
Reserve Board also considers whether the proposed transaction can reasonably be
expected to produce benefits to the public, such as greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interests, or unsound banking practices. The Federal
Reserve Board has the authority to deny an application if it concludes that the
combined organization would have an inadequate capital position or if the
acquiring organization does not meet the requirements of the Community
Reinvestment Act of 1977. In addition, the Merger may not be consummated until
the 15th day following the dates of each of the requisite approvals, during
which periods the United States Department of Justice may comment adversely on
the transaction (which has the effect of extending the waiting period to the
30th day following approval) or challenge such merger on antitrust grounds.
The commencement of an antitrust action would stay the effectiveness of such an
approval unless a court specifically orders otherwise.
The Merger is also subject to the approval of the Georgia Department
of Banking and Finance (the "Georgia Department") and to prior notice to the
Office of Thrift Supervision (the "OTS") neither of which require any waiting
period. In their evaluations, the Georgia Department and the OTS take into
account considerations similar to those applied by the Federal Reserve Board.
SouthTrust has filed with the Federal Reserve Board an application
seeking approval to merge BFC into ST-Sub and to merge the Bank into ST-Bank,
which application was accepted by the Federal Reserve Board on December 22,
1995 and approved by the Federal Reserve Board on January 11, 1996. On
December 4, 1995 ST-Bank submitted to the OCC an application seeking approval
to merge the Bank into ST-Bank. SouthTrust has also transmitted an
application to the Georgia Department seeking approval to consummate the
transactions contemplated by the Merger Agreement, which application was
accepted on January 26, 1996. In addition, on December 21, 1995, BFC filed
the required notice with the OTS respecting the merger of the Bank into
ST-Bank.
THE MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY
APPROVALS. THERE CAN BE NO ASSURANCE THAT SUCH REGULATORY APPROVALS WILL BE
OBTAINED OR AS TO THE TIMING OF ANY SUCH APPROVALS. THERE ALSO CAN BE NO
ASSURANCE THAT ANY SUCH APPROVALS WILL NOT IMPOSE CONDITIONS THAT ARE DEEMED BY
BFC OR SOUTHTRUST TO MATERIALLY ADVERSELY IMPACT THE ECONOMIC OR BUSINESS
ASSUMPTIONS OF THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT. THERE
CAN ALSO BE NO ASSURANCE THAT THE UNITED STATES DEPARTMENT
10
<PAGE> 13
OF JUSTICE OR A STATE ATTORNEY GENERAL WILL NOT CHALLENGE THE MERGER OR, IF
SUCH A CHALLENGE IS MADE, AS TO THE RESULT THEREOF.
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 and the Merger abandoned at any
time prior to the Effective Time in any of the following ways:
(i) By mutual consent of SouthTrust and BFC; or
(ii) By either SouthTrust or BFC (provided that the
terminating party is not then in breach of any representation or
warranty contained in the Merger Agreement) in the event of an
inaccuracy of any representation or warranty of the other party
contained in the Merger Agreement which cannot be or had not been
cured within 30 days after the giving of written notice of the
breaching party of such inaccuracy and which inaccuracy would provide
the terminating party the ability to refuse to consummate the Merger
under the applicable standard set forth in the Merger Agreement; or
(iii) By either SouthTrust or BFC in the event of a
material breach by the other party of any covenant or agreement
contained in the Merger Agreement which cannot be or has not been
cured within 30 days after the giving of written notice to the
breaching party of such breach; or
(iv) By either SouthTrust or BFC in the event (i) any
Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated thereby shall have been
denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit
for appeal, or (ii) the shareholders of BFC fail to vote their
approval of the Merger Agreement and the transactions contemplated
thereby as required by the Georgia Business Corporation Code at the
shareholder meeting where the transactions were presented to such
shareholders for approval and voted upon; or
(v) By either SouthTrust or BFC in the event that the
Merger shall not have been consummated by September 30, 1996, if the
failure to consummate the transactions contemplated hereby on or
before such date is not caused by any breach of the Merger Agreement
by the party electing to terminate; or
(vi) By either SouthTrust or BFC (provided that the
terminating party is not then in breach of any representation or
warranty contained in this Agreement or in material breach of any
covenant or other agreement contained in the Merger Agreement) in the
event that any of the conditions precedent to the obligations of such
party to consummate the Merger cannot be satisfied or fulfilled by
September 30, 1996; or
(vii) By BFC, in connection with BFC entering into a
definitive agreement with another entity, as contemplated in the
Merger Agreement, provided BFC has complied with all of the provisions
thereof, including the advice of counsel and notice provisions
thereof; or
(viii) By BFC if certain conditions with respect to the last
sales price of SouthTrust Common Stock are not met and SouthTrust does
not elect to increase the Exchange Ratio. See "THE MERGER -- Possible
Exchange Ratio Adjustment."
11
<PAGE> 14
See "THE MERGER -- Termination."
Stock Option Agreement
Following the execution of the Merger Agreement, BFC granted
SouthTrust an option (the "Stock Option") to purchase, under certain
circumstances, 942,854 shares (the "Option Shares") of BFC Common Stock at a
price of $29.00 per share pursuant to the terms of a Stock Option Agreement
dated October 31, 1995, between SouthTrust and BFC (the "Stock Option
Agreement"). The "Spread Value" of the Stock Option (as defined in the Stock
Option Agreement) is capped, however, which would have the effect in certain
circumstances of reducing the number of shares of BFC Common Stock constituting
Option Shares. The Stock Option is exercisable only upon the occurrence of
certain events set forth in the Stock Option Agreement, including the receipt
of any required regulatory approvals, none of which has occurred as of the date
hereof. BFC granted the Stock Option as a condition of and in consideration
for the entry by SouthTrust into the Merger Agreement. A copy of the Stock
Option Agreement is attached hereto as Exhibit B, and any description thereof
contained in this Proxy Statement/Prospectus is qualified in its entirety by
reference to such Exhibit B. See "THE MERGER -- Stock Option Agreement."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
BFC and SouthTrust have received an opinion of Alston & Bird 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") and (ii) no gain or loss will be recognized by holders of
shares of BFC Common Stock who receive shares of SouthTrust Common Stock in the
Merger, except that gain or loss will be recognized with respect to cash
received in lieu of fractional interests in shares of SouthTrust Common Stock.
See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES."
THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES MAY VARY DEPENDING UPON
THE PARTICULAR CIRCUMSTANCES OF EACH HOLDER OF SHARES OF BFC COMMON STOCK. ALL
HOLDERS OF SHARES OF BFC COMMON STOCK ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF THE MERGER IN THEIR PARTICULAR CIRCUMSTANCES.
ABSENCE OF RIGHTS OF DISSENT AND APPRAISAL
Rights of dissent and appraisal are not available to shareholders of
BFC under the Georgia Business Corporation Code in connection with Merger. See
"THE MERGER - Absence of Rights of Dissent and Appraisal."
COMPARATIVE STOCK PRICES
SouthTrust Common Stock and BFC Common Stock are traded in the
over-the-counter market through the facilities of Nasdaq.
The following table sets forth the per share last sales prices for
SouthTrust Common Stock and BFC Common Stock, respectively, last as of selected
dates, and the pro forma equivalent market value of the 1.126 shares of
SouthTrust Common Stock to be received in the Merger for each share of BFC
Common Stock:
<TABLE>
<CAPTION>
SouthTrust BFC SouthTrust
Common Stock Common Stock Common Stock
Historical Historical Equivalent(3)
---------- ---------- ----------
<S> <C> <C> <C>
October 30, 1995 (1) $ 25.50 $28.25 $ 28.71
February 1, 1996 (2) $ 26.1875 $28.375 $ 29.49
</TABLE>
__________________________
(1) Last trading day preceding the announcement of the execution of the Merger
Agreement.
(2) Most recent practicable date preceding the date of this Proxy
Statement/Prospectus.
12
<PAGE> 15
(3) Pro forma equivalents calculated using the historical last sales price for
SouthTrust Common Stock as of the selected date multiplied by the exchange
ratio of 1.126 shares of SouthTrust Common Stock per share of BFC Common
Stock.
BFC's shareholders are advised to obtain current market quotations for
SouthTrust Common Stock and BFC Common Stock. No assurance can be given as to
the market prices of SouthTrust Common Stock or BFC 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 BFC Common
Stock for SouthTrust Common Stock is fixed, it will not compensate BFC's
shareholders for decreases in the market price of SouthTrust Common Stock which
could occur before the Effective Time of the Merger. As a result, 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 BFC Common
Stock would decrease. However, in the event the market price for SouthTrust
Common Stock increases, the value of the SouthTrust Common Stock to be received
in the Merger in exchange for BFC Common Stock would increase. For information
as to the circumstances under which BFC may terminate the Merger Agreement, see
"THE MERGER -- Termination."
See "THE MERGER -- Possible Exchange Ratio Adjustment" and "MARKET AND
DIVIDEND INFORMATION RESPECTING THE COMMON STOCK OF SOUTHTRUST AND BFC."
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 BFC who
are not deemed to be "affiliates" (as that term is defined under the Securities
Act) of BFC and who do not become affiliates of SouthTrust. The shares of
SouthTrust Common Stock to be issued to affiliates of BFC may be resold only
pursuant to an effective registration statement, pursuant to Rule 145 under the
Securities Act, 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. Under the volume limitations of Rule 145, and based upon the
outstanding shares of SouthTrust Common Stock as of September 30, 1995, an
affiliate of BFC who otherwise complies with Rule 145, subject to the
undertaking described below, will be free to resell, during any given
three-month period, up to approximately 876,240 shares of SouthTrust Common
Stock.
BFC has agreed to use its reasonable efforts to cause each individual
or entity identified by BFC as an affiliate to deliver to SouthTrust, on or
before thirty (30) days prior to the Effective Time of the Merger, a written
agreement in the form provided for in the Merger Agreement providing that such
affiliate shall not sell, pledge, transfer or otherwise dispose of such shares
of SouthTrust Common Stock to be received by such affiliate upon consummation
of the Merger, except (i) in compliance with the Securities Act or the rules
and regulations thereunder, and (ii) until such time as financial results
covering at least thirty (30) days of combined operations of BFC and SouthTrust
have been published within the meaning of Section 201.01 of the Commission's
Codification of Financial Reporting Policies.
See "THE MERGER -- Resale of SouthTrust Common Stock Received in the
Merger."
DIFFERENCES IN RIGHTS OF BFC SHAREHOLDERS
Upon consummation of the Merger, BFC shareholders will become
SouthTrust stockholders. As a result, their rights as shareholders, which now
are governed by Georgia corporate law and BFC's Articles of Incorporation and
Bylaws, will be governed by Delaware corporate law and will be governed by
SouthTrust's Restated Certificate of Incorporation and Bylaws. Because of
certain differences between the provisions of Georgia corporate law and
Delaware corporate law and of BFC's Articles of Incorporation and Bylaws and
SouthTrust's Restated Certificate of Incorporation and Bylaws, the current
rights of BFC shareholders will change after the Merger. Some of these
differences include anti-takeover provisions. See "COMPARISON OF THE COMMON
STOCK OF SOUTHTRUST AND BFC."
13
<PAGE> 16
ACCOUNTING TREATMENT
The Merger will be accounted for by SouthTrust as a pooling of
interests. See "THE MERGER -- Accounting Treatment."
EQUIVALENT SHARE DATA
The following summary presents comparative historical unaudited per
share data for both SouthTrust and BFC. The pro forma amounts assume the
Merger had been effective during the periods presented and has been accounted
for as a pooling of interests. SouthTrust's pro forma amounts represent the
combined pro forma results, and BFC pro forma equivalent amounts are computed
by multiplying the combined pro forma amounts by a factor of 1.126, to reflect
the Exchange Ratio in the Merger of 1.126 shares of SouthTrust Common Stock for
each share of BFC 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, and the
pro forma financial statements included elsewhere in this Proxy
Statement/Prospectus. Results for the nine months ended September 30, 1995,
are not necessarily indicative of results expected for the entire year.
<TABLE>
<CAPTION>
Years Ended Nine Months
December 31, Ended
---------------------------------------- September 30,
1994 1993 1992 1995
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Net income per common share:
SouthTrust . . . . . . . . . . . . . $ 2.15 $ 1.94 $ 1.66 $ 1.75
BFC . . . . . . . . . . . . . . . . 2.19 1.41 1.05 1.93
SouthTrust pro forma combined . . . 2.13 1.89 1.61 1.75
BFC pro forma equivalent . . . . . . 2.40 2.13 1.81 1.97
Cash dividends per common share:
SouthTrust . . . . . . . . . . . . . $ 0.68 $ 0.60 $ 0.52 $ 0.60
BFC . . . . . . . . . . . . . . . . 0.45 0.10 0.07 0.45
SouthTrust pro forma combined(1) . . 0.68 0.60 0.52 0.60
BFC pro forma equivalent . . . . . . 0.77 0.68 0.59 0.68
Book value per common share (period end):
SouthTrust . . . . . . . . . . . . . $ 13.94 $ 13.25 $ 11.55 $ 15.83
BFC . . . . . . . . . . . . . . . . 18.77 16.90 15.64 19.99
SouthTrust pro forma combined . . . 14.10 13.35 11.70 15.94
BFC pro forma equivalent . . . . . . 15.88 15.03 13.17 17.95
</TABLE>
__________________________
(1) SouthTrust pro forma combined dividends represent historical cash
dividends of SouthTrust.
SELECTED FINANCIAL DATA
The following tables set forth certain selected historical
consolidated financial information for BFC and SouthTrust. 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 BFC and SouthTrust. The financial data for the interim periods ended
September 30, 1995 and 1994 are derived from the unaudited historical financial
statements of BFC and SouthTrust, respectively, and reflect, in the respective
opinions of management of BFC and SouthTrust, 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 BFC and SouthTrust, and the related notes thereto, included in
documents included elsewhere herein or incorporated herein by reference and in
conjunction with the unaudited pro forma financial information, including the
notes thereto, appearing elsewhere in this Proxy Statement/Prospectus. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and "PRO FORMA FINANCIAL
INFORMATION."
14
<PAGE> 17
SOUTHTRUST CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Nine Months
Years Ended December 31, Ended September 30,
----------------------------------------------------------- ---------------------
1994 1993 1992 1991 1990 1995 1994
-------- -------- --------- ------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(in thousands except per share data):
Interest income $1,108,612 $927,551 $828,080 $823,725 $776,661 $1,084,835 $792,108
Interest expense 501,067 397,743 382,930 474,453 498,329 578,869 345,857
------- ------- ------- ------- ------- ------- -------
Net interest income 607,545 529,808 445,150 349,272 278,332 505,966 446,251
Provision for loan losses 44,984 45,032 43,305 38,042 44,635 39,489 33,272
------ ------ ------ ------ ------ ------ ------
Net interest income after
provision for loan losses 562,561 484,776 401,845 311,230 233,697 466,477 412,979
Non-interest income 184,778 174,702 136,683 108,881 91,084 151,730 137,896
Non-interest expense 485,999 434,951 373,636 296,796 234,713 396,509 358,900
------- ------- ------- ------- ------- ------- -------
Income before income taxes 261,340 224,527 164,892 123,315 90,068 221,698 191,975
Provision for income taxes 88,338 73,992 50,646 33,309 20,360 76,282 64,340
------ ------ ------ ------ ------ ------ ------
Net income $173,002 $150,535 $114,246 $90,006 $69,708 $145,416 $127,635
======== ======== ======== ======= ======= ======== ========
Net income per common share
and common share equivalent $2.15 $1.94 $1.66 $1.42 $1.14 $1.75 $1.59
Cash dividends declared
per common share 0.68 0.60 0.52 0.48 0.46 0.60 0.51
Average common shares and common
share equivalents outstanding 80,628 77,772 68,948 63,255 61,148 83,075 80,267
BALANCE SHEET DATA (at period end)
(in millions):
Total assets $17,632.1 $14,708.0 $12,714.4 $10,158.1 $9,005.9 $20,020.8 $16,955.5
Total loans, net 12,121.9 9,448.3 7,546.6 5,965.0 5,531.4 14,077.5 11,472.3
Total deposits 12,801.2 11,515.4 10,082.3 8,277.2 7,228.0 14,009.5 12,243.2
Total stockholders' equity 1,135.3 1,051.8 860.4 662.0 549.6 1,387.3 1,128.5
</TABLE>
BANKERS FIRST CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Nine Months
Years Ended December 31, Ended September 30,
----------------------------------------------------------- -------------------
1994 1993 1992 1991 1990 1995 1994
-------- -------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(in thousands except per share data):
Interest income . . . . . . $71,743 $65,391 $69,828 $113,382 $143,752 $63,257 $51,995
Interest expense . . . . . 37,647 36,841 45,768 83,119 108,585 35,673 27,035
------ ------ ------ -------- -------- -------- --------
Net interest income . . . 34,096 28,550 24,060 30,263 35,167 27,584 24,960
Provision for loan
losses . . . . . . . . . 1,800 3,012 4,787 5,850 18,971 925 700
----- ----- ------ -------- -------- -------- --------
Net interest income after
provision for loan
losses . . . . . . . . . 32,296 25,538 19,273 24,413 16,196 26,659 24,260
Non-interest income . . . . 8,613 8,984 6,947 8,468 11,427 6,471 6,139
Non-interest expense . . . 24,037 23,357 22,878 29,717 46,033 18,680 18,050
------ ------ ------ -------- --------- -------- --------
Income (loss) before
income taxes . . . . . . 16,872 11,165 3,342 3,164 (18,410) 14,450 12,349
Provision (benefit)
for income taxes . . . . 6,047 4,380 (1,394) 984 (139) 4,697 4,549
------ ------ ------ -------- --------- -------- --------
Net income (loss) . . . . $10,825 $ 6,785 $ 4,736 2,180 (18,271) 9,753 7,800
====== ====== ====== ======== ========= ======== ========
Net income (loss)
per common share
and common share
equivalent . . . . . . . $2.19 $1.41 $1.05 $0.50 $(4.21) $1.93 $1.58
Cash dividends declared
per common share . . . . 0.45 0.10 0.07 0.07 0.28 0.45 0.30
Average common shares
and common share
equivalents
outstanding . . . . . . . 4,937 4,810 4,499 4,361 4,335 5,062 4,939
BALANCE SHEET DATA (at period end)
(in millions):
Total assets . . . . . . . $1,063.8 $909.2 $910.6 $904.4 $1,455.9 $1,061.0 $1,040.5
Total loans, net . . . . . 886.6 688.4 609.0 557.0 984.6 885.3 852.6
Total deposits . . . . . . 683.9 631.9 654.9 737.2 1,182.2 769.3 690.9
Total stockholders' equity 84.5 75.2 68.6 63.8 61.9 95.0 82.2
</TABLE>
15
<PAGE> 18
SELECTED PRO FORMA INFORMATION
The following table sets forth certain unaudited pro forma combined
financial information for SouthTrust and BFC giving effect to the Merger. The
unaudited pro forma combining condensed financial presentation is presented for
information purposes only and is not necessarily indicative of the combined
financial position or results of operations which would actually have occurred
if the transactions had been consummated in the past or which may be obtained
in the future. This information should be read in conjunction with the
consolidated financial statements of BFC and SouthTrust and the related notes
thereto included elsewhere herein or incorporated herein by reference and in
conjunction with the unaudited pro forma financial information, including the
notes thereto, appearing elsewhere in this Proxy Statement/Prospectus. Details
of pro forma adjustments affecting the historical combined amounts are included
in the Pro Forma Combining Condensed Financial Statements set forth on pages 46
through 50, inclusive, herein. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE" and "PRO FORMA FINANCIAL INFORMATION."
PRO FORMA COMBINED INFORMATION
SOUTHTRUST CORPORATION AND BANKERS FIRST CORPORATION
<TABLE>
<CAPTION>
Year Ended December 31, Nine months
----------------------------------------- Ended
1994 1993 1992 September 30, 1995
---------- ----------- ---------- ------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
(in thousands except per share data):
Interest income . . . . . . . . . . . . $1,180,355 $ 992,942 $ 897,908 $ 1,148,092
Interest expense . . . . . . . . . . . 538,714 434,584 428,698 614,542
---------- ----------- --------- ------------
Net interest income . . . . . . . . . 641,641 558,358 469,210 533,550
Provision for loan losses . . . . . . . 46,784 48,044 48,092 40,414
---------- ----------- --------- ------------
Net interest income after provision for
loan losses . . . . . . . . . . . . . 594,857 510,314 421,118 493,136
Non-interest income . . . . . . . . . . 193,391 183,686 143,630 158,201
Non-interest expense . . . . . . . . . 510,036 458,308 396,514 415,189
---------- ----------- --------- ------------
Income before income taxes . . . . . . 278,212 235,692 168,234 236,148
Provision for income taxes . . . . . . 94,385 78,372 49,252 80,979
---------- ----------- --------- ------------
Net income . . . . . . . . . . . . . $ 183,827 $ 157,320 $ 118,982 $ 155,169
========== =========== ========= ============
Net income per common share and
common share equivalent . . . . . . . $ 2.13 $ 1.89 $ 1.61 $ 1.75
Average common shares and common
share equivalents outstanding . . . . 86,187 83,188 74,014 88,775
BALANCE SHEET DATA
(in millions)
Total assets . . . . . . . . . . . . . $ 18,695.9 $ 15,617.2 $13,625.0 $ 21,081.8
Total loans, net . . . . . . . . . . . 13,008.5 10,136.7 8,155.6 14,962.8
Total deposits . . . . . . . . . . . . 13,485.1 12,147.3 10,737.2 14,778.8
Total stockholders' equity . . . . . . 1,219.8 1,127.0 929.0 1,482.3
</TABLE>
16
<PAGE> 19
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 Boards of Directors of
BFC, SouthTrust and ST-Sub, and by SouthTrust as the sole shareholder of
ST-Sub. No approval of the Merger by the stockholders of SouthTrust is
required.
Pursuant to the Merger Agreement, BFC will be merged with and into
ST-Sub pursuant to the Georgia Business Corporation Code, and ST-Sub shall be
the Surviving Corporation. Upon the effectiveness of the Merger, each issued
and outstanding share of BFC Common Stock (excluding shares held by any BFC
Company or any SouthTrust Company, in each case other than in a fiduciary
capacity or as a result of debts previously contracted) shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
1.126 shares of SouthTrust Common Stock as the same may be adjusted pursuant to
the terms of the Merger Agreement. See "-- Effect of Merger on BFC Common
Stock."
If the Average Closing Price on the Determination Date is less than
$21.675 and if the Acquiror Ratio shall be less than the Index Ratio, or if the
Average Closing Price on the Determination Date is less than $19.125, then BFC
will have the right to terminate the Agreement unless SouthTrust elects to
adjust the Exchange Ratio in the manner described under "THE MERGER -- Possible
Exchange Ratio Adjustment."
The Exchange Ratio, including the number of shares of SouthTrust
Common Stock issuable in the Merger, is also subject to appropriate adjustment
in the event of certain stock splits, stock dividends, reclassifications or
similar distributions effected by SouthTrust.
All rights with respect to shares of BFC Common Stock issuable
pursuant to the exercise of stock options ("BFC Options") granted by BFC under
stock option plans of BFC (the "BFC Stock Option Plans"), and held by each
participant thereunder, shall be converted into, as of the Effective Time of
the Merger, the right of the holders thereof to receive shares of SouthTrust
Common Stock. See "-- Effect of Merger on Stock Options."
No fractional shares of SouthTrust Common Stock will be issued in the
Merger, and, in lieu thereof, each holder of shares of BFC 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 SouthTrust Common Stock on Nasdaq on the last trading day
preceding the Effective Time.
As the Exchange Ratio may be increased at the option of SouthTrust as
discussed above, the Exchange Ratio may not be definitively determined until
just prior to the Effective Time of the Merger. Based upon the last sales
price of SouthTrust Common Stock on February 1, 1996 of $26.1875 (the last
trading day immediately prior to the date of this Proxy Statement/Prospectus)
the Exchange Ratio would remain 1.126. In the event that SouthTrust has the
right to adjust the Exchange Ratio but chooses not to exercise such right, then
BFC is entitled, at its option upon approval by a majority of its Board of
Directors, to terminate the Merger Agreement. See "-- Possible Exchange Ratio
Adjustment."
Subject to the approval of the Merger Agreement by the shareholders of
BFC, the satisfaction or waiver of the conditions contained in the Merger
Agreement, and the filing of an appropriate Certificate of Merger with the
Secretary of State of Georgia, unless otherwise mutually agreed upon in writing
by the Chief Executive Officers or Chief Financial Officers of SouthTrust and
BFC, the parties have agreed to use their reasonable efforts to cause
17
<PAGE> 20
the Effective Time of the Merger to be the third business day following the
last to occur of (i) the effective date (including expiration of any applicable
waiting period) of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Merger, and (ii) the date on
which the shareholders of BFC approve the Merger Agreement to the extent such
approval is required by applicable law. See "-- Effective Time of the Merger."
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger
The years 1990 through 1992 were difficult financially for BFC as they
were for a number of other thrifts and banks. In early 1992 the Board
suspended the quarterly cash dividend, and later that year the Board reviewed
strategic alternatives with its financial advisor. The strategy adopted
contemplated a period during which BFC would improve its operating performance
and eliminate the major impediments to realizing the highest valuation for the
institution in the market, namely poor asset quality and heavy real estate
investments. At the same time, BFC sought to improve its loan and other
products, cut expenses and expand its branch system in certain locations in
order to increase the value of the franchise.
This strategy was announced publicly and repeated in various letters
and releases to shareholders in 1993 and 1994 as the financial condition and
earnings performance of BFC improved with implementation of this strategy. The
Board revisited this strategy for increasing shareholder value from time to
time during this period and reaffirmed it as earnings increased, asset quality
improved and real estate investments were sold.
In mid-1993, Mid-Atlantic Investors filed a Schedule 13D with the
Securities and Exchange Commission as a result of acquiring more than five
percent of the outstanding BFC Common Stock and indicated therein its interest
in encouraging a possible business combination involving BFC. This filing was
widely interpreted in the stock market as meaning that an activist shareholder,
who had publicly supported the sale of other thrifts in which it had made
material investments, was promoting the sale of BFC. Consequently, the
shareholder base of BFC began to change to include a larger number of
shareholders anticipating and supporting the immediate sale of BFC, and the
stock price began reflecting a speculative sale premium.
During the period from mid-1993 through early 1995, there were several
discussions between representatives of BFC and partners of Mid-Atlantic. It
was clear that a major point of disagreement related not so much to whether BFC
should be merged with another financial institution but the best timing of such
a transaction to realize highest shareholder value.
In connection with the annual meeting of BFC shareholders in 1995,
Mid-Atlantic solicited proxies for a single candidate for the Board who was not
on BFC's slate of nominees and for two shareholder proposals related to
management compensation, and one of Mid-Atlantic's partners sponsored a
shareholder proposal seeking immediate sale or merger of BFC. The BFC proxy
statement, dated March 27, 1995, indicated that the Board continued to consider
the amount of real estate investments and level of nonperforming assets as
being too high to obtain the highest value for shareholders but noted that the
question would be revisited with BFC's financial advisor during the second
quarter of 1995.
The Board discussed with its legal counsel the fiduciary duties of
directors in the context of considering a possible sale of BFC at its meeting
on May 9, 1995, and met with its financial advisor and legal counsel on May 16
and May 24, 1995 to reassess the issue. The Board determined that it was
appropriate for its financial advisor to contact other institutions (some of
which had recently expressed interest in acquiring BFC) in order to ascertain
whether a merger could be negotiated in mid-1995 on terms that would be in the
best interests of BFC and its shareholders. The decision of the Board
concerning potential merger discussions was announced at the reconvened annual
meeting of shareholders on June 7, 1995. At that time, it was also announced
that the shareholder proposal seeking a sale or merger of BFC was approved by
approximately 60% of the shareholders voting on the proposal.
Initial contacts with the most probable potential acquirors, who were
viewed as having the financial and operational capacity to pay the highest
prices, indicated reasonably strong interest in BFC. The interest level of
18
<PAGE> 21
a number of potential acquirors was discussed with the BFC Board at its meeting
on June 27, 1995, and three potential acquirors were selected for further
negotiations and due diligence. It was anticipated that due diligence could be
performed and negotiations completed with one of these parties reasonably
promptly.
The summer and fall of 1995 was a period of very active consolidation
among banks and thrifts generally as larger institutions sought to acquire
other institutions that would complement their franchise and expansion
strategies. This considerable acquisition activity had a disruptive effect on
BFC's merger discussions, because certain of the selected potential acquirors
had pending or subsequently announced significant acquisitions, which changed
the expansion priorities and levels of pricing interest of these acquirors.
Certain structural issues also surfaced during this time period. One such
issue related to an institution that did not want to acquire certain real
estate holdings that BFC had not had an opportunity to dispose of in the
ordinary course. Another such issue related to a certain smaller potential
acquiror who expressed concern about the prospect of having a shareholder
activist as part of its shareholder base following a stock merger and the
likely inability to make arrangements to eliminate such a shareholder in a
pooling transaction. On July 25, 1995, the BFC Board reviewed the status of the
process, found the prospects for reaching agreement with any of those three
potential acquirors for a per share price in the low to mid-$30s not
sufficiently promising, and authorized its financial advisor to revisit certain
institutions and open the process to a wider group of institutions.
Throughout the entire process, efforts were made by BFC and its
financial advisor (i) to accommodate requests by potential acquirors to change
the due diligence schedule and bid deadlines, (ii) to accommodate requested
delays in discussions while certain institutions that expressed interest but
were temporarily occupied with other acquisitions could become responsive
again, (iii) to consider delays for certain institutions that had expressed
some interest but were themselves dealing with whether to be acquired by larger
institutions, and (iv) to consider whether there were alternative approaches to
deal with the structural issues described above.
During the period beginning May 24, 1995, and continuing until
execution of the Merger Agreement, BFC's financial advisor contacted 31
financial institutions and sent non-public information to 12 institutions,
following up with appropriate discussions. Preliminary bids were submitted by
six institutions during the period, and varying degrees of discussions were
held with these six institutions over this period as BFC and its financial
advisor sought to develop the transaction that would provide the best value for
the BFC Board to consider for its shareholders. Two bids from large bank
holding companies were withdrawn before the process ended, one bid from a large
bank holding company was regarded as inadequate, and two bids from smaller bank
holding companies presented structural and financial issues that could not be
resolved in a manner that indicated sufficient likelihood that a desirable
transaction could be ultimately negotiated.
SouthTrust submitted a non-binding proposal on October 13, 1995,
contemplating a tax-free exchange in a stock merger accounted for as a pooling
of interests. The proposal was presented to the BFC Board at its meeting on
October 17, 1995. The principal events of the process were summarized for the
Board, and BFC's financial advisor, Robinson-Humphrey, reviewed with the Board
the discussions with each potential acquiror, including the most recent
contacts with certain institutions where there was a question as to their
position in an effort to determine whether there was any reasonable prospect of
further discussions with the institution being productive and whether any
further contact was necessary to resolve the issue. Robinson-Humphrey reviewed
the SouthTrust proposal in the context of the current banking and thrift
environment and presented financial analyses of the transaction on the basis of
precedent acquisition transactions, comparable company trading analysis, and a
dividend discount valuation analysis. Alston & Bird reviewed certain fiduciary
obligations of directors in the context of considering a sale of the
institution and commented on the application of those rules to the process that
was being undertaken as the Board sought to obtain the best value for the BFC
shareholders. After further discussion by the Board of the positions of the
principal potential acquirors, the Board authorized its financial advisor to
pursue further price negotiation with SouthTrust and prompt due diligence and
the negotiation of a definitive agreement with SouthTrust, all subject to
further consideration by the Board.
On October 23, 1995, SouthTrust submitted a proposal providing for an
increased exchange ratio of 1.126 shares of SouthTrust Common Stock for each
share of BFC Common Stock (which based on the then current market value of
SouthTrust Common Stock on October 22, 1995 represented approximately $28.99
per share of BFC
19
<PAGE> 22
Common Stock). Following receipt of the October 23, 1995 proposal, due
diligence proceeded promptly and the parties' legal advisors negotiated the
final terms of the definitive agreements.
On October 31, 1995, the BFC Board met again to review the final
proposal from SouthTrust in the context of the previous financial analysis by
Robinson-Humphrey. The results of due diligence were reported to the Board.
Alston & Bird reported on the negotiation of the Merger Agreement and
SouthTrust's requirement of a customary stock option agreement as a condition
to the transaction. The legal advisors also discussed a provision providing
for downside protection in case of a significant decline in SouthTrust Common
Stock, the definition of "material adverse effect," and certain charges that
were contemplated to be taken by BFC prior to closing. Robinson-Humphrey
confirmed the issuance of its opinion as to the fairness of the financial terms
of the Merger to the shareholders from a financial point of view. The BFC
Board unanimously approved and authorized execution of the Merger Agreement and
the Stock Option Agreement.
BFC's Reasons for the Merger
In reaching its conclusion to approve the Merger Agreement, the BFC
Board consulted with BFC's senior management, as well as its financial and
legal advisors, and considered various factors, including the following:
(i) The financial terms of the Merger. The presentation by
Robinson-Humphrey indicating that the Merger transaction multiples for BFC,
based on the Exchange Ratio in the Merger and the SouthTrust Common Stock price
on October 30, 1995, were within the range of fairness with other transactions
reviewed by Robinson-Humphrey, and represented multiples of 1.51 times BFC's per
common share fully diluted tangible book value, 11.35 times last 12-months
earnings, and 13.77 % of total assets.
(ii) The effect on shareholder value if BFC remained independent
compared to the value of combining with SouthTrust. In this respect the Board
considered several matters in the course of its eight meetings during which the
issue of sale of BFC was considered between May 9 and October 31, 1995. First,
the Board considered whether it was reasonable to anticipate that BFC, as an
independent enterprise, could meet the earnings projections necessary to
produce a value comparable to the value to be received in the Merger,
particularly if the market price of BFC Common Stock did not reflect some
takeover premium. Second, the Board took into account the fact that BFC's
financial advisor had engaged in a publicly announced auction process which
continued over five months and involved contacts with 31 financial
institutions, including extensive discussions with the institutions regarded as
having capacity to pay the higher prices; and there was no reasonable
probability that further delaying the merger of BFC would result in a better
value for the BFC shareholders. Third, the general prospects for the thrift
industry in the future were uncertain, as was the franchise value of
institutions like BFC to acquirors. Fourth, the Board considered that, based
on the current dividend payouts by BFC and SouthTrust, there would be a 25%
percent increase in dividends for BFC shareholders. Fifth, a decision to
remain independent in the context of the SouthTrust proposal and after five
months of an auction process would likely have a material adverse effect on the
market price of BFC Common Stock. Sixth, the vote of the shareholders at the
1995 annual meeting approving the shareholder proposal to take steps to
immediately sell or merge BFC suggested that there would be further action by
shareholders in the future if BFC were not sold.
