<PAGE> 1
As filed with the Securities and Exchange Commission on June 30, 1998
Registration No. 333-__________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------------
SOUTHTRUST CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 6711 63-0574085
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
420 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 254-5000
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive
offices)
----------------------------
AUBREY D. BARNARD
SOUTHTRUST CORPORATION
420 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 254-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With copies to:
C. LARIMORE WHITAKER MICHAEL T. CRONIN
BRADLEY ARANT ROSE & WHITE LLP JOHNSON, BLAKELY, POPE,
2001 PARK PLACE BOKOR, RUPPEL & BURNS, P.A.
SUITE 1400 911 CHESTNUT STREET
BIRMINGHAM, ALABAMA 35203 CLEARWATER, FLORIDA 33742
(205) 521-8000 (813) 461-1818
---------------------------------------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
----------------------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
---------------------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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===================================================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate offering Amount of
securities to be registered registered per unit price registration fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$2.50 per share.............................. 477,200 Shares(1)
Rights to Purchase Series A Junior * 7,756,184.02 2,288.07
Participating Preferred Stock................ 141,393 Rights(2)
===================================================================================================================================
</TABLE>
* Not Applicable
(1) This Registration Statement covers the maximum number of shares of the
common stock of the Registrant which is expected to be issued in
connection with the merger of Marine Bank with and into a subsidiary of
SouthTrust Corporation.
(2) Represents 8/27th of a Right issued in respect of each share of Common
Stock issued.
(3) Calculated in accordance with Rule 457(f)(2) based on the book value of
June 24, 1998 of the Shares of Common Stock of Marine Bank to be
cancelled in the merger described herein; estimated solely for purposes
of determining the amount of the registration fee.
----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
<PAGE> 2
[LETTERHEAD OF MARINE BANK]
July___, 1998
TO THE SHAREHOLDERS OF
MARINE BANK:
You are cordially invited to attend a Special Meeting of the
Shareholders (the "Special Meeting") of Marine Bank ("Marine") to be held on
August 3, 1998, at 4:00 p.m., local time, at 9400-9th Street North, St.
Petersburg, Florida, 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 Marine with and into a
subsidiary of SouthTrust Corporation ("SouthTrust"). Upon consummation of the
Merger, each share of Marine common stock issued and outstanding (except for
certain shares held by Marine 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 0.355 shares of SouthTrust
common stock, 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 Marine 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.
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 Marine common stock, each share of
Marine common stock being entitled to one vote. 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 Marine 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/ NORRIS E. COUNTS
--------------------
NORRIS E. COUNTS
President
/s/ DENNIS G. RUPPEL
--------------------
DENNIS G. RUPPEL
Chairman
<PAGE> 3
---------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
----------------------------------------
Notice is hereby given that a Special Meeting of Shareholders of Marine
Bank, a Florida banking corporation ("Marine"), will be held on August 3, 1998,
at 4:00 p.m., local time, at 9400-9th Street North, St. Petersburg, Florida, for
the following purposes (the "Special Meeting"):
1. To consider and vote upon the Agreement and Plan of
Merger, dated as of March 24, 1998 (the "Merger Agreement"), a copy of
which is annexed as Exhibit A to the accompanying Proxy
Statement/Prospectus, by and among Marine and SouthTrust Bank, National
Association, a national banking association ("ST-Bank"), and joined in
by SouthTrust Corporation, a Delaware corporation ("SouthTrust"), and
SouthTrust of Alabama, Inc., an Alabama corporation and wholly owned
subsidiary of SouthTrust ("ST-Sub"), whereby Marine will be merged with
and into ST-Bank and holders of Marine common stock will receive 0.355
shares of SouthTrust common stock, with cash being paid in lieu of
issuing fractional shares, for each share of Marine common stock, all
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 shares of common stock
of Marine at the close of business on July 1, 1998 are entitled to notice of and
to vote at the Special Meeting and any adjournment thereof. If the transactions
contemplated by the Merger Agreement are consummated, the shareholders of Marine
dissenting from approval of the Merger Agreement may be entitled, if they comply
with the provisions of the National Bank Act regarding the rights of dissenting
shareholders, to be paid the fair value of their shares. See "THE MERGER --
Rights of Dissent and Appraisal" in the accompanying, Proxy Statement/Prospectus
for a description of the procedures required to be followed to perfect appraisal
rights.
The meeting may be adjourned or postponed from time to time without
notice other than announcement at the meeting, or at any adjournment or
postponement thereof, and any business for which notice is hereby given may be
transacted at any such adjournment or postponement.
A Proxy Card and a Proxy Statement/Prospectus for the Special Meeting
are enclosed.
By Order of the Board of Directors
/s/ NORRIS E. COUNTS
--------------------
NORRIS E. COUNTS
Secretary
St. Petersburg, Florida
July { }, 1998
WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING OR NOT, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY SO THAT MARINE MAY BE ASSURED OF THE PRESENCE OF A
QUORUM AT THE SPECIAL MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE> 4
PROXY STATEMENT/PROSPECTUS
PROXY STATEMENT OF
MARINE BANK
FOR A SPECIAL MEETING OF ITS SHAREHOLDERS
TO BE HELD AUGUST 3, 1998
---------------------------------------------------------------
THIS PROXY STATEMENT INCLUDES THE PROSPECTUS OF
SOUTHTRUST CORPORATION
RELATING TO UP TO 477,200 SHARES OF COMMON STOCK
(PAR VALUE $2.50 PER SHARE)
TO BE ISSUED IN CONNECTION WITH A PROPOSED MERGER OF
MARINE BANK INTO SOUTHTRUST BANK, NATIONAL ASSOCIATION,
A 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 MARINE BANK ("MARINE").
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 HEREIN WITH RESPECT TO MARINE HAS BEEN
PROVIDED BY MARINE, AND SOUTHTRUST AND ITS SUBSIDIARIES ARE RELYING ON THE
ACCURACY OF THAT INFORMATION. ALL INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN WITH RESPECT TO SOUTHTRUST HAS BEEN PROVIDED BY SOUTHTRUST AND
ITS SUBSIDIARIES, AND MARINE IS RELYING ON THE ACCURACY OF THAT INFORMATION.
THIS PROXY STATEMENT/PROSPECTUS AND THE ACCOMPANYING FORM OF PROXY
ARE FIRST BEING MAILED TO SHAREHOLDERS OF MARINE ON OR ABOUT JULY {___}, 1998.
------------------------
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 July___, 1998.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
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<S> <C>
AVAILABLE INFORMATION............................................................................................................4
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION......................................................................4
INTRODUCTION.....................................................................................................................5
General...............................................................................................................5
Voting at the Special Meeting.........................................................................................5
SUMMARY..........................................................................................................................7
Parties to the Merger.................................................................................................7
Special Meeting.......................................................................................................8
The Merger............................................................................................................8
Certain Federal Income Tax Consequences..............................................................................11
Rights of Dissent and Appraisal......................................................................................11
Comparative Stock Prices.............................................................................................12
Resale of SouthTrust Common Stock Received in the Merger.............................................................12
Differences in Rights of Marine Shareholders.........................................................................13
Accounting Treatment.................................................................................................13
Equivalent Share Data................................................................................................14
Selected Financial Data..............................................................................................15
Selected Pro Forma Information.......................................................................................16
THE MERGER .....................................................................................................................17
General ...........................................................................................................17
Background of and Reasons for the Merger.............................................................................17
Interests of Certain Named Persons in the Merger.....................................................................18
Effect of the Merger on Marine Common Stock..........................................................................19
Possible Conversion Ratio Adjustment.................................................................................20
Effective Time of the Merger.........................................................................................20
Exchange of Stock Certificates.......................................................................................21
Resale of SouthTrust Common Stock Received in the Merger.............................................................21
Accounting Treatment.................................................................................................22
Regulatory Approvals and Certain Other Conditions to the Merger; Waiver and Amendment................................22
Termination..........................................................................................................23
Certain Expenses.....................................................................................................24
Rights of Dissent and Appraisal......................................................................................24
Conduct of Business by Marine Pending the Merger.....................................................................25
Business and Management of Marine Following the Merger; Plans for Business of Marine.................................27
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.........................................................................................27
General..............................................................................................................27
DESCRIPTION OF SOUTHTRUST CAPITAL STOCK.........................................................................................28
General..............................................................................................................28
SouthTrust Common Stock..............................................................................................29
SouthTrust Preferred Stock...........................................................................................31
MARKET PRICE AND DIVIDEND INFORMATION RESPECTING THE
SOUTHTRUST COMMON STOCK AND THE MARINE COMMON STOCK..................................................................33
COMPARISON OF THE SOUTHTRUST COMMON STOCK
AND THE MARINE COMMON STOCK..........................................................................................35
Dividends ...........................................................................................................35
Voting Rights and Other Matters......................................................................................35
Dissent and Appraisal Rights.........................................................................................38
Rights on Liquidation................................................................................................38
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
Preemptive Rights....................................................................................................38
Reports to Stockholders and Shareholders.............................................................................38
Stockholders' Rights Plan............................................................................................38
SUPERVISION AND REGULATION......................................................................................................39
SouthTrust...........................................................................................................39
Marine...............................................................................................................41
CERTAIN INFORMATION CONCERNING THE BUSINESS OF MARINE...........................................................................41
MARINE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS............................................................................................44
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.................................................................................61
LEGAL MATTERS...................................................................................................................62
EXPERTS.........................................................................................................................62
ADDITIONAL INFORMATION..........................................................................................................62
Other Business.......................................................................................................62
FINANCIAL STATEMENTS OF MARINE.................................................................................................F-1
EXHIBIT A - AGREEMENT AND PLAN OF MERGER.......................................................................................A-1
EXHIBIT B - NATIONAL BANK ACT DISSENT PROVISIONS...............................................................................B-1
</TABLE>
3
<PAGE> 7
AVAILABLE INFORMATION
SouthTrust is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files 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. The Commission also maintains a
site on the worldwide web (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding reporting companies,
including SouthTrust. In addition, reports, proxy and information statements and
other information concerning SouthTrust may be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20096.
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, as amended (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 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. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY JULY ___, 1998.
SEE "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This Proxy Statement/Prospectus (including information included or
incorporated by reference herein) contains certain forward-looking statements
with respect to the financial condition, results of operations, plans,
objectives, future performance and business of each of SouthTrust and Marine,
including statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "estimates," or similar expressions (see
"SUMMARY -- The Merger," "SUMMARY -- Stock Prices of SouthTrust," "THE MERGER --
Background of and Reasons for the Merger," "THE MERGER -- Effective Time of the
Merger," "THE MERGER -- Business and Management of Marine Following the Merger;
Plans for Business of Marine," "MARKET PRICE AND DIVIDEND INFORMATION RESPECTING
THE SOUTHTRUST COMMON STOCK AND THE MARINE COMMON STOCK" and "MARINE
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS"). These forward-looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ materially from
those contemplated by such forward-looking statements include, among others, the
following possibilities: (a) expected cost savings from the Merger may not be
fully realized or realized within the expected time frame; (b) revenues
following the Merger may be lower than expected, or deposit attrition, operating
costs or customer loss and business disruption following the Merger may be
greater than expected; (c) competitive pressures among depository and other
financial institutions may increase significantly; (d) costs or difficulties
related to the integration of the business of SouthTrust and Marine may be
greater than expected; (e) changes in the interest rate environment may reduce
margins; (f) general economic or business conditions, either nationally or in
the states in which SouthTrust is doing business, may be less favorable than
expected, resulting in, among other things, a deterioration in credit quality or
a reduced demand for credit; (g) legislative or regulatory changes may adversely
affect the business in which SouthTrust is engaged; and (h) changes may occur in
the securities markets.
4
<PAGE> 8
INTRODUCTION
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of
common stock, par value $1.00 per share ("Marine Common Stock") of Marine Bank,
a Florida corporation ("Marine"), in connection with the solicitation of proxies
by the Board of Directors of Marine for use in a special meeting of shareholders
of Marine to be held on August 3, 1998, at 4:00 p.m., local time, at 9400-9th
Street North, St. Petersburg, Florida, and at any adjournment or postponement
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 March 24, 1998 (the "Merger
Agreement") of Marine and SouthTrust Bank, National Association ("ST-Bank"),
joined in by SouthTrust Corporation, a Delaware corporation ("SouthTrust"), and
SouthTrust of Alabama, Inc., an Alabama corporation and a wholly-owned
subsidiary of SouthTrust ("ST-Sub"), providing for the merger of Marine into
ST-Bank (the "Merger") and the exchange in the Merger of each outstanding share
of Marine Common Stock for 0.355 (the "Conversion Ratio") shares of common
stock, par value $2.50 per share, of SouthTrust ("SouthTrust Common Stock"). The
Conversion Ratio gives effect to the three-for-two split of the SouthTrust
Common Stock on February 26, 1998 (the "SouthTrust Stock Split"). See "THE
MERGER - Effect of the Merger on Marine Common Stock."
The 0.355 shares of SouthTrust Common Stock for which each share of
Marine Common Stock may be exchanged in the Merger had an aggregate market
value, based upon the last sales price of SouthTrust Common Stock on July __,
1998, of $_____. See "DESCRIPTION OF SOUTHTRUST CAPITAL STOCK - SouthTrust
Common Stock" and "MARKET AND DIVIDEND INFORMATION RESPECTING THE COMMON STOCK
OF SOUTHTRUST." Because the number of shares of SouthTrust Common Stock to be
received for each share of Marine 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 Marine Common Stock. The Merger Agreement, however,
provides that, at any time during the five-business-day period commencing on the
first day following the end of the ten-trading-day period beginning 30 days
prior to the Closing Date (the "Determination Period"), if the average of the
daily last sales price of SouthTrust Common Stock as reported on NASDAQ for the
Determination Period (the "Average Closing Price") multiplied by the Conversion
Ratio is less than $13.75, then Marine will have the right to terminate the
Merger Agreement unless SouthTrust elects to adjust the Conversion Ratio in the
manner described under "THE MERGER -- Possible Conversion Ratio Adjustment." No
fractional shares of SouthTrust Common Stock will be issued in the Merger, and,
in lieu thereof, each holder of shares of Marine 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 as reported by the Nasdaq National
Market ("NASDAQ") on the last trading day preceding the Effective Time of the
Merger (as defined below).
Subject to the approval of the Merger Agreement by the shareholders of
Marine and the satisfaction or waiver of all conditions contained in the Merger
Agreement, the Merger will become effective on the date and at the time on which
the Merger is deemed effective (the "Effective Time of the Merger") by the
Office of the Comptroller of the Currency (the "Comptroller").
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 Marine has fixed the close of business on
July 1, 1998 as the record date (the "Record Date") for the determination of
holders of shares of Marine Common Stock entitled to notice of and to vote at
the Special Meeting. On the Record Date, Marine had outstanding 1,344,226 shares
of Marine Common Stock which constitutes the only outstanding class of capital
stock of Marine 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 Marine 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 Marine Common Stock entitled to vote
thereon (each share of Marine Common Stock being entitled to one vote) are
required to approve the Merger Agreement. Each holder of record of shares of
Marine Common Stock on the Record Date is entitled to one vote for each share of
such Marine Common Stock held of record.
As of the Record Date, Marine directors and executive officers, and
their affiliates (a total of 10 persons) beneficially owned a total of 635,751
shares of Marine Common Stock, representing approximately 47.31% of the
5
<PAGE> 9
shares of Marine Common Stock entitled to vote at the Special Meeting. All such
directors and officers, and their affiliates, have informed Marine that, as of
the date of the Proxy Statement/Prospectus, they intend to vote for approval of
the Merger Agreement. All of the Marine directors have entered into affiliate
agreements with SouthTrust pursuant to which each agreed to vote for approval of
the Merger at the Special Meeting.
THE BOARD OF DIRECTORS OF MARINE 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 Marine 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 by 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
Marine, who will receive no extra compensation for their services. Marine will
reimburse banks, brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy soliciting materials
to the beneficial owners of shares of Marine Stock.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
6
<PAGE> 10
SUMMARY
The following is a brief summary of certain information contained in or
incorporated by reference into this Proxy Statement/Prospectus with
respect to Marine, 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 State ment/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 600 banking locations in Alabama, Florida, Georgia, Mississippi, North
Carolina, South Carolina and Tennessee. SouthTrust also offers a range of other
services, including mortgage banking services, fiduciary and trust services and
securities brokerage services. As of March 31, 1998, SouthTrust had consolidated
total assets of approximately $32.7 billion, which ranked it as the largest bank
holding company headquartered in Alabama.
Effective June 2, 1997, SouthTrust, pursuant to the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking
Act"), consolidated all of its banking subsidiaries, located in the states of
Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina and
Tennessee, into its largest banking subsidiary, SouthTrust Bank of Alabama,
National Association and changed its name to SouthTrust Bank, National
Association. The bank consolidation was undertaken by SouthTrust in order to
obtain the benefits of the Interstate Banking Act, which, subject to certain
limitations, after June 1, 1997, permits qualifying bank holding companies to
engage in interstate mergers and allows banks to maintain and operate branches
in states other than the states where they maintain their principal place of
business.
SouthTrust has pursued a strategy of acquiring banks and financial
institutions in or near major metropolitan or growth markets in Alabama,
Florida, Georgia, Mississippi, North Carolina, 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.
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 Marine Common Stock in the
Merger.
The principal executive offices of SouthTrust are located at 420 North
20th Street, Birmingham, Alabama 35203, and their telephone number is (205)
254-5000.
Marine
Marine was organized in 1986 as a banking corporation under the laws of
the State of Florida and began operation on November 10, 1986 with the primary
purpose of serving the banking needs of the residents of Pinellas County,
Florida and surrounding areas. Since its organization, Marine has provided most
traditional commercial banking services including, but not limited to, interest
and non-interest bearing checking and savings accounts, commercial, real estate
mortgage, and installment consumer loans, certificates of deposit and individual
retirement accounts. Marine provides commercial banking services primarily to
residents of Pinellas County, Florida, through its singular banking office
located at 9400-9th Street North, St. Petersburg, Florida 33702, and its
telephone number is (813) 577-2627.
SouthTrust of Alabama, Inc.
ST-Sub, an Alabama corporation, is a wholly owned subsidiary of
SouthTrust. It owns ST-Bank. The main office of ST-Sub is located in Birmingham,
Alabama.
SouthTrust Bank, National Association
ST-Bank, a national banking association, is a wholly owned subsidiary
of ST-Sub. The main office of ST-Bank is located in Birmingham, Alabama.
7
<PAGE> 11
SPECIAL MEETING
The Special Meeting will be held at 4:00 p.m., local time, on Friday,
August 3, 1998, at 9400-9th Street North, St. Petersburg, Florida, to consider
and vote upon the approval of the Merger Agreement. Only holders of record of
shares of Marine Common Stock as of the close of business on July 1, 1998 will
be entitled to notice of and to vote at the Special Meeting, including any
adjournment thereof.