(iii) Certain financial information about BFC and SouthTrust. Such
information included, but was not limited to, information with regard to recent
and historical stock performance, valuation analyses, pro forma analyses,
comparative financial and operating performance data, acquisition capacity
analyses, and comparable precedent merger and acquisition transactions
presented by Robinson-Humphrey. The Board also considered the results of due
diligence on SouthTrust, particularly regarding the views of Robinson-Humphrey
about SouthTrust Common Stock.
(iv) Advice of financial advisor and fairness opinion. The opinion
of Robinson-Humphrey (including the assumptions and financial information and
projections relied on by Robinson-Humphrey in arriving at such opinion) that,
as of October 31, 1995, the terms of the Merger were fair to the stockholders
of BFC from a financial point of view. See "-- Opinion of Financial Advisor."
20
<PAGE> 23
(v) Certain nonfinancial information and terms of agreements.
Alston & Bird distributed copies of the Merger Agreement and Stock Option
Agreement to the Board and generally summarized their material provisions. The
Board considered that under the Merger Agreement it would have the right to
terminate the Merger Agreement in the event of a significant decline in the
price of SouthTrust Common Stock prior to consummation of the Merger unless
SouthTrust then elected to increase the Exchange Ratio as specified in the
Merger Agreement. The Board was advised that SouthTrust made the Stock Option
Agreement a condition to the transaction, and the Board considered that the
existence of such an agreement might generally discourage third parties from
bidding but under the circumstances of BFC's extensive auction process such
effect was unlikely to be detrimental to BFC's shareholders and granting the
Stock Option may have assisted in obtaining the SouthTrust transaction at a
higher price. See "--Stock Option Agreement."
(vi) Regulatory approvals. The likelihood of obtaining the
regulatory approvals that would be required with respect to the Merger. See "
- - Regulatory Approvals and Certain Other Conditions to the Merger; Waiver and
Amendment."
(vii) Impact on BFC constituencies. The general impact of the
Merger on various constituencies served by BFC, including its customers,
employees, communities and other.
The foregoing discussion of the information and factors considered by
the BFC Board is not intended to be exhaustive but is believed to include all
material factors considered by the BFC Board. In reaching its determination to
approve the Merger, the BFC Board did not assign any relative or specific
weights to the foregoing factors, and individual directors may have given
differing weights to different factors. After deliberating with respect to the
Merger and the other transactions contemplated thereby, and considering, among
other things, the matters discussed above and the opinion of Robinson-Humphrey
referred to above, the BFC Board unanimously approved the Merger Agreement and
the transactions contemplated thereby, including the Stock Option Agreement, as
being in the best interests of BFC and its shareholders.
For the reasons described above, the BFC Board unanimously approved
the Merger Agreement and believes the Merger is fair to, and in the best
interests of, its shareholders. Accordingly, the BFC Board unanimously
recommends that BFC shareholders vote "FOR" approval of the Merger Agreement.
SouthTrust's Reasons for the Merger
SouthTrust is engaging in the transactions pursuant to the Merger
Agreement because the Merger is consistent with its expansion strategy within
the southeastern United States and because the acquisition of BFC and the Bank
will augment SouthTrust's existing market share in Georgia and enhance its
competitive position in such market.
OPINION OF FINANCIAL ADVISOR
General
BFC retained Robinson-Humphrey to act as its financial advisor in
connection with the Merger. Robinson-Humphrey has rendered opinions, dated
October 31, 1995, and the date hereof, to BFC's Board of Directors that, based
on the matters set forth therein, the consideration to be received pursuant to
the Merger is fair, from a financial point of view, to BFC's shareholders. The
text of such opinion dated the date hereof is set forth in Exhibit C to this
Proxy Statement/Prospectus and should be read in its entirety by shareholders
of BFC. The opinion set forth in Exhibit C is substantially the same as the
opinion delivered to BFC's Board of Directors on October 31, 1995.
The consideration to be received by BFC shareholders in the Merger was
determined by BFC and SouthTrust in their negotiations. No limitations were
imposed by the Board of Directors or management of BFC upon Robinson-Humphrey
with respect to the investigations made or the procedures followed by
Robinson-Humphrey in rendering its opinion.
21
<PAGE> 24
In connection with rendering its opinions to BFC's Board of Directors,
Robinson-Humphrey performed a variety of financial analyses. However, the
preparation of a fairness opinion involves determinations as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances, and, therefore, such an opinion
is not readily susceptible to summary description. Robinson-Humphrey, in
conducting its analyses and in arriving at its opinions, has not conducted a
physical inspection of any of the properties or assets of BFC, and has not made
or obtained any independent valuation or appraisals of any properties, assets
or liabilities of BFC. Robinson-Humphrey has assumed and relied upon the
accuracy and completeness of the financial and other information that was
provided to it by BFC or that was publicly available. Its opinions are
necessarily based on economic, market and other conditions as in effect on, and
the information made available to it as of the date of, its analyses.
Valuation Methodologies
In connection with its opinions on the Merger and the presentation of
its October 31, 1995 opinion to BFC's Board of Directors, Robinson-Humphrey
performed two valuation analyses with respect to BFC: (i) an analysis of
comparable prices and terms of recent transactions involving financial
institutions purchasing thrifts; and (ii) a discounted cash flow analysis. For
purposes of the comparable transaction analyses, SouthTrust's stock was valued
at $25.50 per share. Each of these methodologies is discussed briefly below.
(i) Comparable Transaction Analysis. Robinson-Humphrey performed
analyses of premiums paid for selected thrifts with comparable characteristics
to BFC. Comparable transactions were considered to be transactions where the
seller was a thrift with assets less than or equal to $1.75 billion since
January 1, 1995.
Based on the first of the foregoing transactions, financial
institutions purchasing thrifts with assets less than or equal to $1.75 billion
since January 1, 1995, the analysis yielded a range of transaction values to
book value of 0.72 times to 2.48 times, with a mean of 1.45 times and a median
of 1.45 times. These compare to a transaction value for the Merger of
approximately 1.44 times BFC's book value as of September 30, 1995.
The analysis yielded a range of transaction values as a multiple of
tangible book value for the comparable transactions ranging from 0.72 times to
3.82 times, with a mean of 1.50 times and a median of 1.46 times. These
compare to a transaction value to tangible book value at September 30, 1995 of
approximately 1.51 times for the Merger.
The analysis yielded a range of transaction values as a multiple of
trailing 12-month earnings per share. These values ranged from 7.67 times to
35.22 times, with a mean of 17.25 times and a median of 16.78 times. These
compare to a transaction value to BFC's last twelve months earnings as of
September 30, 1995 of approximately 11.35 times for the Merger.
The analysis yielded a range of transaction values as a percent of
total assets. These values ranged from 3.05 percent to 31.96 percent, with a
mean of 14.69 percent and a median of 14.51 percent. These compare to a
transaction value to the September 30, 1995 total assets of 13.77 percent for
the Merger.
No company or transaction used in the comparable transaction analyses
is identical to BFC. Accordingly, an analysis of the foregoing necessarily
involves complex considerations and judgments, as well as other factors that
affect the public trading value or the acquisition value of the company to
which it is being compared.
(ii) Discounted Cash Flow Analysis. Using discounted cash flow
analysis, Robinson-Humphrey estimated the present value of the future stream of
after-tax cash flows that BFC could produce through 1999, under various
circumstances, assuming that BFC performed in accordance with the
earnings/return projections of management at the time that BFC entered into
acquisition discussions in mid-1995. Robinson-Humphrey estimated the
terminal value for BFC at the end of the period by applying multiples of
earnings ranging from 9.0 to 11.0 times and then discounting the cash flow
streams, dividends paid to shareholders and terminal value using differing
discount rates ranging from 9.0 percent to 13.5 percent chosen to reflect
different assumptions regarding the required rates of return of BFC and the
inherent risk surrounding the underlying projections. This discounted
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cash flow analysis indicated a reference range of $144.2 million to $183.9
million, or $27.58 to $35.16 per share, for BFC.
Compensation of Robinson-Humphrey
Pursuant to an engagement letter dated May 23, 1995, between BFC and
Robinson-Humphrey, BFC agreed to pay Robinson-Humphrey a $300,000 fairness
opinion fee and an incremental success fee (to be paid at closing) equal to
approximately 1.00% of the total value of the transaction less the fairness
opinion fee. BFC has also agreed to indemnify and hold harmless
Robinson-Humphrey and its officers and employees against certain liabilities in
connection with its services under the engagement letter, except for
liabilities resulting from the negligence of Robinson-Humphrey.
As part of its investment banking business, Robinson-Humphrey is
regularly engaged in the valuation of securities in connection with mergers and
acquisitions, negotiated underwriting, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes. BFC's Board of Directors decided to retain
Robinson-Humphrey based on its experience as a financial advisor in mergers and
acquisitions of financial institutions, particularly transactions in the
Southeastern region of the United States, and its knowledge of financial
institutions and BFC in particular.
INTERESTS OF CERTAIN NAMED PERSONS IN THE MERGER
Certain members of BFC management and of the BFC Board of Directors
have interests in the Merger that are in addition to any interests they may
have as shareholders of BFC generally. These interests include, among others,
provisions in the Merger Agreement relating to indemnification of BFC's
directors and officers, directors' and officers' liability insurance, and
certain severance and other employee benefits, as described below.
SouthTrust has agreed in the Merger Agreement that it shall, and shall
cause ST-Sub, to indemnify, defend and hold harmless the present and former
directors, officers, employees and agents of the BFC Companies (as defined in
the Merger Agreement) against all Liabilities (as defined in the Merger
Agreement) arising out of actions or omissions occurring at or prior to the
Effective Time (including the transactions contemplated by the Merger
Agreement) to the full extent permitted under Georgia law and by BFC's Articles
of Incorporation and Bylaws as in effect on the date of the Merger Agreement,
including provisions relating to advances of expenses incurred in the defense
of any Litigation (as defined in the Merger Agreement). SouthTrust has also
agreed to use its reasonable efforts to maintain in effect BFC's existing
directors' and officers' liability insurance policy for six years after the
Effective Time of the Merger, subject to certain limitations, including the
right to substitute policies and to limit the premium costs of such coverage.
Pursuant to the Merger Agreement, appropriate steps will be taken to
terminate all employee benefit plans of BFC as of the Effective Time of the
Merger or as promptly as practicable thereafter, other than the Retirement Plan
and Trust of Bankers First Corporation (the "BFC Retirement Plan") and the
Bankers First Corporation Employee Stock Ownership Plan (the "ESOP").
Following the termination of all such employee benefit plans (other than the
BFC Retirement Plan and the ESOP), and subject to certain conditions described
below, SouthTrust has agreed that the officers and employees of any BFC Company
who SouthTrust or any of its affiliates employs shall be eligible to
participate in the employee benefits 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 BFC'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 BFC 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, notwithstanding anything
contained in the Merger Agreement to the
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contrary, 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.
The Merger Agreement further provides that the BFC Retirement Plan
will, in SouthTrust's discretion, either be (i) merged into the SouthTrust
Corporation Revised Retirement Income Plan (the "ST Retirement Plan") or (ii)
terminated as of such date prior to, on or after the Effective Time of the
Merger, as SouthTrust shall determine and specify. From and after January 1
following the termination of the BFC Retirement Plan or the merger of the BFC
Retirement Plan into the ST Retirement Plan, for purposes of determining
eligibility to participate in, and vesting in accrued benefits under both the
ST Retirement Plan and the SouthTrust Corporation Employee's Profit Sharing
Plan, employment by BFC Companies shall be credited as if it were employment by
SouthTrust, except to the extent otherwise required by applicable law, but such
service shall not be credited for purposes of determining benefit accrual under
the ST Retirement Plan.
The Merger Agreement further provides that the ESOP, as amended to the
extent, if any, necessary to obtain a favorable determination letter from the
Internal Revenue Service, will be terminated as of such date prior to, on, or
after the Effective Time of the Merger, as SouthTrust and BFC shall mutually
determine and specify. In the Merger Agreement, SouthTrust and BFC have agreed
that distributions shall be made from the ESOP in accordance with the terms and
provisions of the ESOP prior to receipt from the Internal Revenue Service of a
favorable determination letter with respect to the effect of such termination
upon the qualified status of the ESOP; subject, however, to the trustee's right
to retain such amounts as it reasonably deems appropriate as a reserve for any
Taxes (as defined in the Merger Agreement) which may be imposed against the
ESOP.
SouthTrust also has agreed that it shall, for a period of 12 months
after the Effective Time of the Merger, provide generally to officers and
employees of the BFC Companies severance benefits in accordance with the
policies of either BFC as disclosed in connection with the Merger Agreement, or
SouthTrust, whichever provides greater benefit to the officer or employee.
On October 31, 1995, BFC entered into a Termination Agreement with H.M.
Osteen, Jr., President and Chief Executive Officer of BFC (the "1995
Termination Agreement"). The 1995 Termination Agreement was entered into in
lieu of renewal of a Termination Agreement, dated as of October 19, 1993 (the
"1993 Termination Agreement"), with Mr. Osteen, which agreement expired on
September 30, 1995. Pursuant to the 1995 Termination Agreement (which provides
for less compensation to Mr. Osteen than would have the 1993 Termination
Agreement if that agreement had been extended) Mr. Osteen has agreed to remain
in the employ of BFC to facilitate the transition between execution of the
Merger Agreement and closing of the Merger (the "Transition Period"), and that
his employment with BFC will cease as of the Effective Time of the Merger or
such earlier date during the Transition Period, but not before February 1, 1996
(except for Cause as defined in the 1993 Termination Agreement), as specified
by BFC's Board of Directors. His salary and current employee benefits will be
continued until such termination date. From and after such termination date
and for a period of one year thereafter (the "Consulting Period"), Mr. Osteen
(i) will remain available to serve BFC in a consulting capacity at no
additional compensation, and (ii) will not serve in a management capacity with
another financial institution in BFC's market area. Unless Mr. Osteen is
terminated for Cause, he will receive, upon termination of his employment
pursuant to the terms of the 1995 Termination Agreement, (i) a cash payment of
$350,000, (ii) title to the automobile currently at his disposal and the
computer, related equipment and office furnishings that are currently in his
office at BFC, (iii) any vested benefits he may have under BFC's employee
benefit plans as are applicable to him on the date of termination (such
benefits to be in accordance with and subject to the applicable terms and
conditions of such plans), (iv) any salary, bonus or other benefits that have
been earned or become payable through the date of termination, but which have
not yet been paid, and (v) any right to purchase continued insurance coverage
following his termination, as provided by law. The 1995 Termination Agreement
provides that it will terminate in the event the Merger is abandoned or fails
to close on or before September 30, 1996.
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EFFECT OF MERGER ON BFC COMMON STOCK
At the Effective Time of the Merger, each issued and outstanding share
of BFC Common Stock (excluding shares held by any BFC Company or any SouthTrust
Company (as defined in the Merger Agreement), in each case other than in a
fiduciary capacity or as a result of debts previously contracted) shall cease
to be outstanding and shall be converted into and exchanged for the right to
receive 1.126 shares of SouthTrust Common Stock, subject to possible adjustment
as described in "THE MERGER -- Possible Exchange Ratio Adjustment."
The Exchange Ratio, including the number of shares of SouthTrust
Common Stock issuable in the Merger, is subject to appropriate adjustment in
the event of certain stock splits, stock dividends, reclassifications or
similar distributions effected by SouthTrust. No fractional shares of
SouthTrust Common Stock will be issued in the Merger, and, in lieu thereof,
each holder of a share of BFC 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 (without interest) 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 SouthTrust Common Stock on Nasdaq on the last trading day preceding
the Effective Time.
Because, except as described above, the exchange ratio of shares of
SouthTrust Common Stock for BFC Common Stock is fixed, it will not compensate
BFC's shareholders for decreases in the market price of SouthTrust Common Stock
which could occur before the Effective Time of the Merger. Further, in the
event the market price of SouthTrust Common Stock decreases after
March 12, 1996, the date of the Special Meeting, the value of the
SouthTrust Common Stock to be received in the Merger in exchange for BFC Common
Stock would decrease below the value prevailing at the time the shareholders of
BFC consider and act upon the proposal to approve and adopt the Merger
Agreement. However, 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 BFC Common Stock would increase. BFC's shareholders are
advised to obtain current market quotations for SouthTrust Common Stock and BFC
Common Stock. No assurance can be given as to the market prices of SouthTrust
Common Stock or BFC Common Stock on the date the Merger becomes effective or as
to the market price of SouthTrust Common Stock thereafter.
POSSIBLE EXCHANGE RATIO ADJUSTMENT
The Merger Agreement provides that it may be terminated by the BFC
Board, at its sole option, if either:
(i) both (a) the Average Closing Price on the Determination
Date (i.e., the average last sale price of SouthTrust Common Stock for
the ten full trading days ending on the date on which approval of the
Federal Reserve Board is received) is less than $21.625 and (b) the
number obtained by dividing the Average Closing Price on the
Determination Date by $25.50 (the "Acquiror Ratio") is less than the
number obtained by dividing the weighted average closing price per
share of the common stocks of the Index Group on the Determination
Date by the weighted average closing price per share of the common
stocks of the Index Group on October 30, 1995 and subtracting 0.15
from this quotient (the "Index Ratio"); or
(ii) the Average Closing Price on the Determination Date is
less than $21.125;
provided, however, that the Merger Agreement would not be so terminated if
SouthTrust elects, in its sole option, to increase the Exchange Ratio as set
forth in the Merger Agreement and as illustrated below. There can be no
assurance that the BFC Board would exercise its rights to terminate the Merger
Agreement if a Termination Event (i.e., the condition in clauses (i) or (ii)
above) exists and if the BFC Board does elect to so terminate the Merger
Agreement, there can be no assurance that SouthTrust would elect to increase
the Exchange Ratio as provided in the Merger Agreement and as illustrated
below.
Certain possible effects of the above provisions on the Exchange Ratio
may be illustrated by the following four scenarios:
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(1) If the Average Closing Price on the Determination Date is not
less than $21.675, there would be no Termination Event and no adjustment to the
Exchange Ratio.
(2) If the Average Closing Price on the Determination Date is less
than $21.675 and greater than $19.125, but the Acquiror Ratio is equal to or
greater than the Index Ratio, there would be no Termination Event and no
increase in the Exchange Ratio.
(3) If the Average Closing Price on the Determination Date is less
than $21.675 and the Acquiror Ratio is less than the Index Ratio, there would
be a Termination Event and the BFC Board could, at its sole option, elect to
terminate the Agreement; provided that SouthTrust could, at its sole option,
override such termination by electing to increase the Exchange Ratio to equal
the lesser of (i) the result of dividing the product of $21.675 and the
Exchange Ratio (as then in effect) by the Average Closing Price on the
Determination Date, and (ii) the result of dividing the product of the Index
Ratio and the Exchange Ratio (as then in effect) by the Acquiror Ratio.
(4) If the Average Closing Price on the Determination Date is less
than $19.125, there would be a Termination Event and the BFC Board could, at
its sole option, elect to terminate the Agreement; provided that SouthTrust
could, at its sole option, override such termination by electing to increase
the Exchange Ratio to equal the quotient obtained by dividing the product of
$19.125 and the Exchange Ratio (as then in effect) by the Average Closing Price
on the Determination Date.
If there were to be a Termination Event described in both paragraphs
(3) and (4) above, the BFC Board could elect which Termination Event to assert.
The above scenarios are for illustrative purposes only and are not intended to,
and do not, reflect the value of the SouthTrust Common Stock that may actually
be received by holders of BFC Common Stock in the Merger, nor do they reflect
all possible termination/increase scenarios.
BFC shareholders should be aware that the Average Closing Price on the
Determination Date on which the occurrence of a Termination Event and the
subsequent increase, if any, in the Exchange Ratio may be determined, will be
based on the average of the last sale prices of SouthTrust Common Stock during
a ten-day period ending on the Determination Date. Accordingly, because the
market price of SouthTrust Common Stock between the Determination Date and the
Effective Time of the Merger, as well as on the date certificates representing
shares of SouthTrust Common Stock are delivered in exchange for shares of BFC
Common Stock following consummation of the Merger, will fluctuate, the value of
the SouthTrust Common Stock actually received by holders of BFC Common Stock
may be more or less than (i) the Average Closing Price on the Determination
Date, or (ii) the value of the SouthTrust Common Stock at the Effective Time
resulting from the Exchange Ratio or any possible adjustment to the Exchange
Ratio as illustrated above.
The Index Group consists of 20 bank holding companies selected by
SouthTrust and BFC as being directly relevant for purposes of distinguishing
changes in SouthTrust's stock prices that are unique from those reflective of
general changes in comparable companies. The 20 bank holding companies are
AmSouth Bancorporation, Barnett Banks, Inc., Central Fidelity Banks, Inc.,
Compass Bancshares, Inc., Crestar Financial Corporation, Deposit Guaranty
Corporation, First American Corporation, First Commerce Corporation, First
Tennessee National Corporation, First Virginia Banks, Inc., Hibernia
Corporation, Mercantile Bankshares Corporation, National Commerce
Bancorporation, Regions Financial Corporation, Signet Banking Corporation,
Southern National Corporation, SunTrust Banks, Inc., Trustmark Corporation,
Union Planters Corporation, and Wachovia Corporation. If SouthTrust or any
company belonging to the Index Group declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination, exchange of shares
or similar transaction between October 30, 1995 and the Determination Date, the
prices of SouthTrust Common Stock or such other common stocks shall be
appropriately adjusted for all purposes, including determining whether there is
a Termination Event or determining any possible increase in the Exchange Ratio
as illustrated above (and, in the case of any such transaction by SouthTrust,
the Exchange Ratio also shall be appropriately adjusted). In the event there
shall have been, between October 30, 1995 and the Determination Date, any
public announcement of a proposal for such company to be acquired or for such
company to acquire another company or companies in transactions with a value
exceeding 25% of the acquiror's market capitalization, such company will be
removed from the Index Group and the weights will be redistributed
proportionately for purposes of computing the Index Price (which, as described
above, is used to determine the Index Ratio which in turn is used in
determining whether there has been a Termination Event and,
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in the case of a Termination Event described in (3) above, is used to determine
the increase in the Exchange Ratio, if any).
It is not possible to know whether a Termination Event will occur
until after the Determination Date. The BFC Board has made no decision as to
whether to exercise its termination right in such situation. The BFC Board
would, consistent with its fiduciary duties, take into account all relevant
facts and circumstances that exist at such time and would consult with its
financial advisors and legal counsel. Approval of the Merger Agreement by the
shareholders of BFC at the Special Meeting will confer on the BFC Board the
power, consistent with its fiduciary duties, to elect to consummate the Merger
in the event of a Termination Event whether or not there is any increase in the
Exchange Ratio and without any further action by, or resolicitation of, the
shareholders of BFC. If the BFC Board elects to exercise its termination
right, BFC must give SouthTrust prompt notice of that decision during a ten-day
period beginning two days after the Determination Date, but the BFC Board may
withdraw such notice, at its sole option, at any time during such ten-day
period. During the five-day period commencing with receipt of such notice,
SouthTrust has the option, in its sole discretion, to increase the Exchange
Ratio in the manner set forth in the Merger Agreement and as illustrated above
and thereby avoid such termination of the Agreement. SouthTrust is under no
obligation to increase the Exchange Ratio, and there can be no assurance that
SouthTrust would elect to increase the Exchange Ratio if the BFC Board were to
exercise its right to terminate the Merger Agreement as set forth above. Any
such decision would be made by SouthTrust in light of the circumstances
existing at the time SouthTrust has the opportunity to make such an election.
If SouthTrust elects to increase the Exchange Ratio as set forth in the Merger
Agreement and as illustrated above, it must give BFC prompt notice of that
election and such increased Exchange Ratio, in which case no termination of the
Agreement would occur as a result of a Termination Event.
The foregoing discussion is qualified in its entirety by reference to
the applicable provisions in the Merger Agreement (a copy of which is set forth
as Exhibit A to this Proxy Statement/Prospectus) relating to possible increase
in the Exchange Ratio as the result of a Termination Event.
EFFECT OF THE MERGER ON BFC STOCK OPTIONS
At the Effective Time of the Merger, all rights with respect to BFC
Common Stock pursuant to stock options or stock appreciation rights ("BFC
Options") granted by BFC under the BFC Stock Plans (as defined in the Merger
Agreement), which are outstanding at the Effective Time of the Merger, whether
or not exercisable, shall be converted and become rights with respect to
SouthTrust Common Stock and will be assumed by SouthTrust in accordance with
the terms of the particular BFC Stock Plan under which such BFC Options were
issued and the stock option agreement by which such BFC Options are evidenced.
From and after the Effective Time of the Merger, (i) each BFC Option assumed by
SouthTrust may be exercised solely for shares of SouthTrust Common Stock, (ii)
the number of shares of SouthTrust Common Stock subject to such BFC Option
shall be equal to the number of shares of BFC Common Stock subject to such BFC
Option immediately prior to the Effective Time multiplied by the Exchange
Ratio, and (iii) the per share exercise price under each such BFC Option shall
be adjusted by dividing the per share exercise price under each such BFC Option
by the Exchange Ratio and rounding up to the nearest cent.
As soon as practicable after the Effective Time of the Merger,
SouthTrust has agreed in the Merger Agreement to file a registration statement
on Form S-3 or Form S-8, as the case may be, with respect to the shares of
SouthTrust Common Stock subject to the BFC Options and to use its reasonable
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as any of the BFC Options remain
outstanding.
It is intended that such assumption of BFC Options shall be undertaken
in a manner that will not constitute a "modification" as defined in Section 424
of the Internal Revenue Code of 1986, as amended (the "Code") as to any stock
option which is an incentive stock option as defined in Section 422 of the
Code. All restrictions or limitations on transfer with respect to shares of
BFC Common Stock awarded under a BFC Stock Plan ("Restricted Stock"), to the
extent that such restrictions or limitations shall not have already lapsed,
shall remain in full force and effect with respect to the shares of SouthTrust
Common Stock into which such Restricted Stock is converted
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unless such restrictions arise under the Securities Act of 1933 and are
eliminated by virtue of the Registration Statement filed by SouthTrust of which
this Proxy Statement/Prospectus is a part.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective on the date and at the time the
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Georgia. The Merger Agreement provides
that, unless otherwise mutually agreed upon in writing, the parties thereto
will use their reasonable efforts to cause such effective time to occur on the
third business day following the last to occur of (i) the effective date
(including expiration of any applicable waiting period) of the last required
Consent of any Regulatory Authority, and (ii) the date on which the
shareholders of BFC approve the Merger Agreement. The Merger cannot become
effective until BFC's shareholders have approved the Merger Agreement and all
required regulatory approvals and actions have been obtained and taken.
No assurance can be provided that the necessary shareholder and
regulatory approvals can be obtained or that other conditions precedent to the
Merger can or will be satisfied. BFC and SouthTrust anticipate that all
conditions to consummation of the Merger will be satisfied so that the Merger
can be consummated on March 15, 1996. However, delays in the consummation of
the Merger could occur.
The Board of Directors of either BFC or SouthTrust generally may
terminate the Agreement if the Merger is not consummated by September 30, 1996,
unless the failure to consummate by that date is the result of a breach of the
Agreement by the party seeking termination. See "-- Regulatory Approvals and
Certain Other Conditions to Consummation of the Merger; Waiver and Amendment"
and "-- Termination."
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Time of the Merger, SouthTrust and BFC
shall cause the exchange agent selected by SouthTrust (the "Exchange Agent") to
mail to each former holder of record of shares of BFC Common Stock appropriate
transmittal materials for use in exchanging their certificates formerly
representing shares of BFC Common Stock for exchange and conversion in
accordance with the procedures provided for herein and in the Merger Agreement.
The letter of transmittal will specify that delivery shall be effected and risk
of loss and title to the certificates shall pass, only upon proper delivery of
such certificates to the Exchange Agent. BFC SHAREHOLDERS SHOULD NOT SURRENDER
THEIR CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE SUCH LETTER OF TRANSMITTAL
AND INSTRUCTIONS. After the Effective Time of the Merger, each holder of
shares of BFC Common Stock shall surrender the certificates representing such
shares to the Exchange Agent and shall promptly receive in exchange therefor
the Merger consideration, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon), and cash in
lieu of any fractional shares of SouthTrust Common Stock to which the
stockholder may otherwise be entitled. Until the stock certificates evidencing
the shares of BFC Common Stock are surrendered pursuant to the Merger
Agreement, no Merger consideration will be delivered or remitted to such
holders. In addition, holders of shares of BFC Common Stock will not be
entitled to receive any interest respecting any dividends or distributions
payable in respect of shares of SouthTrust Common Stock, or on any cash in lieu
of fractional shares. Neither SouthTrust nor the Exchange Agent shall be
liable to a holder of BFC Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property law.
Whenever a divided or other distribution is declared by SouthTrust on
SouthTrust Common Stock, the record date for which is at or after the Effective
Time of the Merger, the declaration will include dividends or other
distributions on all shares issuable pursuant to the Merger Agreement, but,
beginning 60 days after the Effective Time of the Merger, no dividend or other
distribution payable after the Effective Time of the Merger with respect to
SouthTrust Common Stock will be paid to the holder of any certificate
representing shares of BFC Common Stock issued and outstanding at the Effective
Time of the Merger until the holder duly surrenders such certificate. Upon
surrender of such BFC Common Stock certificate, however, both the SouthTrust
Common Stock certificate, together with all undelivered dividends or other
distributions (without interest) and any undelivered cash payments
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to be paid in lieu of fractional shares (without interest), will be delivered
and paid with respect to each share represented by such certificate.
After the Effective Time of the Merger, there will be no transfers of
shares of BFC Common Stock on BFC's stock transfer books. If certificates
formerly representing shares of BFC Common Stock are presented for transfer
after the Effective Time of the Merger, they will be canceled and exchanged for
the shares of SouthTrust Common Stock and a check for the amount due in lieu of
fractional shares, if any, deliverable in respect thereof.
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 BFC who
are not deemed to be "affiliates" (as that term is defined in the rules under
the Securities Act) of BFC and who do not become affiliates of SouthTrust. The
shares of SouthTrust Common Stock to be issued to affiliates of BFC may be
resold only pursuant to an effective registration statement, pursuant to Rule
145 under the Securities Act, 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. Under the volume limitations of Rule 145, and
based upon the outstanding shares of SouthTrust Common Stock as of September
30, 1995 (exclusive of shares of SouthTrust Common Stock to be issued in the
Merger), each affiliate of BFC will be free to resell, during any given
three-month period, up to approximately 876,240 shares of SouthTrust Common
Stock, provided that such affiliate otherwise complies with the provisions of
Rule 145.
This Proxy Statement/Prospectus does not cover any resales of
SouthTrust Common Stock received by persons who may be deemed to be affiliates
of BFC or SouthTrust.
BFC has agreed to use its reasonable efforts to cause each individual
or entity identified by BFC as an affiliate to deliver to SouthTrust, on or
before 30 days prior to the Effective Time of the Merger, a written agreement
in the form provided for in the Merger Agreement providing that such affiliate
shall not sell, pledge, transfer or otherwise dispose of such shares of
SouthTrust Common Stock to be received by such affiliate upon consummation of
the Merger, except (i) in compliance with the Securities Act or the rules and
regulations thereunder, and (ii) until such time as financial results covering
at least 30 days of combined operations of BFC and SouthTrust have been
published within the meaning of Section 201.01 of the Commission's Codification
of Financial Reporting Policies.
ACCOUNTING TREATMENT
The Merger will be accounted for by SouthTrust as a pooling of
interests. Under the pooling of interests method of accounting, the recorded
amounts of the assets and liabilities of BFC and SouthTrust will be carried
forward at their previously recorded amounts. The Merger Agreement provides,
as a condition of both SouthTrust and BFC to consummate the Merger, that both
SouthTrust and BFC shall have received a letter, dated as of the Effective Time
of the Merger, in form and substance reasonably acceptable to SouthTrust and
BFC, from Arthur Andersen LLP to the effect that the Merger will qualify for
pooling of interests accounting treatment, and SouthTrust and BFC also shall
have received a letter, dated as of the Effective Time of the Merger, in form
and substance reasonably acceptable to SouthTrust and BFC, from KPMG Peat
Marwick LLP to the effect that such firm is not aware of any matters relating
to BFC and its subsidiaries which would preclude the Merger from qualifying for
pooling of interests accounting treatment. For information concerning certain
restrictions to be imposed on the transferability of the shares of SouthTrust
Common Stock received by the affiliates of BFC in the Merger in order, among
other things, to assure the availability of pooling of interests accounting
treatment, see "-- Resale of SouthTrust Common Stock Received in the Merger."
REGULATORY APPROVALS AND CERTAIN OTHER CONDITIONS TO THE MERGER; WAIVER AND
AMENDMENT
The respective obligations of SouthTrust and BFC 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
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the Merger, (ii) the approval of the Merger Agreement by the requisite vote of
BFC's shareholders, and (iii) certain other conditions as described in more
detail below.
Applications for the approvals described below have been submitted to
the appropriate regulatory agencies. THERE CAN BE NO ASSURANCE THAT SUCH
REGULATORY APPROVALS WILL BE OBTAINED OR AS TO THE TIMING OF ANY SUCH
APPROVALS. There also can be no assurance that any such approvals will not
impose conditions or be restricted in a manner (including requirements relating
to the raising of additional capital or the disposition of assets) which in the
reasonable judgment of the Board of Directors of either SouthTrust or BFC would
so materially adversely impact the economic or business benefits of the
transactions contemplated by the Agreement that, had such condition or
requirement been known, such party would not, in its reasonable judgment, have
entered into the Agreement.
BFC and SouthTrust are not aware of any material governmental
approvals or actions that are required for consummation of the Merger, except
as described below. Should any other approval or action be required, it
currently is contemplated that such approval or action would be sought.
Consummation of the Merger is subject to receipt of the prior approval
by the Federal Reserve Board under the Bank Holding Company Act. The Bank
Holding Company Act requires that the Federal Reserve Board take into
consideration, among other factors, the financial and managerial resources and
future prospects of the institutions and the convenience and needs of the
communities to be served. The Bank Holding Company Act prohibits the Federal
Reserve Board from approving the Merger (i) if such transaction would result in
a monopoly or be in furtherance of any combination or conspiracy to monopolize
or to attempt to monopolize the business of banking in any part of the United
States, or (ii) if the effect of such transaction in any section of the country
may be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner be a restraint of trade, unless the relevant
regulatory agency finds that the anti-competitive effects of such merger are
clearly outweighed by the public interest and by the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served. Under the Bank Holding Company Act, the Federal Reserve Board also
considers whether the proposed transaction can reasonably be expected to
produce benefits to the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh possible adverse effects,
such as undue concentration of resources, decreased or unfair competition,
conflicts of interests, or unsound banking practices. The Federal Reserve
Board has the authority to deny an application if it concludes that the
combined organization would have an inadequate capital position or if the
acquiring organization does not meet the requirements of the Community
Reinvestment Act of 1977. In addition, the Merger may not be consummated until
the 15th day following the dates of each of the requisite approvals, during
which periods the United States Department of Justice may comment adversely on
the transaction (which has the effect of extending the waiting period to the
30th day following approval) or challenge such Merger on antitrust grounds.