THE MERGER
Terms of the Merger
Subject to approval of the Merger Agreement by the shareholders of
Marine at the Special Meeting, the receipt of required regulatory approvals, and
satisfaction of other conditions, Marine will be merged into ST-Bank pursuant to
the Merger Agreement, and ST-Bank will be the surviving corporation (the
"Surviving Corporation"). At the Effective Time of the Merger, pursuant to the
Merger Agreement, SouthTrust is to issue a total of 477,200 shares of SouthTrust
Common Stock for all of the issued and outstanding Marine Common Stock.
At the Effective Time of the Merger, each share (excluding (i) shares
held by Marine or by SouthTrust or any of its subsidiaries, in each case other
than in a fiduciary capacity or as a result of debts previously contracted, and
(ii) shares dissenting from approval of the Merger Agreement) of Marine Common
Stock will be converted into the right to receive 0.355 shares of SouthTrust
Common Stock as the same may be adjusted pursuant to the Merger Agreement. See
"THE MERGER - Effect of the Merger on Marine Common Stock." If the Average
Closing Price of the SouthTrust Common Stock during the Determination Period,
when multiplied by the Conversion Ratio, is less than $13.75, then Marine will
have the right to terminate the Merger Agreement unless SouthTrust elects to
adjust the Conversion Ratio in the manner described under "THE MERGER --
Possible Conversion Ratio Adjustment."
As the Conversion Ratio may be increased at the option of SouthTrust,
the Conversion Ratio may not be definitively determined until just prior to the
Effective Time of the Merger. Based on the Average Closing Price of SouthTrust
Common Stock as of July ___, 1998 (the last trading day immediately prior to the
date of this Proxy Statement/Prospectus), which Average Closing Price is $____,
the Conversion Ratio would remain 0.355. In the event SouthTrust has the right
to adjust the Conversion Ratio but chooses not to exercise such right, then
Marine is entitled, at its option upon approval by a majority vote of its entire
Board of Directors, to terminate the Merger Agreement.
The Conversion 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 Marine 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 as reported by NASDAQ on the last trading day
preceding the Effective Time of the Merger.
As promptly as practicable after the Effective Time of the Merger,
SouthTrust or its agents will send or cause to be sent to each former holder of
record of Marine Common Stock a letter of transmittal for use in exchanging
their stock certificates formerly representing such Marine 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. MARINE
SHAREHOLDERS SHOULD NOT SURRENDER THEIR CERTIFICATES FOR EXCHANGE UNTIL THEY
RECEIVE SUCH LETTER OF TRANSMITTAL AND INSTRUCTIONS. See "THE MERGER - Exchange
of Stock Certificates."
Vote Required
The affirmative vote of the holders of a majority of the outstanding
shares of Marine Common Stock (each share of Marine Common Stock being entitled
to one vote) is required to approve the Merger Agreement. Directors and
executive officers of Marine, and their affiliates, beneficially owned, as of
the Record Date, directly or indirectly, 635,751 shares of Marine Common Stock,
constituting approximately 47.31% of the shares of Marine 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. All of
the Marine directors have entered into affiliate agreements with SouthTrust
pursuant to which each agreed to vote for approval of the Merger at the Special
Meeting.
Background of and Reasons for the Merger; Recommendations of the Board
of Directors of Marine
In November 1997, the Board of Directors of Marine formed a Long Range
Planning Committee to determine the best strategy to maximize shareholder value.
The Long Range Planning Committee recommended that Marine solicit
8
<PAGE> 12
indications of interest for the sale of Marine, and it was determined that a
merger with an affiliate of SouthTrust was preferable.
The Board of Directors of Marine believes that the Merger Agreement and
the Merger are in the best interests of Marine and its shareholders. The Marine
directors unanimously RECOMMEND THAT MARINE SHAREHOLDERS VOTE FOR APPROVAL OF
THE MERGER AGREEMENT. In unanimously approving the Merger Agreement, Marine's
directors considered, among other things, Marine'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 and legal advice concerning the proposed Merger.
SouthTrust is engaging in the transactions pursuant to the Merger
Agreement because the Merger Agreement is consistent with its expansion strategy
within the southeastern United States and because the acquisition of Marine will
augment SouthTrust's existing market share in West Florida and enhance its
competitive position in such market.
See "THE MERGER - Background of and Reasons for the Merger."
Interests of Certain Named Persons in the Merger
Certain members of Marine'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 Marine generally. Among those interests are certain
agreements by SouthTrust to indemnify directors, officers, employees and agents
of Marine from certain liabilities arising prior to and after the Merger, to the
full extent permitted under Florida law and certain indemnification agreements
entered into between Marine and the directors, and Marine's Articles of
Incorporation and Bylaws. In connection with the Merger Agreement, all of the
Marine directors have entered into affiliate agreements with SouthTrust
restricting them from selling the Marine Common Stock they own for the period 30
days prior to the Effective Time of the Merger and restricting them from
selling, transferring or otherwise disposing of the SouthTrust Common Stock
received in the Merger until such time as financial results covering at least 30
days of combined operations of Marine and SouthTrust have been published within
the meaning of Section 201.01 of the Commission's Codification of Financial
Reporting Policies. Such affiliate agreements also require each director to vote
for the Merger and not exercise any rights of appraisal or rights to dissent
from the Merger. See "THE MERGER -- Interests of Certain Named Persons in the
Merger."
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 on which the Merger is deemed effective by the Comptroller. Unless
otherwise agreed upon by Marine and SouthTrust, and subject to the conditions to
the 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
on the third business day 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 Marine approve the matters relating to the Merger Agreement
required to be approved by such shareholders by applicable law, or at such other
time as the parties may agree. 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 WILL BE OBTAINED OR THAT THE OTHER CONDITIONS PRECEDENT TO
THE MERGER CAN OR WILL BE SATISFIED. MARINE AND SOUTHTRUST ANTICIPATE THAT ALL
CONDITIONS TO THE CONSUMMATION OF THE MERGER WILL BE SATISFIED SO THAT THE
MERGER CAN BE CONSUMMATED ON OR BEFORE AUGUST 7, 1998. 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 Marine 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
Marine shareholders, and (iii) certain other conditions customary in
transactions of this kind.
Because ST-Bank, the surviving bank in the Merger, is a national bank,
the Merger will be subject to the approval of the Comptroller 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 federal supervisory regulatory agency. On or about
May 26, 1998, ST-Bank submitted to the Comptroller an application seeking
approval of the Merger.
The Comptroller will deny approval to 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
9
<PAGE> 13
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 Merger
Act, the Comptroller 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
Comptroller 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 30th day following the date of the approval, during which period the United
States Department of Justice may comment adversely on the transaction or
challenge the Merger on antitrust grounds. However, the Merger may be
consummated on or after the 15th day following the date of the Comptroller
approval if the Comptroller does not receive any adverse comments from the
United States Attorney General and the United States Attorney General consents
to the shorter period. The commencement of an antitrust action would stay the
effectiveness of such an approval unless a court specifically orders otherwise.
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
MARINE 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 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 of the Merger in any of the following ways:
(i) by the mutual consent in writing of SouthTrust,
ST-Sub, ST-Bank and Marine;
(ii) by SouthTrust, ST-Sub, ST-Bank or Marine if the
Merger shall not have occurred on or prior to the record date, as
announced by SouthTrust, for the SouthTrust third quarter dividend for
1998, provided that the failure to consummate the Merger on or before
such date is not accompanied by any breach of the Merger Agreement;
(iii) by SouthTrust or Marine (provided that the
terminating party is not then in breach of any representation,
warranty, covenant or other agreement contained herein) in the event
that any of the conditions precedent to the obligations of the
nonterminating party to consummate the Merger cannot be satisfied or
fulfilled;
(iv) by SouthTrust if (1) SouthTrust shall have
determined that any fact, event or condition exists that, in the
judgment of SouthTrust, (A) is materially at variance with any warranty
or representation of Marine set forth in the Merger Agreement or is a
material breach of any covenant or agreement of Marine contained in the
Merger Agreement, (B) has a Material Adverse Effect (as defined in the
Merger Agreement) or can be reasonably foreseen to have a Material
Adverse Effect upon the Condition (as defined in the Merger Agreement)
of Marine on a consolidated basis or upon the consummation of the
transactions contemplated by the Merger Agreement, (C) would be
materially adverse to the interests of SouthTrust and ST-Sub on a
consolidated basis, (D) would be of such significance with respect to
the business or economic benefits expected to be obtained by SouthTrust
under the Merger Agreement so as to render inadvisable consummation of
the transactions contemplated by the Merger Agreement, or (E) renders
the Merger or the other transactions contemplated by this Agreement
impractical because of any state of war, national emergency, banking
moratorium or general suspension of trading on NASDAQ, the New York
Stock Exchange, Inc. or any other national securities exchange; or (2)
there shall be any litigation or threat of litigation (A) challenging
the validity or legality of the Merger Agreement or the consummation of
the transactions contemplated by the Merger Agreement, (B) seeking
material damages in connection with the consummation of the
transactions contemplated by the Merger Agreement or (C) seeking to
restrain or invalidate the consummation of the transactions
contemplated by the Merger Agreement;
10
<PAGE> 14
(v) by Marine if (1) Marine shall have determined that
any fact, event or condition exists that, in the judgment of Marine,
(A) is materially at variance with any warranty or representation of
SouthTrust, ST-Sub or ST-Bank contained in the Merger Agreement or is a
material breach of any covenant or agreement of SouthTrust, ST-Sub or
ST-Bank contained in the Merger Agreement, (B) has a Material Adverse
Effect or can be reasonably seen to have a Material Adverse Effect upon
the consummation of the transactions contemplated by the Agreement; or
(2) Marine shall have determined that any fact, event or condition
exists that, in the judgment of Marine, would render the Merger and the
other transactions contemplated by the Merger Agreement impractical
because of any state of war, national emergency, banking moratorium or
general suspension of trading on NASDAQ, the New York Stock Exchange,
Inc. or other national securities exchange; or
(vi) by majority vote of the members of the entire Board
of Directors of Marine if certain circumstances with respect to the
average daily last sales prices of SouthTrust Common Stock are not met
and SouthTrust does not elect to increase the Conversion Ratio. See
"THE MERGER Possible Conversion Ratio Adjustment."
In the event of the termination and abandonment of the Merger Agreement
pursuant to the above, no party to the Merger Agreement will have any liability
or further obligations to any other party under the Merger Agreement, except
that if SouthTrust or Marine elects to terminate the Merger Agreement, and the
other party is not in breach of any of its representations, warranties,
covenants or other agreements contained in the Merger Agreement, the terminating
party shall pay to the non-terminating party a termination fee in an amount
equal to $250,000. See "THE MERGER - Termination."
No Solicitation
Marine has agreed that it will not, through any director or officer or
other agent, directly or indirectly solicit or encourage any acquisition
proposal by any person. Marine may not furnish any non-public information to, or
have discussions with, any person, other than SouthTrust, relating to any
takeover proposal. Marine must promptly notify SouthTrust in the event that it
receives any inquiry or proposal relating to any such transaction.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The consummation of the merger is conditioned upon the receipt by
Marine and SouthTrust of an opinion of Bradley Arant Rose & White LLP to the
effect that, for federal income tax purposes, (i) the Merger will constitute a
tax-free 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 Marine 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 MARINE STOCK. ALL
HOLDERS OF SHARES OF MARINE 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.
RIGHTS OF DISSENT AND APPRAISAL
Holders of Marine Common Stock are entitled to dissent from the Merger
and demand the fair value of the shares of Marine Common Stock held by such
holder in cash, if such dissenting shareholder follows the procedures provided
by applicable law which are described elsewhere in this Proxy
Statement/Prospectus and the text of which is set forth in its entirety in
Exhibit B hereto. A person having a beneficial interest in shares of Marine
Common Stock that is held of record in the name of another person, such as a
broker or nominee, must act promptly to cause the record holder to follow the
steps summarized below properly and in a timely manner to perfect whatever
dissenters' rights the beneficial owner may have. See "THE MERGER - Rights of
Dissent and Appraisal."
COMPARATIVE STOCK PRICES
The SouthTrust Common Stock is quoted on NASDAQ under the symbol SOTR.
As of _______, 1998, SouthTrust had approximately _____ holders of record of
SouthTrust Common Stock. As of July 1, 1998, Marine had approximately _____
holders of record of Marine Common Stock. Marine Common Stock is not traded on
any exchange, and there is no established public trading market for such stock.
There are no bid or asked prices available for Marine Common Stock. Management
of Marine is aware of certain transactions in Marine Common Stock that occurred
in 1997 and 1996. Although the prices of all transactions are not known,
management of Marine believes that such prices ranged from $7.85 to $8.50 per
share of Marine Common Stock. No assurance can be given that these trades
11
<PAGE> 15
were effected on an arm's-length basis. Transactions in Marine Common Stock are
infrequent and are negotiated privately between persons involved in those
transactions.
The following table sets forth applicable last sales prices, and pro
forma equivalents based upon such last sales prices, for SouthTrust Common Stock
as of selected dates.
<TABLE>
<CAPTION>
SouthTrust Marine
Common Stock Common Stock
Last Sales Price Equivalent(1)
---------------- -------------
<S> <C> <C>
March 23, 1998(2) $42.19375 $15.2428
July____, 1998(3) _________ ________
</TABLE>
- ---------
(1) Proforma equivalents calculated using the last sales price for
SouthTrust Common Stock as of the selected date multiplied by the
Conversion Ratio of 0.355.
(2) Last trading day preceding public announcement of the proposed
transaction.
(3) Most recent date practicable preceding the date of this Proxy
Statement/Prospectus.
See "MARKET PRICE AND DIVIDEND INFORMATION RESPECTING THE SOUTHTRUST
COMMON STOCK AND THE MARINE COMMON STOCK."
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 Marine who are not
deemed to be "affiliates" (as that term is defined under the Securities Act) of
Marine and who do not become affiliates of SouthTrust. The shares of SouthTrust
Common Stock to be issued to affiliates of Marine 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 March 31, 1998 (exclusive of shares of SouthTrust
Common Stock to be issued in the Merger), an affiliate of Marine 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 1,604,375
shares of SouthTrust Common Stock.
Marine has caused each person identified by Marine as an affiliate to
execute and deliver to SouthTrust a written agreement in the form provided for
in the Merger Agreement providing that such affiliate will not sell, 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 Marine 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 MARINE SHAREHOLDERS
Upon consummation of the Merger, Marine shareholders will become
SouthTrust stockholders. As a result, their rights as shareholders, which now
are governed by Florida corporate law and Marine's Articles of Incorporation and
Bylaws, will be governed by Delaware corporate law and SouthTrust's Restated
Certificate of Incorporation and Bylaws. Because of certain differences between
the provisions of Florida corporate law and Delaware corporate law and of
Marine's Articles of Incorporation and Bylaws and SouthTrust's Restated
Certificate of Incorporation and Bylaws, the current rights of Marine
shareholders will change after the Merger. Some of these differences include
anti-takeover provisions. See "COMPARISON OF THE SOUTHTRUST COMMON STOCK AND THE
MARINE COMMON STOCK."
ACCOUNTING TREATMENT
The Merger will be accounted for by SouthTrust as a pooling of
interests. See "THE MERGER - Accounting Treatment."
12
<PAGE> 16
EQUIVALENT SHARE DATA
The following summary presents comparative historical and pro forma
unaudited per share data for both SouthTrust and Marine. The pro forma amounts
assume the Merger had been effective during the periods presented and had been
accounted for as a pooling of interests. SouthTrust's pro forma amounts
represent the combined pro forma results, and Marine pro forma equivalent
amounts are computed by multiplying the combined pro forma amounts by a factor
of 0.355, to reflect the Conversion Ratio in the Merger. The data presented
should be read in conjunction with the historical financial statements and the
related notes thereto included elsewhere herein or incorporated by reference
herein.
<TABLE>
<CAPTION>
Years Ended Three Months Ended
December 31, March 31,
------------------------------------ -----------------------
1997 1996 1995 1998 1997
--------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net income per diluted common share:
SouthTrust................................. $ 2.03 $ 1.79 $ 1.57 $ 0.54 $ 0.48
Marine..................................... 0.73 0.69 0.61 0.19 0.17
SouthTrust pro forma combined.............. 2.03 1.79 1.57 0.54 0.48
Marine pro forma equivalent................ 0.72 0.64 0.56 0.19 0.17
Cash dividends per common share:
SouthTrust................................. 0.67 0.59 0.53 0.19 0.1667
Marine..................................... 0.10 0.10 0.10 0.00 0.0000
SouthTrust pro forma combined(1)........... 0.67 0.59 0.53 0.19 0.1662
Marine pro forma equivalent................ 0.24 0.21 0.19 0.07 0.0590
Book value per common share (period end):
SouthTrust................................. 14.28 12.03 10.85 15.49 12.52
Marine..................................... 5.46 4.83 4.26 5.65 4.96
SouthTrust pro forma combined.............. 14.29 12.04 10.86 15.50 12.52
Marine pro forma equivalent................ 5.07 4.27 3.85 5.50 4.45
</TABLE>
- ----------------
(1) SouthTrust pro forma combined dividends represent historical cash
dividends of SouthTrust.