The commencement of an antitrust action would stay the effectiveness of such an
approval unless a court specifically orders otherwise.
The Merger also is subject to the approval of the Georgia Department.
In its evaluations, the Georgia Department will take into account
considerations similar to those applied by the Federal Reserve Board. There
are no waiting periods applicable to approval by the Georgia Department.
The Merger cannot proceed in the absence of the requisite regulatory
approvals. There can be no assurance that such regulatory approvals will be
obtained, and, if the Merger is approved, there can be no assurance as to the
date of any such approval. There can also be no assurance that the United
States Department of Justice or a State Attorney General will not challenge the
Merger or, if such a challenge is made, as to the result thereof.
SouthTrust has filed with the Federal Reserve Board an application
seeking approval to merge BFC into ST-Sub and to merge the Bank into ST-Bank,
which application was accepted by the Federal Reserve Board on December 22,
1995 and approved by the Federal Reserve Board on January 11, 1996.
SouthTrust has also transmitted an application to the Georgia Department
seeking approval to consummate the transactions contemplated by the Merger
Agreement which application was accepted on January 26, 1996.
In connection with the Merger, it is contemplated that, either
contemporaneously with or immediately following the Effective Time of the
Merger, the Bank will be merged into ST-Bank, whereupon the Bank will cease to
be a
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separate entity (the "Subsidiary Merger"). Because ST-Bank, the surviving bank
in the transaction, is a national bank, the merger of the banking subsidiaries
will be subject to the approval of the Office of the Comptroller of the
Currency ("OCC") under the Bank Merger Act, which prohibits the merger or
consolidation of any insured institution with any other depository institution
without the approval of the insured institution's primary supervisory federal
regulatory agency. The approval standards to be applied by the OCC under the
Bank Merger Act are identical to those applicable to the Merger under Section 3
of the Bank Holding Company Act. The merger of ST-Bank and the Bank also is
subject to prior notice to the OTS by BFC.
On December 4, 1995, ST-Bank submitted to the OCC an application
seeking approval to merge the Bank into ST-Bank. In addition, on December 21,
1995 BFC filed the required notice with the OTS respecting the merger of
the Bank into ST-Bank.
Approval by the OCC of the Subsidiary Merger is not a condition to the
obligation of SouthTrust to consummate the Merger. Accordingly, it is possible
that, if all conditions to the respective obligations of SouthTrust and BFC to
consummate the Merger are satisfied, but the OCC and all other regulatory
approvals with respect to the Subsidiary Merger have not been obtained, the
Merger could be consummated even though consent to the Subsidiary Merger were
to be delayed.
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 BFC, 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 Registration Statement shall be effective under
the 1933 Act, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing and all necessary
approvals under state securities laws or the 1933 Act or 1934 Act
relating to the issuance or trading of the shares of SouthTrust Common
Stock issuable pursuant to the Merger shall have been received;
(ii) The representations and warranties of SouthTrust and
BFC, respectively, made in the Merger Agreement and assessed as of the
time of the Merger Agreement and the Effective Time shall be accurate
to the extent provided for in the Merger Agreement; provided, however,
that the aggregate effect of any inaccuracies is not reasonably likely
to have a Material Adverse Effect (as defined in the Merger Agreement)
on the party making the representations and warranties;
(iii) SouthTrust and BFC, respectively, shall have
performed and complied, in all material respects with all of their
respective agreements and covenants pursuant to the Merger Agreement;
(iv) The receipt of opinions of counsel for SouthTrust and
BFC, respectively, as to certain matters including certain tax matters
(see "CERTAIN FEDERAL INCOME TAX CONSEQUENCES");
(v) No court or governmental or regulatory authority of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law or order (whether temporary, preliminary
or permanent) or taken any other action which prohibits, restricts or
makes illegal consummation of the transactions contemplated by the
Merger Agreement;
(vi) The shares of SouthTrust issuable pursuant to the
Merger shall have been approved for listing on Nasdaq;
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(vii) The receipt of letters from Arthur Andersen LLP and
KPMG Peat Marwick LLP respecting certain accounting treatment and
financial information regarding the respective parties;
(viii) The opinion of Robinson-Humphrey to the effect that
the consideration to be received by the shareholders of BFC shall have
been received on or before the date this Proxy Statement/Prospectus is
mailed to the shareholders of BFC; and
(ix) SouthTrust shall have received from each affiliate of
BFC the affiliates letter to assure in the reasonable judgment of
SouthTrust that the transaction will qualify for pooling of interest
accounting treatment.
At any time before the Effective Time of the Merger, any party to the
Merger Agreement in writing may (i) waive any Default (as defined in the Merger
Agreement) in the performance of any term of the Merger Agreement by the other
party, (ii) waive or extend the time for compliance or fulfillment of
obligations of the other party, and (iii) waive any and all of the conditions
precedent to its own obligations. In addition, the Merger Agreement may be
amended by written instruments signed on behalf of each of the parties thereto;
provided, however, that after approval by the holders of BFC Common Stock, no
amendment may be made that reduces or modifies in any material respect the
consideration to be received by the holders of BFC Common Stock without further
approval of such shareholders.
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned, at
any time prior to the Effective Time in any of the following ways:
(i) By mutual consent of SouthTrust and BFC; or
(ii) By either SouthTrust or BFC (provided that the
terminating party is not then in breach of any representation or
warranty contained in the Merger Agreement in the event of an
inaccuracy of any representation or warranty of the other party
contained in the Merger Agreement which cannot be or had not been
cured within 30 days after the giving of written notice of the
breaching party of such inaccuracy and which inaccuracy would provide
the terminating Party the ability to refuse to consummate the Merger
under the applicable standard set forth in the Merger Agreement; or
(iii) By either SouthTrust or BFC in the event of a
material breach by the other party of any covenant or agreement
contained in the Merger Agreement which cannot be or has not been
cured within 30 days after the giving of written notice to the
breaching party of such breach; or
(iv) By either SouthTrust or BFC in the event (i) any
Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated thereby shall have been
denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit
for appeal, or (ii) the shareholders of BFC fail to vote their
approval of the Merger Agreement and the transactions contemplated
thereby as required by the Georgia Business Corporation Code at the
shareholders' meeting where the transactions were presented to such
shareholders for approval and voted upon; or
(v) By either SouthTrust or BFC in the event that the
Merger shall not have been consummated by September 30, 1996, if the
failure to consummate the transactions contemplated hereby on or
before such date is not caused by any breach of the Merger Agreement
by the party electing to terminate; or
(vi) By either SouthTrust or BFC (provided that the
terminating party is not then in breach of any representation or
warranty contained in this Agreement or in material breach of any
covenant or other agreement contained in the Merger Agreement) in the
event that any of the
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conditions precedent to the obligations of such party to consummate
the Merger cannot be satisfied or fulfilled by September 30, 1996; or
(vii) By BFC, in connection with BFC entering into a
definitive agreement with another entity, as contemplated in the
Merger Agreement, provided BFC has complied with all of the provisions
thereof, including the advice of counsel and notice provisions
thereof; or
(viii) By BFC if certain conditions relating to the last
sales price of SouthTrust Common Stock are not met and SouthTrust does
not elect to increase the Exchange Ratio. See "THE MERGER -- Possible
Exchange Ratio Adjustment."
In the event of the termination and abandonment of the Merger
Agreement pursuant to the above, the Merger Agreement shall become void and
have no effect, except with respect to certain circumstances involving an
uncured willful breach of a representation, warranty, covenant, or agreement
giving rise to such termination and with respect to the survival of
confidentiality obligations and provisions regarding construction of the Merger
Agreement. The Stock Option Agreement shall be governed by its own terms as to
termination. See "THE MERGER -- Stock Option Agreement."
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 each of the parties shall bear and pay
one-half of the filing fees payable in connection with the Registration
Statement and the Proxy Statement/Prospectus and printing costs incurred in
connection with the printing of the Registration Statement and the Proxy
Statement/Prospectus.
ABSENCE OF RIGHTS OF DISSENT AND APPRAISAL
The Georgia Business Corporation Code does not provide rights of
dissent and appraisal to the holders of shares of capital stock listed on
Nasdaq on the date fixed to determine the shareholders entitled to vote at a
meeting of shareholders called to act upon a plan of merger. Because the BFC
Common Stock was listed on Nasdaq on the Record Date, shareholders of BFC will
not have rights of dissent and appraisal in connection with the Merger.
CONDUCT OF BUSINESS BY BFC PENDING THE MERGER
The Merger Agreement provides that, until the Effective Time of the
Merger, and except with the prior approval of SouthTrust, BFC will and will
cause its subsidiaries to operate its business only in the usual, regular and
ordinary course, preserve intact its business organization and assets and
maintain its rights and franchises, and take no action which would adversely
affect the ability of any party to obtain required consents or to perform its
covenants and agreements under the Merger Agreement. The Merger Agreement
further provides that, until the Effective Time of the Merger, BFC will not do
or agree or commit to do, or permit any of its subsidiaries to do or agree or
commit to do, any of the following without the prior written consent of the
chief executive officer, president or chief financial officer of SouthTrust,
which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other governing
instruments of any BFC Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a BFC Company to another BFC
Company) in excess of an aggregate of $250,000 (for the BFC Companies on a
consolidated basis) except in the ordinary course of the business of BFC
subsidiaries consistent with past practices (which shall include, for BFC
subsidiaries that are depository institutions, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank or Federal
Home Loan Bank, and entry into repurchase agreements fully secured by U.S.
government or agency securities), or impose, or suffer the imposition, on any
asset of any BFC Company of any lien or permit any such lien to exist (other
than in connection
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with deposits, repurchase agreements, bankers acceptances, "treasury tax and
loan" accounts established in the ordinary course of business, the satisfaction
of legal requirements in the exercise of trust powers, and liens in effect as
of the date of the Merger Agreement that are disclosed to SouthTrust); or
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans), directly
or indirectly, any shares, or any securities convertible into any shares, of
the capital stock of any BFC Company, or declare or pay any dividend or make
any other distribution in respect of BFC's capital stock, provided that BFC may
(to the extent legally and contractually permitted to do so), but shall not be
obligated to, declare and pay regular quarterly cash dividends on the shares of
BFC Common Stock at a rate not in excess of $0.15 per share with usual and
regular record and payment dates in accordance with past practice as disclosed
in the Merger Agreement and such dates may not be changed without the prior
written consent of SouthTrust, provided however, that SouthTrust and BFC shall
cooperate in selecting the Effective Time to ensure that, with respect to the
quarterly period in which the Effective Time occurs, the holders of BFC Common
Stock do not become entitled to receive both a dividend in respect of their BFC
Common stock and a dividend in respect of SouthTrust Common Stock or fail to be
entitled to receive any dividend; or
(d) except for the Merger Agreement, or pursuant to the exercise
of stock options outstanding as of the date hereof and pursuant to the terms
thereof in existence on the date of the Merger Agreement, or pursuant to the
Stock Option Agreement, issue, sell, pledge, encumber, authorize the issuance
of, or otherwise permit to become outstanding, any additional shares of BFC
Common Stock or any other capital stock of any BFC Company, or any stock
appreciation rights, or any option, warrant, conversion, or other right to
acquire any such stock, or any security convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital stock of any
BFC Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of BFC Common Stock, or, except as
disclosed to SouthTrust, sell, lease, mortgage or otherwise dispose of or
otherwise encumber any shares of capital stock of any BFC Subsidiary (as such
term is defined in the Merger Agreement) (unless any such shares of stock are
sold or otherwise transferred to another BFC Company) or any asset having a
book value in excess of $250,000 other than in the ordinary course of business
for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment, either
by purchase of stock of securities, contributions to capital, asset transfers,
or purchase of any assets, in any Person (as defined in the Merger Agreement)
other than a wholly owned BFC Subsidiary, or otherwise acquire direct or
indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, (ii) acquisitions of control
by a depository institution subsidiary in its fiduciary capacity, or (iii) the
creation of new wholly owned subsidiaries organized to conduct or continue
activities otherwise permitted by the Merger Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any BFC Company, except in accordance with past
practice as disclosed to SouthTrust pursuant to the Merger Agreement or as
required by law; pay any severance or termination pay or any bonus other than
pursuant to written policies or written contracts in effect on the date of the
Merger Agreement and as disclosed to SouthTrust pursuant to the Merger
Agreement, and enter into or amend any severance agreement with officers of any
BFC Company; grant any material increase in fees or other increases in
compensation or other benefits to directors of any BFC Company except in
accordance with past practice as disclosed to SouthTrust pursuant to the Merger
Agreement; or voluntarily accelerate the vesting of any stock options or other
stock-based compensation or employee benefits; or
(h) enter into or amend any employment contract between any BFC
Company and any Person (unless such amendment is required by law) that the BFC
Company does not have the unconditional right to terminate without liability
(other than liability for services already rendered), at any time on or after
the Effective Time; or
(i) with certain exceptions, adopt any new employee benefit plan
of any BFC Company or make any material change in or to any existing employee
benefit plans of any BFC Company other than any such change that
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is required by law or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan; or
(j) make any significant change in any tax or accounting methods
or systems of internal accounting controls, except as may be appropriate to
conform to changes in tax laws or regulatory accounting requirements or
generally accepted accounting principles; or
(k) commence any litigation other than in accordance with past
practice, settle any litigation involving any liability of any BFC Company for
material money damages or restrictions upon the operations of any BFC Company;
or
(l) except in the ordinary course of business, modify, amend or
terminate any material contract (including any loan contract with an unpaid
balance exceeding $250,000) or waive, release, compromise or assign any
material rights or claims.
In addition, BFC has agreed that no BFC Company nor any Affiliate
thereof nor any Representative (as these terms are defined in the Merger
Agreement) shall directly or indirectly solicit any Acquisition Proposal (as
defined in the Merger Agreement) by any Person. Except to the extent necessary
to comply with fiduciary duties of BFC's Board, as advised by counsel, no BFC
Company or any Affiliate or Representative may furnish any non-public
information that it is not legally obligated to furnish, negotiate with respect
to, or enter into any contract with respect to any Acquisition Proposal, but
BFC may communicate information about such acquisition proposal to its
shareholders if and to the extent that it is required to do so in order to
comply with its legal obligations as advised by counsel. BFC must promptly
notify SouthTrust orally and in writing in the event that it receives any
inquiry or proposal relating to any such transaction.
BFC and SouthTrust have further agreed in the Merger Agreement that
they will consult with respect to (i) their loan, accrual, reserve, litigation
and real estate evaluation policies and practices (including loan
classifications and levels of reserves) and (ii) the character, amount and
timing of any restructuring charges to be taken by each of SouthTrust and BFC
in connection with such matters or otherwise in connection with the
transactions contemplated by the Merger Agreement, including (a) any charge in
respect to the write off or write down of any asset, (b) any reserve or other
charge relating to the fees and expenses of advisors and other third parties in
connection with the transactions contemplated by the Merger Agreement, (c) any
reserve or other charge relating to severance, termination, and retirement
payments in connection with the transactions contemplated by the Merger
Agreement, (d) recapture of the bad-debt reserve of the BFC Companies arising
from the conversion of the Bank into a national banking association or state
bank, and (e) in respect of any SAIF recapitalization special assessment (to
the extent permitted by applicable Law), and any other appropriate accounting
adjustment.
BUSINESS AND MANAGEMENT OF BFC FOLLOWING THE MERGER; PLANS FOR BUSINESS OF BFC
Upon consummation of the Merger, BFC 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.
Following the Merger, the Bank will be merged into ST-Bank in the
Subsidiary Merger. Upon consummation of the Subsidiary Merger, it is
anticipated that the Board of Directors of ST-Bank, as the surviving entity in
the Subsidiary Merger, shall consist of those persons who are serving as
directors of ST-Bank as of the effective time of the Subsidiary Merger, and
such other persons as may be designated in writing by SouthTrust at or prior to
such time. It is further anticipated that the officers of ST-Bank, as the
surviving association in the Subsidiary Merger, shall be those persons serving
as officers of ST-Bank at the effective time of the Subsidiary Merger and such
other persons as may be designated in writing by SouthTrust at or prior to the
effective time of such merger.
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After the Effective Time of the Merger, the Surviving Corporation will
operate as a subsidiary corporation of SouthTrust acting as a holding company
for certain of its banking operations headquartered in Georgia. After the
effectiveness of the Subsidiary Merger, the operations of the Bank will
be integrated into the operations of ST-Bank, with efforts directed toward
preserving the existing customer and banking relationships of the Bank as part
of ST-Bank.
The parties have agreed in the Merger Agreement that appropriate steps
shall be taken to terminate all employee benefit plans of BFC other than the
Retirement Plan and Trust of Bankers First Corporation (the "BFC Retirement
Plan") and the Bankers First Corporation Employee Stock Ownership Plan (the
"ESOP"), as of the Effective Time or as promptly as practicable thereafter.
Following the Effective Time of the Merger, SouthTrust has agreed to cover the
officers and employees of BFC or the Bank who are employed by ST-Sub or ST-Bank
under employee benefit plans of SouthTrust other than the SouthTrust
Corporation Revised Retirement Income Plan ("Retirement Plan") and the
SouthTrust Corporation Employees' Profit Sharing Plan ("Profit Sharing Plan");
to grant such employees coverage and benefits under such employee benefit plans
comparable to those granted SouthTrust employees of comparable position and
seniority; and, subject to the provisions discussed in the following paragraph,
to credit service with BFC or the Bank prior to the Effective Time of the
Merger for purposes of determining eligibility of such employees to participate
in such employee benefit plans.
The Merger Agreement further provides that the BFC Retirement Plan
will either be (i) merged into the SouthTrust Corporation Revised Retirement
Income Plan (the "ST Retirement Plan") or (ii) terminated as of such date prior
to, on or after the Effective Time of the Merger, all as SouthTrust shall
determine and specify. The determination as to whether the BFC Retirement plan
shall terminated or merged into the ST Retirement Plan shall be made by
SouthTrust. From and after (i) January 1 following the termination of the BFC
Retirement Plan or (ii) the merger of the BFC Retirement Plan into the ST
Retirement Plan, for purposes of determining eligibility to participate in, and
vesting in accrued benefits under both the ST Retirement Plan and the
SouthTrust Corporation Employee's Profit Sharing Plan (the "ST PS Plan"),
employment by BFC shall be credited as if it were employment by SouthTrust,
except to the extent otherwise required by applicable law, but such service
shall not be credited for purposes of determining benefit accrual under the ST
Retirement Plan.
In addition, the Merger Agreement provides that the ESOP, as amended
to the extent, if any, necessary to obtain a determination letter from the
Internal Revenue Service, shall be terminated as of such date prior to, on, or
after the Effective Time of the Merger, as SouthTrust and BFC shall mutually
determine and specify. Distributions shall be made from the ESOP in accordance
with the terms and provisions of the ESOP prior to receipt from the Internal
Revenue Service of a favorable determination letter with respect to the effect
of such termination upon the qualified status of the ESOP; subject, however, to
the trustee's right to retain such amounts as it reasonably deems appropriate
as a reserve for any taxes which may be imposed against the ESOP.
STOCK OPTION AGREEMENT
As an inducement and a condition to SouthTrust to enter into the
Merger Agreement, SouthTrust and BFC entered into the Stock Option Agreement,
whereby BFC granted SouthTrust the Stock Option entitling SouthTrust to
purchase up to 942,854 shares (which shall include the option shares before and
after the transfer of such Option Shares, but in no event exceed 19.9% of the
issued and outstanding shares of BFC) of BFC Common Stock, at a price of $29.00
per share, under the circumstances described below. The following description
of the Stock Option Agreement and the Stock Option does not purport to be
complete and is qualified in its entirety by reference to the Stock Option
Agreement, which is incorporated herein by reference and attached hereto as
Exhibit B.
The Stock Option is exercisable only if both a Preliminary Purchase
Event (as hereinafter defined) and a Purchase Event (as hereinafter defined)
shall have occurred after the date of the Stock Option Agreement and prior to
the Effective Time of the Merger.
The term "Preliminary Purchase Event" shall mean any of the following
events or transactions:
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(i) any person (other than SouthTrust or any subsidiary
of SouthTrust) shall have commenced (as such term is defined in Rule
14d-2 under the Exchange Act), or shall have filed a registration
statement under the Securities Act with respect to, a tender offer or
exchange offer to purchase any shares of BFC Common Stock such that,
upon consummation of such offer, such person would own or control 25%
or more of the then-outstanding shares of BFC Common Stock (such an
offer being referred to herein as a "Tender Offer" or an "Exchange
Offer," respectively); or
(ii) the holders of BFC Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders held
for the purpose of voting on the Merger Agreement, such meeting shall
not have been held or shall have been canceled prior to termination of
the Merger Agreement, or BFC's Board of Directors shall have withdrawn
or modified in a manner adverse to SouthTrust the recommendation of
BFC's Board of Directors with respect to the Merger Agreement, in each
case after it shall have been publicly announced that any person
(other than SouthTrust or any subsidiary of SouthTrust) shall have (A)
made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction (as hereinafter defined), (B) commenced a
Tender Offer or filed a registration statement under the Securities
Act with respect to an Exchange Offer, or (C) filed an application (or
given a notice), whether in draft or final form, under the Bank
Holding Company Act, the Bank Merger Act, the Home Owners' Loan Act,
or the Change in Bank Control Act of 1978, for approval to engage in
an Acquisition Transaction. As used herein, the term Acquisition
Transaction shall mean (A) a merger, consolidation, or similar
transaction involving BFC or any of its Subsidiaries (other than
transactions solely between BFC's Subsidiaries), (B) except as
permitted pursuant to Section 7.2 of the Merger Agreement, the
disposition, by sale, lease, exchange, or otherwise, of Assets of BFC
or any of its Subsidiaries representing in either case 25% or more of
the consolidated Assets of BFC and its Subsidiaries, or (C) the
issuance, sale, or other disposition of (including by way of merger,
consolidation, share exchange, or any similar transaction) securities
representing 25% or more of the voting power of BFC or any of its
Subsidiaries (each of (A), (B), or (C), an "Acquisition Transaction");
or
(iii) any person (other than SouthTrust or any subsidiary
of SouthTrust) shall have made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction; or
(iv) any person (other than SouthTrust or any subsidiary
of SouthTrust) shall have filed an application (or given a notice),
whether in draft or final form, under the Bank Holding Company Act,
the Bank Merger Act, the Home Owner's Loan Act, or the Change in Bank
Control Act of 1978, for approval to engage in an Acquisition
Transaction.
As used in the Stock Option Agreement, "person" shall have the meaning
specified in Section 3(a)(9) and 13(d)(3) of the Exchange Act.
The term "Purchase Event" shall mean any of the following events
subsequent to the date of the Stock Option Agreement:
(i) without SouthTrust's prior written consent, BFC shall
have authorized, recommended, publicly proposed, or publicly announced
an intention to authorize, recommend, or propose, or entered into an
agreement with any person (other than SouthTrust or any subsidiary of
SouthTrust) to effect an Acquisition Transaction; or
(ii) any person (other than SouthTrust or any subsidiary
of SouthTrust) shall have acquired beneficial ownership (as such term
is defined in Rule 13d-3 promulgated under the Exchange Act) of or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined under the Exchange Act), other than a group of which
SouthTrust or any subsidiary of SouthTrust is a member, shall have
been formed which beneficially owns or has the right to acquire
beneficial ownership of 25% or more of the then-outstanding shares of
BFC Common Stock.
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The Stock Option shall terminate and be of no further force and effect
upon the earliest to occur of: (i) the Effective Time; (ii) termination of the
Stock Option Agreement in accordance with the terms thereof prior to the
occurrence of a Purchase Event or a Preliminary Purchase Event (other than a
termination of the Merger Agreement by SouthTrust pursuant to Section 10.1(b)
or 10.1(c) thereof (but, in each case, only if the breach giving rise to such
termination was willful) (each a "Default Termination")); (iii) 12 months after
a Default Termination; and (iv) 12 months after termination of the Merger
Agreement (other than a Default Termination) following the occurrence of a
Purchase Event or a Preliminary Purchase Event (each such event referred to
herein as an "Exercise Termination Event").
In the event of any change in BFC Common Stock by reason of a stock
dividend, stock split, split-up, recapitalization, combination, exchange of
shares, or similar transaction, the type and number of shares subject to the
Stock Option, and the purchase price will be adjusted appropriately. After the
occurrence of a Purchase Event, SouthTrust may assign the Stock Option
Agreement and its rights thereunder in whole or in part.
Upon the occurrence of a Repurchase Event (as defined below) that
occurs prior to an Exercise Termination Event, at the request of Holder (as
defined in the Stock Option Agreement), delivered prior to an Exercise
Termination Event, BFC will, subject to regulatory restrictions, be obligated
to repurchase the Stock Option and any shares of Common Stock theretofore
purchased pursuant to the Stock Option, at a specified price. As defined in
the Stock Option Agreement, a "Repurchase Event" shall occur if (i) any person
other than SouthTrust or a SouthTrust subsidiary shall have acquired beneficial
ownership (as such term is defined in Rule 13(d) promulgated under the
Exchange Act), or the right to acquire beneficial ownership, or any "group" (as
such term is defined under the Exchange act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of 50% or
more of the then-outstanding shares of BFC Common Stock, or (ii) any of the
following transactions are consummated: (x) BFC consolidates with or merges
into any person, other than SouthTrust or a SouthTrust subsidiary, and shall
not be the continuing or surviving corporation of such consolidation or merger,
(y) BFC permits any person, other than SouthTrust or a SouthTrust subsidiary,
to merge into BFC and BFC shall be the continuing or surviving corporation,
but, in connection with such merger, the then outstanding shares of BFC Common
Stock shall be changed into or exchanged for stock or other securities of BFC
or any other person or cash or any other property or the outstanding shares of
BFC Common Stock immediately prior to such Merger shall after such merger
represent less than 50% of the outstanding shares and share equivalents of the
merged company, or (z) BFC sells or otherwise transfers all or substantially
all of its assets to any person, other than SouthTrust or a SouthTrust
subsidiary.
In the event that prior to the exercise or termination of the Stock
Option, BFC enters into an agreement to engage in any of the transactions
described in clause (ii) of the definition of Repurchase Event above, the
agreement governing such transaction shall make proper provision so that upon
the consummation of such transaction and upon the terms and conditions set
forth in the Stock Option Agreement, Holder shall receive for each Option Share
with respect to which the Stock Option has not been exercised an amount of
consideration in the form of and equal to the per share amount of consideration
that would be received by the holder of one share of BFC Common Stock less
$29.00, subject to certain provisions in the Stock Option Agreement. Following
the termination of the Merger Agreement, BFC has agreed to file with the
Commission and to cause to become effective certain registration statements
under the Securities Act with respect to dispositions by SouthTrust and its
assigns of all or part of the Stock Option and/or any shares of BFC Common
Stock into which the Stock Option is exercisable.
Notwithstanding any other provision of the Stock Option Agreement to
the contrary, the Stock Option Agreement provides that in no event may
SouthTrust purchase under the terms of the Stock Option Agreement that number
of Option Shares which have a "Spread Value" in excess of $5,650,000. For
purposes of the Stock Option Agreement, "Spread Value" is defined to mean the
difference between (i) the product of (1) the sum of the total number of Option
Shares (x) SouthTrust intends to purchase at the Closing Date (as defined in
the Stock Option Agreement) pursuant to the exercise of the Stock Option and
(y) previously purchased pursuant to the prior exercise of the Stock Option,
and (2) the higher of (I) the closing bid price of BFC Common Stock as quoted
on Nasdaq on the last trading day immediately preceding the Closing Date and
(II) the consideration per share of BFC Common Stock to be offered or paid to
or received by holders of BFC Common Stock in connection with an Acquisition
Transaction (provided, that if the consideration to be offered, paid, or
received shall be other than in cash, the value of such consideration shall be
determined in good faith by an independent nationally recognized investment
banking
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<PAGE> 41
firm selected by SouthTrust and reasonably acceptable to BFC, which
determination shall be conclusive for all purposes of the Stock Option
Agreement), and (ii) the product of (1) the total number of Option Shares (x)
SouthTrust intends to purchase at the Closing Date pursuant to the exercise of
the Stock Option and (y) previously purchased pursuant to the prior exercise of
the Stock Option and (2) the applicable Purchase Price of such Option Shares.
The Stock Option Agreement further provides that in the event the Spread Value
exceeds $5,650,000, the number of Option Shares which SouthTrust is entitled to
purchase at the Closing Date shall be reduced to that number of shares
necessary such that the Spread Value equals or is less than $5,650,000.
The purpose of the Stock Option Agreement and the Stock Option is to
increase the likelihood that the Merger will occur, by making it more difficult
for another party to acquire BFC. The ability of SouthTrust to exercise the
Stock Option and to cause up to an additional 942,854 shares of BFC Common
Stock to be issued may be considered a deterrent to other potential
acquisitions of control of BFC, as it is likely to increase the cost of an
acquisition of all the shares of BFC Common Stock which would then be
outstanding.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of certain of the federal income
tax consequences of the Merger to holders of BFC Common Stock. The discussion
is included for general information purposes only, applies only to a holder of
BFC Common Stock who holds such stock as a capital asset, and may not apply to
special situations, such as holders of BFC Common Stock, if any, who received
their BFC Common Stock upon the exercise of employee stock options or otherwise
as compensation and holders that are insurance companies, securities dealers,
financial institutions or foreign persons.
EACH HOLDER OF BFC COMMON STOCK IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR AS TO THE FEDERAL INCOME TAX CONSEQUENCES IN 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 BFC has requested or will receive an
advance ruling from the Internal Revenue Service ("IRS") as to any of the
federal income tax consequences of the Merger to holders of BFC Common Stock of
any of the federal income tax consequences of the Merger to SouthTrust, ST-Sub
or BFC. The consummation of the Merger is conditioned upon the receipt by BFC
and SouthTrust of an opinion of Alston & Bird as to certain of the federal
income tax consequences of the Merger to the holders of BFC Common Stock. The
opinion of Alston & Bird 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, possibly retroactively. It is
also based on certain assumptions, including the assumption that the holders of
BFC Common Stock will maintain a sufficient equity ownership interest in
SouthTrust after the Merger. The IRS takes the position for purposes of
issuing an advance ruling on reorganizations that the stockholders of the
target corporation (i.e., BFC) must maintain a continuing equity ownership
interest in the corporation in control of the acquiring corporation (i.e.,
SouthTrust) equal, in terms of value, to at least 50 percent of their interest
in the target corporation. Pursuant to this requirement, the management of BFC
has represented to Alston & Bird that there is no plan or intention by any of
the holders of BFC Common Stock who own five percent or more of the outstanding
BFC Common Stock and, to the best knowledge of the management of BFC, the
remaining holders of BFC Common Stock have no plan or intention to sell,
exchange, or otherwise dispose of a number of shares of the SouthTrust Common
Stock that they will receive in the Merger that would reduce on the part of the
holders of BFC Common Stock such holders' ownership to a number of shares of
SouthTrust Common Stock having an aggregate value as of the Effective Time of
less than 50% of the aggregate value of all of the outstanding BFC Common Stock
immediately prior to the Effective Time. For purposes of this representation,
shares of BFC Common Stock that are disposed of or exchanged for cash in lieu
of fractional share interests of SouthTrust Common Stock will be treated as
outstanding BFC Common Stock at the Effective Time. Moreover, shares of BFC
Common Stock and shares of SouthTrust Common Stock held by such holders and
otherwise sold, redeemed or disposed of prior or subsequent to the Effective
Time of the Merger will be considered in making this representation. In
addition, management of SouthTrust has represented to Alston & Bird that it has
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<PAGE> 42
no plan or intention to cause SouthTrust to redeem or otherwise reacquire the
shares of SouthTrust Common Stock issued in the Merger.
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 Alston & Bird the following federal income tax
consequences to the holders of BFC Common Stock should result from the Merger:
(i) The Merger will qualify as a reorganization within
the meaning of Section 368(a) of the Code.
(ii) No gain or loss will be recognized by the
shareholders of BFC upon the receipt of SouthTrust Common Stock
in exchange for their shares of BFC Common Stock. In addition, no
gain or loss will be recognized by BFC stockholders upon
receipt of the Rights attached to the SouthTrust Common Stock.
(iii) The basis of the SouthTrust Common Stock to be
received by the BFC shareholders will be the same as the basis of
the BFC Common Stock surrendered in exchange therefor.
(iv) The holding period of the shares of SouthTrust Common
Stock to be received by the shareholders of BFC will include the
period during which the BFC Common Stock surrendered in exchange
therefor was held, provided that the shares of BFC Common Stock were
held as capital assets as of the Effective Time.
(v) The payment of cash to a BFC shareholder in lieu of
issuing a fractional share interest in SouthTrust Common Stock will be
treated 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 in
exchange for the stock redeemed. Generally, any gain or loss
recognized upon such exchange will be a capital gain or loss, provided
the fractional share would constitute a capital asset in the hands of
such holder.
A successful IRS challenge to the "reorganization" status of the
Merger would result in a BFC shareholder recognizing gain or loss with respect
to each share of BFC Common Stock surrendered equal to the difference between
the shareholder's basis in such share and the fair market value, as of the
Effective Time of the Merger, of the SouthTrust Common Stock received in
exchange therefor. In such event, a BFC shareholder's aggregate basis in the
SouthTrust Common Stock received would equal its fair market value and his or
her holding period for such stock would begin the day after the Merger, which
would mean that the BFC shareholder must hold his or her shares of SouthTrust
Common Stock for longer than six months in order to receive long-term capital
gain treatment upon the sale of such stock.
No opinion is expressed as to the federal 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.
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<PAGE> 43
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 December 31, 1995, there were 87,903,683 shares of SouthTrust Common
Stock issued and outstanding, exclusive of shares held as treasury stock, and
no shares of SouthTrust Preferred Stock were outstanding. As of December 31,
1994, there were 2,741,834 shares of SouthTrust Common Stock reserved for
issuance pursuant to employee benefit plans, and there were 90,812 shares
reserved for issuance upon 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 BFC."
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.
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<PAGE> 44
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.
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 of
one right (a "Right"; collectively, the "Rights") for, and to be attached to,
each share of SouthTrust Common Stock outstanding on March 6, 1989. 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 BFC Common Stock.
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<PAGE> 45
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 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 exhibits to the Registration Statement of
which this Proxy Statement/Prospectus forms a part.
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<PAGE> 46
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> 47
PRO FORMA FINANCIAL INFORMATION
The following pro forma combining condensed financial presentation of
SouthTrust was prepared to provide information on the combined financial
statements of SouthTrust and BFC, as well as the previously consummated
acquisitions by SouthTrust of Plant State Bank, CNB Capital Corp, Southern Bank
Group, First Commercial Financial Corporation and FBC Holding Company, and the
pending acquisitions of Citizens Bank of Macclenny, FFE Financial Corp. and
First State Bank of Florida. The pro forma presentation assumes that these
transactions had been consummated at September 30, 1995 for purposes of the pro
forma statement of condition and, for purposes of the pro forma income
statement, at the inception of each income statement period. Both the Merger
and the acquisition of Citizens Bank of Macclenny will be accounted for as
poolings of interests, with the remaining pending transactions being accounted
for under the purchase method of accounting. In connection with the pending
acquisition of FFE Financial Corp. and First State Bank of Florida, management
of SouthTrust will review the carrying amounts of assets and liabilities to be
acquired to determine if any adjustment to the carrying amounts is necessary.
Actual purchase accounting adjustments will be determined at the respective
consummation dates of each transaction, and are not expected to materially
change the pro forma financial statements presented herein. The pro forma
effect of SouthTrust's acquisition of various branches is not presented because
the operations of such branches, when acquired by SouthTrust, will differ
substantially from available historical financial information of such branches.
The unaudited pro forma combining condensed financial presentation is
presented for information purposes only and is not necessarily indicative of
the combined financial position or results of operations which would actually
have occurred if the transactions had been consummated in the past or which may
be obtained in the future and should be read in conjunction with the audited
financial statements incorporated by reference in this Proxy
Statement/Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
See the Selected Pro Forma Information table herein on page 16, which
sets forth, for the years ended December 31, 1994, 1993 and 1992, and the
nine-months ended September 30, 1995, certain unaudited pro-forma combined
financial information for SouthTrust and BFC giving effect to the Merger.
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<PAGE> 48
SOUTHTRUST CORPORATION
PRO FORMA COMBINING CONDENSED STATEMENT OF CONDITION AS OF SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
SouthTrust Combined
Corporation Pooling SouthTrust Other Pro Forma Pro Forma
Consolidated BFC (1) Adjustments and BFC Acquisitions Adjustments Combined
------------ -------- ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 747,390 $ 25,054 $ 0 $ 772,444 $ 8,208 $(15,818)(4) $ 764,834
Short-term investments 242,904 3,766 0 246,670 14,390 0 261,060
Securities available
for sale . . . . . . 2,023,635 52,312 0 2,075,947 37,038 0 2,112,985
Investment securities . 2,036,057 55,042 0 2,091,099 31,351 0 2,122,450
Loans, net of unearned
income . . . . . . . 14,077,496 885,268 0 14,962,764 213,519 0 15,176,283
Less
Allowance for
loan losses . . 194,962 7,952 0 202,914 2,534 0 205,448
----------- ---------- ------- ----------- -------- -------- -----------
Net loans . . . . 13,882,534 877,316 0 14,759,850 210,985 0 14,970,835
Other assets . . . . . 1,088,243 47,554 0 1,135,797 11,082 8,798 (5) 1,155,677
----------- ---------- ------- ----------- -------- -------- -----------
Total assets . . . $20,020,763 $1,061,044 $0 $21,081,807 $313,054 $(7,020) $21,387,841
=========== ========== ======= =========== ======== ======= ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Deposits:
Interest bearing . . $11,908,785 $759,210 $0 $12,667,995 $250,090 $0 $12,918,085
Other . . . . . . . . 2,100,759 10,092 0 2,110,851 24,721 0 2,135,572
----------- ---------- ------- ----------- -------- -------- -----------
Total deposits . . . . 14,009,544 769,302 0 14,778,846 274,811 0 15,053,657
Federal funds purchased
and securities sold
under agreements to
repurchase . . . . . 2,661,899 15,612 0 2,677,511 0 0 2,677,511
Short-term borrowings . 751,595 111,000 0 862,595 9,000 0 871,595
Other liabilities . . . 319,189 12,274 0 331,463 3,421 0 334,884
Long-term debt . . . . 891,281 57,855 0 949,136 0 0 949,136
----------- ---------- ------- ----------- -------- -------- -----------
Total liabilities . 18,633,508 966,043 0 19,599,551 287,232 0 19,886,783
Stockholders' equity:
Common Stock . . . . 220,289 48 13,328 (2) 233,665 1,068 1,659 (3) 236,392
Capital surplus . . . 337,358 56,891 (13,328)(2) 380,921 7,420 (1,504)(3) 386,837
Retained earnings . . 849,031 37,350 0 886,381 17,430 (7,175)(3) 896,636
Unrealized loss on
securities available
for sale . . . . . (13,267) 712 0 (12,555) (96) 0 (12,651)
Treasury stock, at
cost . . . . . . . (6,156) 0 0 (6,156) 0 0 (6,156)
----------- ---------- ------- ----------- -------- -------- -----------
Total stockholders'
equity . . . . . . . 1,387,255 95,001 0 1,482,256 25,822 (7,020) 1,501,058
----------- ---------- ------- ----------- -------- -------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS'
EQUITY . . . . . . $20,020,763 $1,061,044 $0 $21,081,807 $313,054 $(7,020) $21,387,841
=========== ========== ======= =========== ======== ======= ===========
</TABLE>
See Notes to Pro Forma Combining Condensed Financial Statements.
46
<PAGE> 49
SOUTHTRUST CORPORATION
PRO FORMA COMBINING CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
Combined
SouthTrust Pro Forma SouthTrust Other Pro Forma Pro Forma
Consolidated BFC (1) Adjustments and BFC Acquisitions Adjustments Combined
------------ ------- ----------- ----------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on
loans . . . . . . . $ 880,930 $56,649 $ 0 $937,579 $22,786 $ 0 $ 960,365
Interest on
securities . . . . 193,294 6,289 0 199,583 5,550 (1,366)(6) 203,767
Interest on short-term
investments . . . . 10,611 319 0 10,930 1,384 0 12,314
--------- ------- ------- -------- ------- ------- ----------
Total interest
income . . . . . 1,084,835 63,257 0 1,148,092 29,720 (1,366) 1,176,446
INTEREST EXPENSE
Interest on deposits 413,680 24,838 0 438,518 13,715 0 452,233
Interest on
borrowings . . . . 165,189 10,835 0 176,024 699 0 176,723
--------- ------- ------- -------- ------- ------- ----------
Total interest
expense . . . . . 578,869 35,673 0 614,542 14,414 0 628,956
--------- ------- ------- -------- ------- ------- ----------
Net interest
income . . . . . 505,966 27,584 0 533,550 15,306 (1,366) 547,490
Provision for loan
losses . . . . . . 39,489 925 0 40,414 1,455 0 41,869
--------- ------- ------- -------- ------- ------- ----------
Net interest income
after provision
for loan losses . 466,477 26,659 0 493,136 13,851 (1,366) 505,621
Non-interest income
Service charge on
deposit accounts . 68,595 4,085 0 72,680 1,653 0 74,333
Mortgage origination
and service fees 22,902 927 0 23,829 124 0 23,953
Other . . . . . . 60,233 1,459 0 61,692 1,038 0 62,730
--------- ------- ------- -------- ------- ------- ----------
Total . . . . . 151,730 6,471 0 158,201 2,815 0 161,016
Non-interest expense
Salaries and
employee
benefits . . . . 209,105 8,552 0 217,657 6,318 0 223,975
Net occupancy and
equipment
expenses . . . . 32,047 3,441 0 35,488 2,627 0 38,115
Other . . . . . . 155,357 6,687 0 162,044 5,094 440 (7) 167,578
--------- ------- ------- -------- ------- ------- ----------
Total . . . . . 396,509 18,680 0 415,189 14,039 440 429,668
--------- ------- ------- -------- ------- ------- ----------
Income before
income taxes . . 221,698 14,450 0 236,148 2,627 (1,806) 236,969
Income tax expense . 76,282 4,697 0 80,979 1,620 (478)(8) 82,121
--------- ------- ------- -------- ------- ------- ----------
Net income . . . $ 145,416 $ 9,753 $ 0 $155,169 $ 1,007 $(1,328) $ 154,848
========= ======= ======= ======== ======= ======= ==========
Earnings per
share . . . . $ 1.75 $ 1.75 $ 1.71
Average common
shares . . . . 83,075 88,775 90,799
</TABLE>
____________________
47
<PAGE> 50
SOUTHTRUST CORPORATION
PRO FORMA COMBINING CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
Combined
SouthTrust Pro Forma SouthTrust Other Pro Forma Pro Forma
Consolidated BFC Adjustments and BFC Acquisitions Adjustments Combined
------------ -------- ----------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees
on loans . . . . . $ 868,461 $62,703 $ 0 $ 931,164 $32,658 $ 0 $ 963,822
Interest on
securities . . . . 229,568 8,030 0 237,598 8,093 (1,652)(6) 244,039
Interest on short-term
investments . . . . 10,583 1,010 0 11,593 1,056 0 12,649
---------- ------- -------- ---------- ------- ------- ----------
Total interest
income . . . . 1,108,612 71,743 1,180,355 41,807 (1,652) 1,220,510
INTEREST EXPENSE
Interest on deposits 377,643 25,922 0 403,565 16,507 0 420,072
Interest on
borrowings . . . . 123,424 11,725 0 135,149 638 0 135,787
---------- ------- -------- ---------- ------- ------- ----------
Total interest
expense . . . . 501,067 37,647 0 538,714 17,145 0 555,859
---------- ------- -------- ---------- ------- ------- ----------
Net interest income 607,545 34,096 0 641,641 24,662 (1,652) 664,651
Provision for loan
losses . . . . . . 44,984 1,800 0 46,784 1,106 0 47,890
---------- ------- -------- ---------- ------- ------- ----------
Net interest income
after provision
for loan losses . 562,561 32,296 0 594,857 23,556 (1,652) 616,761
NON-INTEREST INCOME
Service charges on
deposit accounts . 86,304 4,793 0 91,097 2,855 0 93,952
Mortgage origination
and service fees . 27,760 1,226 0 28,986 58 0 29,044
Other . . . . . . . . 70,714 2,594 0 73,308 1,580 0 74,888
---------- ------- -------- ---------- ------- ------- ----------
Total . . . . . . . 184,778 8,613 0 193,391 4,493 0 197,884
NON-INTEREST EXPENSE
Salaries and employee
benefits . . . . . 257,637 10,375 0 268,012 9,866 0 277,878
Net occupancy and
equipment expenses 68,172 4,435 0 72,607 3,672 0 76,279
Other . . . . . . . . 160,190 9,227 0 169,417 8,211 663 (7) 178,291
---------- ------- -------- ---------- ------- ------- ----------
Total . . . . . . . 485,999 24,037 0 510,036 21,749 663 532,448
---------- ------- -------- ---------- ------- ------- ----------
Income (loss) before
income taxes . . 261,340 16,872 0 278,212 6,300 (2,315) 282,197
Income tax expense
(benefit) . . . . . 88,338 6,047 0 94,385 2,080 (578)(8) 95,887
---------- ------- -------- ---------- ------- ------- ----------
Net income (loss) . . $ 173,002 $10,825 $ 0 $ 183,827 $ 4,220 $(1,737) $ 186,310
========== ======= ======== ========== ======= ======= ==========
Earnings (loss) per
share . . . . . . . $ 2.15 $ 2.13 $ 2.09
Average common shares 80,628 86,187 89,212
</TABLE>
__________________
48
<PAGE> 51
NOTES TO PRO FORMA COMBINING CONDENSED FINANCIAL STATEMENTS
Note: The results of operations for SouthTrust for the nine months ended
September 30, 1995 include a charge to earnings of approximately $6.5
million ($4.0 million after tax) related to the accrual of the
proposed assessment on Savings Association Insurance Fund ("SAIF")
insured deposits. Since legislation has not been enacted to levy such
a charge, SouthTrust will reverse the earlier accrual in the fourth
quarter of 1995.
(1) SouthTrust anticipates incurring the following expenses subsequent to
the Merger. These amounts are estimates based on recent available
information and are subject to change. Because they are
non-recurring in nature, they have not been included among the
adjustments in the pro forma statements of income. The recurring
impact of certain purchase related adjustments have not been reflected
in the pro forma financial statements since they are not material. The
non-recurring expenses are as follows:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,800
Write-down of fixed assets . . . . . . . . . . . . . . . . . . . . 1,200
Write-down of other real estate owned . . . . . . . . . . . . . . 500
Merger related expenses . . . . . . . . . . . . . . . . . . . . . 600*
--------
$ 4,100
Tax benefits at 35% . . . . . . . . . . . . . . . . . . . . . . . 1,225
--------
Net effect on retained earnings . . . . . . . . . . . . . . . . . $ 2,875
========
</TABLE>
__________________________
* Merger related expenses are not currently tax deductible.
Additionally, BFC recorded in the fourth quarter of 1995 a
restructuring charge of approximately $1.6 million, which includes $0.5
million in severance amounts for employees terminated before December
31, 1995, incurred merger related expenses of $0.9 million and
miscellaneous other costs of $0.2 million. During the fourth quarter
of 1995, BFC assessed the adequacy of its allowance for loan losses in
light of a softening economy and possible future credit quality
declines in commercial real estate, real estate construction, and the
consumer loan portfolio which BFC has significantly increased over the
past 24 months. Based on this analysis, BFC recorded a fourth quarter
provision for loan losses of approximately $1.9 million, which is
approximately $1.0 million larger than the provision for the nine
months ended September 30, 1995. During 1995, BFC has been studying
the potential benefits of a proposed conversion of the Bank from a
savings bank to a national bank. On December 19, 1995, the boards of
directors of BFC and the Bank formally authorized management to take
the appropriate steps necessary to effect such a conversion. The
conversion, which is not contingent on the consummation of the Merger
between SouthTrust and BFC, resulted in a 1995 fourth quarter charge to
tax expense of approximately $4.4 million to BFC. Legislation is
currently pending in Congress which, if passed, could reduce or
eliminate this charge. Because these amounts are non-recurring in
nature, they have not been included among the adjustments in the
pro-forma statements of income, but will result in an additional
reduction in retained earnings in the amount of $7.0 million.
(2) Reflects the issuance of 5,350,318 shares of SouthTrust Common Stock
for the 4,751,615 shares of BFC Common Stock outstanding at September
30, 1995 at the exchange ratio of 1.126 shares of SouthTrust Common
Stock for each share of BFC Common Stock per BFC share. Amounts do
not reflect the conversion of 478,588 BFC Options which will be
converted into SouthTrust Options at a conversion ratio of 1.126 to 1,
or the proceeds from the exercise of such options.
(3) Reflects the issuance of 785,000 shares of SouthTrust Common Stock for
the outstanding shares of Citizens Bank of Macclenny in a
pooling-of-interest business combination, and 305,721 shares of
SouthTrust Common Stock in the acquisitions of FFE Financial Corp.,
net of eliminated equity of FFE Financial Corp., and the cash
acquisition of First State Bank of Florida, both of which are
accounted for as purchases. Does not reflect the conversion of stock
options or the proceeds from conversion. Aggregate options assumed
will result in 26,271 additional options on SouthTrust Common Stock.
(4) Represents cash purchase portion of other acquisitions.
(5) Goodwill resulting from other acquisitions.
49
<PAGE> 52
(6) To reflect the loss on earning assets for the cash portion of the
purchase price on other acquisitions at the weighted average yield on
earning assets of 7.62% in 1994 and 8.49% for the nine months ended
September 30, 1995.
(7) To reflect the amortization of goodwill resulting from other
acquisitions over a 20 year life on a straight-line basis.
(8) Tax benefit resulting from adjustment (6) above.
50
<PAGE> 53
MARKET AND DIVIDEND INFORMATION RESPECTING THE
COMMON STOCK OF SOUTHTRUST AND BFC
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 and BFC Common Stock
for the calendar quarters indicated. The information listed below with respect
to the high and low last sales prices was obtained from Nasdaq, and reflects
interdealer prices, without retail markup, markdown or commissions, and may not
represent actual transactions.
<TABLE>
<CAPTION>
SouthTrust BFC
Common Stock Common Stock
--------------------- ---------------------
High Low High Low
-------- -------- --------- --------
<S> <C> <C> <C> <C>
1994:
First Quarter . . . . . . . . . . . $ 19 5/8 $ 17 7/8 $ 21 1/4 $ 17 1/4
Second Quarter . . . . . . . . . . . 22 1/8 18 1/8 20 3/4 18 5/8
Third Quarter . . . . . . . . . . . 21 7/8 19 5/8 21 1/4 19
Fourth Quarter . . . . . . . . . . . 20 1/4 17 20 1/4 17 3/4
1995:
First Quarter . . . . . . . . . . . $ 21 3/8 $ 18 $ 26 1/2 $ 19
Second Quarter . . . . . . . . . . . 23 3/8 20 5/8 30 1/4 25 1/4
Third Quarter . . . . . . . . . . . 27 1/4 23 31 1/8 26 7/8
Fourth Quarter . . . . . . . . . . . 26 24 1/2 29 26
1996:
First Quarter
(through February 1, 1996) . . . $ 26 3/16 $ 25 1/4 $ 28 5/8 $ 27 5/8
</TABLE>
On October 30, 1995 and November 1, 1995 (the trading days immediately
before and after the public announcement of the Merger), the last sale
prices of SouthTrust Common Stock, as obtained from Nasdaq, were $25 1/2 and
$24 1/2, respectively, and the last sale prices of BFC Common Stock, as
obtained from Nasdaq, were $28 1/4 and $26 1/8, respectively; and on February 1,
1996, the last sale price of SouthTrust Common Stock as obtained from Nasdaq
was $26 3/16, and the last sale price of BFC Common Stock on February 1, 1996,
as obtained from Nasdaq was $28 3/8.
51
<PAGE> 54
DIVIDENDS
The following table sets forth the respective cash dividends per share
declared on SouthTrust Common Stock and BFC Common Stock during the periods
indicated:
<TABLE>
<CAPTION>
Dividends Declared Dividends Declared
per share of per share of
SouthTrust Common Stock BFC Common Stock
----------------------- ----------------
<S> <C> <C>
1994:
First Quarter . . . . . . . . . . . . . . $ 0.17 $ 0.10
Second Quarter . . . . . . . . . . . . . 0.17 0.10
Third Quarter . . . . . . . . . . . . . . 0.17 0.10
Fourth Quarter . . . . . . . . . . . . . 0.17 0.15
1995:
First Quarter . . . . . . . . . . . . . . $ 0.20 $ 0.15
Second Quarter . . . . . . . . . . . . . 0.20 0.15
Third Quarter . . . . . . . . . . . . . . 0.20 0.15
Fourth Quarter . . . . . . . . . . . . . 0.20 0.15
1996:
First Quarter . . . . . . . . . . . . . . $ 0.22 $ 0.15
</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. SouthTrust has increased
the dividend paid on its Common Stock for 26 consecutive years. 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 by its 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 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.
52
<PAGE> 55
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.
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 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 foregoing laws and regulations, at September 30, 1995,
approximately $290.5 million was available for payment of dividends to
SouthTrust by its bank subsidiaries.
Dividends paid by BFC on the BFC Common Stock are at the discretion of
BFC's Board of Directors and are dependent on the restrictions on the payment
of dividends by corporations chartered in Georgia as described in "COMPARISON
OF THE COMMON STOCK OF SOUTHTRUST AND BFC -- Dividends" below, the restrictions
on the payment of dividends by federal savings banks described below, and BFC's
earnings and financial condition and other relevant factors. Under OTS
regulations, a savings association that is well capitalized is permitted to
declare dividends of up to the greater of (i) the sum of 100% of its current
net income plus one-half of its capital in excess of the minimum regulatory
requirements or (ii) 75% of its net income during the most recent four-quarter
period. The current policy of BFC is to pay dividends on a quarterly basis as
shown in the table above.
COMPARISON OF THE COMMON STOCK
OF
SOUTHTRUST AND BFC
The rights of BFC's shareholders are governed by the Articles of
Incorporation of BFC, the Bylaws of BFC and the laws of the State of Georgia.
The rights of SouthTrust stockholders 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 BFC's
shareholders who become SouthTrust stockholders 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 SouthTrust
Common Stock and the holders of BFC 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 BFC, the General
Corporation Law of the State of Delaware, and the Georgia Business Corporation
Code.
DIVIDENDS
The sources of funds for payments of dividends by SouthTrust and BFC
are their subsidiaries. Because the primary subsidiaries of SouthTrust and BFC
are financial institutions, payments made by such subsidiaries of SouthTrust
and BFC 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 BFC" for information
concerning the effect of such limitations on SouthTrust's and BFC's ability to
pay dividends. Delaware General Corporation Law 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 Georgia
Business Corporation Code provides that a corporation may not make
distributions to its shareholders unless, after giving effect to the
distribution, (i) the corporation would not be able to pay its debts as they
became due in the usual course of business, or (ii) the corporation's total
assets would be less than the sum
53
<PAGE> 56
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 whose preferential
rights are superior to those receiving the distribution.
VOTING RIGHTS AND OTHER MATTERS
Subject to the rights, if any, of any series of their respective
classes of preferred stock, all voting rights of SouthTrust and BFC are vested
in the holders of shares of SouthTrust Common Stock and BFC Common Stock,
respectively, with the holder of each of such share being entitled to one vote.
The holders of SouthTrust Common Stock and BFC Common Stock do not have the
right to cumulate their votes in the election of directors.
As described above under the caption "DESCRIPTION OF SOUTHTRUST
CAPITAL STOCK--SouthTrust Common Stock--Voting Rights and Other Matters," 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 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 holder 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 stockholders 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. The Articles of Incorporation and Bylaws of BFC do not contain
any prohibitions of or limitations on transactions between BFC and a related
party or shareholder.
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.
BFC is subject to Section 14-2-1132 of the Georgia Business
Corporation Code. It provides that a corporation may not engage in any
business combination with any "interested shareholder" for a period of five
years following the time that the shareholder became an interested shareholder,
unless the board of directors approves either the transaction which resulted in
the shareholder becoming an interested shareholder or the business combination
or the interested shareholder beneficially owns at least 90 percent of the
outstanding voting stock of the corporation. In addition, Section 14-2-1133 of
the Georgia Business Corporation Code provides that Section 14-3-1132 shall not
apply unless the Bylaws of the corporation specifically provide for its
applicability. The Bylaws of BFC provide that all of the requirements of the
Georgia Business Corporation Code pertaining to business combinations with
interested shareholders shall be applicable to BFC. Since the BFC Board has
approved the transaction by which SouthTrust would become an "interested
shareholder" of BFC, the provisions of Section 14-2-1132 are not applicable to
the Merger or the transactions contemplated by the Stock Option Agreement.
BFC is also subject to Section 14-2-1111 of the Georgia Business
Corporation Code which provides, in addition to any vote otherwise required by
law or the articles of incorporation, a business combination shall be (i)
unanimously approved by the board of directors, or (ii) recommended by at least
two-thirds of the directors and approved by a majority of the votes entitled to
be cast by holders of voting shares other than shares beneficially held by an
interested stockholder who is, or whose affiliate is, a party to the business
combination. Section 14-2-1112 of the Georgia Business Corporation Code
provides that the vote requirement in Section 14-2-1111 does not apply to a
business combination if certain fair price conditions are satisfied, the
consideration to be received by holders of outstanding shares is in cash or in
the same form as the interested shareholder has previously paid, no reduction
54
<PAGE> 57
in or elimination of dividends has occurred without disinterested director
approval, and the interested shareholder has not received any disproportionate
benefit of any loans, advances, guarantees, pledges or other financial
assistance or tax benefit provided by the corporation. Since the BFC Board has
unanimously approved the Merger, the rate requirement of Section 14-2-1111 does
not apply to the Merger.
The effect of the business combination and affiliated transactions
provisions, respectively, is to make more difficult the acquisition of a
majority control of a corporation or the use of its assets to finance such
acquisition.
The Delaware General Corporation Law enumerates several situations in
which class voting is required with respect to amendments to a corporation's
certificate of incorporation, whether or not the holders of such shares are
entitled to vote thereon by the provisions of the certificate of incorporation,
if such amendments: (i) increase or decrease the aggregate number of
authorized shares, (ii) increase or decrease the par value of the shares of
such class, or (iii) alter or change the powers, preferences or special rights
of the shares of such class as to affect them adversely; provided, that only
the shares of the series so affected by the amendment shall be considered a
separate class for the purpose of the class voting requirements; and provided,
further, that the authorized shares of any class of stock may be increased or
decreased by the affirmative vote of a majority of the stockholders,
irrespective of the class voting requirement set forth above, if so provided in
the original certificate of incorporation, in any amendments thereto which
created such class of stock or in any amendments thereto which was authorized
by a resolution adopted by the affirmative vote of the holders of a majority of
shares of such class.
Under the Georgia Business Corporation Code, the holders of the
outstanding shares of a class are entitled to vote as a separate voting group
on a proposed amendment, unless shareholder voting is not required because an
amendment may be made solely by the board of directors, if the amendment would:
(i) increase or decrease the aggregate number of authorized shares of the
class; provided, however, that if the Articles of Incorporation specifically
authorize the shares of any class to be increased or decreased without a
shareholder vote, under such circumstances, the authorized number, terms,
conditions, designations, preferences, limitations, and relative rights of
those shares may be fixed as provided in the Articles of Incorporation; (ii)
effect an exchange or reclassification of all or part of the shares of the
class into shares of another class; (iii) effect an exchange or
reclassification, or create the right of exchange, of all or part of the shares
of another class into shares of the class; (iv) change the designation, rights,
preferences, or limitations of all or part of the shares of the class; (v)
change the shares of all or part of the class into a different number of shares
of the same class; (vi) create a new class of shares having rights or
preferences with respect to distributions or to dissolution that are prior,
superior, or substantially equal to the shares of the class; (vii) increase the
rights, preferences, or number of authorized shares of any class that, after
giving effect to the amendment, have rights or preferences with respect to
distributions or to dissolution that are prior, superior, or substantially
equal to the shares of the class; (viii) limit or deny an existing preemptive
right of all or part of the shares of the class; (ix) cancel or otherwise
affect rights to distributions of dividends that have accumulated but not yet
been declared on all or part of the shares of the class; or (x) cancel, redeem,
or repurchase all or part of the shares of the class.
The Bylaws of SouthTrust provide that the members of the board of
directors are to be divided into three (3) classes as nearly equal as possible.
Each such class is elected for a three-year term. At each annual meeting of
stockholders, 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 (1) year,
and at least two (2) 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 BFC provide that the entire board of directors of BFC is to be
elected by plurality vote of the shares entitled to vote at an annual meeting
of shareholders at which such election is to occur. Directors so elected shall
serve for a term of one (1) year and until their successors shall be elected
and shall qualify.
Both the Delaware General Corporation Law and Georgia Business
Corporation Code provide (unless otherwise provided in a corporation's charter
or bylaws), that a director, or the entire Board of Directors, may be removed
by the shareholders 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, however, 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
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<PAGE> 58
entire Board of Directors from the office and such removal may be effected only
for cause. The vacancy created by any such removal shall then be filled by
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
Bylaws of BFC provide that directors may be removed with or without cause by a
vote of 75% of the votes entitled to be cast in the election of directors.
The Bylaws of SouthTrust also 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 stockholders at which the term of the class of directors to
which such director has been appointed expires. Therefore, 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 such director's appointment. The Bylaws of BFC
provide that in the event of a vacancy on the Board of Directors by reason of
an increase in the number of directors by an amendment to the Bylaws of BFC, or
through death, resignation, disqualification, removal, or other cause, a new
director or a successor director may be elected by the members of the Board of
Directors to serve until a successor director shall be elected by the
shareholders, but pending election by the shareholders, any such new or
successor director shall be fully qualified to act.
Under the Delaware General Corporation Law (unless otherwise provided
in a corporation's charter), 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
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 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 Georgia Business Corporation Code,
any action required or permitted to be taken by the shareholders of a
corporation may be taken without a meeting and without a shareholder vote if a
written consent is signed by all of the holders of the outstanding capital
stock of the corporation. Under the Bylaws of BFC, any action required to be
taken by the Board of Directors or a committee of the Board at a meeting may be
taken without a meeting if written consent, setting forth the action taken,
shall be signed by all the directors or committee members and filed with the
minutes of the proceedings of the Board or committee. Such consent shall have
the same effect as though the action had been taken at a regular meeting.
Certain portions of the Restated Certificate of Incorporation of
SouthTrust described in certain of the proceeding 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 outstanding
voting stock of SouthTrust. BFC's Articles of Incorporation generally may be
amended as prescribed by law. The Bylaws of BFC may be amended by the
affirmative vote of a majority of all the directors then holding office at any
meeting of the Board if notice of the proposed amendment is contained in the
notice of the meeting. Any bylaws adopted by the Board of Directors of BFC may
be altered, amended or repealed, and new bylaws may be adopted by the
shareholders. Shareholders of BFC, by an affirmative vote of the holders of
75% of the votes entitled to be cast, may alter, amend or repeal the Bylaws of
BFC and adopt new bylaws at any meeting if notice of the proposed amendment is
contained in the notice of the meeting. The shareholders may prescribe that
any bylaw adopted by them shall not be altered, amended or repealed by the
Board of Directors.
The provisions contained in the Restated Certificate of Incorporation
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.
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<PAGE> 59
DISSENT AND APPRAISAL RIGHTS
A shareholder of BFC has dissent and appraisal rights pursuant to
Section 14-2-1301 et seq. of the Georgia Business Corporation Code (the
"Georgia Dissent Provisions") in the event of any of the following corporate
actions: (i) consummation of a plan of merger to which the corporation is a
party if shareholder approval is required; (ii) consummation of a plan of share
exchange to which the corporation is a party if shareholder approval is
required; (iii) consummation of a sale or exchange of all or substantially all
of the property of the corporation if shareholder vote is required; (iv) an
amendment to the articles of incorporation that materially and adversely
affects the rights in respect of a dissenter's shares; and (v) any corporate
action taken pursuant to a shareholder vote to the extent that the voting or
nonvoting shareholders of the corporation, if any, are entitled to dissent
pursuant to the articles of incorporation, bylaws or resolutions of the board
of directors of the corporation. See "THE MERGER - Rights of Dissent and
Appraisal." A stockholder of SouthTrust has similar dissent and appraisal
rights pursuant to Section 262 of the General Corporation Law of Delaware (the
"Delaware Dissent Provisions"), but only in the event of a merger or
consolidation. Both the Georgia Dissent Provisions and the Delaware Dissent
Provisions provide that there is no right to dissent if, at the record date,
the shares of the corporation were listed on a national securities exchange,
designated as a national market system security on Nasdaq or held by more than
2,000 shareholders. Since the shares of SouthTrust Common Stock are listed on
Nasdaq and held by more than 2,000 stockholders of record, and the shares of
BFC are listed on Nasdaq, neither the stockholders of SouthTrust nor the
shareholders of BFC have any right to dissent pursuant to either the Delaware
Dissent Provisions or the Georgia Dissent Provisions.
RIGHTS ON LIQUIDATION
In the event of liquidation, the holders of SouthTrust Common Stock
and the holders of BFC 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 preferred stock presently outstanding or
hereafter issued by either corporation.
PREEMPTIVE RIGHTS
The holders of SouthTrust Common Stock and BFC Common Stock do not
have any preemptive rights to purchase additional shares of any class of
securities, including common stock, of SouthTrust or BFC, 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 stockholders 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 stockholders on an interim basis
containing unaudited financial information.
The BFC Common Stock is registered under the Exchange Act, and,
therefore, BFC is required to provide annual reports containing audited
financial statements to shareholders, file other reports with the Commission
and solicit proxies in accordance with the rules of the Commission. BFC also
provides reports to its shareholders on an interim basis containing unaudited
financial information.
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. Each
Right entitles the holder thereof to purchase from SouthTrust 1/100th of a
share of the Series A Preferred Stock at the Purchase Price. BFC has not
adopted any similar plan.
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<PAGE> 60
SUPERVISION AND REGULATION
SOUTHTRUST CORPORATION
Bank Holding Company Regulation
SouthTrust is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended (the "Holding Company Act"), and is
registered with the Federal Reserve Board. SouthTrust's banking subsidiaries
are subject to restrictions under federal law which limit the transfer of funds
by the subsidiary banks to SouthTrust and its nonbanking subsidiaries, whether
in the form of loans, extensions of credit, investments or asset purchases.
Such transfers by any subsidiary bank to SouthTrust 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 a bank holding company, SouthTrust is 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 each of its 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 related to FDIC assistance provided to a subsidiary in danger of
default -- the other banking subsidiaries of SouthTrust 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 SouthTrust 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 the 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 Institution 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 September 30, 1995,
approximately $290.5 million was available for payment of dividends to
SouthTrust by its bank subsidiaries. The payment of dividends by any
subsidiary bank may also 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.
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Risk-Based Capital Guidelines
Under the Federal Reserve Board's risk-based capital guidelines
applicable to SouthTrust, the minimum ratio of capital to risk-weighted assets
(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 December 31, 1994, SouthTrust
and all of SouthTrust's subsidiary banks were sufficiently capitalized to be
considered "well capitalized." See " -- Recent Legislation." At least half of
the total capital is to consist 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 the 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. On September 30, 1995, SouthTrust had a Tier 1 capital
ratio of 7.82%, a total risk-based capital ratio of 11.45% and a leverage ratio
of 6.41%.
The following table sets forth the various regulatory capital ratios
of SouthTrust as of the periods indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------
1995 1994
---- ----
<S> <C> <C>
REGULATORY CAPITAL RATIOS:
Tier 1 risk-based capital* . . . . . . . . . . . . . . 7.82% 7.86%
Total risk-based capital . . . . . . . . . . . . . . . 11.45 12.04
Leverage ratio* . . . . . . . . . . . . . . . . . . . . 6.41 6.19
- ---------------------
</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, 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
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") substantially revised the depository institution regulatory and
funding provisions of the Federal Deposit Insurance Act and makes revisions to
several other federal banking statutes. Among other things, FDICIA requires
the federal banking regulators to take prompt corrective action in respect of
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,
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 under-capitalized 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
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<PAGE> 62
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 became subject to
restrictions on borrowing from the Federal Reserve System, effective as of
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 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, effective January 1, 1993, the FDIC implemented 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 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. The institution's
independent public accountant is required to audit and attest to certain of the
statements made in that annual report.