13
<PAGE> 17
SELECTED FINANCIAL DATA
The following tables set forth certain selected historical consolidated
financial information for Marine 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 Marine and
SouthTrust. The financial data for the interim periods ended March 31, 1998 and
March 31, 1997 are derived from the unaudited historical financial statements of
SouthTrust and Marine, respectively, and reflect in the respective opinions of
management of SouthTrust and Marine, 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 Marine and SouthTrust, and the related notes thereto, contained in
documents included elsewhere herein or incorporated herein by reference. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
SOUTHTRUST CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(in thousands, except per share data):
Interest income ......................... $ 2,232,252 $ 1,804,220 $ 1,484,623 $ 1,108,612 $ 927,551
Interest expense ........................ 1,186,079 938,194 791,423 501,067 397,743
----------- ----------- ----------- ----------- -----------
Net interest income ................... 1,046,173 866,026 693,200 607,545 529,808
Provision for loan losses ............... 90,613 90,027 61,286 44,984 45,032
----------- ----------- ----------- ----------- -----------
Net interest income after
provision for loan losses ............. 955,560 775,999 631,914 562,561 484,776
Non-interest income ..................... 270,507 254,809 208,664 184,778 174,702
Non-interest expense .................... 748,216 643,298 536,534 485,999 434,951
----------- ----------- ----------- ----------- -----------
Income before income taxes .............. 477,851 387,510 304,044 261,340 224,527
Income taxes ............................ 171,143 132,807 105,039 88,338 73,992
----------- ----------- ----------- ----------- -----------
Net income ............................ $ 306,708 $ 254,703 $ 199,005 $ 173,002 $ 150,535
=========== =========== =========== =========== ===========
Net income per diluted common share ..... $ 2.03 $ 1.79 $ 1.57 $ 1.43 $ 1.29
Cash dividends declared
per common share ...................... 0.67 0.59 0.53 0.45 0.40
Average diluted common shares outstanding
(in thousands) ........................ 151,008 142,154 126,687 121,157 117,027
BALANCE SHEET DATA (at period end)
(in thousands):
Total assets ............................ $30,906,445 $26,223,193 $20,787,024 $17,632,059 $14,707,964
Total loans, net ........................ 22,159,314 19,061,269 14,448,524 11,950,215 9,313,086
Total deposits .......................... 19,586,584 17,305,493 14,575,077 12,801,239 11,515,311
Total stockholders' equity .............. 2,194,641 1,734,892 1,430,870 1,135,268 1,051,766
</TABLE>
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Interest income ......................... $ 597,462 $ 510,650
Interest expense ........................ 324,112 266,094
----------- -----------
Net interest income ................... 273,350 244,556
Provision for loan losses ............... 17,855 22,375
----------- -----------
Net interest income after
provision for loan losses ............. 255,495 222,181
Non-interest income ..................... 88,118 61,978
Non-interest expense .................... 212,506 174,041
----------- -----------
Income before income taxes .............. 131,107 110,118
Income taxes ............................ 44,655 39,218
----------- -----------
Net income ............................ $ 86,452 $ 70,900
=========== ===========
Net income per diluted common share ..... $ 0.54 $ 0.48
Cash dividends declared
per common share ...................... 0.19 0.1667
Average diluted common shares outstanding
(in thousands) ........................ 159,998 147,738
BALANCE SHEET DATA (at period end)
(in thousands):
Total assets ............................ $32,697,604 $27,350,052
Total loans, net ........................ 23,212,852 19,860,972
Total deposits .......................... 20,532,916 17,593,585
Total stockholders' equity .............. 2,485,807 1,870,456
</TABLE>
MARINE BANK
<TABLE>
<CAPTION>
Three Months
Years Ended December 31, Ended March 31,
----------------------------------------------- -----------------
1997 1996 1995 1994 1993 1998 1997
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(in thousands, except per share data):
Interest income ................... $ 4,459 $ 4,121 $ 3,936 $ 3,707 $ 3,289 $ 1,168 $ 1,096
Interest expense .................. 1,804 1,697 1,593 1,286 1,148 504 460
------- ------- ------- ------- ------- ------- -------
Net interest income ............. 2,655 2,424 2,343 2,421 2,141 664 636
Provision (credit) for loan losses 0 0 46 0 126 0 0
------- ------- ------- ------- ------- ------- -------
Net interest income after
provision for loan losses ....... 2,655 2,424 2,297 2,421 2,015 664 636
Non-interest income ............... 124 191 120 180 147 31 31
Non-interest expense .............. 1,223 1,157 1,202 1,232 1,146 294 296
------- ------- ------- ------- ------- ------- -------
Income before income taxes ........ 1,556 1,458 1,215 1,369 1,016 401 371
Income taxes ...................... 576 542 450 509 378 151 140
------- ------- ------- ------- ------- ------- -------
Net income ........................ $ 980 $ 916 $ 765 $ 860 $ 638 $ 250 $ 231
======= ======= ======= ======= ======= ======= =======
Net income per diluted common share $0.7289 $0.6854 $0.6105 $0.7879 $0.5839 $0.1859 $0.1723
Cash dividends declared
per common share ................ 0.10 0.10 .10 0.10 0.10 0 0
Average diluted common shares
outstanding (in thousands) ........ 1,344 1,344 1,327 1,092 1,092 1,344 1,344
BALANCE SHEET DATA (at period end)
(in thousands):
Total assets ...................... $58,499 $55,861 $52,324 $50,949 $46,565 $63,213 $55,209
Total loans, net .................. 35,395 34,991 30,839 30,692 27,933 35,878 35,459
Total deposits .................... 48,403 47,216 43,804 42,123 40,505 48,184 46,242
Total stockholders' equity ........ 7,332 6,491 5,659 4,873 4,197 7,599 6,670
</TABLE>
14
<PAGE> 18
SELECTED PRO FORMA INFORMATION
The following table sets forth certain unaudited pro forma combined
condensed financial information for SouthTrust and Marine giving effect to the
Merger. The unaudited pro forma combined 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 transaction 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 Marine and SouthTrust and the related notes
thereto included elsewhere herein or incorporated herein by reference. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
PRO FORMA COMBINED INFORMATION
SOUTHTRUST CORPORATION AND MARINE BANK
<TABLE>
<CAPTION>
Three Months Ended
Years Ended December 31, March 31,
------------------------------------ --------------------
1997 1996 1995 1998 1997
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(in thousands, except per share data):
Interest income ......................... $2,236,711 $1,808,341 $1,488,559 $598,630 $511,746
Interest expense ........................ 1,187,883 939,891 793,016 324,616 266,554
---------- ---------- ---------- -------- --------
Net interest income ................... 1,048,828 868,450 695,543 274,014 245,192
Provision for loan losses ............... 90,613 90,027 61,332 17,855 22,375
---------- ---------- ---------- -------- --------
Net interest income after provision for
loan losses ........................... 958,215 778,423 634,211 256,159 222,817
Non-interest income ..................... 270,631 255,000 208,784 88,149 62,009
Non-interest expense .................... 749,439 644,455 537,736 212,800 174,337
---------- ---------- ---------- -------- --------
Income before income taxes .............. 479,407 388,968 305,259 131,508 110,489
Income taxes ............................ 171,719 133,349 105,489 44,806 39,358
---------- ---------- ---------- -------- --------
Net income ............................ $ 307,688 $ 255,619 $ 199,770 $ 86,702 $ 71,131
========== ========== ========== ======== ========
Net income per diluted common share ..... $ 2.03 $ 1.79 $ 1.57 $ 0.54 $ 0.48
Average diluted common shares outstanding
(in thousands) ........................ 151,485 142,631 127,158 160,475 148,215
BALANCE SHEET DATA
(in millions)
Total assets ............................ $ 30,964 $ 26,279 $ 20,839 $ 32,761 $ 27,405
Total loans, net ........................ 22,194 19,096 14,480 23,249 19,896
Total deposits .......................... 19,635 17,352 14,619 20,581 17,640
Total stockholders' equity .............. 2,202 1,742 1,437 2,494 1,878
</TABLE>
15
<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
Marine, SouthTrust, ST-Sub and ST-Bank, by SouthTrust as the sole shareholder
of ST-Sub and by ST-Sub as the sole shareholder of ST-Bank. No approval of the
Merger by the stockholders of SouthTrust is required.
Pursuant to the Merger Agreement, Marine will be merged with and into
ST-Bank pursuant to the Florida Banking Code and the National Bank Act, and
ST-Bank will be the Surviving Corporation. Subject to approval of the Merger
Agreement by the shareholders of Marine at the Special Meeting, the receipt of
required regulatory approvals, and satisfaction of other conditions, Marine will
be merged into ST-Bank pursuant to the Merger Agreement. At the Effective Time
of the Merger, pursuant to the Merger Agreement, SouthTrust is to issue a total
of 477,200 shares of SouthTrust Common Stock for all of the issued and
outstanding shares of Marine Common Stock. As of the date of the Merger
Agreement, a total of 1,344,226 shares of Marine Common Stock will be issued and
outstanding.
At the Effective Time of the Merger, each share (excluding (i) shares
held by Marine or by SouthTrust or any of its subsidiaries, in each case other
than in a fiduciary capacity or as a result of debts previously contracted, and
(ii) shares dissenting from approval of the Merger Agreement) of Marine Common
Stock, will become and be converted into the right to receive 0.355 shares of
SouthTrust Common Stock, as the same may be adjusted pursuant to the terms of
the Merger Agreement. See "THE MERGER -- Effect of the Merger on Marine Common
Stock."
If the average of the daily last sales prices of SouthTrust Common
Stock (the "Average Closing Price") as reported on NASDAQ for the ten
consecutive full trading days in which such shares are traded on the NASDAQ
during the ten-trading-day period beginning 30 days prior to the Closing Date
(the "Determination Period"), when multiplied by the Conversion Ratio, is less
than $13.75, Marine will have the right to elect to terminate the Merger
Agreement unless SouthTrust elects to increase the Conversion Ratio in the
manner described under "THE MERGER -- Possible Conversion Ratio Adjustment."
The Conversion 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 Marine 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
prices of SouthTrust Common Stock as reported by NASDAQ on the last trading day
preceding the Effective Time of the Merger.
The Merger will become effective on the date and at the time on which
the Merger is deemed effective by the Comptroller. 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 as soon as
practicable following the later 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, (ii) the date on which the shareholders of Marine approve the Merger
Agreement to the extent such approval is required by applicable law, or such
other time as the parties may agree. See "THE MERGER -- Effective Time of the
Merger."
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger
In November 1997, the Board of Directors of Marine formed a Long
Range Planning Committee comprised of Mr. Norris Counts, Mr. George Ruppel, Mr.
Dennis Ruppel, Mr. James Macaluso and Mr. Charles Block. This Committee was
delegated the responsibility to determine the best strategy to maximize
shareholder value. At the January 15, 1998 meeting of the Board of Directors,
the Long Range Planning Committee recommended that Marine solicit indications of
interest for the sale of Marine. It was determined that the sale of Marine's
stock was preferable, from a financial point of view to shareholders, than a
conversion to a corporation taxable under sub chapter S of the Internal Revenue
Code. Three potential acquirors were identified as the most desirable
purchasers.
16
<PAGE> 20
During the months of January through March 1998, representatives of
Marine met with representatives of several possible acquisition and merger
candidates, including SouthTrust. At the March 6, 1998 Board of Directors
meeting, it was determined that a merger with SouthTrust was preferable. During
March 1998, representatives of Marine and SouthTrust conducted various due
diligence activities and negotiated the terms and conditions to be included in a
definitive Merger Agreement. At a Board of Directors meeting held on March 19,
1998, the Board of Marine met to review and consider the Merger Agreement. At
such Board of Directors meeting all of the directors of Marine were present and
voted to approve the Merger and the Merger Agreement, with such changes as the
representatives of the Long Range Planning Committee determined, in consultation
with Marine's President and legal counsel, would be appropriate. All of the
directors and officers of Marine have advised SouthTrust, that, as of the date
of the Proxy Statement/Prospectus, they intend to vote for the approval of the
Merger Agreement.
The 0.355 shares of SouthTrust's Common Stock to be exchanged for
each share of Marine Bank's Common Stock reflects prices that were negotiated on
an arm's-length basis between representatives of Marine and representatives of
SouthTrust. There was no affiliation, relationship, understanding or transaction
between Marine and its representatives, on one hand, and SouthTrust and ST-Bank,
and their representatives, on the other hand, prior to the execution of the
Merger Agreement.
The Board of Directors of Marine considered a variety of factors in
evaluating and approving the Merger and the Merger Agreement, including (a) the
value of the consideration to be received by Marine's shareholders relative to
the book value and earnings per share of Marine Common Stock; (b) certain
information concerning the financial condition, results of operations and
business prospects of Marine and SouthTrust; (c) the marketability of Marine's
Common Stock, (d) the competitive and regulatory environment for financial
institutions generally; (e) the fact that the Merger will enable Marine
shareholders to exchange their shares of Marine's Common Stock for shares of
common stock of a much larger combined entity, the stock of which is more widely
held and more actively traded and which historically has paid cash dividends;
(f) SouthTrust's ability to provide comprehensive financial services in relevant
markets; and (g) other pertinent information. The Board of Directors of Marine
did not assign any relative weights to the above factors, but it considered all
of such factors to be material. The Board of Directors believes that it
appropriately addressed all of the relevant concerns in the proposed transaction
with SouthTrust, and it concluded that the terms of the transaction with
SouthTrust are fair to the shareholders of Marine from a financial point of
view. Based on these factors, the Board of Directors of Marine determined that
the Merger was in the best interests of the shareholders of Marine and approved
the Merger Agreement.
THE MEMBERS OF THE BOARD OF DIRECTORS OF MARINE HAVE UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND DETERMINED THAT THE MERGER IS FAIR, FROM A
FINANCIAL POINT OF VIEW, AND IS IN THE BEST INTERESTS OF MARINE AND ITS
SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS OF MARINE RECOMMENDS THAT
SHAREHOLDERS OF MARINE VOTE IN FAVOR OF THE MERGER AGREEMENT.
SouthTrust is engaging in the transactions pursuant to the Merger
because the Merger is consistent with its expansion strategy within the
southeastern United States and because the acquisition of Marine will augment
SouthTrust's existing market share in the West Florida banking market and
enhance its competitive position in such market.
INTERESTS OF CERTAIN NAMED PERSONS IN THE MERGER
Certain members of Marine management and of Marine's Board of
Directors have interests in the Merger that are in addition to any interests
they may have as shareholders of Marine generally. These interests include,
among others, provisions in the Merger Agreement relating to indemnification of
Marine's directors and officers and certain severance and other employee
benefits, as described below.
SouthTrust has agreed in the Merger Agreement that, for a period of
three years after the Effective Time, it will indemnify, defend and hold
harmless each person entitled to indemnification from Marine against all
liabilities arising out of actions or omissions occurring at or prior to the
Effective Time of the Merger (including the transactions contemplated by the
Merger Agreement) to the same extent and subject to the same conditions set
forth in Marine's Bylaws as in effect on the date of the Merger Agreement, and
in certain indemnification agreements between Marine and each of the directors
of Marine.
Following the Effective Time of the Merger and subject to certain
conditions described below, SouthTrust has agreed that the officers and
employees of Marine who SouthTrust or any of its affiliates employs will be
eligible to participate in the employee benefit plans of SouthTrust, including
welfare and fringe benefit plans, on the same basis as and subject to the same
conditions as are applicable to any newly-hired employee of SouthTrust, except
that (i) with respect to SouthTrust's group medical insurance plan, SouthTrust
will credit each such employee for eligible expenses incurred by such employee
and his or her dependents (if applicable) under Marine's group medical insurance
plan
17
<PAGE> 21
during the current calendar year for purposes of satisfying the deductible
provisions under SouthTrust's group medical benefits plan for such current year;
and (ii) credit for each such employee's past service with Marine prior to the
Effective Time of the Merger will be given by SouthTrust to employees for
purposes of: (1) determining vacation and sick leave benefits and accruals in
accordance with the established policies of SouthTrust; (2) establishing
eligibility for participation in, and vesting under, SouthTrust's employee
benefits plans and for purposes of determining the scheduling of vacations and
other determinations which are made based on length of service (except that such
credit for past service will not be given to any such employee for purposes of
establishing eligibility for participation in the 1990 Discounted Stock Plan of
SouthTrust); and (3) determining satisfaction of applicable waiting periods
under said plans for pre-existing conditions.
The Merger Agreement further provides that the Marine Bank 401(k)
Plan will either be merged into the SouthTrust Corporation Employee's Profit
Sharing Plan (the "STPS Plan") effective as of January 1 of the year following
the Effective Time of the Merger or will be terminated as of a date prior to on
or after the Effective Time of the Merger. From and after January 1 following
the Effective Time of the Merger, for purposes of determining eligibility to
participate in, and vesting in accrued benefits under, both the SouthTrust
Corporation Revised Retirement Income Plan (the "ST Retirement Plan") and the
STPS Plan, employment by Marine will be credited as if it were employment by
SouthTrust, but such service will not be credited for purposes of determining
benefit accrual under the ST Retirement Plan.
EFFECT OF THE MERGER ON MARINE COMMON STOCK
Pursuant to the Merger Agreement, Marine will be merged with and into
ST-Bank pursuant to the Florida Banking Code and the National Bank Act, and
ST-Bank will be the Surviving Corporation. At the Effective Time of the Merger,
and subject to approval of the Merger Agreement by the shareholders of Marine at
the Special Meeting, the receipt of required regulatory approvals, and
satisfaction of other conditions, pursuant to the Merger Agreement, SouthTrust
is to issue a total of 477,200 shares of SouthTrust Common Stock for all of the
issued and outstanding Marine Common Stock. As of the date of the Merger
Agreement, a total of 1,344,226 shares of Marine Common Stock will be issued and
outstanding.
At the Effective Time of the Merger, each share (excluding (i) shares
held by Marine or by SouthTrust or any of its subsidiaries, in each case other
than in a fiduciary capacity or as a result of debts previously contracted, and
(ii) shares dissenting from approval of the Merger Agreement) of Marine Common
Stock, will become and be converted into the right to receive 0.355 shares of
SouthTrust Common Stock subject to possible adjustment as described in "THE
MERGER - Possible Conversion Ratio Adjustment."
The Conversion 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 a share of Marine 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 prices of SouthTrust Common Stock as reported by NASDAQ
on the last trading day preceding the Effective Time of the Merger.
Because, except as described above, the Conversion Ratio of shares of
SouthTrust Common Stock for Marine Common Stock is fixed, it will not compensate
Marine 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 August 3, 1998, the
date of the Special Meeting, the value of the SouthTrust Common Stock to be
received in the Merger in exchange for the Marine Common Stock would decrease
below the value prevailing at the time the shareholders of Marine 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 Marine
Common Stock would increase. Marine's shareholders are advised to obtain current
market quotations for SouthTrust Common Stock. No assurance can be given as to
the market prices of SouthTrust Common Stock on the date the Merger becomes
effective or as to the market price of SouthTrust Common Stock thereafter.
18
<PAGE> 22
POSSIBLE CONVERSION RATIO ADJUSTMENT
The Merger Agreement provides that it may be terminated by majority
vote of the members of the entire Board of Directors of Marine at any time
during the five-business-day period commencing on the first day following the
end of the Determination Period, if the Average Closing Price of SouthTrust
Common Stock for the Determination Period multiplied by the Conversion Ratio is
less than $13.75. If Marine elects to terminate the Merger Agreement, it must
give prompt written notice thereof to SouthTrust; provided, that such notice of
election to terminate may be withdrawn at any time within the aforementioned
five-business-day period. During the five-business-day period commencing with
its receipt of such notice, SouthTrust has the option to elect to increase the
Conversion Ratio such that the increased Conversion Ratio multiplied by the
Average Closing Price is greater than or equal to $13.75. If SouthTrust makes an
election contemplated by the preceding sentence within such five-business-day
period, it will give prompt written notice to Marine of such election and the
revised Conversion Ratio, whereupon no termination shall have occurred and the
Merger Agreement will remain in effect in accordance with its terms (except as
the Conversion Ratio shall have been so modified), and any references in the
Merger Agreement to "Conversion Ratio" will thereafter be deemed to refer to the
Conversion Ratio as adjusted.
There can be no assurance that the Marine Board would exercise its
rights to terminate the Merger Agreement if the Average Closing Price of
SouthTrust Common Stock, when multiplied by the Conversion Ratio, is less than
$13.75. Furthermore, if the Marine Board does elect to so terminate the Merger
Agreement, there can be no assurance that SouthTrust would elect to increase the
Conversion Ratio as provided in the Merger Agreement. Marine shareholders should
be aware that the Average Closing Price for the Determination Period and the
subsequent increase, if any, in the Conversion Ratio, will be based on the
average last sales price of SouthTrust Common Stock during the ten-trading-day
period beginning 30 days prior to the Closing Date. Accordingly, because the
market price of SouthTrust Common Stock between the last day of the
Determination Period 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 Marine Common Stock following consummation of the
Merger, will fluctuate, the value of the SouthTrust Common Stock actually
received by holders of Marine Common Stock may be more or less than (i) the
Average Closing Price during the Determination Period, or (ii) the value of the
SouthTrust Common Stock at the Effective Time resulting from the Conversion
Ratio or any possible adjustment of the Conversion Ratio as illustrated above.