FDICIA amended the 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 "adequately capitalized" 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.
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 will be implemented through the adoption of regulations by
the various federal banking agencies. FDICIA is not expected to have a
material effect on the results of operations of SouthTrust or BFC.
Source of Strength
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. In addition, any capital loans by a bank holding company to any of
its banking subsidiaries are subordinate in right of payment to
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<PAGE> 63
deposits and to certain other indebtedness of such banks. In the event of a
bank holding company's bankruptcy, any commitment by the bank holding company
to a federal bank regulatory agency to maintain the capital of a banking
subsidiary will be assumed by the bankruptcy trustee and entitled to a priority
of payment. In the event of a loss suffered or anticipated by the FDIC --
either as a result of default of a banking subsidiary or SouthTrust or related
to FDIC assistance provided to a subsidiary in danger of default -- the other
banking subsidiaries of SouthTrust may be assessed for the FDIC's loss, subject
to certain exceptions.
The Riegle-Neal Interstate Banking and Branching Efficiency Act
In September 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Banking Act") became law. The
Interstate Banking Act has two major provisions regarding the merger,
acquisition and operation of banks across state lines. First it provides that
effective September 29, 1995, adequately capitalized and managed bank holding
companies are permitted to acquire banks in any state. State laws prohibiting
interstate banking or discriminating against out-of-state banks will be
preempted as of the effective date. States cannot enact laws opting out of
this provision; however, states may adopt a minimum restriction requiring that
target banks located with the state be in existence for a period of years, up
to a maximum of five years, before such bank may be subject to the Interstate
Banking Act. The Interstate Banking Act establishes deposit caps which
prohibit acquisitions that would result in the acquiror controlling 30% or more
of the deposits of insured banks and thrifts held in the state in which the
acquisition or merger is occurring or in any state in which the target
maintains a branch or 10% or more of the deposits nationwide. State-level
deposit caps are not preempted as long as they do not discriminate against
out-of- state acquirors, and the federal deposit caps apply only to initial
entry acquisitions.
In addition to the foregoing, the Interstate Banking Act provides that
as of June 1, 1997, adequately capitalized and managed banks will be able to
engage in interstate branching by merging banks in different states. However,
unlike the interstate banking provision, states may opt out of the application
of this provision by enacting specific legislation before June 1, 1997. If a
state does not opt-out, banks will be required to comply with the state's
provisions with respect to branching across state lines.
Proposals to change the laws and regulations governing the banking
industry are frequently introduced in Congress, in the state legislatures and
before the various bank regulatory agencies. The likelihood and timing of any
such changes and the impact such changes might have on SouthTrust and its
subsidiaries, however, cannot be determined at this time.
BFC
BFC is registered with the OTS as a savings and loan holding company
and is subject to OTS regulation, examination, supervision and reporting
requirements. The Bank is a member of the Federal Home Loan Bank System and
its deposit accounts are insured up to applicable limits by the FDIC under
SAIF. The Bank is subject to regulation by the OTS, as its chartering agency,
and the FDIC, as its deposit insurer. See "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE -- Information with Respect to BFC."
CERTAIN INFORMATION CONCERNING THE BUSINESS OF BFC AND THE BANK
A complete description of the business of BFC and the Bank for the
year ended December 31, 1994 is contained in BFC's Annual Report on Form 10-K
for the year ended December 31, 1994, which Annual Report on Form 10-K is
incorporated herein by reference. The following description of certain aspects
of the business of BFC and the Bank sets forth certain developments regarding
the business of BFC and the Bank which have occurred subsequent to December 31,
1994. Additional information regarding the business of BFC and the Bank is
contained in BFC's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1995, June 30, 1995 and March 31, 1995, which Quarterly Reports
are incorporated herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE - Information with Respect to BFC."
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BENEFICIAL OWNERSHIP OF BFC COMMON STOCK
The following table sets forth information as of the Record Date with
respect to those persons known by BFC to be the beneficial owners of more than
5% of the outstanding shares of BFC Common Stock, and as to shares of BFC
Common Stock beneficially owned by the directors of BFC individually and by all
officers and directors of BFC as a group, exclusive of the 942, 854 shares of
BFC Common Stock subject to the SouthTrust Option. See "THE MERGER -
Background of and Reasons for the Merger."
<TABLE>
<CAPTION>
Amount
and Nature
Name and Address of of Beneficial Percent
Beneficial Owner Ownership of Class (1)
----------------- --------- ------------
<S> <C> <C>
5% Shareholder:
Mid-Atlantic Investors 385,617 (2) 8.06%
Jerry Zucker
H. Jerry Shearer
P.O. Box 7574
Columbia, SC 29202
SouthTrust Estate and Trust Company
of Georgia, N.A. as Trustee for the
Bankers First Employee Stock
Ownership Plan 399,811 (3) 8.36%
Corporate Trust Department
P.O. Box 1001
Atlanta, GA 30301
H. M. Osteen, Jr. 360,754 (4) 7.24% (5)
One 10th Street
Augusta, GA 30901
Directors and Executive Officers:
T. Richard Daniel 11,276 (6) *
Larry DeMeyers 172,426 (7) 3.55
Edward M. Gillespie 38,186 *
William B. Kuhlke, Jr. 19,272 (8) *
H. M. Osteen, Jr. 360,754 (9) 7.24
R. Lee Smith, Jr. 48,059 (10) 1.00
Robert E. Stagg 11,597 (11) *
J. William Weltch 2,000 *
Arthur J. Gay, Jr. 87,877 (12) 1.82
Charles O. Parker 39,445 (13) *
Glenn W. Peters 63,517 (14) 1.33
All Officers and Directors
of BFC as a Group
(15 persons) 999,796 (15) 19.40
</TABLE>
__________________________________
* Indicates ownership of less than one percent (1%).
(1) Ownership interest is based upon 4,784,323 shares eligible to be
voted, adjusted when applicable to reflect the stock options which are
exercisable within 60 days of the Record Date.
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(2) Includes 124,600 shares beneficially owned by Jerry Zucker, H. Jerry
Shearer and Mid-Atlantic, a partnership comprised of Messrs. Zucker
and Shearer, over which they share voting, investment and dispositive
power. Mr. Zucker beneficially owns an additional 325,000 shares of
the Company's Common Stock over which he has sole voting, investment
and dispositive power.
(3) The Trust has disclaimed beneficial ownership of the shares pursuant
to Rule 13d-4 by virtue of the existence of substantial limitations on
the power to vote or dispose of the shares. With respect to voting of
the shares held by the Trust, participants in the Bankers First
Employee Stock Ownership Plan ("Participants") are entitled to direct
the Trustee as to the manner in which shares which have been allocated
to their respective accounts shall be voted on any matter requiring
the vote of shareholders. The Trust provides that shares which have
not been allocated to Participants' accounts, or for which voting
instructions are not received, shall be voted by the Trustee.
(4) Includes 195,421 shares covered by stock options exercisable by Mr.
Osteen within 60 days of the Record Date. Also includes 5,000 shares
owned by Mr. Osteen's children as to which he may be deemed to share
voting and investment power.
(5) Mr. Osteen's percentage ownership has been adjusted to include stock
options which are exercisable within 60 days of the Record Date.
(6) Includes 3,325 shares beneficially owned by Mr. Daniel's wife as to
which he may be deemed to share voting and investment power.
(7) Includes 73,450 shares covered by stock options exercisable by Dr.
DeMeyers within 60 days of the Record Date.
(8) Includes 443 shares beneficially owned by Mr. Kuhlke's wife and as to
which he may be deemed to share voting and investment power.
(9) Includes 195,421 shares covered by stock options exercisable by Mr.
Osteen within sixty days of the Record Date. Also includes 5,000
shares owned by Mr. Osteen's children as to which he may be deemed to
share voting and investment power.
(10) Includes 36,810 shares covered by stock options exercisable by Mr.
Smith within 60 days of the Record Date.
(11) Includes 3,940 shares owned jointly by Mr. Stagg and his wife.
(12) Includes 33,800 shares covered by stock options exercisable by Mr. Gay
within 60 days of the Record Date.
(13) Includes 9,500 shares covered by stock options exercisable by Mr.
Parker within 60 days of the Record Date.
(14) Includes 8,000 shares covered by stock options exercisable by Mr.
Peters within 60 days of the Record Date.
(15) Includes 369,981 shares covered by stock options of the executive
officers and directors of BFC as a group, exercisable within 60 days
of the Record Date. Also includes an aggregate of 12,708 shares of
BFC Common Stock with respect to which the directors and executive
officers may be deemed to share voting and investment power and 65,300
shares of BFC Common Stock held in the BFSB Retirement Plan and Trust
and of which certain executive officers have the power to vote.
63
<PAGE> 66
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
INFORMATION WITH RESPECT TO SOUTHTRUST
The following documents filed by SouthTrust with the Commission are
incorporated by reference herein:
(i) SouthTrust's Annual Report on Form 10-K for the year
ended December 31, 1994 (including therein SouthTrust's Proxy
Statement for its Annual Meeting of Stockholders held April 19, 1995)
(Commission File No. 0-3613);
(ii) SouthTrust's Quarterly Reports on Form 10-Q for the
quarters ended September 30, 1995, June 30, 1995 and March 31, 1995
(Commission File No. 0-3613); and
(iii) SouthTrust's Current Report on Form 8-K dated January
9, 1996 (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 herein or 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 (i) the discussion of
consummated and pending acquisitions set forth under the caption "SUMMARY -
Parties to the Merger - SouthTrust"; (ii) the discussion of contingencies
included in SouthTrust's Quarterly Report on Form 10-Q for the quarters ended
June 30, 1995 and September 30, 1995; (iii) the discussion of non-interest
expense included in SouthTrust's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995; and (iv) SouthTrust's Current Report on Form 8-K.
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, Treasurer and Controller, SouthTrust Corporation, 420
North 20th Street, 34th Floor, Birmingham, Alabama, 35203, telephone number
(205) 254-5000.
INFORMATION WITH RESPECT TO BFC
The following documents filed by BFC with the Commission are
incorporated by reference herein:
(i) BFC's Annual Report on Form 10-K for the year ended
December 31, 1994 (Commission File 0-12120);
(ii) BFC's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1995, June 30, 1995 and March 31, 1995 (Commission
File No. 0-12120); and
(iii) BFC's Current Reports on Form 8-K dated November 2,
1995 and December 28, 1995 (Commission File No. 0-12120).
64
<PAGE> 67
All documents filed by BFC 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
filing of such documents.
Any statement contained herein or 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.
Copies of all documents pertaining to BFC 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 Statements/Prospectus is delivered upon written or oral request.
Requests for such copies should be directed to Glenn W. Peters, Bankers First
Corporation, One 10th Street, Augusta, Georgia 30901, telephone number (706)
849-3200.
LEGAL MATTERS
Certain legal matters in connection with the SouthTrust Common Stock
being offered hereby will be passed upon by Bradley, Arant, Rose & White,
Birmingham, Alabama, counsel for SouthTrust. As of September 30, 1995, the
partners and associates of the firm of Bradley, Arant, Rose & White
beneficially owned approximately 2,034,000 shares of SouthTrust Common
Stock.
Certain tax consequences of the transaction have been passed upon by
Alston & Bird, Atlanta, Georgia.
See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES."
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 LLP,
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 Financial Statements of BFC and subsidiaries as of
December 31, 1994 and 1993, and for each of the years in the three year period
ended December 31, 1994, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick LLP regarding the December 31, 1994 consolidated
financial statements refers to a change in the method of accounting for
investments to adopt the provisions of Statement of Finanical Accounting
Standards (SFAS) No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" in 1994, and also refers to a change in accounting for
post-retirement benefits other than pensions in 1993 to adopt the provisions of
SFAS No. 106, "Employers' Accounting for Post-Retirement Benefits Other than
Pensions."
ADDITIONAL INFORMATION
AVAILABLE INFORMATION; DELISTING AND DEREGISTRATION
After the Effective Time of the Merger, the BFC Common Stock will not
be registered pursuant to the Exchange Act, and BFC will not be subject to the
information requirements of the Exchange Act. Accordingly, BFC will no longer
be required to file periodic reports, proxy statements and other information
with the Commission or to transmit certain documents to its shareholders. See
"AVAILABLE INFORMATION."
65
<PAGE> 68
OTHER BUSINESS
The Board of Directors of BFC 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. 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.
SHAREHOLDER PROPOSALS
No proposals to be presented at BFC's 1996 Annual Meeting of
Shareholders which would be held if the Merger is not consummated were received
by BFC prior to November 18, 1995, the date on which, under the rules of the
Commission, such proposals were required to be submitted to BFC in order for a
shareholder of BFC to have the right to have such proposal included in BFC's
proxy materials for such annual meeting.
66
<PAGE> 69
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BANKERS FIRST CORPORATION,
SOUTHTRUST CORPORATION
AND
SOUTHTRUST OF GEORGIA, INC.
DATED AS OF OCTOBER 31, 1995
A-1
<PAGE> 70
<TABLE>
<S> <C> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5
-------
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5
--------
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
--------------------------------
1.1 MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5
------
1.2 TIME AND PLACE OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5
-------------------------
1.3 EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5
--------------
1.4 EXECUTION OF STOCK OPTION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6
-----------------------------------
ARTICLE 2
TERMS OF MERGER
---------------
2.1 CHARTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6
-------
2.2 BYLAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6
------
2.3 DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6
----------------------
ARTICLE 3
MANNER OF CONVERTING SHARES
---------------------------
3.1 CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6
--------------------
3.2 ANTI-DILUTION PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6
------------------------
3.3 SHARES HELD BY BFC OR ACQUIROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7
------------------------------
3.4 FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7
-----------------
3.5 CONVERSION OF STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-7
---------------------------
ARTICLE 4
EXCHANGE OF SHARES
------------------
4.1 EXCHANGE PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
-------------------
4.2 RIGHTS OF FORMER BFC SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
---------------------------------
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BFC
-------------------------------------
5.1 ORGANIZATION, STANDING, AND POWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
---------------------------------
5.2 AUTHORITY; NO BREACH BY AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9
---------------------------------
5.3 CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9
-------------
5.4 BFC SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
----------------
5.5 SEC FILINGS; FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
---------------------------------
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
------------------------------------
5.7 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11
-----------
5.8 ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12
------
5.9 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12
---------------------
5.10 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12
--------------------
5.11 LABOR RELATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
---------------
5.12 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
----------------------
5.13 MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14
------------------
5.14 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
-----------------
5.15 REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
-------
5.16 STATEMENTS TRUE AND CORRECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
---------------------------
5.17 ACCOUNTING, TAX AND REGULATORY MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
--------------------------------------
5.18 STATE TAKEOVER LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
-------------------
5.19 CHARTER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
------------------
5.20 STATUS OF LOAN PORTFOLIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
------------------------
5.21 ADEQUACY OF ALLOWANCE AND OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
---------------------------------------
</TABLE>
A-2
<PAGE> 71
<TABLE>
<S> <C> <C>
5.22 DERIVATIVE CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
--------------------
5.23 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
----------------------------------
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND S-T GEORGIA
----------------------------------------------------------
6.1 ORGANIZATION, STANDING, AND POWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17
---------------------------------
6.2 AUTHORITY; NO BREACH BY AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17
---------------------------------
6.3 CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17
-------------
6.4 SEC FILINGS; FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18
---------------------------------
6.5 ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18
------------------------------------
6.6 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18
--------------------
6.7 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
-----------------
6.8 REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
-------
6.9 STATEMENTS TRUE AND CORRECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
---------------------------
6.10 ACCOUNTING, TAX AND REGULATORY MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
--------------------------------------
6.11 RIGHTS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
----------------
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
----------------------------------------
7.1 AFFIRMATIVE COVENANTS OF BFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
----------------------------
7.2 NEGATIVE COVENANTS OF BFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
-------------------------
7.3 COVENANTS OF ACQUIROR AND S-T GEORGIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21
-------------------------------------
7.4 ADVERSE CHANGES IN CONDITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
----------------------------
7.5 REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
-------
ARTICLE 8
ADDITIONAL AGREEMENTS
---------------------
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . A-22
-------------------------------------------------------------
8.2 EXCHANGE LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
----------------
8.3 APPLICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
------------
8.4 FILINGS WITH STATE OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
--------------------------
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
-------------------------------------
8.6 INVESTIGATION AND CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
---------------------------------
8.7 PRESS RELEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
--------------
8.8 CERTAIN ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
---------------
8.9 ACCOUNTING AND TAX TREATMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
----------------------------
8.10 STATE TAKEOVER LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
-------------------
8.11 CHARTER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
------------------
8.12 AGREEMENT OF AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
-----------------------
8.13 EMPLOYEE BENEFITS AND CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
-------------------------------
8.14 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26
---------------
8.15 CERTAIN MODIFICATIONS; RESTRUCTURING CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26
--------------------------------------------
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
-------------------------------------------------
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
---------------------------------------
9.2 CONDITIONS TO OBLIGATIONS OF ACQUIROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
-------------------------------------
9.3 CONDITIONS TO OBLIGATIONS OF BFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
--------------------------------
</TABLE>
A-3
<PAGE> 72
<TABLE>
<S> <C>
ARTICLE 10
TERMINATION
-----------
10.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
-----------
10.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
---------------------
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
---------------------------------------------
ARTICLE 11
MISCELLANEOUS
-------------
11.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
-----------
11.2 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-39
--------
11.3 BROKERS AND FINDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-39
-------------------
11.4 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-39
----------------
11.5 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-39
----------
11.6 WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-39
-------
11.7 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40
----------
11.8 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40
-------
11.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40
-------------
11.10 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40
------------
11.11 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
--------
11.12 INTERPRETATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
---------------
11.13 ENFORCEMENT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
------------------------
11.14 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
------------
LIST OF EXHIBITS
----------------
EXHIBIT 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-44
---------
EXHIBIT 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-45
---------
EXHIBIT 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-48
---------
EXHIBIT 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-49
---------
</TABLE>
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<PAGE> 73
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of October 31, 1995, by and among BANKERS FIRST CORPORATION ("BFC"), a
Georgia corporation having its principal office located in Augusta, Georgia;
SOUTHTRUST CORPORATION ("Acquiror"), a Delaware corporation having its
principal office located in Birmingham, Alabama; and SOUTHTRUST OF GEORGIA,
INC. ("S-T Georgia") , a Georgia corporation having its principal office
located in Atlanta, Georgia.
PREAMBLE
The Boards of Directors of BFC, S-T Georgia and Acquiror are of the
opinion that the transactions described herein are in the best interests of the
parties and their respective shareholders. This Agreement provides for the
acquisition of BFC by Acquiror pursuant to the merger of BFC with and into S-T
Georgia. At the effective time of such merger, the outstanding shares of the
capital stock of BFC shall be converted into the right to receive shares of the
common stock of Acquiror (except as provided herein). As a result,
shareholders of BFC shall become shareholders of Acquiror and S-T Georgia shall
continue to conduct the business and operations of BFC as a wholly-owned
subsidiary of Acquiror. The transactions described in this Agreement are
subject to the approvals of the shareholders of BFC, the Board of Governors of
the Federal Reserve System, the Office of Thrift Supervision, the Georgia
Department of Banking and Finance and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the Merger for federal income tax purposes shall qualify as
a "reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and for accounting purposes shall qualify for treatment as a pooling of
interests.
Immediately after the execution and delivery of this Agreement, as a
condition and inducement to Acquiror's willingness to enter into this
Agreement, BFC and Acquiror are entering into a stock option agreement (the
"Stock Option Agreement"), in substantially the form of Exhibit 1, pursuant to
which BFC is granting to Acquiror an option to purchase shares of BFC Common
Stock.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time, BFC shall be merged with and into S-T Georgia in accordance
with the provisions of Section 14-2-1101 of the GBCC and with the effect
provided in Section 14-2-1106 of the GBCC (the "Merger"). S-T Georgia shall be
the Surviving Corporation resulting from the Merger, shall remain a
wholly-owned subsidiary of Acquiror and shall continue to be governed by the
Laws of the State of Georgia. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the respective
Boards of Directors of BFC, S-T Georgia and Acquiror.
1.2 TIME AND PLACE OF CLOSING. The Closing will take place at 9:00
A.M. on the date that the Effective Time occurs (or the immediately preceding
day if the Effective Time is earlier than 9:00 A.M.), or at such other time as
the Parties, acting through their chief executive officers or chief financial
officers, may mutually agree. The place of Closing shall be at the offices of
Alston & Bird, Atlanta, Georgia, or such other place as may be mutually agreed
upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by
this Agreement shall become effective on the date and at the time the
Certificate of Merger reflecting the Merger shall become effective with
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<PAGE> 74
the Secretary of State of the State of Georgia (the "Effective Time"). Subject
to the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the chief executive officers or chief financial officers of each
Party, the Parties shall use their reasonable efforts to cause the Effective
Time to occur on the third business day following the last to occur of (i) the
effective date (including expiration of any applicable waiting period) of the
last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, and (ii) the date on which the shareholders
of BFC approve this Agreement to the extent such approval is required by
applicable Law.
1.4 EXECUTION OF STOCK OPTION AGREEMENT. Immediately after the
execution of this Agreement and as a condition thereto, BFC is executing and
delivering to Acquiror the Stock Option Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Articles of Incorporation of S-T Georgia in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of S-T Georgia in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of S-T Georgia in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of S-T Georgia in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the officers of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the
Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article
3, at the Effective Time, by virtue of the Merger and without any action on the
part of Acquiror, S-T Georgia, BFC, or the shareholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of Acquiror Capital Stock, including any
associated Acquiror Rights, issued and outstanding immediately prior to
the Effective Time shall remain issued and outstanding from and after
the Effective Time.
(b) Each share of S-T Georgia Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued
and outstanding from and after the Effective Time.
(c) Each share of BFC Common Stock (excluding shares held by any
BFC Company or any Acquiror Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted) issued
and outstanding at the Effective Time shall cease to be outstanding and
shall be converted into and exchanged for the right to receive 1.126
shares of Acquiror Common Stock (subject to possible adjustment pursuant
to Section 10.1(h) of this Agreement, the "Exchange Ratio"). Pursuant
to the Acquiror Rights Agreement, each share of Acquiror Common Stock
issued in connection with the Merger upon conversion of BFC Common Stock
shall be accompanied by an Acquiror Right.
3.2 ANTI-DILUTION PROVISIONS. In the event Acquiror changes the
number of shares of Acquiror Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in
the case of a stock dividend) or the effective date thereof (in the case of a
stock split or similar recapitalization for which a record
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<PAGE> 75
date is not established) shall be prior to the Effective Time, the Exchange
Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY BFC OR ACQUIROR. Each of the shares of BFC Common
Stock held by any BFC Company or by any Acquiror Company, in each case other
than in a fiduciary capacity or as a result of debts previously contracted,
shall be canceled and retired at the Effective Time and no consideration shall
be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of BFC Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of Acquiror Common Stock (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 a share of Acquiror Common Stock
multiplied by the market value of one share of Acquiror Common Stock at the
Effective Time. The market value of one share of Acquiror Common Stock at the
Effective Time shall be the last sale price of such common stock on the Nasdaq
National Market (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by Acquiror) on the last
trading day preceding the Effective Time. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder in respect of
any fractional shares.
3.5 CONVERSION OF STOCK OPTIONS. At the Effective Time, all rights
with respect to BFC Common Stock pursuant to stock options or stock
appreciation rights ("BFC Options") granted by BFC under the BFC Stock Plans,
which are outstanding at the Effective Time, whether or not exercisable, shall
be converted into and become rights with respect to Acquiror Common Stock, and
Acquiror shall assume each BFC Option, in accordance with the terms of the BFC
Stock Plan and stock option agreement by which it is evidenced, except that
from and after the Effective Time, (i) Acquiror and its Compensation Committee
shall be substituted for BFC and the Committee of BFC's Board of Directors
(including, if applicable, the entire Board of Directors of BFC) administering
such BFC Stock Plan, (ii) each BFC Option assumed by Acquiror may be exercised
solely for shares of Acquiror Common Stock (or cash in the case of stock
appreciation rights), (iii) the number of shares of Acquiror Common Stock
subject to such BFC Option shall be equal to the number of shares of BFC Common
Stock subject to such BFC Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, and (iv) the per share exercise price under
each such BFC Option shall be adjusted by dividing the per share exercise price
under each such BFC Option by the Exchange Ratio and rounding up to the nearest
cent. Notwithstanding the provisions of clause (iii) of the preceding
sentence, Acquiror shall not be obligated to issue any fraction of a share of
Acquiror Common Stock upon exercise of BFC Options and any fraction of a share
of Acquiror Common Stock that otherwise would be subject to a converted BFC
Option shall represent the right to receive a cash payment upon exercise of
such converted BFC Option equal to the product of such fraction and the
difference between the market value of one share of Acquiror Common Stock at
the time of exercise of such Option and the per share exercise price of such
Option. The market value of one share of Acquiror Common Stock at the time of
exercise of an Option shall be the last sale price of such common stock on the
Nasdaq National Market (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Acquiror) on the
last trading day preceding the date of exercise. In addition, notwithstanding
clauses (iii) and (iv) of the first sentence of this Section 3.5, each BFC
Option which is an "incentive stock option" shall be adjusted as required by
Section 424 of the Internal Revenue Code, and the regulations promulgated
thereunder, so as not to constitute a modification, extension or renewal of the
option, within the meaning of Section 424(h) of the Internal Revenue Code. BFC
agrees to take all necessary steps to effectuate the foregoing provisions of
this Section 3.5. As soon as practicable after the Effective Time, Acquiror
shall file a registration statement on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate forms), with respect to the shares of
Acquiror Common Stock subject to such options and shall use its reasonable
efforts to maintain the effectiveness of such registration statements (and
maintain the current status of the prospectus or prospectuses contained
therein) for so long as such options remain outstanding.
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<PAGE> 76
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Acquiror
and BFC shall cause the exchange agent selected by Acquiror (the "Exchange
Agent") to mail to the former shareholders of BFC appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates theretofore representing shares of BFC
Common Stock shall pass, only upon proper delivery of such certificates to the
Exchange Agent). After the Effective Time, each holder of shares of BFC Common
Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Agreement. To the extent
required by Section 3.4 of this Agreement, each holder of shares of BFC Common
Stock issued and outstanding at the Effective Time also shall receive, upon
surrender of the certificate or certificates representing such shares, cash in
lieu of any fractional share of Acquiror Common Stock to which such holder may
be otherwise entitled (without interest). Acquiror shall not be obligated to
deliver the consideration to which any former holder of BFC Common Stock is
entitled as a result of the Merger until such holder surrenders such holder's
certificate or certificates representing the shares of BFC Common Stock for
exchange as provided in this Section 4.1. The certificate or certificates of
BFC Common Stock so surrendered shall be duly endorsed as the Exchange Agent
may require. Any other provision of this Agreement notwithstanding, neither
Acquiror, the Surviving Corporation nor the Exchange Agent shall be liable to a
holder of BFC Common Stock for any amounts paid or property delivered in good
faith to a public official pursuant to any applicable abandoned property Law.
4.2 RIGHTS OF FORMER BFC SHAREHOLDERS. At the Effective Time, the
stock transfer books of BFC shall be closed as to holders of BFC Common Stock
immediately prior to the Effective Time and no transfer of BFC Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of BFC Common Stock (other
than shares to be canceled pursuant to Section 3.3 of this Agreement) shall
from and after the Effective Time represent for all purposes only the right to
receive the consideration provided in Sections 3.1 and 3.4 of this Agreement in
exchange therefor, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior
to the Effective Time which have been declared or made by BFC in respect of
such shares of BFC Common Stock in accordance with the terms of this Agreement
and which remain unpaid at the Effective Time. Whenever a dividend or other
distribution is declared by Acquiror on the Acquiror Common Stock, the record
date for which is at or after the Effective Time, the declaration shall include
dividends or other distributions on all shares issuable pursuant to this
Agreement, but beginning 60 days after the Effective Time no dividend or other
distribution payable to the holders of record of Acquiror Common Stock as of
any time subsequent to the Effective Time shall be delivered to the holder of
any certificate representing shares of BFC Common Stock issued and outstanding
at the Effective Time until such holder surrenders such certificate for
exchange as provided in Section 4.1 of this Agreement. However, upon surrender
of such BFC Common Stock certificate, both the Acquiror Common Stock
certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered dividends and cash payments
to be paid for fractional share interests (without interest) shall be delivered
and paid with respect to each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BFC
BFC hereby represents and warrants to Acquiror as follows:
5.1 ORGANIZATION, STANDING, AND POWER. BFC is a corporation duly
organized, validly existing, and in good standing under the Laws of the State
of Georgia, and has the corporate power and authority to carry on its business
as now conducted and to own, lease and operate its material Assets. BFC is
duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and
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<PAGE> 77
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except for
such jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on BFC.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) BFC has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
BFC, subject to the approval of this Agreement by the holders of a majority of
the outstanding shares of BFC Common Stock, which is the only shareholder vote
required for approval of this Agreement and consummation of the Merger by BFC.
Subject to such requisite shareholder approval, this Agreement represents a
legal, valid, and binding obligation of BFC, enforceable against BFC in
accordance with its terms (except in all cases 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 BFC,
nor the consummation by BFC of the transactions contemplated hereby, nor
compliance by BFC with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of BFC's Articles of Incorporation or
Bylaws, or (ii) except as disclosed in Section 5.2 of the BFC Disclosure
Memorandum, constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any BFC
Company under, any Contract or Permit of any BFC Company, where such Default or
Lien, or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BFC, or, (iii)
subject to receipt of the requisite approvals referred to in Section 9.1(b) of
this Agreement, violate any Law or Order applicable to any BFC Company or any
of their respective material Assets.
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on BFC, no
notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by BFC of the Merger and the other transactions
contemplated in this Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of BFC consists of (i)
12,500,000 shares of BFC Common Stock, of which 4,770,523 shares are issued
and outstanding as of the date of this Agreement and not more than 5,222,605
shares will be issued and outstanding at the Effective Time, and (ii) 7,500,000
shares of serial preferred stock, par value $.01 per share, none of which are
issued and outstanding. All of the issued and outstanding shares of capital
stock of BFC are duly and validly issued and outstanding and are fully paid and
nonassessable under the GBCC. None of the outstanding shares of capital stock
of BFC has been issued in violation of any preemptive rights of the current or
past shareholders of BFC. BFC has reserved 1,105,000 shares of BFC Common
Stock for issuance under the BFC Stock Plans, pursuant to which options to
purchase not more than 452,082 shares of BFC Common Stock are outstanding.
(b) Except as set forth in Section 5.3(a) of this Agreement, or
as provided in the Stock Option Agreement, there are no shares of capital stock
or other equity securities of BFC outstanding and no outstanding Rights
relating to the capital stock of BFC.
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<PAGE> 78
5.4 BFC SUBSIDIARIES. BFC has disclosed in Section 5.4 of the BFC
Disclosure Memorandum all of the BFC Subsidiaries as of the date of this
Agreement. Except as disclosed in Section 5.4 of the BFC Disclosure
Memorandum, BFC or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each BFC Subsidiary. No equity
securities of any BFC Subsidiary are or may become required to be issued (other
than to another BFC Company) by reason of any Rights, and there are no
Contracts by which any BFC Subsidiary is bound to issue (other than to another
BFC Company) additional shares of its capital stock or Rights or by which any
BFC Company is or may be bound to transfer any shares of the capital stock of
any BFC Subsidiary (other than to another BFC Company). There are no Contracts
relating to the rights of any BFC Company to vote or to dispose of any shares
of the capital stock of any BFC Subsidiary. All of the shares of capital stock
of each BFC Subsidiary held by a BFC Company are fully paid and nonassessable
under the applicable corporation Law of the jurisdiction in which such
Subsidiary is incorporated or organized and are owned by the BFC Company free
and clear of any Lien. Each BFC Subsidiary is either a savings association or
a corporation, and is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each BFC Subsidiary is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on BFC. Each BFC Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Savings Association Insurance Fund.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) BFC has filed and made available to Acquiror all forms,
reports, and documents required to be filed by BFC with the SEC since December
31, 1992 (collectively, the "BFC SEC Reports"). The BFC SEC Reports (i) at the
time filed, complied in all material respects with the applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required
to be stated in such BFC SEC Reports or necessary in order to make the
statements in such BFC SEC Reports, in light of the circumstances under which
they were made, not misleading.
(b) Each of the BFC Financial Statements (including, in each
case, any related notes) contained in the BFC SEC Reports, including any BFC
SEC Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements,
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC),
and fairly presented the consolidated financial position of BFC and its
Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994,
except as disclosed in the BFC Financial Statements, dated subsequent to
December 31, 1994, which are delivered prior to the date of this Agreement or
as disclosed in Section 5.6 of the BFC Disclosure Memorandum, (i) there have
been no events, changes, or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
BFC and (ii) BFC has not taken an action or failed to taken any action, prior
to the date of this Agreement, which action or failure, if taken after the date
of this Agreement, would represent or result in a material breach or violation
of any of the covenants and agreements of BFC contained in this Agreement.
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<PAGE> 79
5.7 TAX MATTERS.
(a) All Tax returns required to be filed by or on behalf of any
of the BFC Companies have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
December 31, 1994, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on BFC, and all returns filed are complete and accurate to the
Knowledge of BFC. All Taxes shown on filed returns have been paid. As of the
date of this Agreement, there is no audit examination, deficiency, or refund
Litigation with respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on BFC, except as reserved against in the BFC Financial
Statements delivered prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) None of the BFC Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination
by the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due for
any of the BFC Companies for the period or periods through and including the
date of the respective BFC Financial Statements has been made and is reflected
on such BFC Financial Statements.
(d) Deferred Taxes of the BFC Companies have been provided for
in accordance with GAAP.
(e) Each of the BFC Companies is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements under federal, state and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BFC.
(f) None of the BFC Companies has made any payment, is obligated
to make any payment or is a party to any contract, agreement of other
arrangement that could obligate it to make any payment that would be disallowed
as a deduction under Section 280G or 162(m) of the Internal Revenue Code.
(g) There are no Liens with respect to Taxes upon any of the
Assets of the BFC Companies.
(h) There has not been an ownership change, as defined in
Section 382(g) of the Internal Revenue Code of the BFC Companies that occurred
during or after any Taxable Period in which the BFC companies incurred a net
operating loss that carries over to any Taxable Period ending after December
31, 1994.
(i) No BFC Company has filed any consent under Section 341(f) of
the Internal Revenue Code concerning a collapsible corporation.
(j) No BFC Company has or has had a permanent establishment in
any foreign country, as defined in any applicable tax treaty or convention
between the United States and such foreign country.
(k) None of the BFC Companies is a party to any tax allocation
or sharing agreement and none of the BFC Companies has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was BFC) has any Liability for taxes of any
Person (other than BFC and its Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor or by contract or otherwise.