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 the possible
increase in the Conversion Ratio.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective on the date and at the time on which
the Merger is deemed effective by the Comptroller. 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 as soon as practicable
following the later 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 Marine approve the Merger Agreement or
such other date to which SouthTrust and Marine agree. The Merger cannot become
effective until Marine 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 will be obtained or that other conditions precedent to the
Merger can or will be satisfied. Marine and SouthTrust anticipate that all
conditions to consummation of the Merger will be satisfied so that the Merger
can be consummated on or before August 7, 1998. However, delays in the
consummation of the Merger could occur.
Either SouthTrust, ST-Sub, ST-Bank or Marine generally may terminate
the Agreement if the Merger is not consummated on or prior to the record date,
as announced by South-Trust, for the SouthTrust third quarter dividend for 1998,
provided that the failure to consummate by that date is not accompanied by any
breach of any representations, warranties, covenants or other agreements
contained in the Merger Agreement by the party electing to terminate. See "THE
MERGER -- 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
Marine will cause the exchange agent selected by SouthTrust (the "Exchange
Agent") to mail to each former holder of record of shares of Marine Common Stock
appropriate transmittal materials for use in exchanging their certificates
formerly representing shares of Marine Common Stock for exchange and conversion
in accordance with the procedures provided for herein and in the Merger
Agreement.
19
<PAGE> 23
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. MARINE 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 Marine Common Stock shall surrender the certificates
representing such shares to the Exchange Agent and shall promptly receive in
exchange therefor the SouthTrust Common Stock, 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
such shareholder may otherwise be entitled. Until the stock certificates
evidencing the shares of Marine Common Stock are surrendered pursuant to the
Merger Agreement, no SouthTrust Common Stock will be delivered or remitted to
such holders. In addition, holders of shares of Marine 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 Marine 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 dividend or other distribution is declared by SouthTrust
on SouthTrust Common Stock, the record date of 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,
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
Marine Common Stock issued and outstanding at the Effective Time of the Merger
until the holder duly surrenders such certificate. Upon surrender of such Marine
Common Stock certificate, however, both the SouthTrust Common Stock certificate,
together with all undelivered dividends or other distributions (without interest
thereon) and any undelivered cash payments to be paid in lieu of fractional
shares (without interest thereon) 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 Marine Common Stock on Marine's stock transfer books. If certificates
formerly representing shares of Marine Common Stock are presented for transfer
after the Effective Time of the Merger, they will be canceled and exchanged for
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 Marine who are not
deemed to be "affiliates" (as that term is defined in the rules under the
Securities Act) of Marine and who do not become affiliates of SouthTrust. The
shares of SouthTrust Common Stock to be issued to affiliates of Marine 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 March 31,
1998 (exclusive of shares of SouthTrust Common Stock to be issued in the
Merger), each affiliate of Marine will be free to resell, during any given
three-month period, up to approximately 1,604,375 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 Marine or SouthTrust.
Marine has caused each person identified by Marine as an affiliate to
execute a written agreement in the form provided for in the Merger Agreement
providing that such affiliate will not sell, 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 Marine 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 Marine and SouthTrust will be carried
forward at their previously recorded amounts. The Merger Agreement provides, as
a condition of SouthTrust's obligations to consummate the Merger, that
SouthTrust shall not have determined that the transactions contemplated by the
Merger Agreement fail to qualify for pooling of interest 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 Marine in the Merger in order, among other things, to assure the
availability of pooling-of-interests accounting treatment, see "THE MERGER --
Resale of SouthTrust Common Stock Received in the Merger."
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REGULATORY APPROVALS AND CERTAIN OTHER CONDITIONS TO THE MERGER; WAIVER AND
AMENDMENT
The respective obligations of SouthTrust and Marine 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
Marine 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 Marine
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 Merger Agreement.
Marine 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 certain
regulatory approvals, including the Comptroller 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
federal supervisory regulatory agency. On May 26, 1998, ST-Bank submitted to the
Comptroller an application seeking approval of the Merger.
The Bank Merger Act requires that the Comptroller 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. In essence, the Comptroller will deny approval of 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 Merger
Act, the Comptroller 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
Comptroller 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 30th day following the date of the approval of the Comptroller, during which
period the United States Department of Justice may comment adversely on the
transaction or challenge the Merger on antitrust grounds. However, the Merger
may be consummated on or after the 15th day following the date of the approval
of the Comptroller if the Comptroller does not receive any adverse comments from
the United States Attorney General and the United States Attorney General
consents to the shorter period. The commencement of an antitrust action would
stay the effectiveness of such an approval unless a court specifically orders
otherwise.
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 also can 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.
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 Marine, 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 will be effective under
the Securities Act, no stop orders suspending the effectiveness of the
Registration Statement will have been issued and no proceeding by the
Commission or any other regulatory authority to suspend the
effectiveness thereof will have been initiated or threatened by the
Commission or any other Regulatory Authority;
(ii) The representations and warranties of SouthTrust
and Marine, respectively, made in the Merger Agreement and assessed as
of the time of the Merger Agreement and as of all times up
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to and including the Effective Time of the Merger will be accurate to
the extent provided for in the Merger Agreement;
(iii) SouthTrust and Marine, respectively, will have
performed, and complied with all of their respective agreements and
covenants pursuant to the Merger Agreement;
(iv) The receipt of the opinion of Bradley Arant Rose &
White LLP 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 will have enacted, issued, promulgated,
enforced or entered any law, order or similar restriction or taken any
other action which prohibits or makes illegal the consummation of the
transactions contemplated by the Merger Agreement;
(vi) The shares of SouthTrust Common Stock issuable
pursuant to the Merger will have been approved for listing on NASDAQ;
(vii) SouthTrust shall not have determined that the
transactions contemplated by the Merger Agreement fail to qualify for
pooling of interests accounting treatment; and
(viii) In the case of SouthTrust's obligations, the
holders of not more than 5% of Marine Common Stock, will have taken
appropriate steps to dissent from the Merger; and
At any time before the Effective Time of the Merger, any party to the
Merger Agreement may waive any default in the performance of any term of the
Merger Agreement by the other party, waive or extend the time for compliance or
fulfillment by the other party of any and all of such other parties'
obligations, and waive any or all conditions to its obligations under the Merger
Agreement, except any condition which, if not satisfied, would result in the
violation of any law or any applicable governmental regulation. In addition, any
provision of 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 Marine Common Stock, no amendment may be made that
reduces or modifies the consideration to be received by the holders of Marine
Common Stock.
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned, at
any time prior to the Effective Time of the Merger in any of the following ways:
(i) by the mutual consent in writing of SouthTrust,
ST-Sub, ST-Bank and Marine;
(ii) by SouthTrust, ST-Sub, ST-Bank or Marine if the
Merger shall not have occurred on or prior to the record date, as announced by
SouthTrust, for the SouthTrust third quarter dividend for 1998, provided that
the failure to consummate the Merger on or before such date is not accompanied
by any breach of any of the representations, warranties, covenants or other
agreements contained in the Merger Agreement by the party electing to terminate;
(iii) by SouthTrust or Marine (provided that the
terminating party is not then in breach of any representation, warranty,
covenant or other agreement contained herein) in the event that any of the
conditions precedent to the obligations of the nonterminating party to
consummate the Merger cannot be satisfied or fulfilled;
(iv) by SouthTrust if: (1) SouthTrust shall have
determined that any fact, event or condition exists that, in the judgment of
SouthTrust, (A) is materially at variance with any warranty or representation of
Marine set forth in the Merger Agreement or is a material breach of any covenant
or agreement of Marine contained in the Merger Agreement, (B) has a Material
Adverse Effect or can be reasonably foreseen to have a Material Adverse Effect
upon the Condition (as defined in the Merger Agreement) of Marine on a
consolidated basis or upon the consummation of the transactions contemplated by
the Agreement, (C) would be materially adverse to the interests of SouthTrust
and ST-Sub on a consolidated basis, (D) would be of such significance with
respect to the business or economic benefits expected to be obtained by
SouthTrust under the Merger Agreement so as to render inadvisable consummation
of the transactions contemplated by the Agreement, or (E) renders the Merger or
the other transactions contemplated by this Agreement impractical because of any
state of war, national emergency, banking moratorium or general suspension of
trading on NASDAQ, the New York Stock Exchange, Inc. or any other national
securities
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exchange; or (2) there shall be any litigation or threat of litigation (A)
challenging the validity or legality of the Merger Agreement or the consummation
of the transactions contemplated by this Agreement, (B) seeking damages in
connection with the consummation of the transactions contemplated by the Merger
Agreement or (C) seeking to restrain or invalidate the consummation of the
transactions contemplated by the Merger Agreement.
(v) by Marine if (1) Marine shall have determined that
any fact, event or condition exists that, in the judgment of Marine, (A) is
materially at variance with any warranty or representation of SouthTrust, ST-Sub
or ST-Bank contained in the Merger Agreement or is a material breach of any
covenant or agreement of SouthTrust, ST-Sub or ST-Bank contained in the Merger
Agreement, (B) has a Material Adverse Effect or can be reasonably seen to have a
Material Adverse Effect upon the consummation of the transactions contemplated
by the Merger Agreement; (2) Marine shall have determined that any fact, event
or condition exists that, in the judgment of Marine, would render the Merger and
the other transactions contemplated by this Agreement impractical because of any
state of war, national emergency, banking moratorium or general suspension of
trading on NASDAQ, the New York Stock Exchange, Inc. or other national
securities exchange.
(vi) by majority vote of the members of the entire
Board of Directors of Marine if certain conditions relating to the average last
sales price of SouthTrust Common Stock are not met and SouthTrust does not elect
to increase the Conversion Ratio. See "THE MERGER -- Possible Conversion Ratio
Adjustment".
In the event of the termination and abandonment of the Merger
Agreement pursuant to the foregoing, no party to the Merger Agreement will have
any liability or further obligations to any other party under the Merger
Agreement except that if SouthTrust or Marine elects to terminate the Merger
Agreement, and the other party is not in breach of any of its representations,
warranties, covenants or other agreements contained in the Merger Agreement, the
terminating party shall pay to the nonterminating party a termination fee in an
amount equal to $250,000.
CERTAIN EXPENSES
The Merger Agreement provides that the parties thereto will bear their
own expenses incurred in connection with consummating the transactions
contemplated thereby except that SouthTrust will bear all 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.
RIGHTS OF DISSENT AND APPRAISAL
A shareholder of Marine may dissent from the Merger and receive in
cash the appraised value, as of the Effective Time of the Merger, of the shares
of Marine Common Stock held by such shareholder pursuant to Section 215a of the
United States Code (the "Dissent Provisions"). Section 215a of the United States
Code is the controlling provision relating to the dissent rights of Marine
shareholders in light of Section 658.41(2) of the Florida Banking Code which
provides that federal, rather than Florida law, will be controlling in the
merger of a Florida bank into a national bank. The appraised value of the Marine
Common Stock may differ from the consideration that a shareholder of Marine is
entitled to receive in the Merger. The following is a summary of the Dissent
Provisions, the full text of which is set forth as Exhibit B to this Proxy
Statement/Prospectus.
Under the Dissent Provisions, a shareholder of Marine may dissent from
the Merger by (i) voting against the Merger or by giving notice in writing at or
prior to the Special Meeting to Marine that the shareholder dissents from the
Merger Agreement, and (ii) making a written request to ST-Bank to receive the
fair value of the shares of Marine Common Stock, which request is required to be
made within thirty days of the Effective Time of the Merger and to be
accompanied by the surrender of the shareholder's stock certificates.
The value of the shares of any dissenting shareholder shall be
determined as of the Effective Time of the Merger by an appraisal made by a
committee of three persons, composed of one person selected by the holders of a
majority of the shares of Marine Common Stock for which rights of dissent are
being asserted, one selected by the Board of Directors of ST-Bank and the third
selected by the other two. The valuation agreed upon by any two of the three
appraisers shall govern. However, if the value so fixed is not satisfactory to
any dissenting shareholder who has requested payment, that shareholder may,
within five days after being notified of the appraised value of his shares,
appeal to the Comptroller, who shall cause a reappraisal to be made which shall
be final and binding as to the value of the shares of the dissenting shareholder
who has appealed to the Comptroller.
If, within ninety days from the Effective Time of the Merger, for any
reason one or more of the three appraisers is not selected as provided by the
Dissent Provisions, or the appraisers shall fail to determine the value of the
shares, the Comptroller shall upon written request of any interested party cause
an appraisal to be made which
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shall be final and binding on all parties. In any event, the value of shares
ascertained under the Dissent Provisions shall be promptly paid to the
dissenting shareholders by ST-Bank. In addition, the SouthTrust Common stock
that would have been delivered to the dissenting shareholders but for their
dissent may, if required by law, be sold at an advertised public auction at
which SouthTrust may bid. If the shares are auctioned and are sold at a price
greater than that paid to the dissenting shareholders, such excess amount would
be remitted to the dissenting shareholders. The Comptroller has taken the
position that a shareholder may dissent as to less than all of the shares of
stock owned by such shareholder. The expenses of the Comptroller in making the
reappraisal or the appraisal, as the case may be, shall be paid by ST-Bank.
The foregoing is only a summary of the Dissent Provisions. The full
text of such provisions is set forth as Exhibit B to this Proxy
Statement/Prospectus and each Marine shareholder is urged to read these
provisions
carefully.
CONDUCT OF BUSINESS BY MARINE PENDING THE MERGER
The Merger Agreement provides that, until the Effective Time of the
Merger, and except with the prior approval of SouthTrust, or as otherwise
required by law or regulation, Marine will operate its business only in the
usual, regular and ordinary course, preserve intact its business organization,
employees, goodwill with customers and advantageous business relationships and
retain the services of its officers and key employees, and Marine will take no
action which would adversely affect its ability to obtain required regulatory
approvals or to perform any of its material obligations under the Merger
Agreement. The Merger Agreement further provides that, until the Effective Time
of the Merger, Marine 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 SouthTrust, which consent will not be unreasonably
withheld:
(i) change, delete or add any provision of or to the Articles of
Incorporation or Bylaws of Marine;
(ii) change the number of shares of the authorized, issued or
outstanding capital stock of Marine, including any issuance,
purchase, redemption, split, combination or reclassification
thereof, or issue or grant any option, warrant, call,
commitment, subscription, right or agreement to purchase
relating to the authorized or issued capital stock of
Marine, declare, set aside or pay any dividend or other
distribution with respect to the outstanding capital stock
of Marine;
(iii) incur any material liabilities or material obligations
(other than deposit liabilities and short-term borrowings
in the ordinary course of business), whether directly or by
way of guaranty, including any obligation for borrowed
money, or whether evidenced by any note, bond, debenture, or
similar instrument, except in the ordinary course of
business consistent with past practice;
(iv) make any capital expenditures individually in excess of
$25,000, or in the aggregate in excess of $50,000 other than
pursuant to binding commitments existing on December 31,
1997 and disclosed in a Disclosure Schedule delivered
pursuant to the Merger Agreement and other than expenditures
necessary to maintain existing assets in good repair;
(v) sell, transfer, convey or otherwise dispose of any real
property (including "other real estate owned") or interest
therein or any tangible or intangible personal property
having a book value in excess of or in exchange for
consideration in excess of $25,000 for each such parcel or
interest;
(vi) pay any bonuses to any executive officer or director except
pursuant to the terms of an enforceable agreement as
reflected in a Disclosure Schedule delivered pursuant to the
Merger Agreement; enter into any new, or amend in any
respect any existing, employment, consulting,
non-competition or independent contractor agreement with any
person; alter the terms of any existing incentive bonus or
commission plan; adopt any new or amend in any material
respect any existing employee benefit plan, except as may be
required by law; grant any general increase in compensation
to its employees as a class or to its officers except for
non-executive officers in the ordinary course of business
and consistent with past practices and policies or except in
accordance with the terms of an enforceable written
agreement; grant any material increases in fees or other
increases in compensation or in other benefits to any of its
directors; or effect any change in any
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material respect in retirement benefits to any class of
employees or officers, except as required by law;
(vii) enter into or extend any agreement, lease or license
relating to real property, tangible or intangible personal
property or any service or other function (including,
without limitation), data processing or bankcard functions
relating to Marine that involves an aggregate of $25,000;
(viii) increase or decrease the rate of interest paid on time
deposits or on certificates of deposit, except in a manner
and pursuant to policies consistent with Marine's past
practices;
(ix) purchase or otherwise acquire any investment securities for
its own account having an average remaining life to maturity
greater than five years, or any asset-backed security, other
than those issued or guaranteed by the Government National
Mortgage Association, the Federal National Mortgage
Association or Home Loan Mortgage Corporation, or any
Derivative Contract;
(x) acquire twenty percent (20%) or more of the assets or equity
securities of any person or acquire direct or indirect
control of any person, other than in connection with (A) any
internal reorganization or consolidation involving existing
subsidiaries of Marine which has been approved in advance in
writing by SouthTrust, (B) foreclosures in the ordinary
course of business, (C) acquisitions of control by Marine in
a fiduciary capacity or (D) the creation of new subsidiaries
organized to conduct and continue activities otherwise
permitted by this Agreement; or
(xi) commence any cause of action or proceeding other than in
accordance with past practice or settle any action, claim,
arbitration, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing,
inquiry or other proceeding against Marine or any of its
subsidiaries for material money damages or restrictions upon
any of their operations.
Marine has also agreed that it will not, acting through any director
or officer or other agent, nor shall it authorize or knowingly permit any
officer, director or employee of, or any investment banker, attorney, accountant
or other representative retained by Marine to, solicit or encourage, including
by way of furnishing information, any inquiries or the making of any proposal
which may reasonably be expected to lead to any takeover proposal with respect
to Marine. Marine has agreed to promptly advise SouthTrust orally and in writing
of any such inquiries or proposals received by Marine. As used in this
paragraph, "takeover proposal" means any proposal for a merger or other business
combination involving Marine or for the acquisition of a significant equity
interest in Marine or for the acquisition of a significant portion of the assets
or liabilities of Marine.
Immediately prior to the Closing, at the request of SouthTrust, Marine
has agreed to establish and take such reserves and accruals as SouthTrust
reasonably requests to conform Marine's loan, accrual, reserve and other
accounting policies to the policies of ST-Bank.
BUSINESS AND MANAGEMENT OF MARINE FOLLOWING THE MERGER; PLANS FOR BUSINESS OF
MARINE
Upon consummation of the Merger, Marine will be merged into ST-Bank,
with ST-Bank 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 will consist of those persons who are
serving as directors of ST-Bank 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 will be those persons serving as officers of ST-Bank 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.
After the Effective Time of the 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.