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5.8 ASSETS. Except as disclosed in Section 5.8 of the BFC Disclosure
Memorandum or as disclosed or reserved against in the BFC Financial Statements
delivered prior to the date of this Agreement, the BFC Companies have good and
marketable title, free and clear of all Liens, to all of their respective
material Assets. All tangible properties used in the businesses of the BFC
Companies are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with BFC's past practices.
All Assets which are material to BFC's business on a consolidated basis, held
under leases or subleases by any of the BFC Companies, are held under valid
Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other 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 proceedings may be brought), and each
such Contract is in full force and effect. The BFC Companies currently
maintain insurance similar in amounts, scope and coverage to that maintained by
other peer banking organizations. None of the BFC Companies has received
notice from any insurance carrier that (i) any such insurance will be canceled
or that coverage thereunder will be reduced or eliminated, or (ii) premium
costs with respect to any such policies of insurance will be substantially
increased. Except as disclosed in Section 5.8 of the BFC Disclosure
Memorandum, there are presently no claims pending under any such policies of
insurance and no notices have been given by any of the BFC Companies under such
policies. The Assets of the BFC Companies include all Assets required to
operate the business of the BFC Companies as presently conducted.
5.9 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of BFC, each BFC Company, its Participation
Facilities, and its Loan Properties are, and have been, in compliance with all
Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on BFC.
(b) To the Knowledge of BFC, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other forum
in which any BFC Company or any of its Participation Facilities has been or,
with respect to threatened Litigation, may be named as a defendant (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,
whether or not occurring at, on, under, or involving a site owned, leased, or
operated by any BFC Company or any of its Participation Facilities, except for
such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BFC.
(c) To the Knowledge of BFC, there is no Litigation pending or
threatened before any court, governmental agency, or board or other forum in
which any of its Loan Properties (or BFC 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, whether or not occurring at, on,
under, or involving a Loan Property, except for such Litigation pending or
threatened that is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BFC.
(d) To the Knowledge of BFC, there is no reasonable basis for
any Litigation of a type described in subsections (b) or (c), except such as is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BFC.
(e) To the Knowledge of BFC, there have been no releases of
Hazardous Material in, on, under, or affecting any such property, Participation
Facility or Loan Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BFC.
5.10 COMPLIANCE WITH LAWS. BFC is duly registered as a savings and
loan holding company under the HOLA. Each BFC Company has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, except for those Permits the absence of
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on BFC, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
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individually or in the aggregate, a Material Adverse Effect on BFC. Except as
disclosed in Section 5.10 of the BFC Disclosure Memorandum, none of the BFC
Companies:
(a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on BFC; and
(b) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i)
asserting that any BFC Company is not in compliance with any of the Laws
or Orders which such governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BFC, (ii)
threatening to revoke any Permits, the revocation of which is reasonably
likely to have, individually or in the aggregate, a Material Adverse
Effect on BFC, or (iii) requiring any BFC Company to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or to adopt any
Board resolution or similar undertaking, which restricts materially the
conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment
of dividends.
5.11 LABOR RELATIONS. No BFC Company is the subject of any Litigation
asserting that it or any other BFC Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other BFC Company to bargain with any
labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving any BFC Company, pending or threatened,
or to the Knowledge of BFC, is there any activity involving any BFC Company's
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
5.12 EMPLOYEE BENEFIT PLANS.
(a) BFC has disclosed in Section 5.12 of the BFC Disclosure
Memorandum, and has delivered or made available to Acquiror prior to the
execution of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any BFC Company or ERISA
Affiliate (as defined below) thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
and under which employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries are eligible to participate
(collectively, the "BFC Benefit Plans"). Any of the BFC Benefit Plans which is
an "employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, is referred to herein as a "BFC ERISA Plan." Each BFC ERISA Plan which
is also a "defined benefit plan" (as defined in Section 414(j) of the Internal
Revenue Code) is referred to herein as a "BFC Pension Plan." No BFC Pension
Plan is or has been a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) All BFC Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on BFC. Each BFC ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code has
received a favorable determination letter from the Internal Revenue Service,
and BFC is not aware of any circumstances likely to result in revocation of any
such favorable determination letter. To the Knowledge of BFC, no BFC Company
has engaged in a transaction with respect to any BFC Benefit Plan that,
assuming the Taxable Period of such transaction expired as of the date hereof,
would subject any BFC Company to a Tax imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA in amounts which are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on BFC.
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(c) No BFC Pension Plan has any "unfunded current liability," as
that term is defined in Section 302(d)(8)(A) of ERISA, and the 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. Since the date of the
most recent actuarial valuation, except as disclosed in Section 5.12 of the BFC
Disclosure Memorandum, there has been (i) no material change in the financial
position of any BFC Pension Plan, (ii) no change in the actuarial assumptions
with respect to any BFC Pension Plan, and (iii) no increase in benefits under
any BFC Pension Plan as a result of plan amendments or changes in applicable
Law which is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on BFC or materially adversely affect the funding
status of any such plan. Neither any BFC Pension Plan nor any "single-employer
plan," within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any BFC Company, or the single-employer plan of any
entity which is considered one employer with BFC under Section 4001 of ERISA or
Section 414 of the Internal Revenue Code or Section 302 of ERISA (whether or
not waived) (an "ERISA Affiliate") has an "accumulated funding deficiency"
within the meaning of Section 412 of the Internal Revenue Code or Section 302
of ERISA, which is reasonably likely to have a Material Adverse Effect on BFC.
No BFC Company has provided, or is required to provide, security to a BFC
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by any BFC Company with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Material Adverse
Effect on BFC. No BFC Company has incurred any withdrawal Liability with
respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate), which
Liability is reasonably likely to have a Material Adverse Effect on BFC. No
notice of a "reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been required
to be filed for any BFC Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof.
(e) Except as disclosed in Section 5.12 of the BFC Disclosure
Memorandum, no BFC Company has any Liability for retiree health and life
benefits under any of the BFC Benefit Plans and there are no restrictions on
the rights of such BFC Company to amend or terminate any such Plan without
incurring any Liability thereunder, which Liability is reasonably likely to
have a Material Adverse Effect on BFC.
(f) Except as disclosed in Section 5.12 of the BFC Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any BFC Company from
any BFC Company under any BFC Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any BFC Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit, where such
payment, increase, or acceleration is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on BFC.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees
and former employees of any BFC Company and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the BFC Financial Statements to the extent
required by and in accordance with GAAP.
5.13 MATERIAL CONTRACTS. Except as disclosed in Section 5.13 of the
BFC Disclosure Memorandum or otherwise reflected in the BFC Financial
Statements, none of the BFC Companies, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination,
consulting, or retirement Contract providing for aggregate payments to any
Person in any calendar year in excess of $100,000, (ii) any Contract relating
to the borrowing of money by any BFC Company or the guarantee by any BFC
Company of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully- secured repurchase agreements,
and Federal Home Loan Bank advances of depository institution Subsidiaries,
trade payables, and Contracts relating to borrowings or guarantees
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made in the ordinary course of business), and (iii) any other Contract or
amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by BFC with the SEC as of the date of this Agreement that has not
been filed as an exhibit to BFC's Form 10-K filed for the fiscal year ended
December 31, 1994, or in another SEC Document and identified to Acquiror
(together with all Contracts referred to in Sections 5.8 and 5.12(a) of this
Agreement, the "BFC Contracts"). With respect to each BFC Contract and except
as disclosed in Section 5.13 of the BFC Disclosure Memorandum: (i) the Contract
is in full force and effect; (ii) no BFC Company is in Default thereunder,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on BFC; (iii) no BFC Company has
repudiated or waived any material provision of any such Contract; and (iv) no
other party to any such Contract is, to the Knowledge of BFC, in Default in any
respect, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BFC, or has
repudiated or waived any material provision thereunder. All of the
indebtedness of any BFC Company for money borrowed (other than Federal Home
Loan Bank advances) is prepayable at any time by such BFC Company without
penalty or premium.
5.14 LEGAL PROCEEDINGS. Except as disclosed in Section 5.14 of the BFC
Disclosure Memorandum, there is no Litigation instituted or pending, or, to the
Knowledge of BFC, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any BFC Company, or against any director,
employee or employee benefit plan of any BFC Company or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BFC, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any BFC Company, that are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on BFC.
Section 5.14 of the BFC Disclosure Memorandum contains a summary of all
Litigation as of the date of this Agreement to which any BFC Company is a party
and which names a BFC Company as a defendant and where, in the case of
Litigation brought by Persons other than Regulatory Authorities or other
government authorities, the estimated exposure is $250,000 or more.
5.15 REPORTS. Since January 1, 1992, or the date of organization if
later, each BFC Company has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with (i) the SEC, including, but not limited to, Forms 10-K,
Forms 10-Q, Forms 8-K, and proxy statements, (ii) other Regulatory Authorities,
and (iii) any applicable state securities or banking authorities (except, in
the case of state securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on BFC). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its
respective date, each such report and document did not, in all material
respects, 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
made therein, in light of the circumstances under which they were made, not
misleading.
5.16 STATEMENTS TRUE AND CORRECT. None of the information supplied or
to be supplied by any BFC Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by Acquiror with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any BFC Company or any Affiliate thereof for inclusion in the Proxy
Statement to be mailed to BFC's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by a BFC Company or
any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of BFC, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of any proxy for the Shareholders' Meeting. All
documents that any BFC Company or any Affiliate thereof is responsible for
filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all
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material respects with the provisions of applicable Law.
5.17 ACCOUNTING, TAX AND REGULATORY MATTERS. No BFC Company or any
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to
in Section 9.1(b) of this Agreement or result in the imposition of a condition
or restriction of the type referred to in the last sentence of such Section.
5.18 STATE TAKEOVER LAWS. Each BFC Company has taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable "moratorium," "control share," "fair price," "business combination,"
or other anti-takeover laws and regulations of the State of Georgia
(collectively, "Takeover Laws"), including Sections 14-2-1111 and 14-2-1132 of
the GBCC.
5.19 CHARTER PROVISIONS. Each BFC Company has taken all action so that
the entering into of this Agreement and the consummation of the Merger and the
other transactions contemplated by this Agreement do not and will not result in
the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of any BFC Company or restrict or impair
the ability of Acquiror or any of its Subsidiaries to vote, or otherwise to
exercise the rights of a shareholder with respect to, shares of any BFC Company
that may be directly or indirectly acquired or controlled by it.
5.20 STATUS OF LOAN PORTFOLIO. All loans shown on the Financial
Statements as of June 30, 1995, or which may be entered into after such date,
were, and will be, made for good, valuable and adequate consideration in the
ordinary course of business of BFC and in accordance in all material respects
with sound banking practices and are not and will not be subject, to the
Knowledge of BFC, to any defense, set-offs or counter-claims, including such as
may be afforded by usury or truth-in-lending laws, except as may be afforded by
bankruptcy, insolvency or similar laws or by general principles of equity,
other than exceptions, omissions, defenses, set-offs or counter-claims which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BFC, and the notes and other evidences of indebtedness with
respect to the loans and all forms of pledges, mortgages and other collateral
documents and security agreements relating to the loans are, and will be, in
all material respects enforceable, valid, true and genuine, except such as are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BFC.
5.21 ADEQUACY OF ALLOWANCE AND OTHER MATTERS. The allowances for
possible loan losses as shown on the BFC Financial Statements as of and for the
period ended June 30, 1995 were, and the allowance for possible loan losses to
be shown on the BFC Financial Statements as of any date subsequent to the
execution of this Agreement, will be, adequate to provide for possible losses,
net of recoveries as relating to loans previously charged-off, in respect of
loans outstanding (including accrued interest receivable) of BFC and its
Subsidiaries and other extensions of credit (including letters of credit, or
commitments to make loans or extend credit) and each such allowance has been
established in accordance with generally accepted accounting principles.
5.22 DERIVATIVE CONTRACTS. No BFC Company is a party to or has agreed
to enter into an exchange-traded or over-the-counter swap, forward, future,
option, cap, floor or collar financial contract, or any other interest rate or
foreign currency protection contract not included on the BFC Financial
Statements which is a financial derivative contract (including various
combinations thereof).
5.23 ABSENCE OF UNDISCLOSED LIABILITIES. No BFC Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BFC, except Liabilities which are
accrued or reserved against in the BFC Financial Statement as of and for the
period ended June 30, 1995, or reflected in the notes thereto and except for
Liabilities incurred since such date in the ordinary course of business of BFC.
Since June 30, 1995, none of the BFC Companies has incurred or paid any
Liability which would have a Material Adverse Effect on BFC.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND S-T GEORGIA
Acquiror and S-T Georgia hereby represent and warrant to BFC as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Acquiror and S-T Georgia are
corporations duly organized, validly existing, and in good standing under the
Laws of the States of Delaware and Georgia, respectively, and each has the
corporate power and authority to carry on its business as now conducted and to
own, lease and operate its material Assets. Acquiror and S-T Georgia are each
duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Acquiror.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Each of Acquiror and S-T Georgia has the corporate power and
authority necessary to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Acquiror and S-T Georgia. This Agreement represents a legal, valid, and
binding obligation of Acquiror and S-T Georgia, enforceable against Acquiror
and S-T Georgia in accordance with its terms (except in all cases 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
Acquiror or S-T Georgia, nor the consummation by Acquiror or S-T Georgia of the
transactions contemplated hereby, nor compliance by Acquiror or S-T Georgia
with any of the provisions hereof, will (i) conflict with or result in a breach
of any provision of Acquiror's Certificate of Incorporation or Bylaws or S-T
Georgia's Articles of Incorporation or Bylaws, or (ii) constitute or result in
a Default under, or require any Consent pursuant to, or result in the creation
of any Lien on any Asset of any Acquiror Company under, any Contract or Permit
of any Acquiror Company, where such Default or Lien, or any failure to obtain
such Consent, is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Acquiror, or, (iii) subject to receipt of the
requisite approvals referred to in Section 9.1(b) of this Agreement, violate
any Law or Order applicable to any Acquiror Company or any of their respective
material Assets.
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Acquiror,
no notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by Acquiror of the Merger and the other
transactions contemplated in this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of Acquiror consists
of (i) 200,000,000 shares of Acquiror Common Stock, of which 87,763,319 shares
were issued and outstanding as of October 17, 1995, exclusive of Acquiror
Rights issued under the Acquiror Rights Agreement, and (ii) 5,000,000 shares of
Acquiror Preferred Stock, none of which are issued and outstanding. All of the
issued and outstanding shares of Acquiror Capital Stock are, and all of the
shares of Acquiror Common Stock to be issued in exchange for shares of BFC
Common Stock upon consummation of the Merger, when issued in accordance with
the terms of this Agreement, will be, duly and validly issued and outstanding
and fully paid and nonassessable under the DGCL. None of the outstanding
shares of Acquiror Capital Stock has been, and none of the shares of Acquiror
Common Stock to
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be issued in exchange for shares of BFC Common Stock upon consummation of the
Merger will be, issued in violation of any preemptive rights of the current or
past shareholders of Acquiror.
6.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Acquiror has filed and made available to BFC all forms,
reports, and documents required to be filed by Acquiror with the SEC since
December 31, 1992, other than registration statements on Forms S-4 and S-8
(collectively, the "Acquiror SEC Reports"). The Acquiror SEC Reports (i) at
the time filed, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be,
and (ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material
fact required to be stated in such Acquiror SEC Reports or necessary in order
to make the statements in such Acquiror SEC Reports, in light of the
circumstances under which they were made, not misleading.
(b) Each of the Acquiror Financial Statements (including, in
each case, any related notes) contained in the Acquiror SEC Reports, including
any Acquiror SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto, was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC), and fairly presented the consolidated financial position of
Acquiror and its Subsidiaries as at the respective dates and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount.
6.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1994,
except as disclosed in the Acquiror Financial Statements, dated subsequent
December 31, 1994, and delivered prior to the date of this Agreement or as
disclosed in Section 6.5 of the Acquiror Disclosure Memorandum, (i) there have
been no events, changes or occurrences which have had, or are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
Acquiror and (ii) neither Acquiror nor S-T Georgia has not taken any action or
failed to take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result
in a material breach or violation of any of the covenants and agreements of
Acquiror or S-T Georgia contained in this Agreement.
6.6 COMPLIANCE WITH LAWS. Each of Acquiror and S-T Georgia is duly
registered as a bank holding company under the BHC Act. Each Acquiror Company
has in effect all Permits necessary for it to own, lease or operate its
material Assets and to carry on its business as now conducted, except for those
Permits the absence of which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Acquiror, and there has occurred
no Default under any such Permit, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Acquiror. Except as disclosed in Section 6.6 of the Acquiror Disclosure
Memorandum, no Acquiror Company:
(a) is in violation of any Laws, Orders or Permits applicable to
its business or employees conducting its business, except for violations
which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Acquiror; and
(b) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i)
asserting that any Acquiror Company is not in compliance with any of the
Laws or Orders which such governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Acquiror,
(ii) threatening to revoke any Permits, the revocation of which is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Acquiror, or (iii) requiring any Acquiror Company to
enter into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment or memorandum
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of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve
policies, its management, or the payment of dividends.
6.7 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
or, to the Knowledge of Acquiror, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any Acquiror Company, or against
any Asset, interest, or right of any of them, that is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Acquiror,
nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any Acquiror Company, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Acquiror.
6.8 REPORTS. Since January 1, 1992, or the date of organization if
later, each Acquiror Company has filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with (i) the SEC, including, but not limited to, Forms 10-K,
Forms 10-Q, Forms 8-K, and proxy statements, (ii) other Regulatory Authorities,
and (iii) any applicable state securities or banking authorities (except, in
the case of state securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Acquiror). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws. As of its
respective date, each such report and document did not, in all material
respects, 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
made therein, in light of the circumstances under which they were made, not
misleading.
6.9 STATEMENTS TRUE AND CORRECT. None of the information supplied or
to be supplied by any Acquiror Company or any Affiliate thereof for inclusion
in the Registration Statement to be filed by Acquiror with the SEC, will, when
the Registration Statement becomes effective, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein not misleading. None of the information supplied
or to be supplied by any Acquiror Company or any Affiliate thereof for
inclusion in the Proxy Statement to be mailed to BFC's shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by any Acquiror Company or any Affiliate thereof with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to the
Proxy Statement, when first mailed to the shareholders of BFC, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meeting, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any Acquiror Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
6.10 ACCOUNTING, TAX AND REGULATORY MATTERS. No Acquiror Company or
any Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to
in Section 9.1(b) of this Agreement or result in the imposition of a condition
or restriction of the type referred to in the last sentence of such Section.
6.11 RIGHTS AGREEMENT. Execution of this Agreement and consummation of
the Merger and the other transactions contemplated by this Agreement will not
result in the grant of any rights to any Person under the Acquiror Rights
Agreement (other than as contemplated by Section 3.1 of this Agreement) or
enable or require the Acquiror Rights to be exercised, distributed or
triggered. No "Stock Acquisition Date" or "Triggering Event" (as such terms
are defined in the Acquiror Rights Agreement) has occurred.
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF BFC. Unless the prior written consent of
the other Party shall have been obtained, and except as otherwise expressly
contemplated herein, BFC shall and shall cause each of its Subsidiaries to (a)
operate its business only in the usual, regular, and ordinary course, (b)
preserve intact its business organization and Assets and maintain its rights
and franchises, and (c) take no action which would (i) adversely affect the
ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the
type referred to in the last sentence of Section 9.1(b) of this Agreement, or
(ii) adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF BFC. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, BFC
covenants and agrees that it will not do or agree or commit to do, or permit
any of its Subsidiaries to do or agree or commit to do, any of the following
without the prior written consent of the chief executive officer, president or
chief financial officer of Acquiror, which consent shall not be unreasonably
withheld:
(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of any BFC Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a BFC Company to another BFC
Company) in excess of an aggregate of $250,000 (for the BFC Companies on
a consolidated basis) except in the ordinary course of the business of
BFC Subsidiaries consistent with past practices (which shall include,
for BFC Subsidiaries that are depository institutions, creation of
deposit liabilities, purchases of federal funds, advances from the
Federal Reserve Bank or Federal Home Loan Bank, and entry into
repurchase agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition, on any Asset of any
BFC Company of any Lien or permit any such Lien to exist (other than in
connection with deposits, repurchase agreements, bankers acceptances,
"treasury tax and loan" accounts established in the ordinary course of
business, the satisfaction of legal requirements in the exercise of
trust powers, and Liens in effect as of the date hereof that are
disclosed in the BFC Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into
any shares, of the capital stock of any BFC Company, or declare or pay
any dividend or make any other distribution in respect of BFC's capital
stock, provided that BFC may (to the extent legally and contractually
permitted to do so), but shall not be obligated to, declare and pay
regular quarterly cash dividends on the shares of BFC Common Stock at a
rate not in excess of $.15 per share with usual and regular record and
payment dates in accordance with past practice disclosed in Section
7.2(c) of the BFC Disclosure Memorandum and such dates may not be
changed without the prior written consent of Acquiror; provided, that,
notwithstanding the provisions of Section 1.3, the Parties shall
cooperate in selecting the Effective Time to ensure that, with respect
to the quarterly period in which the Effective Time occurs, the holders
of BFC Common Stock do not become entitled to receive both a dividend in
respect of their BFC Common Stock and a dividend in respect of Acquiror
Common Stock or fail to be entitled to receive any dividend; or
(d) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof and pursuant to the
terms thereof in existence on the date hereof, or pursuant to the Stock
Option Agreement, issue, sell, pledge, encumber, authorize the issuance
of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding,
any additional shares of BFC Common Stock or any other capital stock of
any BFC Company, or any stock appreciation rights, or any option,
warrant, conversion, or other right to acquire any such stock, or any
security convertible into any such stock; or
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(e) adjust, split, combine or reclassify any capital stock of
any BFC Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of BFC Common
Stock, or, except as disclosed in Section 7.2(e) of the BFC Disclosure
Memorandum, sell, lease, mortgage or otherwise dispose of or otherwise
encumber any shares of capital stock of any BFC Subsidiary (unless any
such shares of stock are sold or otherwise transferred to another BFC
Company) or any Asset having a book value in excess of $250,000 other
than in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of
three years or less, purchase any securities or make any material
investment, either by purchase of stock of securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person other
than a wholly owned BFC Subsidiary, or otherwise acquire direct or
indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, (ii) acquisitions of
control by a depository institution Subsidiary in its fiduciary
capacity, or (iii) the creation of new wholly owned Subsidiaries
organized to conduct or continue activities otherwise permitted by this
Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any BFC Company, except in accordance with past
practice disclosed in Section 7.2(g) of the BFC Disclosure Memorandum or
as required by Law; pay any severance or termination pay or any bonus
other than pursuant to written policies or written Contracts in effect
on the date of this Agreement and disclosed in Section 7.2(g) of the BFC
Disclosure Memorandum; and enter into or amend any severance agreements
with officers of any BFC Company; grant any material increase in fees or
other increases in compensation or other benefits to directors of any
BFC Company except in accordance with past practice disclosed in Section
7.2(g) of the BFC Disclosure Memorandum; or voluntarily accelerate the
vesting of any stock options or other stock-based compensation or
employee benefits; or
(h) enter into or amend any employment Contract between any BFC
Company and any Person (unless such amendment is required by Law) that
the BFC Company does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered),
at any time on or after the Effective Time; or
(i) except as disclosed in Section 7.2(i) of the BFC Disclosure
Memorandum, adopt any new employee benefit plan of any BFC Company or
make any material change in or to any existing employee benefit plans of
any BFC Company other than any such change that is required by Law or
that, in the opinion of counsel, is necessary or advisable to maintain
the tax qualified status of any such plan; or
(j) make any significant change in any Tax or accounting methods
or systems of internal accounting controls, except as may be appropriate
to conform to changes in Tax Laws or regulatory accounting requirements
or GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any BFC
Company for material money damages or restrictions upon the operations
of any BFC Company; or
(l) except in the ordinary course of business, modify, amend or
terminate any material Contract (including any loan Contract with an
unpaid balance exceeding $250,000) or waive, release, compromise or
assign any material rights or claims.
7.3 COVENANTS OF ACQUIROR AND S-T GEORGIA. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, each of Acquiror and S-T Georgia covenants and agrees that it shall
(x) continue to conduct its business and the business of its Subsidiaries in a
manner designed in its reasonable judgment, to enhance the long-term value of
the Acquiror Common Stock and the business prospects of the Acquiror Companies
and (y) take no action which would (i) materially adversely affect the ability
of any
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Party to obtain any Consents required for the transactions contemplated hereby
without imposition of a condition or restriction of the type referred to in the
last sentence of Section 9.1(b) of this Agreement, or (ii) materially adversely
affect the ability of any Party to perform its covenants and agreements under
this Agreement; provided, that the foregoing shall not prevent any Acquiror
Company from discontinuing or disposing of any of its Assets or business if
such action is, in the judgment of Acquiror, desirable in the conduct of the
business of Acquiror and its Subsidiaries.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements
are contained in any such reports filed with the SEC, such financial statements
will fairly present the consolidated financial position of the entity filing
such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods
then ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL. As
soon as practicable after execution of this Agreement, Acquiror shall file the
Registration Statement with the SEC, and shall use its reasonable efforts to
cause the Registration Statement to become effective under the 1933 Act and
take any action required to be taken under the applicable state Blue Sky or
securities Laws in connection with the issuance of the shares of Acquiror
Common Stock upon consummation of the Merger. BFC shall furnish all
information concerning it and the holders of its capital stock as Acquiror may
reasonably request in connection with such action. BFC shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. In connection with the Shareholders' Meeting, (i) BFC shall
prepare and file with the SEC a Proxy Statement and mail such Proxy Statement
to BFC's shareholders, (ii) the Parties shall furnish to each other all
information concerning them that they may reasonably request in connection with
such Proxy Statement, (iii) the Board of Directors of BFC shall recommend
(subject to compliance with their fiduciary duties as advised by counsel) to
its shareholders the approval of this Agreement, and (iv) the Board of
Directors and officers of BFC shall (subject to compliance with their fiduciary
duties as advised by counsel) use their reasonable efforts to obtain such
shareholders' approval.
8.2 EXCHANGE LISTING. Acquiror shall use its reasonable efforts to
list, prior to the Effective Time, on the Nasdaq National Market the shares of
Acquiror Common Stock to be issued to the holders of BFC Common Stock pursuant
to the Merger.
8.3 APPLICATIONS. Acquiror shall promptly prepare and file, and BFC
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
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8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, S-T Georgia shall execute and file the
Certificate of Merger with the Secretary of State of the State of Georgia in
connection with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts 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 to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude
either Party from exercising its rights under this Agreement. Each Party shall
use, and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the other
Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the
other Party reasonably requests, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. No investigation by a Party
shall affect the representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreement, each Party shall, and shall cause its advisers and
agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a material
breach of any representation, warranty, covenant or agreement of the other
Party or which has had or is reasonably likely to have a Material Adverse
Effect on the other Party.
8.7 PRESS RELEASES. Prior to the Effective Time, BFC and Acquiror
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no BFC Company nor any Affiliate thereof nor
any Representative retained by any BFC Company shall directly or indirectly
solicit any Acquisition Proposal by any Person. Except to the extent necessary
to comply with the fiduciary duties of BFC's Board of Directors as advised by
counsel, no BFC Company or any Affiliate or Representative thereof shall
furnish any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but BFC may communicate information about such an
Acquisition Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised by
counsel. Any action taken by BFC upon advice of its counsel, in accordance
with the preceding sentence, including the termination of this Agreement, shall
not be deemed to be, or to result in, a breach of any of the representations,
warranties, covenants, agreements or restrictions of BFC contained in this
Agreement. BFC shall promptly notify Acquiror
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orally and in writing in the event that it receives any inquiry or proposal
relating to any such transaction.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Merger, and to take no action
which would cause the Merger not, to qualify for pooling-of-interests
accounting treatment and treatment as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 STATE TAKEOVER LAWS. Each BFC Company shall take all necessary
steps to exempt the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable state
Takeover Law, including Parts 2 and 3 of Article 11 of Chapter 2 of Title 14 of
the GBCC.
8.11 CHARTER PROVISIONS. Each BFC Company shall take all necessary
action to ensure that the entering into of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby do not and will
not result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws or other governing instruments of any BFC Company or
restrict or impair the ability of Acquiror or any of its Subsidiaries to vote,
or otherwise to exercise the rights of a shareholder with respect to, shares of
any BFC Company that may be directly or indirectly acquired or controlled by
it.
8.12 AGREEMENT OF AFFILIATES. BFC has disclosed in Section 12 of the
BFC Disclosure Memorandum all Persons whom it reasonably believes is an
"affiliate" of BFC for purposes of Rule 145 under the 1933 Act. BFC shall use
its reasonable efforts to cause each such Person to deliver to Acquiror not
later than 30 days prior to the Effective Time, a written agreement,
substantially in the form of Exhibit 2, providing that such Person will not
sell, pledge, transfer, or otherwise dispose of the shares of BFC Common Stock
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
shares of Acquiror Common Stock to be received by such Person upon consummation
of the Merger except in compliance with applicable provisions of the 1933 Act
and the rules and regulations thereunder and until such time as financial
results covering at least 30 days of combined operations of Acquiror and BFC
have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. If the Merger will qualify for
pooling-of-interests accounting treatment, shares of Acquiror Common Stock
issued to such affiliates of BFC in exchange for shares of BFC Common Stock
shall not be transferable until such time as financial results covering at
least 30 days of combined operations of Acquiror and BFC have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies, regardless of whether each such affiliate has provided the
written agreement referred to in this Section 12 (and Acquiror shall be
entitled to place restrictive legends upon certificates for shares of Acquiror
Common Stock issued to affiliates of BFC pursuant to this Agreement to enforce
the provisions of this Section 12). Acquiror shall not be required to maintain
the effectiveness of the Registration Statement under the 1933 Act for the
purposes of resale of Acquiror Common Stock by such affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS.
(a) Following the Effective Time, except as otherwise provided
in this Section 15, Acquiror shall provide generally to officers and employees
of the BFC Companies employee benefits under employee benefit plans (other than
stock option or other plans involving the potential issuance of Acquiror Common
Stock), on terms and conditions which when taken as a whole are substantially
similar to those currently provided by the Acquiror Companies to their
similarly situated officers and employees; provided, that, for a period of 12
months after the Effective Time, Acquiror shall provide generally to officers
and employees of BFC Companies severance benefits in accordance with the
policies of either (i) BFC as disclosed in Section 8.13 of the BFC Disclosure
Memorandum, or (ii) Acquiror, whichever of (i) or (ii) will provide the greater
benefit to the officer or employee. Acquiror also shall cause the Surviving
Corporation and its Subsidiaries to honor in accordance with their terms all
employment, severance, consulting and other compensation Contracts disclosed in
Section 8.13 of the BFC Disclosure Memorandum to Acquiror between any BFC
Company and any current or former director, officer, or employee thereof, and
all provisions for vested benefits or other vested amounts earned or accrued
through the Effective Time under the BFC Benefit Plans. The parties
acknowledge that nothing in this Agreement shall be construed as constituting
an employment agreement between Acquiror or any of its Affiliates and any
officer or employee of any BFC Company or an obligation on the part of Acquiror
or any of its
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Affiliates to employ any such officers or employees.
(b) The parties agree that appropriate steps shall be taken to
terminate all employee benefit plans of BFC other than the Retirement Plan and
Trust of Bankers First Corporation (the "BFC Retirement Plan") and the Bankers
First Corporation Employee Stock Ownership Plan (the "ESOP"), as of the
Effective Time or as promptly as practicable thereafter. Following the
termination of all such plans (other than the BFC Retirement Plan and ESOP),
and subject to Section 8.13(c) hereof, Acquiror agrees that the officers and
employees of any BFC Company who the Surviving Corporation or its Subsidiaries
employs shall be eligible to participate in Acquiror'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 Acquiror;
provided, that:
(i) with respect to Acquiror's group medical insurance
plan, Acquiror shall credit each such employee for eligible expenses
incurred by such employee and his or her dependents (if applicable)
under BFC's group medical insurance plan during the current calendar
year for purposes of satisfying the deductible provisions under
Acquiror's plan for such current year, and Acquiror shall waive all
waiting periods under said plans for pre-existing conditions; and
(ii) credit for each such employee's past service with BFC
Companies prior to the Effective Time ("Past Service Credit") shall be
given by Acquiror to employees for purposes of:
(1) determining vacation and sick leave benefits
and accruals, in accordance with the established policies of
Acquiror;
(2) establishing eligibility for participation in
and vesting under Acquiror's employee benefit plans (including
welfare and fringe benefit plans), and for purposes of
determining the scheduling of vacations and other determinations
which are 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 Acquiror.
(c) The parties further agree that the BFC Retirement Plan will
either be (i) merged into the SouthTrust Corporation Revised Retirement Income
Plan (the "ST Retirement Plan") or (ii) terminated as of such date prior to, on
or after the Effective Time, all as Acquiror shall determine and specify. The
determination as to whether the BFC Retirement Plan shall be terminated or
merged into the ST Retirement Plan shall be made by Acquiror. From and after
(i) January 1 following the termination of the BFC Retirement Plan or (ii) the
merger of the BFC Retirement Plan into the ST Retirement Plan, for purposes of
determining eligibility to participate in, and vesting in accrued benefits
under both the ST Retirement Plan and the SouthTrust Corporation Employee's
Profit Sharing Plan (the "ST PS Plan"), employment by BFC Companies shall be
credited as if it were employment by Acquiror, except to the extent otherwise
required by applicable Law, but such service shall not be credited for purposes
of determining benefit accrual under the ST Retirement Plan.
(d) The ESOP as amended to the extent, if any, necessary to
obtain such a determination letter from the Internal Revenue Service, shall be
terminated as of such date prior to, on, or after the Effective Time, as
Acquiror and BFC shall mutually determine and specify. Distributions shall be
made from the ESOP in accordance with the terms and provisions of the ESOP
prior to receipt from the Internal Revenue Service of a favorable determination
letter with respect to the effect of such termination upon the qualified status
of the ESOP; subject, however, to the trustee's right to retain such amounts as
it reasonably deems appropriate as a reserve for any Taxes which may be imposed
against the ESOP.
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8.14 INDEMNIFICATION.
(a) Acquiror shall, and shall cause the Surviving Corporation
to, indemnify, defend and hold harmless the present and former directors,
officers, employees and agents of the BFC Companies (each, an "Indemnified
Party") against all Liabilities arising out of actions or omissions occurring
at or prior to the Effective Time (including the transactions contemplated by
this Agreement) to the full extent permitted under Georgia Law and by BFC's
Articles of Incorporation and Bylaws as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of any
Litigation. Without limiting the foregoing, in any case in which approval by
the Surviving Corporation is required to effectuate any indemnification,
Acquiror shall direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent counsel
mutually agreed upon between Acquiror and the Indemnified Party.