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Following the Effective Time of the Merger, SouthTrust has agreed to
cover the officers and employees of Marine who are employed by ST-Bank under the
employee benefit plans of SouthTrust; 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 Marine
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 Marine 401(k) Plan will
either be merged into the STPS Plan or will be terminated as of a date prior to
the Effective Time of the Merger. From and after January 1 following the
Effective Time of the Merger, for purposes of determining eligibility to
participate in, and vesting in accrued benefits under both the ST Retirement
Plan and the STPS Plan, employment by Marine will be credited as if it were
employment by SouthTrust, but such service will not be credited for purposes of
determining benefit accrual under the ST Retirement Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion is a summary of the material federal income
tax consequences of the Merger to holders of Marine Common Stock. The discussion
is included for general information purposes only, applies only to a holder of
Marine Common Stock who holds such stock as a capital asset, and may not apply
to special situations, such as holders of Marine Common Stock, if any, who
received their Marine 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 MARINE 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, ST-Bank nor Marine 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 Marine Common
Stock or of any of the federal income tax consequences of the Merger to
SouthTrust, ST-Sub, ST-Bank or Marine. The consummation of the Merger is
conditioned upon the receipt by Marine and SouthTrust of an opinion of Bradley
Arant Rose & White LLP as to certain of the federal income tax consequences of
the Merger to the holders of Marine Common Stock. The opinion of Bradley Arant
Rose & White LLP 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 with retroactive effect. Management
of SouthTrust has represented to Bradley Arant Rose & White LLP that it has 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
positions stated in the opinion will be upheld by the courts if challenged by
the IRS.
In the opinion of Bradley Arant Rose & White LLP, the following
federal income tax consequences to the holders of Marine Common Stock will
result from the Merger:
(i) For federal income tax purposes the Merger will
be viewed as an acquisition by ST-Sub of substantially all of the
assets of Marine solely in exchange for SouthTrust voting common
stock and the assumption of all the liabilities of Marine by ST-Sub,
followed by the transfer of the assets of Marine to ST-Bank and the
assumption by ST-Bank of the liabilities of Marine.
(ii) The acquisition by ST-Sub of substantially all of
the assets of Marine in exchange solely for shares of SouthTrust
voting common stock and the assumption by ST-Sub of Marine's
liabilities, as described above, will constitute a reorganization
within the meaning of Section 368(a)(1)(C) of the Code. For purposes
of this opinion, "substantially all" means at least ninety percent
(90%) of the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets of Marine.
Pursuant to Section 368(a)(2)(C) of the Code, the acquisition by
ST-Sub of substantially all of the assets of Marine will not be
disqualified under Section 368(a)(1)(C) of the Code solely by reason
of the fact that the assets of Marine that were acquired by ST-Sub
are transferred to ST-Bank. SouthTrust, ST-Sub and Marine each will
be a "party to the reorganization" within the meaning of Section
368(b) of the Code. The requirement under Section 368(a)(2)(G) of the
Code that Marine distribute the stock, securities, and other
properties it receives, as well as its other properties, in pursuance
of the plan of reorganization will be satisfied by reason of the
issuance by ST-Sub of the merger consideration directly to the
holders of Marine Common Stock, and by reason of the cessation of the
separate corporate existence of Marine pursuant to the Merger
Agreement and the applicable provisions of the Florida Code.
(iii) No gain or loss will be recognized by the
shareholders of Marine upon the receipt of SouthTrust Common Stock
(including the Rights associated therewith) solely in exchange for
their shares of Marine Common Stock. In addition, no gain or loss will
be recognized by Marine shareholders upon the receipt of the Rights
attached to the SouthTrust Common Stock.
(iv) The basis of the SouthTrust Common Stock to be
received by the Marine shareholders will be the same as the basis of
Marine Common Stock surrendered in exchange therefor, except for the
basis allocated to any fractional shares.
(v) The holding period of the shares of SouthTrust
Common Stock to be received by the shareholders of Marine will include
the period during which Marine Common Stock surrendered
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<PAGE> 30
in exchange therefor was held, provided that the shares of Marine
Common Stock were held as capital assets within the meaning of Section
1221 of the Code as of the Effective Time of the Merger.
(vi) Marine shareholders who exercise dissenters'
rights, and as a result of which receive only cash, will be treated
as having received such cash as a distribution in redemption of their
Marine Common Stock, subject to the provisions and limitations of
Section 302 of the Code. Those Marine shareholders who hold no
SouthTrust Common Stock, directly or indirectly through the
application of Section 318(a) of the Code, following the Merger shall
be treated as having a complete termination of interest within the
meaning of Section 302(b)(3) of the Code, and the cash received will
be treated as a distribution in full payment in exchange for Marine
Common Stock as provided in Section 302(a) of the Code. As provided
in Section 1001 of the Code, gain will be realized and recognized by
such shareholders measured by the difference between the redemption
price and the adjusted basis of the Marine shares surrendered as
determined under Section 1011 of the Code. Provided Section 341 of
the Code (relating to collapsible corporations) is inapplicable and
the Marine Common Stock is a capital asset in the hands of such
shareholders, the gain, if any, will constitute capital gain. Such
gain will constitute a long-term capital gain if the surrendered
Marine shares were held by the shareholder for a period greater than
one year prior to the Merger; if the surrendered Marine shares were
held by such shareholder for a period of one year or less, the gain
will constitute short-term capital gain.
(vii) The payment of cash to a Marine 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.
The opinion of Bradley Arant Rose & White LLP is rendered solely with
respect to certain federal income tax consequences of the Merger under the Code,
and does not extend to the income or other tax consequences of the Merger under
the laws of any State or any political subdivision of any State; nor does it
extend to any tax effects or consequences of the merger to SouthTrust, ST-Sub or
ST-Bank other than those expressly stated in the opinion. 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.
DESCRIPTION OF SOUTHTRUST CAPITAL STOCK
GENERAL
The authorized capital stock of SouthTrust consists of 505,000,000
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 March 31, 1998, there were 160,437,557 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 March 31, 1998,
there were 7,987,500 shares of SouthTrust Common Stock reserved for issuance
pursuant to employee benefit plans. 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
"DESCRIPTION OF SOUTHTRUST CAPITAL STOCK -- 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 ST-Bank) 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 Designations describing the Series A Junior
Participating Preferred Stock, and SouthTrust's Restated By-laws.
SOUTHTRUST COMMON STOCK
Dividend Rights
Subject to any prior rights of any SouthTrust Preferred Stock
outstanding, 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 subsidiary is
a bank, payments made by such subsidiary to SouthTrust are limited by law and
regulations of the bank regulatory authorities. See "MARKET PRICE AND DIVIDEND
INFORMATION RESPECTING THE SOUTHTRUST COMMON STOCK AND THE MARINE COMMON STOCK."
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
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<PAGE> 31
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.
The SouthTrust Common Stock does not have any conversion rights, nor
are there any redemption or sinking fund provisions applicable thereto. Holders
of SouthTrust Common Stock are not entitled to any preemptive rights to
subscribe for any additional securities which may be issued.
Liquidation Rights
In the event of liquidation, holders of 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, roughly 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 By-laws of SouthTrust provide that a director,
or SouthTrust's entire Board of Directors, may be removed by the stockholders
only for cause. The Restated Certificate of Incorporation and By-laws 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 By-laws 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 (the
"Record Date") of one right (a "Right" and collectively, the "Rights") for, and
to be attached to, each share of SouthTrust Common Stock outstanding on the
Record Date. Each Right entitles the holder thereof to purchase from SouthTrust
one one-hundredth of a share of SouthTrust Preferred Stock designated as the
Series A Junior Participating Preferred Stock ("Series A Preferred Stock") at a
purchase price of $75.00 (the "Purchase Price"). Such resolutions also provide
that as long as the Rights are attached to shares of SouthTrust Common Stock as
provided in the Rights Agreement referred to below, the appropriate number of
Rights will be issued with each share of SouthTrust Common Stock issued after
the Record Date. 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, a three-for-two stock split effected
by SouthTrust on May 19, 1993, and a three-for-two stock split effected by
SouthTrust on February 26, 1998. Accordingly, at the present time eight-twenty
sevenths of a Right is attached to each share of SouthTrust Common Stock and
eight-twenty sevenths of a Right will be issued with each share of SouthTrust
Common Stock exchanged in the Merger for Marine Stock.
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<PAGE> 32
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 above.
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. (now
known as ChaseMellon Shareholder Services LLC), 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.
Transfer Agent
The transfer agent for SouthTrust Common Stock is ChaseMellon
Shareholder Services LLC.
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<PAGE> 33
SOUTHTRUST PREFERRED STOCK
General
Under SouthTrust's Restated Certificate of Incorporation, SouthTrust's
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, the three-for-two stock split effected
on May 19, 1993, and the three-for-two stock split effected on February 26,
1998, 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> 34
MARKET PRICE AND DIVIDEND INFORMATION RESPECTING THE
SOUTHTRUST COMMON STOCK AND THE MARINE COMMON STOCK
MARKET PRICE
The SouthTrust Common Stock is quoted on NASDAQ under the symbol SOTR.
As of March 31, 1998, SouthTrust had approximately _____ holders of record of
the SouthTrust Common Stock. The following table sets forth, for the periods
indicated, the high and low closing prices per share of the SouthTrust Common
Stock as reported by NASDAQ. On ______, 1998, the last reported sale price of
the SouthTrust Common Stock as reported by NASDAQ was ______.
<TABLE>
<CAPTION>
Price*
-----------------------------------
High Low
------------- -------------
<S> <C> <C>
1996:
First Quarter..................................... $ 19.1667 $ 16.8333
Second Quarter.................................... 19.0000 17.7500
Third Quarter..................................... 21.2500 17.6667
Fourth Quarter.................................... 24.0833 20.3333
1997:
First Quarter..................................... 28.5000 22.7500
Second Quarter.................................... 28.2500 23.5833
Third Quarter..................................... 34.4583 25.7500
Fourth Quarter.................................... 42.8333 30.6667
1998:
First Quarter..................................... 45.1250 35.7500
Second Quarter (through _______, 1998)............
</TABLE>
- ---------------------
* The information listed above was obtained from the National
Association of Securities Dealers, Inc., and reflects interdealer
prices, without retail markup, markdown or commissions, and may not
represent actual transactions.
Marine Stock is not traded on any exchange, and there is no
established public trading market for such stock. There are no bid or asked
prices available for Marine Stock. Management of Marine is aware of certain
transactions in Marine Common Stock that occurred in 1997 and 1996. Although the
prices of all transactions are not known, management of Marine believes that
such prices ranged from $7.85 to $8.50 per share of Marine Common Stock. No
assurance can be given that these trades were effected on an arm's-length basis.
Transactions in Marine Common Stock are infrequent and are negotiated privately
between persons involved in those transactions.
On March 23, 1998 and March 25, 1998 (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 $42 15/16 and $42 1/4,
respectively; and on _________, 1998, the last sale price of SouthTrust Common
Stock as obtained from NASDAQ was $____.
DIVIDENDS
The following table sets forth, for the periods indicated, the
dividends declared by SouthTrust and by Marine per share of Marine Common Stock,
respectively, as well as the pro-forma dividend per share (based on the number
of shares of SouthTrust Common Stock to be issued per share of Marine Common
Stock) after the Merger.
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<PAGE> 35
<TABLE>
<CAPTION>
Pro-Forma
SouthTrust Marine Dividend Per
Common Stock Common Stock Share of
Dividend Per Dividend Per Marine
Share Share Stock(1)
------------ ------------ ------------
<S> <C> <C> <C>
1996:
First Quarter $ 0.1467 $ 0 0.0521
Second Quarter 0.1467 0 0.0521
Third Quarter 0.1467 0 0.0521
Fourth Quarter 0.1467 0.10 0.0521
1997:
First Quarter 0.1667 0 0.0592
Second Quarter 0.1667 0 0.0592
Third Quarter 0.1667 0 0.0592
Fourth Quarter 0.1667 0.10 0.0592
1998:
First Quarter 0.1900 0 0.0675
Second Quarter 0 0.0675
(through July____, 1998)
</TABLE>
(1) The pro-forma dividend per share of Marine Stock is equal to the
SouthTrust Common Stock dividend per share multiplied by the
Conversion Ratio and represents the dividend that would have been
distributed on the number of shares of SouthTrust Common Stock to be
received for each share of Marine Common Stock. See "COMPARISON OF THE
SOUTHTRUST COMMON STOCK AND THE MARINE STOCK."
Dividends paid by SouthTrust on the SouthTrust Common Stock are at the
discretion of SouthTrust's Board of Directors and are affected by certain legal
restrictions on the payment of dividends as described below, SouthTrust's
earnings and financial condition and other relevant factors. SouthTrust has
increased the dividend paid on the SouthTrust Common Stock for 28 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 legal restrictions on the payment of dividends as
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 bank subsidiary. As a national banking association, the amount
of dividends that SouthTrust's subsidiary bank may declare in one year, without
approval of the Comptroller, is the sum of the bank's retained net profits for
that year and its retained net profits for the preceding two years. Under rules
promulgated by the Comptroller, the calculation of net profits is more
restrictive under certain circumstances. Under the foregoing laws and
regulations, at December 31, 1997, approximately $472.5 million was available
for payment of dividends to SouthTrust by its bank subsidiary.
Dividends paid by Marine on the Marine Common Stock are at the
discretion of Marine's Board of Directors and are affected by certain legal
restrictions on the payment of dividends as described below, Marine's earnings
and financial condition and other relevant factors. The current policy of Marine
is to pay annual dividends.
COMPARISON OF THE
SOUTHTRUST COMMON STOCK
AND THE MARINE STOCK
The rights of Marine shareholders are governed by the Articles of
Incorporation of Marine, the Bylaws of Marine and the laws of the State of
Florida. The rights of SouthTrust stockholders are governed by the Restated
Certificate of Incorporation of SouthTrust, the By-laws of SouthTrust and the
laws of the State of Delaware. After the
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<PAGE> 36
Merger becomes effective, the rights of Marine 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 By-laws. The
following summary of the rights of the holders of SouthTrust Common Stock and
the holders of Marine Common Stock is qualified in its entirety by reference to
the Restated Certificate of Incorporation and By-laws of SouthTrust, the
Articles of Incorporation and Bylaws of Marine, the General Corporation Law of
the State of Delaware, and the Florida Business Corporation Act.
DIVIDENDS
The sources of funds for payments of dividends by SouthTrust are its
subsidiaries. Because Marine and the primary subsidiaries of SouthTrust are
financial institutions, payments made by such subsidiaries to SouthTrust and by
Marine to its 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 PRICE AND DIVIDEND
INFORMATION RESPECTING THE SOUTHTRUST COMMON STOCK AND THE MARINE STOCK" for
information concerning the effect of such limitations on SouthTrust's and
Marine'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 Florida Banking Code provides that a Florida banking corporation may
declare dividends equal to the net profits of the period to which such dividends
relate plus its retained net profits of the preceding two years. Further, with
the approval of the Florida Department of Banking and Finance (the "Florida
Department"), a bank may declare a dividend from retained net profits which
accrued prior to the preceding two years. Notwithstanding the foregoing, at
least 20% of the bank's net profits must be carried over to the bank's surplus
fund until the surplus fund shall equal at least the amount of its common and
preferred stock then issued and outstanding. In any event, no bank may declare
any dividend at a time at which its net income for the current year, combined
with the retained net income for the preceding two years, is a loss or which
would cause the capital accounts of the bank to fall below the minimum amounts
required by state or federal law. Under the foregoing laws and regulations, at
March 31, 1998, approximately $2,543,000 was available for payment of dividends
to its shareholders by Marine.
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 Marine are
vested in the holders of shares of SouthTrust Common Stock and Marine Common
Stock, respectively, with the holder of each of such share being entitled to one
vote. The holders of SouthTrust Common Stock and Marine 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 holders of 70% of the outstanding voting
securities of SouthTrust, except in cases in which either certain price criteria
and procedural requirements are satisfied or the transaction is recommended to
the 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 Marine do not contain any
prohibitions of or limitations on transactions between Marine 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.
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<PAGE> 37
Marine is subject to Section 607.0901 of the Florida Business
Corporation Act. That section generally provides that a business combination
with any person deemed to be an "interested shareholder" must be approved by the
affirmative vote of the holders of two-thirds of the voting shares other than
the shares beneficially owned by the interested shareholder unless any of the
following conditions apply to the transaction: (i) the transaction has been
approved by a majority of the disinterested directors; (ii) the corporation has
not had more than 300 shareholders of record at any time during the three years
proceeding the announcement of such transaction; (iii) the interested
shareholder has been a beneficial owner of at least 80% of the corporation's
outstanding voting shares for at least five years proceeding the announcement of
such transaction; (iv) the interested shareholder is the beneficial owner of at
least 90% of the outstanding voting shares of the corporation, exclusive of
shares acquired directly from the corporation in a transaction not approved by a
majority of disinterested directors; (v) the corporation is an investment
company registered under the Investment Company Act of 1940; or (vi)
consideration will be paid to holders of each class or series of voting shares
of the corporation and certain conditions concerning the consideration received
are met. An "interested shareholder" is defined as any person who directly or
indirectly owns more than 10% of the outstanding voting shares of a corporation.
Marine is also subject to Section 607.0902 of the Florida Business Corporation
Act. That section generally provides that, in the event a person acquires shares
in a corporation giving that person certain levels of voting control of the
corporation, such person's shares will have the same voting rights as other
shareholders' shares only to the extent granted by resolution approved by the
shareholders of the corporation.
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 will 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.
The Florida Business Corporation Act enumerates several situations in
which class voting is required with respect to amendments of a corporation's
articles of incorporation, whether or not the holders of such shares are
entitled to vote thereon by the provisions of the articles of incorporation, if
such amendments: (i) increase or decrease the aggregate number of authorized
shares of the class; (ii) effect an exchange reclassification of all or part of
the shares of the class into shares of another class; (iii) effect an exchange
reclassification, or create a right of exchange, of all or part of the shares of
another class into the 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 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 existing preemptive rights on
all or part of the shares of the class; or (ix) cancel or otherwise affect
rights to distributions or dividends that have accumulated but not yet been
declared on all or part of the shares of the class. Additionally, if a proposed
amendment to a corporation's articles of incorporation entitling two or more
series of shares to vote as separate classes would effect those two or more
series in the same or substantially similar way, shares of all the series so
effected must vote together as a single class on the proposed amendment. Voting
by class or series as a separate voting group is required on a plan of merger if
the plan contains a provision which, if contained in a proposed amendment to the
articles of incorporation, would entitle the class or series to vote as a
separate voting group on the proposed amendment.
The By-laws of SouthTrust provide that the members of SouthTrust's
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, roughly 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. Therefore, control of SouthTrust's 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 SouthTrust's Board of Directors can be
changed. But for this provision in the By-laws of SouthTrust, all directors
would stand for election at each annual meeting. The Bylaws of Marine provide
that the entire Board of Directors of Marine is to be elected by majority vote
of the shares entitled to vote at an annual meeting of shareholders at which
such election is to occur. Directors so elected serve for a term of one (1) year
and until their successors shall be elected and shall qualify.
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<PAGE> 38
Both the Delaware General Corporation Law and Florida Business
Corporation Act 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 By-laws 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 SouthTrust's
entire Board of Directors from office and such removal may be effected only for
cause. The vacancy created by any such removal will then be filled by majority
vote of the directors then in office and the successor director so elected will
fill the unexpired term of the director removed from office. The Bylaws of
Marine do not address removal of directors, and therefore the provisions of the
Florida Business Corporation act will control.
The By-laws of SouthTrust also provide that vacancies on SouthTrust's
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 and
Articles of Marine provide that the stockholders may authorize the Board of
Directors to increase the number of directors by no more than two directors and
appoint persons to fill the resulting vacancies. The Bylaws and Articles of
Marine do not otherwise address vacancies created in the Board of Directors.