(b) Acquiror shall, or shall cause the Surviving Corporation to,
use its reasonable efforts (and BFC shall cooperate prior to the Effective Time
in these efforts) to maintain in effect for a period of six years after the
Effective Time BFC's existing directors' and officers' liability insurance
policy (provided that Acquiror may substitute therefor (i) policies of at least
the same coverage and amounts containing terms and conditions which are
substantially no less advantageous or (ii) with the consent of BFC given prior
to the Effective Time, any other policy) with respect to claims arising from
facts or events which occurred prior to the Effective Time and covering persons
who are currently covered by such insurance; provided that neither Acquiror nor
the Surviving Corporation shall be obligated to make premium payments for such
six-year period in respect of such policy (or coverage replacement of such
policy) which exceed, for the portion related to BFC's directors and officers,
200% of the annual premium payments on BFC's current policy in effect as of the
date of this Agreement (the "Maximum Amount"). If the amount of the premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, Acquiror shall use its reasonable best efforts to maintain the most
advantageous policies of directors' and officers' liability insurance
obtainable for a premium equal to the Maximum Amount.
(c) The Surviving Corporation shall not be liable for any
settlement effected without its prior written consent. The Surviving
Corporation shall not have any obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
Law.
(d) If Acquiror or the Surviving Corporation or any of their
successors or assigns shall consolidate with or merge into any other Person and
shall not be the continuing or surviving Person of such consolidation or merger
or shall transfer all or substantially all of its assets to any Person, then
and in each case, proper provision shall be made so that the successors and
assigns of Acquiror or Surviving Corporation, as the case may be, shall assume
the obligations set forth in this Section 8.14.
(e) The provisions of this Section 8.14 are intended to be for
the benefit of, and enforceable by, each Indemnified Party, his or her heirs and
representatives.
8.15 CERTAIN MODIFICATIONS; RESTRUCTURING CHARGES. Following the
execution of this Agreement, Acquiror and BFC will consult with respect to (i)
their loan, accrual, reserve, litigation and real estate evaluation policies
and practices (including loan classifications and levels of reserves) and (ii)
the character, amount and timing of any restructuring charges to be taken by
each of Acquiror and BFC in connection with such matters or otherwise in
connection with the transactions contemplated by this Agreement, including (a)
any charge in respect to the write off or write down of any Asset, (b) any
reserve or other charge relating to the fees and expenses of advisors and other
third parties in connection with the transactions contemplated by this
Agreement, (c) any reserve or other charge relating to severance, termination,
and retirement payments in connection with the transactions contemplated by
this Agreement, (d) recapture of the bad-debt reserve of the BFC Companies
arising from the conversion of Bankers First Savings Bank, FSB into a national
banking association or state bank, and (e) in respect of any SAIF
recapitalization special assessment (to the extent permitted by applicable
Law), and any other appropriate accounting adjustment. Acquiror and BFC hereby
acknowledge and agree that the decision to effect any such change to the loan,
accrual, reserve, litigation and
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real estate evaluation policies or practices of BFC (including loan
classifications and levels of reserve) or to make any restructuring charge,
including the timing and amount thereof, shall be subject to the mutual
agreement of Acquiror and BFC; provided, that no action shall be taken pursuant
to this Section 15 unless such action is consistent with generally accepted
accounting principles. Notwithstanding anything to the contrary set forth
above, the warranties, representations, covenants and agreements of BFC
contained in this Agreement shall not be deemed to be untrue, or breached or
otherwise affected in any respect, as a consequence of any action taken
pursuant to this Section 8.15.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:
(A) SHAREHOLDER APPROVAL. The shareholders of BFC shall have
approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required
by Law, by the provisions of any governing instruments, or by the rules
of the NASD.
(B) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or made
and shall be in full force and effect and all waiting periods required
by Law shall have expired. No Consent obtained from any Regulatory
Authority which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner (including
requirements relating to the raising of additional capital, but not
including any requirements that Assets or deposits be divested in order
to cure any asserted anti-trust concern, the parties agreeing that the
risk of such divestiture requirements is assumed by Acquiror) which in
the reasonable judgment of the Board of Directors of either Party would
so materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement that, had such condition or
requirement been known, such Party would not, in its reasonable
judgment, have entered into this Agreement.
(C) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated
by this Agreement.
(D) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and
all necessary approvals under state securities Laws or the 1933 Act or
1934 Act relating to the issuance or trading of the shares of Acquiror
Common Stock issuable pursuant to the Merger shall have been received.
(E) EXCHANGE LISTING. The shares of Acquiror Common Stock
issuable pursuant to the Merger shall have been approved for listing on
the Nasdaq National Market.
(F) POOLING LETTERS. Each of the Parties shall have received a
letter, dated as of the Effective Time, in form and substance reasonably
acceptable to such Party, from Arthur Andersen & Co. LLP to the effect
that the Merger will qualify for pooling-of-interests accounting
treatment. Each of the Parties also shall have received a letter, dated
as of the Effective Time, in form and substance reasonably acceptable to
such Party, from KPMG Peat Marwick LLP to the effect that such firm is
not aware of any matters relating to BFC and its Subsidiaries which
would preclude the Merger from qualifying for pooling-of-interests
accounting treatment.
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(G) TAX MATTERS. Each Party shall have received a written
opinion of counsel from Alston & Bird in form reasonably satisfactory to
such Parties (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of BFC Common
Stock for Acquiror Common Stock will not give rise to gain or loss to
the shareholders of BFC with respect to such exchange (except to the
extent of any cash received), and (iii) none of BFC or Acquiror will
recognize gain or loss as a consequence of the Merger (except for the
inclusion in income of the amount of the bad-debt reserve maintained by
BFC and any other amounts resulting from any required change in
accounting methods and any income and deferred gain recognized pursuant
to Treasury regulations issued under Section 1502 of the Internal
Revenue Code). In rendering such Tax Opinion, such counsel shall be
entitled to rely upon representations of officers of BFC and Acquiror
reasonably satisfactory in form and substance to such counsel.
9.2 CONDITIONS TO OBLIGATIONS OF ACQUIROR. The obligations of
Acquiror to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Acquiror pursuant to Section 11.6(a) of
this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of
BFC set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though
all such representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date). The
representations and warranties of BFC set forth in Section 5.3 of this
Agreement shall be true and correct (except for inaccuracies which are
de minimus in amount). The representations and warranties of BFC set
forth in Sections 5.17, 5.18 and 5.19 of this Agreement shall be true
and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of BFC set forth in
this Agreement (including the representations and warranties set forth
in Sections 5.3, 5.17, 5.18 and 5.19) such that the aggregate effect of
such inaccuracies has, or is reasonably likely to have, a Material
Adverse Effect on BFC; provided that, for purposes of this sentence
only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed
not to include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of BFC to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(C) CERTIFICATES. BFC shall have delivered to Acquiror (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions of its obligations set forth in Section
9.2(a) and 9.2(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by BFC's Board of Directors
and shareholders evidencing the taking of all corporate action necessary
to authorize the execution, delivery and performance of this Agreement,
and the consummation of the transactions contemplated hereby, all in
such reasonable detail as Acquiror and its counsel shall request.
(D) OPINION OF COUNSEL. Acquiror shall have received an opinion
of Alston & Bird, counsel to BFC, dated as of the Closing, in form
reasonably satisfactory to Acquiror, as to the matters set forth in
Exhibit 3.
(E) ACCOUNTANT'S LETTERS. Acquiror shall have received from
KPMG Peat Marwick LLP letters dated not more than five days prior to (i)
the date of the Proxy Statement and (ii) the Effective Time, with
respect to certain financial information regarding BFC, in form and
substance reasonably satisfactory to Acquiror, which letters shall be
based upon customary specified procedures undertaken by such firm in
accordance with Statement of Auditing Standard No. 72.
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(F) AFFILIATES AGREEMENTS. Acquiror shall have received from
each affiliate of BFC the affiliates letter referred to in Section 8.12
of this Agreement, to the extent necessary to assure in the reasonable
judgment of Acquiror that the transactions contemplated hereby will
qualify for pooling-of-interests accounting treatment.
9.3 CONDITIONS TO OBLIGATIONS OF BFC. The obligations of BFC to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by BFC pursuant to Section 11.6(b) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of
Acquiror set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date). The representations and warranties of Acquiror set forth in
Section 6.3 of this Agreement shall be true and correct (except for
inaccuracies which are de minimus in amount). The representations and
warranties of Acquiror set forth in Sections 6.10 and 6.11 of this
Agreement shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of
Acquiror set forth in this Agreement (including the representations and
warranties set forth in Sections 6.3, 6.10 and 6.11) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to
have, a Material Adverse Effect on Acquiror; provided that, for purposes
of this sentence only, those representations and warranties which are
qualified by references to "material" or "Material Adverse Effect" shall
be deemed not to include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the agreements and covenants of Acquiror to be performed and complied
with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and
complied with in all material respects.
(C) CERTIFICATES. Acquiror shall have delivered to BFC (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions of its obligations set forth in Section
9.3(a) and 9.3(b) of this Agreement have been satisfied, and (ii)
certified copies of resolutions duly adopted by Acquiror's Board of
Directors and S-T Georgia's Board of Directors evidencing the taking of
all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as BFC and its
counsel shall request.
(D) OPINION OF COUNSEL. BFC shall have received an opinion of
Bradley, Arant, Rose & White, counsel to Acquiror, dated as of the
Effective Time, in form reasonably acceptable to BFC, as to the matters
set forth in Exhibit 4.
(E) FAIRNESS OPINION. BFC shall have received from The
Robinson-Humphrey Company, Inc. a letter, dated not more than five
business days prior to the date of the Proxy Statement, to the effect
that, in the opinion of such firm, the consideration to be received by
BFC shareholders in connection with the Merger is fair, from a financial
point of view, to such shareholders.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of BFC, this Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of Acquiror and
the Board of Directors of BFC;
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or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set
forth in Section 9.2(a) of this Agreement in the case of BFC and Section
9.3(a) in the case of Acquiror or in material breach of any covenant or
other agreement contained in this Agreement) in the event of an
inaccuracy of any representation or warranty of the other Party
contained in this Agreement which cannot be or has not been cured within
30 days after the giving of written notice to the breaching Party of
such inaccuracy and which inaccuracy would provide the terminating Party
the ability to refuse to consummate the Merger under the applicable
standard set forth in Section 9.2(a) of this Agreement in the case of
BFC and Section 9.3(a) of this Agreement in the case of Acquiror; or
(c) By the Board of Directors of either Party in the event of a
material breach by the other Party of any covenant or agreement
contained in this Agreement which cannot be or has not been cured within
30 days after the giving of written notice to the breaching Party of
such breach; or
(d) By the Board of Directors of either Party in the event (i)
any Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated hereby shall have been
denied by final nonappealable action of such authority or if any action
taken by such authority is not appealed within the time limit for
appeal, or (ii) the shareholders of BFC fail to vote their approval of
this Agreement and the transactions contemplated hereby as required by
the GBCC at the Shareholders' Meeting where the transactions were
presented to such shareholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event that
the Merger shall not have been consummated by September 30, 1996, if the
failure to consummate the transactions contemplated hereby on or before
such date is not caused by any breach of this Agreement by the Party
electing to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set
forth in Section 9.2(a) of this Agreement in the case of BFC and Section
9.3(a) in the case of Acquiror or in material breach of any covenant or
other agreement contained in this Agreement) in the event that any of
the conditions precedent to the obligations of such Party to consummate
the Merger cannot be satisfied or fulfilled by the date specified in
Section 10.1(e) of this Agreement; or
(g) By the Board of Directors of BFC, in connection with
entering into a definitive agreement with a Person in accordance with
Section 8.8, provided it has complied with all of the provisions thereof,
including the advice of counsel and notice provisions thereof; or
(h) By the Board of Directors of BFC, if it determines by a vote
of a majority of the members of its entire Board, at any time during the
ten-day period commencing two days after the Determination Date, if
either:
(x) both of the following conditions are satisfied:
(1) the Average Closing Price of shares of
Acquiror Common Stock shall be less than $21.675; and
(2) (i) the quotient obtained by dividing
the Average Closing Price on the Determination Date by $25.50
(such number being referred to herein as the "Acquiror Ratio")
shall be less than (ii) the quotient obtained by dividing the
Index Price on the Determination Date by the Index Price on the
Starting Date and subtracting 0.15 from the quotient in this
clause (x)(2)(ii) (such number being referred to herein as the
"Index Ratio"); or
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(y) the Average Closing Price on the Determination Date
of shares of Acquiror Common Stock shall be less than $19.125;
subject, however, to the following four sentences. If BFC refuses to
consummate the Merger pursuant to this Section 10.1(h), it shall give
prompt written notice thereof to Acquiror, which notice shall specify
which of clauses (x) or (y) is applicable (or if both would be
applicable, which clause is being invoked); provided, that such notice
of election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing
with its receipt of such notice, Acquiror shall have the option, in the
case of a failure to satisfy the condition in clause (x), to elect to
increase the Exchange Ratio to equal the lesser of (i) the quotient
obtained by dividing (1) the product of $21.675 and the Exchange Ratio
(as then in effect) by (2) the Average Closing Price, and (ii) the
quotient obtained by dividing (1) the product of the Index Ratio and the
Exchange Ratio (as then in effect) by (2) the Acquiror Ratio. During
such five-day period, Acquiror shall have the option, in the case of a
failure to satisfy the condition in clause (y), to elect to increase the
Exchange Ratio to equal the quotient obtained by dividing (i) the
product of $19.125 and the Exchange Ratio (as then in effect) by (ii)
the Average Closing Price. If Acquiror makes an election contemplated
by either of the two preceding sentences, within such five-day period,
it shall give prompt written notice to BFC of such election and the
revised Exchange Ratio, whereupon no termination shall have occurred
pursuant to this Section 10.1(h) and this Agreement shall remain in
effect in accordance with its terms (except as the Exchange Ratio shall
have been so modified), and any references in this Agreement to
"Exchange Ratio" shall thereafter be deemed to refer to the Exchange
Ratio as adjusted pursuant to this Section 10.1(h).
For purposes of this Section 10.1(h), the following terms shall
have the meanings indicated:
"Average Closing Price" shall mean the average of the
daily last sales prices of Acquiror Common Stock as reported on
the Nasdaq National Market (as reported by The Wall Street
Journal or, if not reported thereby, another authoritative source
as chosen by Acquiror) for the ten consecutive full trading days
in which such shares are traded on the Nasdaq National Market
ending at the close of trading on the Determination Date.
"Determination Date" shall mean the date on which the
Consent of the Board of Governors of the Federal Reserve System
shall be received.
"Index Group" shall mean the 20 bank holding
companies listed below, the common stocks of all of which shall
be publicly traded and as to which there shall not have been,
since the Starting Date and before the Determination Date, any
public announcement of a proposal for such company to be acquired
or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that any such company or companies
are removed from the Index Group, the weights (which shall be
determined based upon the number of outstanding shares of common
stock) shall be redistributed proportionately for purposes of
determining the Index Price. The 20 bank holding companies and
the weights attributed to them are as follows:
<TABLE>
<CAPTION>
Bank Holding Companies Weighting
---------------------- ---------
<S> <C>
AmSouth Bancorporation 4.95%
Barnett Banks, Inc. 8.18
Central Fidelity Banks, Inc. 3.39
Compass Bancshares, Inc. 3.23
Crestar Financial Corporation 3.20
Deposit Guaranty Corporation 1.60
First American Corporation 2.16
First Commerce Corporation 2.46
First Tennessee National Corporation 2.86
</TABLE>
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<PAGE> 100
<TABLE>
<S> <C>
First Virginia Banks, Inc. 2.88
Hibernia Corporation 10.12
Mercantile Bankshares Corporation 4.73
National Commerce Bancorporation 2.10
Regions Financial Corporation 3.85
Signet Banking Corporation 8.73
Southern National Corporation 4.99
SunTrust Banks, Inc. 9.69
Trustmark Corporation 2.96
Union Planters Corporation 3.47
Wachovia Corporation 14.46
Total 100.00%
</TABLE>
"Index Price" on a given date shall mean the weighted
average (weighted in accordance with the factors listed above) of
the closing prices of the companies composing the Index Group.
"Starting Date" shall mean October 30, 1995.
If any company belonging to the Index Group or Acquiror declares
or effects a stock dividend, reclassification, recapitalization,
split-up, combination, exchange of shares, or similar transaction
between the Starting Date and the Determination Date, the prices for the
common stock of such company or Acquiror shall be appropriately adjusted
for the purposes of applying this Section 10.1(h).
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant
to Sections 10.1(b), 10.1(c) or 10.1(f) of this Agreement shall not relieve
the breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination. The Stock Option Agreement shall be governed by its own terms as
to termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 8.12 and 8.14 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition
of all of the stock or assets of, or other business combination
involving such Party or any of its Subsidiaries or the acquisition of a
substantial equity interest in, or a substantial portion of the assets
of, such Party or any of its Subsidiaries.
"ACQUIROR CAPITAL STOCK" shall mean, collectively, the Acquiror
Common Stock, the Acquiror Preferred Stock and any other class or series
of capital stock of Acquiror.
"ACQUIROR COMMON STOCK" shall mean the $2.50 par value common
stock of Acquiror.
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"ACQUIROR COMPANIES" shall mean, collectively, Acquiror and all
Acquiror Subsidiaries.
"ACQUIROR DISCLOSURE MEMORANDUM" shall mean the written
information entitled "SouthTrust Corporation Disclosure Memorandum"
delivered prior to the date of this Agreement to BFC describing in
reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section of
this Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced
with respect thereto.
"ACQUIROR FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any)
of Acquiror as of June 30, 1995, and as of December 31, 1994 and 1993,
and the related statements of income, changes in shareholders' equity,
and cash flows (including related notes and schedules, if any) for the
six months ended June 30, 1995, and for each of the three years ended
December 31, 1994, 1993 and 1992, as filed by Acquiror in SEC Documents,
and (ii) the consolidated statements of condition of Acquiror (including
related notes and schedules, if any) and related statements of income,
changes in shareholders' equity, and cash flows (including related notes
and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to June 30, 1995.
"ACQUIROR PREFERRED STOCK" shall mean the $1.00 par value preferred
stock of Acquiror.
"ACQUIROR RIGHTS" shall mean the preferred stock purchase rights
issued pursuant to the Acquiror Rights Agreement.
"ACQUIROR RIGHTS AGREEMENT" shall mean that certain Rights
Agreement, dated February 22, 1989, between Acquiror and Mellon Bank,
N.A., as Rights Agent.
"ACQUIROR SUBSIDIARIES" shall mean the Subsidiaries of Acquiror,
which shall include any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Acquiror in the future and
owned by Acquiror at the Effective Time.
"AFFILIATE" of a Person shall mean: (i) any other Person directly,
or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any
officer, director, partner, employer, or direct or indirect beneficial
owner of any 10% or greater equity or voting interest of such Person; or
(iii) any other Person for which a Person described in clause (ii) acts
in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits (other than the Stock Option Agreement) delivered
pursuant hereto and incorporated herein by reference.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of such
Person and wherever located.
"BFC COMMON STOCK" shall mean the $.01 par value common stock of
BFC.
"BFC COMPANIES" shall mean, collectively, BFC and all BFC
Subsidiaries.
"BFC DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Bankers First Corporation Disclosure Memorandum" delivered
prior to the date of this Agreement to Acquiror describing in reasonable
detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made.
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Information disclosed with respect to one Section shall not be deemed to
be disclosed for purposes of any other Section not specifically
referenced with respect thereto.
"BFC FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of BFC as of June
30, 1995, and as of December 31, 1994 and 1993, and the related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the six months ended
June 30, 1995, and for each of the three fiscal years ended December 31,
1994, 1993 and 1992, as filed by BFC in SEC Documents, and (ii) the
consolidated balance sheets of BFC (including related notes and
schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to June 30, 1995.
"BFC STOCK PLANS" shall mean the existing stock option and other
stock-based compensation plans of BFC designated as follows: 1984
Incentive Stock Option Plan, 1986 Incentive Stock Option Plan, 1987
Incentive Stock Option Plan, 1989 Incentive Stock Option Plan, 1991
Incentive Stock Option Plan, Nonqualified Stock Option Plan, Director's
Discounted Option Plan and Employee Stock Ownership Plan and Trust.
"BFC SUBSIDIARIES" shall mean the Subsidiaries of BFC, which shall
include the BFC Subsidiaries described in Section 5.4 of this Agreement
and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of BFC in the future and owned by BFC at the
Effective Time.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956,
as amended.
"CERTIFICATE OF MERGER" shall mean the Certificate of Merger to be
executed by S-T Georgia and filed with the Secretary of State of the
State of Georgia relating to the Merger as contemplated by Section 1.1
of this Agreement.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Confidentiality Agreement, dated May 31, 1995, between BFC and Acquiror.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding or undertaking of
any kind or character, or other document to which any Person is a party
or that is binding on any Person or its capital stock, Assets or
business.
"DEFAULT" shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract, Order
or Permit, or (iii) any occurrence of any event that with or without the
passage of time or the giving of notice would give rise to a right to
terminate or revoke, change the current terms of, or renegotiate, or to
accelerate, increase, or impose any Liability under, any Contract, Order
or Permit.
"DGCL" shall mean the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) and
which are administered, interpreted or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response
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Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42
U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases or threatened releases of any Hazardous Material,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any Hazardous
Material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall have the meaning provided in Section 5.12
of this Agreement.
"EXHIBITS" 1 through 4, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof, and
may be referred to in this Agreement and any other related instrument or
document without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by
Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person (including references
to such Person being aware of a particular matter) shall mean the
personal knowledge after due inquiry of the Chairman, President, Chief
Financial Officer, Chief Accounting Officer, Chief Credit Officer,
General Counsel, any Assistant or Deputy General Counsel, or any Senior
or Executive Vice President of such Person.
"LAW" shall mean any code, law, ordinance, regulation, reporting
or licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities or business, including those promulgated,
interpreted or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement,
lien, mortgage, pledge, reservation, restriction, security interest,
title retention or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable, (ii) for depository
institution Subsidiaries of a Party, pledges to secure deposits and
other Liens incurred in the ordinary course of the banking business, and
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(iii) Liens which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on a Party.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
Party, its business, its Assets (including Contracts related to it), or
the transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned, leased or operated
by the Party in question or by any of its Subsidiaries or in which such
Party or Subsidiary holds a security or other interest (including an
interest in a fiduciary capacity), and, where required by the context,
includes the owner or operator of such property, but only with respect
to such property.
"MATERIAL" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question; provided
that any specific monetary amount stated in this Agreement shall
determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change
or occurrence which, individually or together with any other event,
change or occurrence, has a material adverse impact on (i) the financial
position, business, or results of operations of such Party and its
Subsidiaries, taken as a whole, or (ii) the ability of such Party to
perform its obligations under this Agreement or to consummate the Merger
or the other transactions contemplated by this Agreement, provided that
"material adverse impact" shall not be deemed to include the impact of
(a) changes in banking and similar Laws of general applicability or
interpretations thereof by courts or governmental authorities, (b)
changes in generally accepted accounting principles or regulatory
accounting principles generally applicable to banks, savings
associations or their holding companies, (c) actions and omissions of a
Party (or any of its Subsidiaries) taken with the prior informed written
consent of the other Party in contemplation of the transaction
contemplated hereby, including those changes and charges contemplated by
Section 8.15 hereof (whether or not such changes are made or such charges
are taken), and (d) the direct effects of compliance with this Agreement
on the operating performance of the Parties, including expenses incurred
by the Parties in consummating the transactions contemplated by the
Agreement.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market System of
the National Association of Securities Dealers Automated Quotations
System.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi- judicial decision or award, ruling,
or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency or Regulatory
Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in
which the Party in question or any of its Subsidiaries participates in
the management and, where required by the context, said term means the
owner or operator of such facility or property, but only with respect to
such facility or property.
"PARTY" shall mean either BFC or Acquiror, and "PARTIES" shall
mean both BFC and Acquiror.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or
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that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets or business.
"PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability
company, trust, business association, group acting in concert, or any
person acting in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by BFC to
solicit the approval of BFC's shareholders of the transactions
contemplated by this Agreement, which shall include the prospectus of
Acquiror relating to the issuance of the Acquiror Common Stock to
holders of BFC Common Stock.
"REGISTRATION STATEMENT" shall mean the Registration Statement on
Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Acquiror under the 1933 Act with respect to the shares of Acquiror
Common Stock to be issued to the shareholders of BFC in connection with
the transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board of
the Governors of the Federal Reserve System, the Office of Thrift
Supervision (including its predecessor, the Federal Home Loan Bank
Board), the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, all state regulatory agencies having
jurisdiction over the Parties and their respective Subsidiaries, the
NASD and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a
Person.
"RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and
the rules and regulations of any Regulatory Authority promulgated
thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders
of BFC to be held pursuant to Section 8.1 of this Agreement, including
any adjournment or adjournments thereof.
"S-T GEORGIA COMMON STOCK" shall mean the $1.00 par value common
stock of S-T Georgia.
"SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or
controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding equity securities is owned directly or
indirectly by its parent; provided, there shall not be included any such
entity acquired through foreclosure or any such entity the equity
securities of which are owned or controlled in a fiduciary capacity.
"SURVIVING CORPORATION" shall mean S-T Georgia as the surviving
corporation resulting from the Merger.
"TAX" or "TAXES" shall mean any federal, state, county, local, or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other
taxes,
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assessments, charges, fares, or impositions, including interest,
penalties, and additions imposed thereon or with respect thereto.
"TAXABLE PERIOD" shall mean any period prescribed by any
governmental authority, including the United States or any state, local,
foreign government or subdivision or agency thereof for which a Tax
Return is required to be filed or Tax is required to be paid.
"TAX RETURN" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined
or unitary group that includes a Party or its Subsidiaries.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
<TABLE>
<S> <C>
Acquiror Ratio Section 10.1(h)
Acquiror SEC Reports Section 6.4(a)
Average Closing Price Section 10.1(h)
BFC Benefit Plans Section 5.12(a)
BFC Contracts Section 5.13
BFC ERISA Plan Section 5.12(a)
BFC Options Section 3.5
BFC Pension Plan Section 5.12(a)
BFC Retirement Plan Section 8.13(b)
BFC SEC Reports Section 5.5(a)
Closing Section 1.2
Determination Date Section 10.1(h)
Effective Time Section 1.3
ERISA Affiliate Section 5.12(c)
ESOP Section 8.13(b)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
Indemnified Party Section 8.14(a)
Index Group Section 10.1(h)
Index Price Section 10.1(h)
Index Ratio Section 10.1(h)
Maximum Amount Section 8.14(b)
Merger Section 1.1
Past Service Credit Section 8.13(b)(ii)
ST PS Plan Section 8.13(b)
ST Retirement Plan Section 8.13(c)
Starting Date Section 10.1(h)
Stock Option Agreement Preamble
Takeover Laws Section 5.18
Tax Opinion Section 9.1(g)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
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11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each of
the Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees
and expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each of the Parties shall bear and pay
one-half of the filing fees payable in connection with the Registration
Statement and the Proxy Statement and printing costs incurred in connection
with the printing of the Registration Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or
shall be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for The Robinson-Humphrey Company,
Inc. as to BFC, each of the Parties represents and warrants that neither it nor
any of its officers, directors, employees, or Affiliates has employed any
broker or finder or incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions, or finders' fees in
connection with this Agreement or the transactions contemplated hereby. In the
event of a claim by any broker or finder based upon his, her or its
representing or being retained by or allegedly representing or being retained
by BFC or Acquiror, each of BFC and Acquiror, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any Liability in
respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except for the
Confidentiality Agreement). Nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, other than as provided in Sections 8.13 and 8.14 of
this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
shareholder approval of this Agreement has been obtained; provided, that after
any such approval by the holders of BFC Common Stock, there shall be made no
amendment that reduces or modifies in any material respect the consideration to
be received by the holders of BFC Common Stock without the further approval of
such shareholders.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, Acquiror, acting through
its Board of Directors, chief executive officer or other authorized officer,
shall have the right to waive any Default in the performance of any term of
this Agreement by BFC, to waive or extend the time for the compliance or
fulfillment by BFC of any and all of its obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of Acquiror
under this Agreement, except any condition which, if not satisfied, would
result in the violation of any Law. No such waiver shall be effective unless
in writing signed by a duly authorized officer of Acquiror.
(b) Prior to or at the Effective Time, BFC, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by Acquiror, to waive or extend the time for the compliance or
fulfillment by Acquiror of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of BFC
under this Agreement, except any condition which, if not satisfied, would
result in the violation of any Law. No such waiver shall be effective unless
in writing signed by a duly authorized officer of BFC.
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(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained
in this Agreement in one or more instances shall be deemed to be or construed
as a further or continuing waiver of such condition or breach or a waiver of
any other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered by hand,
by facsimile transmission, by registered or certified mail, postage pre-paid,
or by courier or overnight carrier, to the persons at the addresses set forth
below (or at such other address as may be provided hereunder), and shall be
deemed to have been delivered as of the date so delivered:
BFC: Bankers First Corporation
One Tenth Street
Augusta, Georgia 30901
Telecopy Number: (706) 849-3349
Attention: H.M. Osteen, Jr.
Copy to Counsel: Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 881-7777
Attention: F. Dean Copeland
Acquiror: SouthTrust Corporation
420 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 254-5022
Attention: Frederick W. Murray, Jr.
Copy to Counsel: Bradley, Arant, Rose & White
2001 Park Place
Suite 1400
Birmingham, Alabama 35203
Telecopy Number: (205) 252-0264
Attention: C. Larimore Whitaker
11.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Georgia, without regard to any
applicable conflicts of Laws.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 109
11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No party to this Agreement shall
be considered the draftsman. The parties acknowledge and agree that this
Agreement has been reviewed, negotiated and accepted by all parties and their
attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
11.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
[Signatures on following page]
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<PAGE> 110
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: BANKERS FIRST CORPORATION
/s/ J. Randal Hall By: /s/ H. M. Osteen, Jr.
- ------------------- -----------------------
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: SOUTHTRUST CORPORATION
/s/ Alton E. Yother By: /s/ F. W. Murray
- ------------------- ------------------
Assistant Secretary Executive Vice President
[CORPORATE SEAL]
ATTEST: SOUTHTRUST OF GEORGIA, INC.
/s/ Alton E. Yother By: /s/ F. W. Murray
- ------------------- ------------------
Assistant Secretary Chairman
[CORPORATE SEAL]
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<PAGE> 111
LIST OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
1. Form of Stock Option Agreement. (Section 1.4)
2. Form of agreement of affiliates of BFC. (Section Section 12, 9.2(f)).
3. Matters as to which Alston & Bird will opine. (Section 9.2(d)).
4. Matters as to which Bradley, Arant, Rose & White will opine. (Section 9.3(d)).
</TABLE>
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<PAGE> 112
EXHIBIT 1
STOCK OPTION AGREEMENT
(Exhibit 1 is included as Exhibit B of this Proxy Statement/Prospectus)
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<PAGE> 113
EXHIBIT 2
FORM OF AFFILIATE AGREEMENT
SouthTrust Corporation
420 North 20th Street
Birmingham, Alabama 35203
Ladies and Gentlemen:
The undersigned is a shareholder of Bankers First Corporation ("BFC"), a
corporation organized and existing under the laws of the State of Georgia and
located in Augusta, Georgia, and will become a shareholder of the SouthTrust
Corporation ("SouthTrust") pursuant to the transactions described in the
Agreement and Plan of Merger, dated as of October 31, 1995 (the "Agreement"),
by and among SouthTrust, SouthTrust of Georgia, Inc. ("S-T Georgia") and BFC.
Under the terms of the Agreement, BFC will be merged into and with S-T Georgia
(the "Merger"), and the shares of the $.01 par value common stock of BFC ("BFC
Common Stock") will be converted into and exchanged for shares of the $2.50 par
value common stock of SouthTrust ("SouthTrust Common Stock"). This Affiliate
Agreement represents an agreement between the undersigned and SouthTrust
regarding certain rights and obligations of the undersigned in connection with
the shares of SouthTrust to be received by the undersigned as a result of the
Merger.
In consideration of the Merger and the mutual covenants contained herein,
the undersigned and SouthTrust hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees that as
to BFC he is an "affiliate" under Rule 145(c) as defined in Rule 405 of the
Rules and Regulations of the Securities and Exchange Commission ("SEC") under
the Securities Act of 1933, as amended ("1933 Act"), and the undersigned
anticipates that he will be such an "affiliate" at the time of the Merger.
2. Initial Restriction on Disposition. The undersigned agrees that
he will not sell, transfer, or otherwise dispose of his interests in, or reduce
his risk relative to, any of the shares of SouthTrust Common Stock into which
his shares of BFC Common Stock are converted upon consummation of the Merger
until such time as SouthTrust notifies the undersigned that the requirements of
SEC Accounting Series Release Nos. 130 and 135 ("ASR 130 and 135") have been
met. The undersigned understands that ASR 130 and 135 relate to publication of
financial results of post-Merger combined operations of SouthTrust and BFC.
SouthTrust agrees that it will publish such results within 45 days after the
end of the first fiscal quarter of SouthTrust containing the required period of
post-Merger combined operations and that it will notify the undersigned
promptly following such publication.
3. Covenants and Warranties of Undersigned. The undersigned
represents, warrants and agrees that:
(a) During the 30 days immediately preceding the Effective Time
of the Merger, the undersigned has not sold, transferred, or otherwise
disposed of his interests in, or reduced his risk relative to, any of
the shares of SouthTrust Common Stock or BFC Common Stock beneficially
owned by the undersigned as of the date of the Shareholders' Meeting of
BFC held to approve the Merger.
(b) The SouthTrust Common Stock received by the undersigned as a
result of the Merger will be taken for his own account and not for
others, directly or indirectly, in whole or in part.
(c) SouthTrust has informed the undersigned that any
distribution by the undersigned of SouthTrust Common Stock has not been
registered under the 1933 Act and that shares of SouthTrust Common Stock
received pursuant to the Merger can only be sold by the undersigned (1)
following registration under the 1933 Act, or (2) in conformity with the
volume and other requirements of Rule 145(d) promulgated by the SEC as
the same now exist or may hereafter be amended, or (3) to the extent
some other exemption from registration under the 1933 Act might be
available. The undersigned
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<PAGE> 114
understands that SouthTrust is under no obligation to file a
registration statement with the SEC covering the disposition of the
undersigned's shares of SouthTrust Common Stock or to take any other
action necessary to make compliance with an exemption from such
registration available.