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 By-laws
of SouthTrust, the stockholders are not permitted to call a special meeting of
stockholders or to require that SouthTrust's Board of Directors call such a
meeting. Under the Florida Business Corporation Act, 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 Marine, any action required to be taken by Marine 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 will 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 SouthTrust's classified Board of Directors,
may be amended only by the affirmative vote of the holders of 70% of the
outstanding voting stock of SouthTrust. Marine's Articles of Incorporation
generally may be amended as prescribed by law. The Bylaws of Marine may be
amended by the affirmative vote of a majority of the shareholders present and
voting at any special or annual meeting, provided a statement of the proposed
amendment is contained in the notice of the meeting, or by the affirmative vote
of a majority of all the directors present and voting at any regular or special
meeting of Marine's Board of Directors if a statement of the proposed amendment
is contained in the notice of the meeting.
The provisions contained in the Restated Certificate of Incorporation
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 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> 39
DISSENT AND APPRAISAL RIGHTS
A shareholder of Marine has dissent and appraisal rights pursuant to
Section 215a of the United States Code (the "NBA Dissent Provisions"). Section
215a of the United States Code is the controlling provision relating to the
dissent rights of Marine shareholders in light of Section 658.41(2) of the
Florida Banking Code which provides that federal, rather than Florida law, will
be controlling in the merger of a Florida bank into a national bank. Under the
NBA Dissent Provisions, a shareholder of Marine may dissent from the Merger and
receive the fair value of the shares of Marine Common Stock in lieu of the
stated merger consideration.
Under Section 262 of the General Corporation Law of Delaware (the
"Delaware Dissent Provisions"), a stockholder has no right to dissent to a
merger 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 stockholders. Since the shares of
SouthTrust Common Stock are listed on NASDAQ and held by more than 2,000
stockholders of record, the stockholders of SouthTrust do not have any right to
dissent pursuant to the Delaware Dissent Provisions.
RIGHTS ON LIQUIDATION
In the event of liquidation, the holders of SouthTrust Common Stock
and the holders of Marine 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 Marine Stock do not have
any preemptive rights to purchase additional shares of any class of securities,
including common stock, of SouthTrust or Marine, respectively, which may
hereafter be issued.
REPORTS TO STOCKHOLDERS AND SHAREHOLDERS
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 Marine Common Stock is not registered under the Exchange Act.
Marine provides its shareholders with annual reports containing audited
financial statements of Marine. In addition, Marine regularly files reports with
the FDIC and the Florida Department of Banking, certain of which may be
inspected by the public.
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 eight- twenty sevenths of a
Right issued pursuant to the Rights Agreement described under such caption. Each
Right entitles the holder thereof to purchase from SouthTrust one one-hundredth
of a share of Series A Preferred Stock at the Purchase Price. Marine has not
adopted any similar plan.
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<PAGE> 40
SUPERVISION AND REGULATION
SOUTHTRUST
General
SouthTrust is a bank holding company within the meaning of the Bank
Holding Company Act and is registered with the Federal Reserve Board. ST-Bank,
SouthTrust's banking subsidiary, is subject to restrictions under federal law
which limit the transfer of funds by ST-Bank to SouthTrust and its nonbanking
subsidiaries, whether in the form of loans, extensions of credit, investments or
asset purchases. Such transfers by ST-Bank to SouthTrust or any nonbanking
subsidiary are limited in amount to 10% of ST-Bank's capital and surplus and,
with respect to SouthTrust and all such nonbanking subsidiaries, to an aggregate
of 20% of ST-Bank's capital and surplus. Furthermore, such loans and extensions
of credit are required to be secured in specified amounts. The Bank 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 nonbanking 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 periodic 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.
The approval of the Comptroller is required for any dividend proposed
to be paid by ST-Bank to SouthTrust if the total of all dividends declared by
ST-Bank in any calendar year would exceed the total of its retained net profits,
as defined by the Comptroller, 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. Under the foregoing laws and
regulations, at March 31, 1998, approximately $341.3 million was available for
payment of dividends to SouthTrust by its subsidiaries, primarily ST-Bank. The
payment of dividends by ST-Bank may also be affected by other factors, such as
the maintenance of adequate capital for ST-Bank. In addition to the foregoing
restrictions, the Federal Reserve Board has the power to prohibit the payment of
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 Comptroller has the authority to
prohibit the payment of dividends by a national bank when it determines such
payment to be an unsafe and unsound banking practice.
Capital Adequacy
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 under the guidelines, a bank
must have a total risk-based capital ratio in excess of 10%. At March 31, 1998,
ST-Bank was considered "well capitalized." Under these guidelines, at least half
of the total capital is to be comprised of common equity, retained earnings and
a limited amount of perpetual preferred stock, after subtracting certain
intangibles, 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. ST-Bank is subject to
similar capital requirements adopted by the Comptroller. In addition, the
Federal Reserve Board, the Comptroller and the Federal Deposit Insurance
Corporation (the "FDIC") have adopted a minimum leverage ratio (Tier 1 capital
to adjusted quarterly average 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 March 31, 1998, ST-Bank had a Tier 1 capital ratio of
7.66%, a total risk-based capital ratio of 11.42% and a leverage ratio of 6.63%.
Failure to meet 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,
issuance of a capital directive, a prohibition on the taking of brokered
deposits and certain other restrictions on its business.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") substantially revised the depositary institution regulatory and
funding provisions of the Federal Deposit Insurance Act as well as several other
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<PAGE> 41
federal banking statutes. Among other things, FDICIA requires the federal
banking regulators to take prompt corrective action in respect of depositary
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, is adequately capitalized if it meets each such measure, is
undercapitalized if it fails to meet any such measure, is significantly
undercapitalized if it is significantly below such measure and is critically
undercapitalized if it fails to meet any critical capital level set forth in
applicable regulations. The critically undercapitalized level occurs where
tangible equity is less than 2% of total tangible assets or less than 65% of the
minimum leverage ratio to be prescribed by regulation (except to the extent that
2% would be higher than such 65% level). A depository institution may be deemed
to be in a capitalization category that is lower than is indicated by its actual
capital position if it receives an unsatisfactory examination rating.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions 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.
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.
The Riegle-Neal Interstate Banking and Branching Efficiency Act
In September 1994, the Interstate Banking Act became law. The
Interstate Banking Act provides that as of 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 were preempted as of the effective date, although states were
permitted to require that target banks located within the state be in existence
for a period of up to 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, the Interstate Banking Act provides that as of June 1,
1997, adequately capitalized and managed banks may engage in interstate
branching by merging banks in different states and allowing banks to maintain
branches in states other than the states where they maintain their principal
place of business. Acting pursuant to this authorization, SouthTrust, effective
June 2, 1997, consolidated all of its then existing banking subsidiaries into
its largest banking subsidiary and changed the subsidiary's name to SouthTrust
Bank, National Association.
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 agency. 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.
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<PAGE> 42
MARINE
Marine is chartered by the State of Florida. It is subject to
comprehensive regulation, examination and supervision by the Florida Department
of Banking and Finance ("Florida Department") and the FDIC, and is subject to
other laws and regulations applicable to banks. Such regulations include
limitations on loans to a single borrower and to its directors, officers and
employees; restrictions on the opening and closing of branch offices; the
maintenance of required capital and liquidity ratios; the granting of credit
under equal and fair conditions; disclosure of the cost and terms of such
credit; and restrictions as to permissible investments. Marine is examined
periodically by both the Florida Department and the FDIC, to each of whom it
submits regular periodic reports regarding its financial condition and other
matters. Both the Florida Department and the FDIC have a broad range of powers
to enforce regulations under their respective jurisdictions, and to take
discretionary actions determined to be for the protection of the safety and
soundness of Marine, including the institution of cease and desist orders and
the removal of directors and officers. Marine's deposit accounts are insured by
the Bank Insurance Fund of the FDIC up to a maximum of $100,000 per insured
depositor. The FDIC issues regulations, has authority to conduct periodic
examinations, requires the filing of reports and generally supervises the
operations of its insured banks. This supervision and regulation is intended
primarily for the protection of depositors.
Any insured bank which is not operated in accordance with or does not
conform to FDIC regulations, policies and directives may be sanctioned for
non-compliance. Proceedings may be instituted against any insured bank or any
director, officer, or employee of such bank engaging in unsafe and unsound
practices, including the violation of applicable laws and regulations. The FDIC
has the authority to terminate insurance of accounts pursuant to procedures
established for that purpose.
CERTAIN INFORMATION CONCERNING THE BUSINESS OF MARINE
GENERAL
Marine was organized in 1986 as a banking corporation under the laws
of the State of Florida and began operation on November 10, 1986 with the
primary purpose of serving the banking needs of the residents of Pinellas
County, Florida and surrounding areas. Since its organization, Marine has
provided most traditional commercial banking services including, but not limited
to, interest and non-interest bearing checking and savings accounts,
certificates of deposit, individual retirement accounts, and commercial, real
estate mortgage, and installment consumer loans.
Marine provides commercial banking services primarily to residents of
Pinellas County, Florida through its singular banking office located at 9400 -
9th Street North, St. Petersburg, Florida 33702. Deposits of Marine Bank are
insured by the Federal Deposit Insurance Corporation ("FDIC"). Marine acts as
issuing agent for U.S. Savings Bonds and travelers checks. It offers collection
teller services, wire transfer facilities, safe deposit, 24 hour voice response,
and night depository facilities. The transaction accounts and certificates of
deposits are tailored to Marine's principal market area at rates competitive
with those offered in Marine's primary service area. On December 31, 1997,
Marine had total assets of $58.4 million, total deposits of $48.4 million, and
stockholders' equity of $7.3 million.
The business of Marine consists primarily of attracting retail
deposits from the general public in the areas served by its banking office and
using those funds to make both secured and unsecured commercial loans, as well
as loans for the purchase, construction, financing and refinancing of commercial
and residential real estate in its primary market area in southern portions of
Pinellas County consisting of St. Petersburg, Largo, Pinellas Park, and
surrounding communities. Marine also makes consumer loans. The principal sources
of funds for Marine's lending and investment activities are deposits, repayments
of loans and proceeds from the sale of investment securities. Marine's revenues
are derived primarily from interest on loans, and investments and fees received
in connection with its lending and deposit activities. Marine's principal
expenses are the interest paid on deposits, general operating expenses, and
administrative expenses.
Marine offers a wide range of short to medium-term commercial and
personal loans. Commercial loans include both secured and unsecured loans for
working capital (including inventory and receivables), business expansion
(including acquisition of real estate and improvements), purchase of equipment
and machinery, and Small Business Administration ("SBA") loans. Consumer loans
include secured and unsecured loans for financing automobiles, boats, home
improvements and personal investments. Marine also originates a variety of
residential real estate loans, including conventional mortgage loans
collateralized by first mortgage liens to enable home owners to purchase,
refinance or improve residential real property, as well as home equity lines of
credit generally secured by second mortgage liens.
Marine is a member of Tampa Bay Community Reinvestment Corporation,
("TBCRC"), whose purpose is to make loans to low to moderate income housing
applicants.
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Marine provides a variety of corporate and personal banking services
to individuals, businesses and other institutions located in its market area.
Deposit services include certificates of deposit, individual retirement
accounts. checking and other demand deposit accounts, interest bearing
transaction accounts, savings accounts and money market deposit accounts. The
transaction accounts and time certificates are tailored to the principal market
areas at rates competitive to those in the area. All deposit accounts are
insured by the FDIC to the maximum extent provided by law.
Marine offers ATM cards (with access to local, state, and national
networks), safe deposit boxes, wire transfers, direct deposit services, and
automatic drafts for various accounts. Marine also offers both personal and
corporate VISA and MasterCard credit cards issued by a correspondent bank which
assumes the risk of repayment of credit extended through the use of such cards.
Marine encounters competition both in making loans and attracting
deposits. The deregulation of the banking industry and the evolution of
interstate banking has created a highly competitive environment for commercial
banking in Marine's market area. In one or more aspects of its business, Marine
competes with other commercial banks, savings and loan associations, credit
unions, finance companies, mutual funds, insurance companies, securities
brokerage and investment management firms, and other financial intermediaries
operating in its market and elsewhere. Most of these competitors, some of which
are affiliated with large bank holding companies, have substantially greater
resources and higher lending limits than Marine, and they may offer certain
services, such as fiduciary services, that Marine does not provide.
Marine's primary market is served by approximately 20 other commercial
banks, with 117 branch offices, and 3 thrift institutions with 10 offices. In
addition, approximately 14 credit unions have offices in Marine's immediate
market area.
Competition among financial institutions is based upon interest rates
offered on deposit accounts, interest rates charged on loans and other
extensions of credit, service charges, the quality of the services rendered, the
convenience of banking facilities, and, in the case of commercial borrowers,
relative lending limits.
Marine is subject to examination, regulation and comprehensive
supervision by the Florida Department and the FDIC. As is the case with banking
institutions generally, Marine's operations are significantly influenced by
general economic conditions and by related monetary and fiscal policies of the
Federal Reserve System. Deposit flows and interest rates on competing
investments and general market rates of interest influence Marine's cost of
funds. Lending activities are affected by the demand for financing of real
estate and other types of loans, which in turn are affected by the interest
rates at which such financing may be offered and other factors affecting local
demand and availability of funds.
EMPLOYEES
At December 31, 1997, Marine had 18 full-time and 1 part-time
employees, none of whom is represented by a collective bargaining agreement.
Management believes that employee relations are excellent.
DESCRIPTION OF PROPERTIES
Marine owns the land and building housing its singular banking office,
which is located at 9400 - 9th Street North, St. Petersburg, Florida 33702. This
property is a 1 acre parcel with 4,576 square feet of building. The bank
building includes four private offices, a walk-in vault containing 243 safe
deposit boxes, four customer service desks, and five inside teller stations. In
addition, the main office has three covered drive-through banking lanes.
LEGAL PROCEEDINGS
Marine is involved in routine legal proceedings occurring in the
ordinary course of business that, in the aggregate, are believed by management
to be immaterial to Marine's financial condition and results of operations.
REGULATION AND LEGISLATION
As a state-chartered commercial bank, Marine is subject to extensive
regulation by the Florida Department and the FDIC. Marine files reports with the
Florida Department and the FDIC concerning its activities and financial
condition, in addition to obtaining regulatory approvals prior to entering into
certain transactions such as mergers with or acquisitions of other financial
institutions. Periodic examinations are performed by the Florida Department and
the FDIC to monitor Marines compliance with the various regulatory requirements.
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CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
Marine's directors and officers and certain business organizations and
individuals associated with them have been customers of and have had banking
transactions with Marine and are expected to continue such transactions in the
future. In connection with such transactions, Marine's directors and officers
from time to time have borrowed funds from Marine for various business and
personal reasons. The extensions of credit made by Marine to its directors and
officers (i) were made in the ordinary course of business, (ii) were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and (iii)
did not involve more than a normal risk of collectability or present other
unfavorable features.
PRINCIPAL AND MANAGEMENT
The following table sets forth, as of the date of this Prospectus, (a)
the name and address of the persons known by Marine to be beneficial owners of
more than 5% of the shares of Marine Common Stock and the name of each of
Marine's directors; (b) the number and percent of the shares of Marine Common
Stock owned by each such person and by all of the directors and executive
officers of Marine as a group; and (c) the estimated number of shares of
SouthTrust Bank Common Stock each such person or group is expected to receive as
a result of the Merger (assuming that such persons do not exercise their
dissenters' rights), calculated by multiplying the number of shares of Marine
Common Stock beneficially owned by such person or group by the Exchange Ratio.
<TABLE>
<CAPTION>
SOUTHTRUST BANK
STOCK EXPECTED
TO BE
SHARES BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED (1) PERCENT OWNED PERCENT
------------------------ ------------------- ------- ---------------- -------
<S> <C> <C> <C> <C>
Frederick L. Bickley 25,073 ( 2) 1.87% 8,901 *
Charles H. Block 60,507 ( 3) 4.50% 21,480 *
Norris E. Counts 86,305 ( 4) 6.42% 30,638 *
Hardy L. Ericson 42,350 ( 5) 3.15% 15,034 *
Robert E. Fehr 56,947 ( 6) 4.24% 20,216 *
James Macaluso 32,754 ( 7) 2.44% 11,628 *
Gordon R. Poucher 77,032 ( 8) 5.73% 27,346 *
Dennis G. Ruppel 131,186 ( 9) 9.76% 46,571 *
George Ruppel 51,706 (10) 3.85% 18,356 *
Henry B. Sayler 71,891 (11) 5.35% 25,521 *
ALL DIRECTORS & 635,751 47.31% 225,691 *
EXECUTIVE OFFICERS AS
A GROUP (10 PERSONS)
</TABLE>
- -------------------------------
*Amount represents less than 1%
(1) Under applicable SEC regulations, shares are considered to be
beneficially owned by a person if such person either (a) directly or
indirectly has or shares the power to vote or dispose of the shares,
whether or not such person has any economic interest in the shares, or
(b) has the right to acquire such shares within 60 days of the
particular date. Unless otherwise indicated, the named beneficial
owner has the sole voting and investment power with respect to the
shares reported.
(2) This amount consists of 12,184 shares owned by Frederick L. Bickley,
6,445 shares held in his IRA, and 6,444 shares held in his wife's IRA.
This amount excludes 13,585 shares owned by his wife, of which Mr.
Bickley disclaims beneficial ownership.
(3) This amount consists of 6,723 shares which Mr. Block votes as Trustee
of The Angela Nicole Hooker Trust, 6,723 shares as Trustee of The Ryan
Nathaniel Hooker Trust, 6,723 shares as Trustee of the Kyle D. Hooker
Trust, 6,723 as Trustee of The Jeffery P. Brandes trust, 6,723 shares
as Trustee of The Polly C. Brandes Trust,
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<PAGE> 45
6,723 shares as Trustee of The Tyler S. Brandes Trust, 6,723 shares as
Trustee of The Emily M. Tibbetts Trust, 6,723 shares as Trustee of The
Michael D. Tibbetts Trust and 6,723 shares as Trustee of The Jessica
Lee Tibbetts Trust. Mr. Block disclaims beneficial ownership for any
of the trusts.
(4) This amount consists of 32,585 shares owned jointly with his wife and
53,720 shares held in his IRA. Mr. Counts address is 1791 Tanglewood
Drive NE, St. Petersburg, Florida 33702.
(5) This amount consists of 18,002 shares which Mr. Ericson owns as
Trustee of the Hardy L. Ericson Revocable Trust dated May 24, 1985 and
24,348 shares owned by his wife as Trustee of the Mary W. Ericson
Revocable Trust dated June 28, 1995.
(6) This amount consists of 50,217 shares owned jointly with his wife,
1,346 shares owned jointly with his daughter (Diana Jo Fehr), 1,346
shares owned jointly with his son (Robert E. Fehr, Jr.), 1,346 shares
owned jointly with his son (Steven Eugene Fehr), 1,346 Shares owned
jointly with his daughter (Sherry Lynn Strickland), and 1,346 shares
owned jointly with his daughter (Teresa Ann Strickland).