4. Restrictions on Transfer. The undersigned understands and agrees
that stop transfer instructions with respect to the shares of SouthTrust Common
Stock received by the undersigned pursuant to the Merger will be given to
SouthTrust's Transfer Agent and that there will be placed on the certificates
for such shares, or shares issued in substitution thereof, a legend stating in
substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is accounted for as a "pooling of interests"
and may not be sold, nor may the owner thereof reduce his risks relative
thereto in any way, until such time as SouthTrust Corporation
("SouthTrust") has published the financial results covering at least 30
days of combined operations after the effective date of the merger
through which the business combination was effected. In addition, the
shares represented by this certificate may not be sold, transferred or
otherwise disposed of except or unless (1) covered by an effective
registration statement under the Securities Act of 1933, as amended, (2)
in accordance with (i) Rule 145(d) (in the case of shares issued to an
individual who is not an affiliate of SouthTrust) or (ii) Rule 144 (in
the case of shares issued to an individual who is an affiliate of
SouthTrust) of the Rules and Regulations of such Act, or (3) in
accordance with a legal opinion satisfactory to counsel for SouthTrust
that such sale or transfer is otherwise exempt from the registration
requirements of such Act."
Such legend will also be placed on any certificate representing SouthTrust
securities issued subsequent to the original issuance of the SouthTrust Common
Stock pursuant to the Merger as a result of any transfer of such shares or any
stock dividend, stock split, or other recapitalization as long as the
SouthTrust Common Stock issued to the undersigned pursuant to the Merger has
not been transferred in such manner to justify the removal of the legend
therefrom. Upon the request of the undersigned, SouthTrust shall cause the
certificates representing the shares of SouthTrust Common Stock issued to the
undersigned in connection with the Merger to be reissued free of any legend
relating to restrictions on transfer by virtue of ASR 130 and 135 as soon as
practicable after the requirements of ASR 130 and 135 have been met. In
addition, if the provisions of Rules 144 and 145 are amended to eliminate
restrictions applicable to the SouthTrust Common Stock received by the
undersigned pursuant to the Merger, or at the expiration of the restrictive
period set forth in Rule 145(d), SouthTrust, upon the request of the
undersigned, will cause the certificates representing the shares of SouthTrust
Common Stock issued to the undersigned in connection with the Merger to be
reissued free of any legend relating to the restrictions set forth in Rules 144
and 145(d) upon receipt by SouthTrust of an opinion of its counsel to the
effect that such legend may be removed.
5. Understanding of Restrictions on Dispositions. The undersigned
has carefully read the Agreement and this Affiliate Agreement and discussed
their requirements and impact upon his ability to sell, transfer, or otherwise
dispose of the shares of SouthTrust Common Stock received by the undersigned,
to the extent he believes necessary, with his counsel or counsel for BFC.
6. Filing of Reports by SouthTrust. SouthTrust agrees, for a period
of three years after the effective date of the Merger, to file on a timely
basis all reports required to be filed by it pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended, so that the public information
provisions of Rule 145(d) promulgated by the SEC as the same are presently in
effect will be available to the undersigned in the event the undersigned
desires to transfer any shares of SouthTrust Common Stock issued to the
undersigned pursuant to the Merger.
7. Transfer Under Rule 145(d). If the undersigned desires to sell or
otherwise transfer the shares of SouthTrust Common Stock received by him in
connection with the Merger at any time during the restrictive period set forth
in Rule 145(d), the undersigned will provide the necessary representation
letter to the transfer agent for SouthTrust Common Stock together with such
additional information as the transfer agent may reasonably request. If
SouthTrust's counsel concludes that such proposed sale or transfer complies
with the requirements of Rule 145(d), SouthTrust shall cause such counsel to
provide such opinions as may be necessary
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to SouthTrust's Transfer Agent so that the undersigned may complete the
proposed sale or transfer.
8. Acknowledgments. The undersigned recognizes and agrees that the
foregoing provisions also apply to all shares of the capital stock of BFC and
SouthTrust that are deemed to be beneficially owned by the undersigned pursuant
to applicable federal securities laws, which the undersigned agrees may
include, without limitation, shares owned or held in the name of (i) the
undersigned's spouse, (ii) any relative of the undersigned or of the
undersigned's spouse who has the same home as the undersigned, (iii) any trust
or estate in which the undersigned, the undersigned's spouse, and any such
relative collectively own at least a 10% beneficial interest or of which any of
the foregoing serves as trustee, executor, or in any similar capacity, and (iv)
any corporation or other organization in which the undersigned, the
undersigned's spouse and any such relative collectively own at least 10% of any
class of equity securities or of the equity interest. The undersigned further
recognizes that, in the event that the undersigned is a director or officer of
SouthTrust or becomes a director or officer of SouthTrust upon consummation of
the Merger, among other things, any sale of SouthTrust Common Stock by the
undersigned within a period of less than six months following the effective
time of the Mergers may subject the undersigned to liability pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended.
9. Miscellaneous. This Affiliate Agreement is the complete agreement
between SouthTrust and the undersigned concerning the subject matter hereof.
Any notice required to be sent to any party hereunder shall be sent by
registered or certified mail, return receipt requested, using the addresses set
forth herein or such other address as shall be furnished in writing by the
parties. This Affiliate Agreement shall be governed by the laws of the State
of Georgia.
This Affiliate Agreement is executed as of the ___ day of ___________,
1995.
Very truly yours,
___________________________
Signature
___________________________
Print Name
___________________________
___________________________
Address
[add below the signatures of
all registered owners of
shares deemed beneficially
owned by the affiliate]
___________________________
Name:
___________________________
Name:
___________________________
Name:
AGREED TO AND ACCEPTED as of
_______________, 1996
SOUTHTRUST CORPORATION
By:_________________________
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EXHIBIT 3
MATTERS AS TO WHICH
ALSTON & BIRD WILL OPINE
1. BFC is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Georgia with full corporate power and
authority to conduct its business as described in the proxy statement used to
solicit the approval by the shareholders of BFC of the transactions
contemplated by the Agreement ("Proxy Statement"), and to own and use its
Assets.
2. The execution and delivery by BFC of the Agreement and compliance
with its terms do not and will not violate or contravene any provision of the
Articles of Incorporation or Bylaws of BFC or, to our knowledge, result in any
breach of, or default or acceleration under, any material Contract or Order to
which BFC or any of its Subsidiaries is a party or by which BFC or any of its
Subsidiaries is bound.
3. The Agreement has been duly and validly authorized, executed and
delivered by BFC, and assuming valid authorization, execution and delivery by
Acquiror and S-T Georgia, constitutes a valid and binding agreement of BFC
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or similar laws affecting
creditors' rights generally, provided, however, that we express no opinion as
to the availability of the equitable remedy of specific performance.
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EXHIBIT 4
MATTERS AS TO WHICH
BRADLEY, ARANT, ROSE & WHITE WILL OPINE
1. Acquiror and S-T-Georgia are corporations duly organized, validly
existing and in good standing under the Laws of the States of Delaware and
Georgia, respectively, with full corporate power and authority to conduct their
business as described in the proxy statement used to solicit the approval by
the shareholders of BFC of the transactions contemplated by the Agreement
("Proxy Statement"), and to own and use their respective Assets.
2. The execution and delivery of the Agreement and compliance with
its terms do not and will not violate or contravene any provision of the
Certificate of Incorporation, Articles of Incorporation or Bylaws of Acquiror
or S-T Georgia or, to our knowledge, any order, arbitration award, judgment, or
decree to which Acquiror or S-T Georgia is a party or by which Acquiror or S-T
Georgia is bound.
3. The Agreement has been duly and validly executed and delivered by
Acquiror and S-T Georgia, and assuming valid authorization, execution and
delivery by BFC, constitutes a valid and binding agreement of Acquiror and S-T
Georgia, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, or similar laws affecting
creditors' rights generally, provided, however, that we express no opinion as
to the availability of the equitable remedy of specific performance.
4. The shares of Acquiror Common Stock to be issued to the
shareholders of BFC upon consummation of the Merger have been registered under
the 1933 Act, are duly authorized, and, when issued in accordance with the
Agreement, will be validly issued, fully paid and non-assessable and will not
not have been issued in violation of any statutory preemptive rights of
shareholders.
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EXHIBIT B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 31, 1995 (the "Agreement"),
by and between Bankers First Corporation, a Georgia corporation ("Issuer"), and
SouthTrust Corporation, a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement and
Plan of Merger, dated as of October 31, 1995 (the "Merger Agreement"),
providing for, among other things, the merger of Issuer with and into
SouthTrust of Georgia, Inc., a wholly owned subsidiary of Grantee, with
SouthTrust of Georgia, Inc. as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants, and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree
as follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase a number of shares of common stock, par value $.01 per share ("Issuer
Common Stock"), of Issuer up to 942,854 shares (as adjusted as set forth
herein, the "Option Shares," which shall include the Option Shares before and
after any transfer of such Option Shares, but in no event shall the number of
Option Shares for which this Option is exercisable exceed 19.9% of the issued
and outstanding shares of Issuer Common Stock) at a purchase price per Option
Share (the "Purchase Price") equal to $29.00 (subject to adjustment as set
forth herein).
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of its agreements or
covenants contained in this Agreement or the Merger Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
shares covered by the Option issued by any court of competent jurisdiction in
the United States shall be in effect, Holder may exercise the Option, in whole
or in part, at any time and from time to time following the occurrence of a
Purchase Event; provided that the Option shall terminate and be of no further
force and effect upon the earliest to occur of (A) the Effective Time, (B)
termination of the Merger Agreement in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event (other
than a termination of the Merger Agreement by Grantee pursuant to Section
10.1(b) or 10.1(c) thereof (but, in each case, only if the breach giving rise
to such termination was willful) (each a "Default Termination")), (C) 12 months
after a Default Termination, and (D) 12 months after termination of the Merger
Agreement (other than a Default Termination) following the occurrence of a
Purchase Event or a Preliminary Purchase Event; provided, further, that any
purchase of shares upon exercise of the Option shall be subject to compliance
with applicable law, including, without limitation, the Bank Holding Company
Act of 1956, as amended (the "BHC Act") and the Home Owners' Loan Act of 1933,
as amended (the "HOLA"). The term "Holder" shall mean the holder or holders of
the Option from time to time, and which initially is Grantee. The rights set
forth in Section 8 shall terminate when the right to exercise the Option
terminates (other than as a result of a complete exercise of the Option) as set
forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events subsequent to the date of this Agreement:
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(i) without Grantee's prior written consent, Issuer shall
have authorized, recommended, publicly proposed, or publicly announced
an intention to authorize, recommend, or propose, or entered into an
agreement with any person (other than Grantee or any Subsidiary of
Grantee) to effect an Acquisition Transaction (as defined below). As
used herein, the term Acquisition Transaction shall mean (A) a merger,
consolidation, or similar transaction involving Issuer or any of its
Subsidiaries (other than transactions solely between Issuer's
Subsidiaries), (B) except as permitted pursuant to Section 7.2 of the
Merger Agreement, the disposition, by sale, lease, exchange, or
otherwise, of Assets of Issuer or any of its Subsidiaries representing
in either case 25% or more of the consolidated Assets of Issuer and its
Subsidiaries, or (C) the issuance, sale, or other disposition of
(including by way of merger, consolidation, share exchange, or any
similar transaction) securities representing 25% or more of the voting
power of Issuer or any of its Subsidiaries (each of (A), (B) or (C), an
"Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined under the Exchange Act), other than a group of which Grantee
or any Subsidiary of Grantee is a member, shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of,
25% or more of the then-outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of
the following events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 25% or more
of the then-outstanding shares of Issuer Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders held
for the purpose of voting on the Merger Agreement, such meeting shall
not have been held or shall have been canceled prior to termination of
the Merger Agreement, or Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee the recommendation
of Issuer's Board of Directors with respect to the Merger Agreement, in
each case after it shall have been publicly announced that any person
(other than Grantee or any Subsidiary of Grantee) shall have (A) made,
or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction, (B) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect to an
Exchange Offer, or (C) filed an application (or given a notice), whether
in draft or final form, under the BHC Act, the Bank Merger Act, the
HOLA, or the Change in Bank Control Act of 1978, for approval to engage
in an Acquisition Transaction; or
(iii) any person (other than Grantee or any Subsidiary of
Grantee) shall have made, or disclosed an intention to make, a proposal
to engage in an Acquisition Transaction; or
(iv) any person (other than Grantee or any Subsidiary of
Grantee) shall have filed an application (or given a notice), whether in
draft or final form, under the BHC Act, the Bank Merger Act, the HOLA,
or the Change in Bank Control Act of 1978, for approval to engage in an
Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it shall
send to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it intends
to purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 15 business days from the Notice Date
for the closing (the "Closing") of such purchase (the
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"Closing Date"). If prior notification to or approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), the
Office of the Thrift Supervision (the "OTS") or any other regulatory authority
is required in connection with such purchase, Issuer shall cooperate with
Holder in the filing of the required notice or application for approval and the
obtaining of such approval and the Closing shall occur immediately following
such regulatory approvals (and any mandatory waiting periods). Any exercise of
the Option shall be deemed to occur on the Notice Date relating thereto.
(e) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall Holder purchase under the terms of this Agreement
that number of Option Shares which have a "Spread Value" in excess of
$5,650,000. For purposes of this Agreement, "Spread Value" shall mean the
difference between (i) the product of (1) the sum of the total number of Option
Shares (x) Holder intends to purchase at the Closing Date pursuant to the
exercise of the Option and (y) previously purchased pursuant to the prior
exercise of the Option, and (2) the higher of (I) the closing bid price of
Issuer Common Stock as quoted on the Nasdaq National Market on the last trading
day immediately preceding the Closing Date and (II) the consideration per share
of Issuer Common Stock to be offered or paid to or received by holders of
Issuer Common Stock in connection with an Acquisition Transaction (provided,
that if the consideration to be offered, paid, or received shall be other than
in cash, the value of such consideration shall be determined in good faith by
an independent nationally recognized investment banking firm selected by Holder
and reasonably acceptable to Issuer, which determination shall be conclusive
for all purposes of this Agreement), and (ii) the product of (1) the total
number of Option Shares (x) Holder intends to purchase at the Closing Date
pursuant to the exercise of the Option and (y) previously purchased pursuant to
the prior exercise of the Option and (2) the applicable Purchase Price of such
Option Shares. In the event the Spread Value exceeds $5,650,000, the number of
Option Shares which Grantee is entitled to purchase at the Closing Date shall
be reduced to that number of shares necessary such that the Spread Value equals
or is less than $5,650,000.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer specified
in Section 12(f) hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges, and
encumbrances of any kind whatsoever and subject to no pre-emptive rights, and
(B) if the Option is exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to purchase the balance of
the shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF OCTOBER
31, 1995. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend
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is not required for purposes of the Securities Act.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Issuer. This Agreement has
been duly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and, at all times from
the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance,
upon exercise of the Option, the number of shares of Issuer Common Stock
necessary for Grantee to exercise the Option, and Issuer will take all
necessary corporate action to authorize and reserve for issuance all
additional shares of Issuer Common Stock or other securities which may
be issued pursuant to Section 7 upon exercise of the Option. The shares
of Issuer Common Stock to be issued upon due exercise of the Option,
including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance
pursuant hereto, shall be duly and validly issued, fully paid, and
nonassessable, and shall be delivered free and clear of all liens,
claims, charges, and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any stockholder of Issuer.
6. REPRESENTATIONS AND WARRANTS OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This Agreement has
been duly executed and delivered by Grantee.
(b) This Option is not being, and any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Laws.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason
of a stock dividend, stock split, split- up, recapitalization, combination,
exchange of shares, or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Holder would have received in respect of Issuer Common Stock if the Option had
been exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Issuer Common Stock are issued after
the date of this Agreement (other than pursuant to an event described in the
first sentence of this Section 7(a)), the number of shares of Issuer Common
Stock subject to the Option shall be adjusted so that, after such issuance, it,
together with any shares of Issuer Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Issuer Common Stock then issued
and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter in an agreement: (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Grantee or one
of its subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such
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merger, the then-outstanding shares of Issuer Common Stock shall be changed
into or exchanged for stock or other securities of Issuer or any other person
or cash or any other property or the outstanding shares of Issuer Common Stock
immediately prior to such merger shall after such merger represent less than
50% of the outstanding shares and share equivalents of the merged company; or
(iii) to sell or otherwise transfer all or substantially all of its assets to
any person, other than Grantee or one of its subsidiaries, then, and in each
such case, the agreement governing such transaction shall make proper
provisions so that upon the consummation of any such transaction and upon the
terms and conditions set forth herein, Holder shall receive for each Option
Share with respect to which the Option has not been exercised an amount of
consideration in the form of and equal to the per share amount of consideration
that would be received by the holder of one share of Issuer Common Stock less
the Purchase Price (and, in the event of an election or similar arrangement
with respect to the type of consideration to be received by the holders of
Issuer Common Stock, subject to the foregoing, proper provision shall be made
so that the holder of the Option would have the same election or similar rights
as would the holder of the number of shares of Issuer Common Stock for which
the Option is then exercisable); provided, that if the sum of (i) the aggregate
value of the Net Consideration to be received by Holder pursuant to this
Section 7(b) and (ii) the consideration to be received for Option Shares with
respect to which the Option shall have previously been exercised, less the
aggregate Purchase Price paid therefor (collectively, the "Total
Consideration") shall exceed $5,650,000, then the Net Consideration shall be
reduced to the extent necessary such that the Total Consideration equals or is
less than $5,650,000. If the consideration to be offered, paid, or received
pursuant to this Section 7(b) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Holder and reasonably acceptable
to Issuer, which determination shall be conclusive for all purposes of this
Agreement.
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to the last sentence of Section 3(a), at the request
of Holder at any time commencing upon the first occurrence of a Repurchase
Event (as defined in Section 8(d)) that occurs prior to the termination of this
Option pursuant to Section 3(a) hereof, Issuer shall repurchase from Holder the
Option and all shares of Issuer Common Stock purchased by Holder pursuant
hereto with respect to which Holder then has beneficial ownership. The date on
which Holder exercises its rights under this Section 8 is referred to as the
"Request Date." Such repurchase shall be at an aggregate price (the "Section 8
Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any
shares of Issuer Common Stock acquired pursuant to the Option with
respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7), multiplied
by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or,
in the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership, multiplied by the number of such shares;
provided, that the amounts to be paid pursuant to clauses (ii) and (iii) above
shall not exceed $5,650,000.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten business days after the Request Date (the "Repurchase
Closing"), pay the Section 8 Repurchase Consideration to Holder in immediately
available funds, and contemporaneously with such payment Holder shall surrender
to Issuer the Option and the certificates evidencing the shares of Issuer
Common Stock purchased thereunder with respect to which Holder then has
beneficial ownership, and Holder shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free and clear
of all liens, claims, charges, and encumbrances of any kind whatsoever.
Notwithstanding the foregoing, to the extent that prior notification to
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or approval of the Federal Reserve Board, the OTS or other regulatory authority
is required in connection with the payment of all or any portion of the Section
8 Repurchase Consideration, Holder shall have the ongoing option to revoke its
request for repurchase pursuant to Section 8, in whole or in part, or to
require that Issuer deliver from time to time that portion of the Section 8
Repurchase Consideration that it is not then so prohibited from paying and
promptly file the required notice or application for approval and expeditiously
process the same (and each party shall cooperate with the other in the filing
of any such notice or application and the obtaining of any such approval). If
the Federal Reserve Board, the OTS or any other regulatory authority
disapproves of any part of Issuer's proposed repurchase pursuant to this
Section 8, Issuer shall promptly give notice of such fact to Holder. If the
Federal Reserve Board, the OTS or other agency prohibits the repurchase in part
but not in whole, then Holder shall have the right (i) to revoke the repurchase
request or (ii) to the extent permitted by the Federal Reserve Board, the OTS
or other agency, determine whether the repurchase should apply to the Option
and/or Option Shares and to what extent to each, and Holder shall thereupon
have the right to exercise the Option as to the number of Option Shares for
which the Option was exercisable at the Request Date less the sum of the number
of shares covered by the Option in respect of which payment has been made
pursuant to Section 8(a)(ii) and the number of shares covered by the portion of
the Option (if any) that has been repurchased. Holder shall notify Issuer of
its determination under the preceding sentence within five business days of
receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of
Holder's rights under this Section 8 shall terminate on the date of termination
of this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of Issuer Common Stock paid for
any such share by the person or groups described in Section 8(d)(i), (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 7(b)(i), 7(b)(ii), or 7(b)(iii), or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market (or if Issuer Common Stock is not quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by Holder) during the 60 business days preceding the
Request Date; provided, however, that in the event of a sale of less than all
of Issuer's Assets, the Applicable Price shall be the sum of the price paid in
such sale for such Assets and the current market value of the remaining Assets
of Issuer as determined by an independent nationally recognized investment
banking firm selected by Holder and reasonably acceptable to Issuer (which
determination shall be conclusive for all purposes of this Agreement), divided
by the number of shares of the Issuer Common Stock outstanding at the time of
such sale. If the consideration to be offered, paid, or received pursuant to
either of the foregoing clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder and reasonably
acceptable to Issuer, which determination shall be conclusive for all purposes
of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any
person (other than Grantee or any Subsidiary of Grantee) shall have acquired
beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act), or the right to acquire beneficial ownership, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of 50% or
more of the then-outstanding shares of Issuer Common Stock, or (ii) any of the
transactions described in Section 7(b)(i), 7(b)(ii), or 7(b)(iii) shall be
consummated.
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9. REGISTRATION RIGHTS.
(a) Following the termination of the Merger Agreement, Issuer
shall, subject to the conditions of subparagraph (c) below, if requested by any
Holder, including Grantee and any permitted transferee ("Selling Shareholder"),
as expeditiously as possible prepare and file a registration statement under
the Securities Laws if such registration is necessary in order to permit the
sale or other disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to Holder upon exercise
of the Option in accordance with the intended method of sale or other
disposition stated by Holder in such request, including, without limitation, a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer shall use its best efforts to qualify such
shares or other securities for sale under any applicable state securities laws.
(b) If Issuer at any time after the exercise of the Option
proposes to register any shares of Issuer Common Stock under the Securities
Laws in connection with an underwritten public offering of such Issuer Common
Stock, Issuer will promptly give written notice to Holder of its intention to
do so and, upon the written request of Holder given within 30 days after
receipt of any such notice (which request shall specify the number of shares of
Issuer Common Stock intended to be included in such underwritten public
offering by Selling Shareholder), Issuer will cause all such shares for which
Holder shall have requested participation in such registration, to be so
registered and included in such underwritten public offering; provided, that
Issuer may elect to not cause any such shares to be so registered (i) if the
underwriters in good faith object for valid business reasons, or (ii) in the
case of a registration solely to implement a dividend reinvestment or similar
plan, an employee benefit plan or a registration filed on Form S-4 or any
successor form; provided, further, that such election pursuant to clause (i)
may only be made two times. If some but not all the shares of Issuer Common
Stock, with respect to which Issuer shall have received requests for
registration pursuant to this subparagraph (b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among the Selling Shareholders and any other person (other than
Issuer) who or which is permitted to register their shares of Issuer Common
Stock in connection with such registration pro rata in the proportion that the
number of shares requested to be registered by each Selling Shareholder bears
to the total number of shares requested to be registered by all Selling
Shareholders (including such other persons) then desiring to have Issuer Common
Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each
registration statement referred to in subparagraph (a) above to become
effective and to obtain all consents or waivers of other parties which are
required therefor and to keep such registration statement effective, provided,
that Issuer may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days provided Issuer shall
in good faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Laws
pursuant to subparagraph (a) above:
(i) prior to the earliest of (a) termination of the
Merger Agreement pursuant to Section 10.1 thereof, (b) failure to obtain
the requisite stockholder approval pursuant to Section 9.1(a) of the
Merger Agreement, and (c) a Purchase Event or a Preliminary Purchase
Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a
registration referred to in subparagraph (b) above pursuant to which the
Selling Shareholder or Selling Shareholders concerned were afforded the
opportunity to register such shares under the Securities Laws and such
shares were registered as requested; and
(v) unless a request therefor is made to Issuer by
Selling Shareholders holding at least 25% or more of the aggregate
number of Option Shares (including shares of Issuer Common Stock
issuable upon exercise of the Option) then outstanding.
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Issuer shall use all reasonable efforts to make any filings,
and take all steps, under all applicable state securities laws to the extent
necessary to permit the sale or other disposition of the Option Shares so
registered in accordance with the intended method of distribution for such
shares, provided, that Issuer shall not be required to consent to general
jurisdiction or qualify to do business in any state where it is not otherwise
required to so consent to such jurisdiction or to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of counsel), accounting expenses, legal expenses, printing expenses, expenses
of underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph (a) or (b) above (including the
related offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to subparagraph (a) or (b)
above. Underwriting discounts and commissions relating to Option Shares, fees
and fees and disbursements of counsel to the Selling Shareholders, and any
other expenses incurred by such Selling Shareholders in connection with any
such registration shall be borne by such Selling Shareholders.
(e) In connection with any registration under subparagraph (a)
or (b) above Issuer hereby indemnifies the Selling Shareholders, and each
underwriter thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, losses, claims, damages, and liabilities caused by any untrue
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such expenses,
losses, claims, damages, or liabilities of such indemnified party are caused by
any untrue statement or alleged untrue statement that was included by Issuer in
any such registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance upon and
in conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director, and controlling person of Issuer shall be indemnified by such Selling
Shareholder, or by such underwriter, as the case may be, for all such expenses,
losses, claims, damages, and liabilities caused by any untrue, or alleged
untrue, statement, that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such underwriter,
as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of
such action, but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any indemnified
party under this subparagraph (e). In case notice of commencement of any such
action shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the extent it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense of such action at its own expense, with counsel chosen by it
and satisfactory to such indemnified party. The indemnified party shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party
unless (i) the indemnifying party either agrees to pay the same, (ii) the
indemnifying party falls to assume the defense of such action with counsel'
satisfactory to the indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be available to the
indemnifying party that may be contrary to the interest of the indemnified
party, in which case the indemnifying party shall be entitled to assume the
defense of such action notwithstanding its obligation to bear fees and expenses
of such counsel. No indemnifying party shall be liable for any settlement
entered into without its consent, which consent may not be unreasonably
withheld.
If the indemnification provided for in this subparagraph (e)
is unavailable to a party otherwise
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entitled to be indemnified in respect of any expenses, losses, claims, damages,
or liabilities referred to herein, then the indemnifying party, in lieu of
indemnifying such party otherwise entitled to be indemnified, shall contribute
to the amount paid or payable by such party to be indemnified as a result of
such expenses, losses, claims, damages, or liabilities in such proportion as is
appropriate to reflect the relative benefits received by Issuer, the selling
shareholders, and the underwriters from the offering of the securities and also
the relative fault of Issuer, the selling shareholders, and the underwriters in
connection with the statements or omissions which resulted in such expenses,
losses, claims, damages, or liabilities, as well as any other relevant
equitable considerations. The amount paid or payable by a party as a result of
the expenses, losses, claims, damages, and liabilities referred to above shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim;
provided, that in no case shall any Selling Shareholder be responsible, in the
aggregate, for any amount in excess of the net offering proceeds attributable
to its Option Shares included in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Any obligation by any holder to indemnify shall
be several and not joint with other holders.
In connection with any registration pursuant to subparagraph
(a) or (b) above, Issuer and each Selling Shareholder (other than Grantee)
shall enter into an agreement containing the indemnification provisions of this
subparagraph (e).
(f) Issuer shall comply with all reporting requirements and will
do all such other things as may be necessary to permit the expeditious sale at
any time of any Option Shares by Holder in accordance with and to the extent
permitted by any rule or regulation promulgated by the SEC from time to time,
including, without limitation, Rules 144 and 144A. Issuer shall at its expense
provide Holder with any information necessary in connection with the completion
and filing of any reports or forms required to be filed by them under the
Securities Laws, or required pursuant to any state securities laws or the rules
of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any other
securities to be acquired upon exercise of the Option are then authorized for
quotation or trading or listing on the Nasdaq National Market or any national
securities exchange or any other automated quotations system maintained by a
self-regulatory organization, Issuer, upon the request of Holder, will promptly
file an application, if required, to authorize for quotation or trading or
listing the shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the Nasdaq National Market or any national
securities exchange or any other automated quotations system maintained by a
self-regulatory organization and will use its best efforts to obtain approval,
if required, of such quotation or listing as soon as practicable.
11. DIVISION OF OPTION. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option"
as used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Agreement, and (in the case of loss, theft,
or destruction) of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Agreement, if mutilated, Issuer will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional contractual obligation on
the part of Issuer, whether or not the Agreement so lost, stolen, destroyed, or
mutilated shall at any time be enforceable by anyone.
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12. MISCELLANEOUS.
(A) EXPENSES. Except as otherwise provided in Section 10, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants, and counsel.
(B) WAIVER AND AMENDMENT. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered, or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(C) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY.
This Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than the indemnified parties under Section 9(e)
and any transferees of the Option Shares or any permitted transferee of this
Agreement pursuant to Section 12(h)) any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or a federal or state regulatory agency to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants, and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated. If for any
reason such court or regulatory agency determines that the Option does not
permit Holder to acquire, or does not require Issuer to repurchase, the full
number of shares of Issuer Common Stock as provided in Sections 3 and 8 (as
adjusted pursuant to Section 7), it is the express intention of Issuer to allow
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(D) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Georgia without regard to
any applicable conflicts of law rules.
(E) DESCRIPTIVE HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
(F) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), or mailed by registered or certified mail
(return receipt requested) to the parties at the addresses set forth in the
Merger Agreement (or at such other address for a party as shall be specified by
like notice):
(G) COUNTERPARTS. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(H) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder or under the Option shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party, except that Grantee may assign
this Agreement to a wholly owned Subsidiary of Grantee and Grantee may assign
its rights hereunder in whole or in part after the occurrence of a Purchase
Event. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties and their
respective successors and assigns.
(I) FURTHER ASSURANCES. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
(J) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief, and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such
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equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ATTEST: BANKERS FIRST CORPORATION
/S/ J. RANDAL HALL BY: /S/ H.M. OSTEEN
- ----------------------- ------------------------------
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: SOUTHTRUST CORPORATION
/S/ ALTON E. YOTHER BY: /S/ F.W. MURRAY, JR.
- ------------------------ ------------------------------
Assistant Secretary Executive Vice President
[CORPORATE SEAL]
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EXHIBIT C
THE ROBINSON-HUMPHREY COMPANY, INC.
February 2, 1996
Board of Directors
Bankers First Corporation
One 10th Street
Augusta, Georgia 30901
Gentlemen:
In connection with the proposed acquisition of Bankers First
Corporation ("BNKF") by SouthTrust Corporation ("SOTR") (the "Merger"), you
have asked us to render an opinion as to whether the financial terms of the
Merger, as provided in the Agreement of Combination dated as of October 31,
1995 among such parties (the "merger Agreement"), are fair, from a financial
point of view, to the stockholders of BNKF. Under the terms of the merger,
holders of all outstanding shares of BNKF stock will receive consideration
equal to 1.126 shares of SOTR common stock for each BNKF share held. Based on
a closing share price for SOTR of $26.1875 the implied purchase price per share
as of February 1, 1996 was $29.4871 per BNKF share.
Our firm, as part of its investment banking business, is
frequently involved in the valuation of securities as related to public
underwritings, private placements, mergers, acquisitions, recapitalizations and
other purposes.
In connection with our study for rendering this opinion, we
have reviewed the Merger Agreement, BNKF's financial results for fiscal years
1990 through 1994 and for the quarter ended September 30, 1995 and certain
documents and information we deem relevant to our analysis. We have also held
discussions with senior management of BNKF for the purpose of reviewing the
historical and current operations of, and outlook for BNKF, industry trends,
the terms of the proposed Merger, and related matters.
We have also studied published financial data concerning
certain other publicly traded banks which we deem comparable to BNKF as well as
certain financial data relating to acquisitions of other banks that we deem
relevant or comparable. In addition, we have reviewed other published
information, performed certain financial analyses and considered other factors
and information which we deem relevant.
We have reviewed similar information and data relating to SOTR
including its historical financial statements, from fiscal 1990 up through and
including the quarter ended September 30, 1995.
In rendering this opinion, we have relied upon the accuracy of
the Merger Agreement, the financial information listed above, and other
information furnished to us by BNKF and SOTR. We have not separately verified
this information nor have we made an independent evaluation of any of the
assets or liabilities of BNKF and SOTR.
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Based upon the foregoing and upon current market and economic
conditions, we are of the opinion that, from a financial point of view, the
terms of the Merger as provided in the Merger Agreement are fair to the
stockholders of BNKF.
Very truly yours,
/s/ THE ROBINSON-HUMPHREY COMPANY, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
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BANKERS FIRST CORPORATION
ONE 10TH STREET
AUGUSTA, GEORGIA 30901
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS -- MARCH 12, 1996
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF BANKERS FIRST
CORPORATION)
The undersigned shareholder of Bankers First Corporation ("BFC") hereby
appoints H.M. Osteen, Jr. and Glenn W. Peters and each of them, with full power
of substitution, proxies to vote the shares of stock which the undersigned
could vote if personally present at the Special Meeting of the Shareholders of
BFC to be held at the principal executive offices of BFC at One 10th Street,
Augusta, Georgia on March 12, 1996 at 9:00 a.m., local time, or at any
adjournment thereof:
(1) PROPOSAL TO MERGE BFC INTO SOUTHTRUST OF GEORGIA, INC.
FOR [ ] AGAINST [ ] ABSTAIN [ ] with
respect to the approval of that certain Agreement and Plan of Merger, dated as
of October 31, 1995 (the "Merger Agreement"), between BFC, SouthTrust
Corporation ("SouthTrust") and SouthTrust of Georgia, Inc. ("ST-Sub"), pursuant
to which BFC will be merged into ST-Sub and each share of common stock of BFC
outstanding immediately prior to the Effective Time of the Merger shall be
converted into the right to receive 1.126 shares of common stock of SouthTrust,
as described in more detail in the Proxy Statement/Prospectus dated February 2,
1996; and
(2) IN THEIR DISCRETION, 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 OF
SHAREHOLDERS OR ANY ADJOURNMENT OR ADJOURNMENTS THEREOF.
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED FOR PROPOSAL (1).
Date: , 1996
----------------- ---------------------------------
(Signature(s) of Shareholder)
Please date and sign exactly as name appears hereon. If shares are held
jointly, each shareholder should sign. Agents, executors, administrators,
guardians, trustees, etc., should use full title, and, if more than one, all
should sign. If the shareholder is a corporation, please sign full corporate
name by an authorized officer.