(7) This amount consists of 22,420 shares owned by James Macaluso, 8,410
shares which Mr. Macaluso owns as Trustee of the James Macaluso Trust
U/A/D 11/1/90, and 1,924 shares which Mr. Macaluso owns as Trustee of
the Macaluso Family Trust U/A/D 10/14/92 FBO James Macaluso.
(8) This amount consists of 50,679 shares owned individually and 23,313
shares held in his IRA, and 3,040 shares held in A. Randy's Electric,
Inc. Mr. Poucher's address is 9087 Baywood Park Drive, Seminole,
Florida 33777.
(9) This amount consist of 64,018 shares owned individually and 67,168
shares voted by Mr. Ruppel as Trustee of The George Ruppel Family
Trust of which Mr. Ruppel is beneficial owner of only 3,535 shares
(one nineteenth interest as beneficiary of said trust). This amount
excludes 49,425 shares owned by his wife, of which Mr. Ruppel
disclaims beneficial ownership. Mr. Ruppel's address is 295 Bayside
Drive, Clearwater Beach, Fl. 33767.
(10) This amount consists of 51,706 shares owned jointly with his wife.
This amount excludes 54,486 shares owned by his wife, of which Mr.
Ruppel disclaims beneficial ownership.
(11) This amount consists of 31,202 shares owned by Mr. Sayler as trustee
of the Henry Sayler Trust DTD 4/6/66, 4,151 shares owned by his wife
as trustee of the Wyline C. Sayler Trust DTD 5/10/66, 26,199 held in
his IRA, and 10,339 shares held in his wife's IRA. Mr. Sayler's
address is 1221 Darlington Oak Circle NE, St. Petersburg, Florida
33703.
42
<PAGE> 46
MARINE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Marine conducts a general commercial banking business which consists
of attracting deposits from the general public and applying those funds to the
origination of loans for commercial, consumer, and residential purposes.
Marine's profitability depends primarily on net interest income, which is the
difference between interest income generated from interest-earning assets (i.e.,
loans and investments) less the interest expense incurred on interest-bearing
liabilities (i.e., customer and borrowed funds). Net interest income is affected
by the relative amounts of interest-earning assets and interest-bearing
liabilities and the interest rates paid on these balances.
Net interest income is dependent on Marine's interest rate spread,
which is the difference between the average yield earned on its interest-earning
assets and the average rate paid on its interest-bearing liabilities. When
interest-earning assets approximate or exceed interest-bearing liabilities, any
positive interest rate spread will generate net interest income. Accordingly,
net interest income is strongly impacted by levels of deposits which do not bear
interest costs. During 1997, Marine maintained a net yield on average earning
assets of 5.08%. The net yield is impacted by interest rates, deposit flows, and
loan demands.
Additionally, Marine's profitability also is affected by such factors
as the level of non-interest income and expenses, the provision for loan losses
and the effective tax rate. Non-interest income consists primarily of service
charges and other fees, rental income and sales of investment securities.
Non-interest expenses primarily consist of compensation and benefits, occupancy
related expenses, and other operating expenses.
Since the commencement of banking operations in November 1986, Marine
has experienced a steady growth of assets to its $63.2 million level at March
31, 1998. Marine has sustained its growth and maintained its capital position
through internally generated profits.
The following discussion and analysis of earnings and related
financial data is presented herein to assist investors in understanding the
financial condition and results of operations of Marine for the fiscal years
ended December 31, 1997 and 1996, and with respect to the three month period
ending March 31, 1998, compared to the three month period ending March 31, 1997.
Results for the three month period ended March 31, 1998, may not be indicative
of the results for the entire year ending on December 31, 1998. This discussion
should be read in conjunction with the consolidated financial statements and
related footnotes presented elsewhere herein.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 1998 and 1997.
For the three months ended March 31, 1998, Marine reported net income
of approximately $250,000, or $0.19 per share, as compared to net income of
$231,000, or $0.17 per share for the three month period ending March 31, 1997,
an increase of approximately $19,000. Net income for the three month period
ending March 31, 1998, was approximately 8.2% higher than the three months ended
March 31, 1997, due principally to an increase in assets. Net interest income
increased to approximately $664,000 for the three months ended March 31, 1998,
compared with approximately $636,000 for the three months ended March 31, 1997.
A substantial portion of this increase was attributable to an increase in
assets.
Total assets at March 31, 1998, were approximately $63.2 million, an
increase of $8.0 million or 14.5% from March 31, 1997. This increase was the
result of growth in assets.
Marine's loans at March 31, 1998, totaled approximately $35.9 million,
net, or approximately 57% of total assets. As noted above, of the approximately
$35.9 million net portfolio loans, $28.8 million were commercial loans, $5.7
million were residential real estate construction and mortgage loans and $2.0
million were installment loans. The allowance for loan losses was $595,000 at
March 31, 1998 and at March 31, 1997. The loan loss allowance represents
approximately 1.57% of total loans at March 31, 1998, down from 1.59% at March
31, 1997.
43
<PAGE> 47
Comparison of the Fiscal Years Ended December 31, 1997 and 1996.
For the year ended December 31, 1997, Marine reported net income of
approximately $980,000, or $0.73 per share, as compared to net income of
approximately $917,000 or $0.69 per share for the year ended December 31, 1996.
The 1997 net income compares favorably to net income for the year ended December
31, 1996, due principally to an increase in earning assets. Net interest income
on a fully taxable equivalent basis for the year ended December 31, 1997, was
approximately $2,656,000, or 5.08% of average earning assets, as compared to
$2,423,000, or 4.92%, for the year ended December 31, 1996. The increase in net
interest income was due to increased earning assets. See "MARINE MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Net
Interest Income" and "-- Provisions for Loan Losses".
Marine's total assets at December 31, 1997, were approximately $58.5
million, an increase of approximately $2.6 million or 4.6%, from December 31,
1996.
Marine's loans at December 31, 1997, totaled approximately $35.4
million, net, or approximately 61% of total assets. As noted above, of the $35.4
million net loans, $28.6 million were commercial loans, $5.5 million were
residential real estate construction and mortgage loans and $2.0 million were
installment loans. The allowance for loan losses was $575,000 at December 31,
1997, and at December 31, 1996. The loan loss allowance represents approximately
1.59% of total loans, at December 31, 1997, down from 1.61% at December 31,
1996. Management believes the current level in allowance for loan losses is
adequate to absorb potential losses in the loan portfolio. See "MARINE
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS -- Provisions for Loan Losses."
NET INTEREST INCOME
Net interest income, which has constituted the principal source of
income for Marine, represents the difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities.
The principal interest-earning assets are loans made to businesses and
individuals. Interest-bearing liabilities primarily consist of time deposits,
interest paying checking accounts ("NOW accounts"), retail savings deposits and
money market accounts. Funds generated by these interest-bearing liabilities are
invested in interest-earning assets. Accordingly, net interest income depends
upon the volume of average interest-earning assets and average interest-bearing
liabilities and the interest rates earned or paid on them.
Net interest income for the three month periods ended March 31, 1998,
and 1997, was approximately $664,000 and $636,000, respectively, and the net
yields on average interest-earning assets were 4.63% and 4.82%, respectively.
Net interest income for the fiscal years ended December 31, 1997 and
1996, totaled approximately $2,656,000 and $2,423,000, respectively, and the net
yields on average interest-earning assets were 5.08% and 4.92%, respectively.
Total interest expense for the years ended December 31, 1997, and December 31,
1996 was approximately $1,803,000 and $1,698,000, respectively, and the average
cost of interest bearing liabilities for each period was 4.51% and 4.45%,
respectively.
The following table shows for each category of interest-earning assets
and interest bearing liabilities the average amount outstanding, the interest
earned or paid on such amount, and the average rate earned or paid for the three
months ended March 31, 1998, and 1997, and for the years ended December 31,
1997, and 1996. The table also shows the average rate earned on all
interest-earning assets, the average rate paid on all interest-bearing
liabilities and the net yield on average interest-earning assets for the same
periods.
44
<PAGE> 48
COMPARATIVE AVERAGE BALANCES, INTEREST, AND AVERAGE YIELDS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
--------------------------- ------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- -------- ------ ------- ------- ---------
Interest earning assets:
<S> <C> <C> <C> <C> <C> <C>
Loans receivable, net $35,786 $ 854 9.55% $35,577 $ 843 9.48%
Investment securities, taxable 16,577 246 5.94% 14,620 220 6.02%
Investment securities nontaxable 0.00% 0.00%
Federal funds sold 5,058 68 5.38% 2,580 33 5.12%
------- -------- ------ ------- ------- ---------
Total interest earning assets $57,421 $ 1,168 8.14% $52,777 $ 1,096 8.31%
Non-interest earning assets:
Cash and due from banks $ 1,821 $ 1,674
Other assets 1,661 1,868
------- -------
Total non-interest earning assets $ 3,482 $ 3,542
------- -------
Total assets $60,903 $56,319
======= =======
Interest bearing liabilities:
Deposits
Interest bearing demand and
NOW deposits $ 5,109 $ 30 2.35% $ 4,177 $ 25 2.39%
Savings deposits 1,246 7 2.25% 1,272 7 2.20%
Money market deposits 7,421 53 2.86% 6,740 47 2.79%
Time deposits 25,596 352 5.50% 27,239 364 5.35%
Repurchase agreements 5,350 62 4.64% 1,684 17 4.04%
------- -------- ---- ------- -------- ---------
Total interest bearing liabilities $44,722 $ 504 4.51% $41,112 $ 460 4.48%
Non-interest bearing liabilities:
Non-interest bearing deposits $ 7,759 $ 7,598
Other liabilities 936 1,007
Total non-interest bearing ------- -------
liabilities $ 8,695 $ 8,605
------- -------
Total liabilities $53,417 $49,717
======= =======
Stockholder's equity $ 7,486 $ 6,602
------- -------
Total liabilities
and stockholder's equity $60,903 $56,319
======= =======
Net interest income $ 664 $ 636
======== ========
Net yield on average earning assets 4.63% 4.82%
==== =========
</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1997 1996
---------------------------------- --------------------------------
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
-------- --------- --------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Loans receivable, net $35,055 $ 3,429 9.78% $32,506 $3,136 9.65%
Investment securities, taxable 14,560 886 6.09% 14,047 841 5.99%
Investment securities nontaxable 0.00% 0.00%
Federal funds sold 2,661 144 5.41% 2,729 144 5.28%
------- --------- --------- ------- ------ ---------
Total interest earning assets $52,276 $ 4,459 8.53% $49,282 $4,121 8.36%
Non-interest earning assets:
Cash and due from banks $ 1,622 $ 1,575
Other assets 1,861 2,271
Total non-interest earning assets $ 3,483 $ 3,846
Total assets $55,759 $53,128
------- -------
Interest bearing liabilities:
Deposits
Interest bearing demand and
NOW deposits $ 4,676 $ 111 2.37% $ 4,073 $ 97 2.38%
Savings deposits 1,267 29 2.29% 1,165 26 2.23%
Money market deposits 6,441 168 2.61% 6,391 167 2.61%
Time deposits 25,453 1,404 5.52% 24,571 1,329 5.41%
Repurchase agreements 2,140 91 4.25% 1,991 97 3.97%
------- --------- --------- ------- ------ ---------
Total interest bearing liabilities $39,977 $ 1,803 4.51% $38,191 $1,698 4.45%
Non-interest bearing liabilities:
Non-interest bearing deposits $ 7,799 $ 7,348
Other liabilities 1,017 1,499
------- -------
Total non-interest bearing
liabilities $ 8,816 $ 8,847
------- -------
Total liabilities $48,793 $47,038
------- -------
Stockholder's equity $ 6,966 $ 6,090
Total liabilities and -------
and stockholder's equity $55,759 $53,128
======= =======
Net interest income $ 2,656 $2,423
========= ======
Net yield on average earning assets 5.08% 4.92%
========= =========
</TABLE>
The effect on interest income, interest expense, and net interest
income for the periods indicated, of changes in average balance and rate, is
shown below. The effect of a change in average balance has been determined by
applying the average rate at the year-end for the earlier period to the change
in average balance at the year-end for the later period. Changes resulting from
average balance/rate variances are included in changes resulting from volume.
45
<PAGE> 49
RATE/VOLUME ANALYSIS OF NET INCOME
<TABLE>
<CAPTION>
Three Months Ended Year Ended Year Ended
March 31, December 31, December 31,
1998 Compared to 1997 1997 Compared to 1996 1996 Compared to 1995
--------------------- --------------------- ---------------------
Increase (Decrease) Due to Increase (Decrease) Due to (Increase (Decrease) Due to
-------------------------- -------------------------- ---------------------------
Average Average Total Average Average Total Average Average Total
Volume Rate Change Volume Rate Change Volume Rate Change
------- -------- ------ ------- ------ ------ ------- ------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest earned on:
Loans receivable, net $ 5 $ 6 $ 11 $ 249 $43 $292 $ 267 $(298) $ (31)
Investment securities, taxable 29 (3) 26 31 14 45 74 (2) 72
Investment securities, non-taxable -- -- -- -- -- -- -- -- --
Federal funds sold 33 2 35 (4) 4 -- (59) (21) (80)
---- ---- ---- ----- --- ---- ----- ----- -----
Total interest income 67 5 72 276 61 337 282 (321) (39)
Interest paid on:
Interest bearing demand and $ 5 $ -- $ 5 $ 14 $-- $ 14 $ 6 $ -- $ 6
NOW deposits -- 1 1 2 1 3 (1) -- (1)
Savings deposits 5 1 6 1 -- 1 (14) 4 (10)
Money market deposits (23) 11 (12) 49 27 76 114 23 137
Time deposits 43 3 46 6 6 12 (44) 20 (24)
---- ---- ---- ----- --- ---- ----- ----- -----
Repurchase agreements 30 16 46 72 34 106 61 47 108
Total interest expense ---- ---- ---- ----- --- ---- ----- ----- -----
Change in interest income $ 37 $(11) $ 26 $ 204 $27 $231 $ 221 $(368) $(147)
==== ==== ==== ===== === ==== ===== ===== =====
</TABLE>
PROVISION FOR LOAN LOSSES
Due to the adequacy of the loan loss reserve, in the opinion of the
Bank's Directors no addition was made to the loan loss allowance during the
years of 1996 or 1997 or during the first three months of 1998.
The level of loan loss allowance has been based upon management's
continual review of the loan portfolio. Management reviews the loans by type and
nature of collateral and establishes an appropriate provision for loan losses
based upon historical charge-off experience, the present and prospective
financial condition of specific borrowers, industry concentrations within the
loan portfolio, size of the credit, existence and quality of any collateral,
profitability, and general economic conditions.
The total allowance for loan losses was $575,000 (or 1.59% of total
loans) in 1997 and $575,000 (or 1.61% of total loans) in 1996. Marine did not
have any non-accrual loans as of March 31, 1998 and 1997, or December 31, 1997
and 1996, respectively.
Although management uses the best information available to make
determinations with respect to the allowance for loan losses, future adjustments
may be necessary if economic conditions differ substantially from the
assumptions used. Material additions to Marine's allowance for loan losses would
result in a decrease in Marine's net income and capital. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS OF MARINE - Results of Operations
Allowance for Loan Losses."
NON-INTEREST INCOME
For the three months ended March 31, 1998 and 1997, non-interest
income was approximately $31,000 and $31,000, respectively.
46
<PAGE> 50
Non-interest income decreased to approximately $124,000 for the year
ended December 31, 1997, from $191,000 for year ended December 31, 1996, a
decrease of 35%. The decrease in non-interest income was primarily the result of
a reduction in service fees.
The following table compares the various categories of non-interest
income for the periods indicated.
NON-INTEREST INCOME AND NON-INTEREST EXPENSE CATEGORIES
<TABLE>
<CAPTION>
Three Months Ended March 31, Years Ended December 31,
----------------------------- -----------------------
1998 1997 1997 1996
---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Service Charge and other fees $ 31 $ 31 $ 124 $ 191
Rental income - - - -
Securities gain (loss), net - - - -
------ ------ ------ ------
Total non-interest income $ 31 $ 31 $ 124 $ 191
====== ====== ====== ======
</TABLE>
NON-INTEREST EXPENSE
Non-interest expense for the three months ended March 31, 1998 and
1997, totaled approximately $294,000 and $295,000, respectively.
Non-interest expense increased from approximately $1,157,000 for the
year ended December 31, 1996, to $1,222,000 for the year ended December 31,
1997, due primarily to increased salary and equipment expenses.
The following table summarizes the various categories of non-interest
expense for periods indicated.
NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
Three Months Ended March 31, Years Ended December 31,
------------------------------ ----------------------------
1998 1997 1997 1996
------- ------- --------- ---------
<S> <C> <C> <C> <C>
Salaries and employee benefits $ 162 $ 160 $ 633 $ 605
Occupancy expense 19 16 72 68
Marketing and advertising 1 - 3 2
Data processing fees 19 19 75 71
Furniture and equipment 13 15 65 60
FDIC premiums 1 1 5 2
Professional fees 8 10 34 27
Printing, stationery and supplies 7 6 28 25
Director fees and expenses 20 23 134 115
Postage 7 6 23 22
Other expenses 37 39 150 160
------- ------- --------- ---------
Total non-interest expense $ 294 $ 295 $ 1,222 $ 1,157
======= ======= ========= =========
</TABLE>
INCOME TAXES
For the three-month periods ended March 31, 1998 and 1997, Marine's
provision for income taxes was approximately $151,000 and $140,000,
respectively. The increase was the result of increased earnings for the three-
month period in 1998 as compared to 1997.
For the year ended December 31, 1997, Marine's provision for income
taxes was approximately $576,000, as compared to $542,000 for the year ended
December 31, 1996, as a result of increased earnings during 1997.
47
<PAGE> 51
ASSET/LIABILITY MANAGEMENT
Marine seeks to maintain a program of asset and liability management
designed to limit its vulnerability to interest rate risk. The principal measure
of Marine's exposure to interest rate risk is its interest rate sensitivity
"gap" which is the difference between interest rate sensitive assets and
liabilities. An asset or liability is considered to be interest rate sensitive
if it will reprice or mature within the time period analyzed, usually one year.
A gap is considered positive when the amount of interest rate sensitive assets
exceeds the amount of interest rate sensitive liabilities. When the opposite
occurs, the gap is considered to be negative. During periods of increasing
interest rates, a negative gap would tend to adversely affect net income while a
positive gap would tend to result in an increase in net interest income. During
periods of decreasing interest rates, the inverse would tend to occur. If the
maturities of Marine's assets and liabilities were equally flexible and moved
concurrently, the impact of any material or prolonged increase (or decrease) in
interest rates or net interest income would be minimal.
Marine's asset and liability policies are directed toward matching,
to the extent possible, its interest rate sensitive assets and liabilities to
achieve and maintain a satisfactory differential between its interest income and
interest expense regardless of the general level and movement of interest rates.
To this end, an Asset and Liability Management Committee ("ALCO Committee")
reviews on a regular basis the duration of asset and liability categories.
The following tables set forth the interest rate-sensitive assets and
liabilities of Marine at March 31, 1998, and December 31, 1997, which are
expected to mature or are subject to repricing in each of the time periods
indicated. The tables may not be indicative of Marine's rate sensitive position
at other points in time. The balances have been derived based on the financial
characteristics of the various assets and liabilities. Adjustable and floating
rate assets are included in the period in which interest rates are next
scheduled to adjust rather than their scheduled maturity dates. Fixed rate loans
are shown in the periods in which they are scheduled to be repaid. Repricing of
time deposits is based on their scheduled maturities. Deposits without a stated
maturity are repriced based on known characteristics of the deposit product.
48
<PAGE> 52
INTEREST RATE SENSITIVITY ANALYSIS AS OF MARCH 31, 1998
(Dollars in Thousands)
TERM TO REPRICING
<TABLE>
<CAPTION>
90 Days 91 Days More Than
or Less to 1 Year 1 Year Total
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Interest-earning assets
Federal funds sold $ 5,058 $ - $ - $ 5,058
Investment securities, taxable 0 3,494 13,042 16,536
Loans, net 14,015 6,502 $ 16,026 $ 36,543
------------ ------------- ------------ ------------
Total interest-earning assets $ 19,073 $ 9,996 $ 29,068 $ 58,137
============ ============= ============ ============
Interest-bearing liabilities:
Interest bearing demand and
NOW deposits $ 5,093 $ - $ - $ 5,093
Savings deposits 1,275 - - 1,275
Money market deposits 7,543 - - 7,543
Time deposits 6,600 10,611 9,056 26,267
Repurchase agreements 7,144 - - 7,144
------------ ------------- ------------ ------------
Total interest-bearing liabilities $ 27,655 $ 10,611 $ 9,056 $ 47,322
------------ ------------- ------------ ------------
Interest sensitivity gap period $ (8,582) $ (615) $ 20,012 $ 10,815
============ ============= ============ ============
Cumulative gap $ (8,582) $ (9,197) $ 10,815
============ ============= ============
Cumulative ratio of interest-earning
assets to interest-bearing liabilities 0.69 0.76 1.23
Cumulative gap to total assets (0.14) (0.15) 0.17
</TABLE>
49
<PAGE> 53
INTEREST RATE SENSITIVITY ANALYSIS AS OF DECEMBER 31, 1997
TERM TO REPRICING
<TABLE>
<CAPTION>
90 Days 91 Days More Than
or Less to 1 Year 1 Year Total
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Interest-earning assets
Federal funds sold $ 3,292 $ - $ - $ 3,292
Investment securities, taxable 500 3,490 12,297 16,287
Loans, net 12,998 4,885 $ 18,180 $ 36,063
------------ ------------- ------------ ------------
Total interest-earning assets $ 16,790 $ 8,375 $ 30,477 $ 55,642
============ ============= ============ ============
Interest-bearing liabilities:
Interest bearing demand and
NOW deposits $ 5,506 $ - $ - $ 5,506
Savings deposits 1,085 - - 1,085
Money market deposits 6,782 - - 6,782
Time deposits 5,355 10,983 8,241 24,579
Repurchase agreements 2,440 - - 2,440
------------ ------------- ------------ ------------
Total interest-bearing liabilities $ 21,168 $ 10,983 $ 8,241 $ 40,392
------------ ------------- ------------ ------------
Interest sensitivity gap period $ (4,378) $ (2,608) $ 22,236 $ 15,250
============ ============= ============ ============
Cumulative gap $ (4,378) $ (6,986) $ 15,250
============ ============= ============
Cumulative ratio of interest-earning
assets to interest-bearing liabilities 0.79 0.78 1.38
Cumulative gap to total assets (0.07) (0.19) 0.26
</TABLE>
FINANCIAL CONDITION
LENDING ACTIVITIES
A primary source of income for Marine is the interest earned on loans.
At December 31, 1997, Marine's total assets were approximately $58.5 million as
compared to $55.9 million at December 31, 1996, and net loans were $35.4 million
representing 61% of the total assets for 1997 as compared to net loans of $35.0
million representing 63% of the total assets in 1996. Management believes that
the increase in net loans from 1996 to 1997 is primarily attributable to
increased loan demand resulting from a stronger local economy as well as its
reputation among businesses and individuals located in its primary market area
as an independent community bank.
50
<PAGE> 54
The following table summarized the composition of Marine's loan
portfolio by type of loan on the dates indicated.
LOAN PORTFOLIO COMPOSITION
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Years Ended December 31,
--------------------- ------------------------------------------------------
March 31, 1998 1997 1996
--------------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Amount % Amount % Amount %
----------- ------- ------------ ------- ------------ -------
Type of loan:
Commercial and financial $ 28,826 78.80% $ 28,568 79.20% $ 28,013 78.60%
Real estate construction - 0.00% -- 0.00% -- 0.00%
Real estate mortgage 5,686 15.60% 5,532 15.30% 5,183 14.60%
Installment loans to individuals 2,031 5.60% 1,963 5.50% 2,430 6.80%
----------- ------- ------------ ------- ------------ -------
Total loans 36,543 100.00% 36,063 100.00% 35,626 100.00%
======= ======= =======
Less:
Unearned loan fees 90 93 60
Allowance for loan losses 575 575 575
----------- ------------ ------------
Total loans, net $ 35,878 $ 35,395 $ 34,991
=========== ============ ============
</TABLE>
Marine generally does not make long-term fixed rate residential
mortgage loans.
The following tables set forth the maturities of loans (excluding
residential real estate mortgages and installment loans) outstanding at December
31, 1997, and an analysis of sensitivities of all loans due to changes in
interest rates.
LOAN MATURITY SCHEDULE
At December 31, 1997
--------------------
<TABLE>
<CAPTION>
Due After 1
Due in 1 Year But Due After
Year or Less Before 5 Years 5 Years Total
------------ -------------- ---------- -------------
<S> <C> <C> <C> <C>
Commercial and financial loans $ 394 $ 7,091 $ - $ 7,485
Commercial real estate - 20,207 876 21,083
Real estate-construction - - - -
---------- ------------ --------- -------------
$ 394 $ 27,298 $ 876 $ 28,568
========== ============ ========= =============
</TABLE>
51
<PAGE> 55
The following table sets forth as of March 31, 1998, and December 31,
1997, the dollar amounts of loans due after one year which had predetermined
interest rates and which had floating or adjustable rates.
DOLLAR AMOUNT OF LOANS
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
Type of interest rate:
Predetermined $ 16,024 $ 18,159
Floating or adjustable 5,622 5,421
------------- --------------
Total $ 21,646 $ 23,580
============= ==============
</TABLE>
ASSET QUALITY
Management has sought to maintain a high quality of assets through
conservative underwriting and sound lending practices. Management has followed
this policy even though it may have caused it to forego the funding of higher
yielding loans. As of December 31, 1997, approximately 74% of the loans in
Marine's portfolio are collateralized by first mortgage liens in commercial real
estate and one-to-four-family residences which historically have carried
relatively low credit risk. As of March 31, 1998, approximately 73% of the total
loan portfolio was collateralized by this type of property. The level of
delinquent loans and real estate owned as of the period end also is relevant to
the credit quality of the loan portfolio. As of December 31, 1997 and as of
March 31, 1998, there were no non-performing loans or real estate owned.
In an effort to maintain the quality of the loan portfolio, management
has sought to minimize higher risk types of lending and additional precautions
have been taken when such loans are made in order to reduce Marine's risk of
loss. With respect to its real estate related loans, there can be no assurance
that a downturn in the value of the real estate on the central west coast of
Florida will not have a material adverse impact on the profitability of Marine's
loans. However, as part of its loan portfolio management strategy, Marine has
typically required a substantial percentage of the purchase price as a down
payment and amortization of principal during the term of the loan. Management
believes that such precautions have reduced Marine's exposure to the risks
associated with a downturn in real estate values.
Commercial and financial loans also entail certain additional risks
since they usually involve large loan balances to single borrowers or a related
group of borrowers, resulting in a more concentrated loan portfolio. Further,
since their repayment is usually dependent upon the successful operation of the
commercial enterprise, they also are subject to adverse conditions in the
economy. Commercial loans are generally riskier than residential mortgages
because they are typically made on the basis of the ability to repay from the
cash flow of a business rather than on the ability of the borrower or guarantor
to repay. Further, the collateral underlying commercial loans may depreciate
over time, and occasionally cannot be appraised with as much precision as
residential real estate and may fluctuate in value based on the success of the
business.
While there is no assurance that Marine will not suffer any losses on
its construction loans or its commercial real estate loans, management believes
that it has reduced the risks associated therewith because, among other things,
substantially all of such loans relate to projects where the borrower has
demonstrated to management that its business will generate sufficient income to
repay the loan. In this regard, Marine has made a few land acquisition and
development loans and construction loans to developers of residential properties
for the construction of real estate subdivisions and multi-family housing
projects. Marine primarily enters into agreements with individuals who are
familiar to Marine.
52
<PAGE> 56
In addition to maintaining high quality assets, management has
attempted to limit Marine's risk exposure to any one borrower or borrowers with
similar or related entities. As of March 31, 1998, Marine has extended credit in
excess of $1 million to only four borrowers. The current outstanding balance of
these four credits is approximately $4.4 million. As of March 31, 1998, all of
these loans were performing in accordance with their contractual terms and none
of them are considered to be potential problem loans.
Loan concentrations are defined as amounts loaned to a number of
borrowers engaged in similar activities which would cause them to be similarly
impacted by economic or other conditions. Marine, on a routine basis, evaluates
these concentrations for purposes of policing its concentrations and to make
necessary adjustments in its lending practices that most clearly reflect the
economic times, loan to deposit ratios, and industry trends. As of March 31,
1998, Marine did not have any concentration of loans to any particular group of
customers engaged in similar activities or having similar economic
characteristics. However, as indicated above, a substantial natural geographical
concentration of credit risk exists within Marine's primary market area.
Concentrations of loans in the following categories exceed 10% of the total loan
portfolio: Real Estate Mortgage Loans and Commercial Real Estate Loans.
The Board of Directors of Marine concentrates its efforts and
resources, and that of its senior management and lending officials, on
underwriting procedures. Marine's Loan Committee reviews monthly all loans
subject to close monitoring due to internal policy guidelines. In addition,
senior loan officers of Marine have established a review process with the
objective of quickly identifying, evaluating, and initiating necessary
corrective action for marginal loans. The goal of the loan review process is to
address substandard and non-performing loans as early as possible. Combined,
these components are integral elements of Marine's loan program which has
resulted in its loan portfolio performance to date. Nonetheless, management
maintains a cautious outlook in anticipating the potential effects of uncertain
economic conditions.
CLASSIFICATION OF ASSETS
Generally, interest on loans is accrued and credited to income based
upon the principal balance outstanding. It is management's policy to discontinue
the accrual of interest income and classify a loan as non-accrual when principal
or interest is past due 90 days or more and the loan is not adequately
collateralized, or when in the opinion of management, principal or interest is
not likely to be paid in accordance with the terms of the obligation. Consumer
installment loans will be charged-off after 90 days of delinquency unless
adequately collateralized and in the process of collection. Loans are not
returned to accrual status until principal and interest payments are brought
current and future payments appear certain. Interest accrued and unpaid at the
time a loan is placed on non-accrual status is charged against interest income.
Subsequent payments received are applied to the outstanding principal balance.
Real estate acquired by Marine as a result of foreclosure or acceptance
of deeds in lieu of foreclosure is classified as real estate owned ("REO").
These properties are recorded on the date acquired at the lower of fair value
less estimated selling costs or the recorded investment in the related loan. If
the fair value after deducting the estimated selling costs of the acquired
property is less than the recorded investment in the related loan, the estimated
loss is charged to the allowance for loan losses at that time. The resulting
carrying value established at the date of foreclosure becomes the new cost basis
for subsequent accounting. After foreclosure, if the fair value less estimated
selling costs of the property becomes less than its cost, the deficiency is
charged to the provision for losses on other real estate owned. Costs relating
to the developmental improvement of the property are capitalized, whereas those
relating to holding the property for sale are charged as an expense.
As of December 31, 1997 and 1996, respectively, and for the periods
ending March 31, 1998 and 1997, respectively, Marine did not have REO or any
non-accrual or potential problem loans.
53
<PAGE> 57
ALLOWANCE FOR LOAN LOSSES
In originating loans, Marine recognizes that credit losses will be
experienced and that the risk of loss will vary with, among other things, the
type of loan being made, the creditworthiness of the borrower over the term of
the loan and, in the case of a collateralized loan, the quality of the
collateral for the loan as well as general economic conditions. It is
management's policy to maintain an adequate allowance for loan losses based on,
among other things, Marine's historical loan loss experience, evaluation of
economic conditions and regular reviews of delinquencies and loan portfolio
quality.
Marine adopted Statement of Financial Accounting Standards No. 114
"Accounting by Creditors for Impairment of a Loan," (SFAS No. 114). Under this
standard, a loan is considered impaired, based on current information and
events, if it is probable that Marine will be unable to collect the scheduled
payments of principal or interest when due according to the contractual terms of
the loan agreement. Marine evaluates individual loans for impairment from
internally generated watch lists and other sources. Loans meeting the criteria
for impairment may or may not be placed on non-accrual status, based on the
loan's current status. The measurement of impaired loans is generally based on
the present value of expected future cash flows discounted at the historical
effective interest rate, except that all collateral-dependent loans are measured
for impairment based on the fair value of the collateral. The SFAS No. 114
resulted in no additional provision for loan losses.
Marine also has adopted Statement of Financial Accounting Standards No.
118, "Accounting by Creditors for Impairment of a Loan -- Income Recognition and
Disclosures," (SFAS No. 118). SFAS No. 118 amends SFAS No. 114 to allow a
creditor to use existing methods for recognizing interest income on any impaired
loan, rather than the methods prescribed in SFAS No. 114.
The allowance for loan losses has been established through charges to
earnings in the form of a provision for loan losses. Increases and decreases in
the allowance due to changes in the measurement of the impaired loans are
included in the provision for loan losses. Loans continue to be classified as
impaired unless they are brought fully current and the collection of scheduled
interest and principal is considered probable. When a loan or portion of a loan
is determined to be uncollectible, the portion deemed uncollectible is charged
against the allowance.
Loans, including impaired loans, generally, have been classified by
Marine as nonaccrual if they are past due as to maturity or payment of principal
or interest for a period of more than ninety (90) days, unless such loans are
well collateralized and in the process of collection. If a loan or a portion of
a loan is classified as doubtful or is partially charged off, the loan is
classified as nonaccrual. Loans that are on a current payment status or past due
less than ninety (90) days may also be classified as nonaccrual if repayment in
full of principal and/or interest is in doubt.
While a loan is classified as a nonaccrual and the future
collectability of the recorded loan balance is doubtful, collections of interest
and principal are generally applied as a reduction to principal outstanding.
When the future collectability of the recorded loan balance is expected,
interest income may be recognized on a cash basis. In the case where a
nonaccrual loan has been partially charged off, recognition of interest on a
cash basis is limited to that which would have been recognized on the recorded
loan balance at the contractual interest rate. Cash interest receipts in excess
of that amount are recorded as recoveries to the allowance for loan losses until
prior charge-offs have been fully recovered.
Management continues to actively monitor Marine's asset quality and to
charge-off loans against the allowance for loan losses when appropriate or to
provide specific loss allowances when necessary. Although management believes it
uses the best information available to make determinations with respect to the
allowance for loan losses, future adjustments may be necessary if economic
conditions differ from the economic conditions in the assumptions used in making
the initial determinations.
Marine's allowance for loan losses was $575,000 at March 31, 1998
(1.57% of total loans), and $575,000 at December 31, 1997 (1.59% of total
loans). Marine did not have any charge-offs or recoveries on previously
charged-off loans for the three month period ended March 31, 1998, or for the
fiscal year ended December 31, 1997 and for the
54
<PAGE> 58
fiscal year ended December 31, 1996. Marine's directors have determined the
allowance for loan losses to be adequate to cushion against the reasonable
expected economic losses that may result from an economic slowdown.
The following table sets forth an analysis of Marine's allowance for
possible loan losses for the periods indicated.
SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
(Dollars in Thousands)
THREE MONTHS ENDED YEARS ENDED
------------------ -----------
MARCH 31, DECEMBER 31,
-------- -----------
1998 1997 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Total net loans outstanding at end of period $35,878 $35,459 $35,395 $34,991
Average net loans outstanding during the year 35,786 35,577 35,055 32,506
Allowance for loan losses, beginning of period 575 575 575 575
Loans charged-off during the period:
Commercial and financial - - - -
Real estate mortgage - - - -
Real estate construction - - - -
Installment loans to individuals - - - -
Total loans charged-off - - - -
Recoveries of loans previously charged-off: - - - -
Commercial and financial - - - -
Real estate mortgage - - - -
Real estate construction - - - -
Installment loans to individuals - - - -
Total recoveries - - - -
Net loans charged-off during the period - - - -
Provisions for loan losses - - - -
------- ------- ------- -------
Allowance for loan losses, end of period $ 575 $ 575 $ 575 $ 575
======= ======= ======= =======
Non-performing loans, end of period - - - -
Net charge-offs during year to average net loans - - - -
Allowance as a percentage of non-performing - - - -
Loans
</TABLE>
As a result of Marine's lack of non-accrual loans and charge-off
history, all of the allowance for loan losses is unallocated.
Investment Activities
Securities that management has the positive intent and Marine has the
ability at the time of purchase to hold until maturity are classified as
securities held to maturity. Securities in this category are carried at
amortized cost adjusted for accretion of discounts and amortization of premiums
using the effective interest method over the estimated life of the securities.
If a security has a decline in fair value below its amortized cost that is other
than temporary, then the security will be written down to its new cost basis by
recording a loss in the statement of operations. Securities to be held for
indefinite periods of time and not intended to be held to maturity are
classified as available for sale. Assets included in this category are those
assets that management intends to use a part of its asset/liability management
strategy and that may be sold in response to changes in interest rates,
resultant prepayment risk and other factors related to interest rate and
resultant prepayment risk changes. Securities available for sale are recorded at
fair value. Both unrealized holding gains and losses on securities available for
sale, net of taxes, are included as a separate component of shareholders' equity
in the consolidated balance sheets until these gains or losses are realized. The
cost of investment securities sold is determined by the specific identification
method. If a security has a decline in fair value that is other than temporary,
then the securities will be written down to its fair value by recording a loss
in the statement of operations. These securities are recorded at fair value.
Both unrealized gains and losses are included in the balance sheets. Marine
currently has no securities classified as trading securities.
55
<PAGE> 59
At March 31, 1998, Marine had an unrealized gain, net of taxes, of
$58,403. This unrealized gain was shown as an increase in shareholders' equity
for the first quarter of 1998 as compared to an unrealized gain of $41,889, net
of taxes, as of December 31, 1997.
At March 31, 1998, Marine's investment portfolio totaled approximately
$16,536,000, compared to $16,287,000 at December 31, 1997. The portfolio at
March 31, 1998, consisted of United States treasury securities and federal
agency obligations.
The following table summarizes the carrying value of Marine's
investment portfolio as of the dates indicated.
INVESTMENT SECURITIES PORTFOLIO
(Dollars in Thousands)
<TABLE>
<CAPTION>
At March 31, At December 31,
---------- -------------------------------
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
Investment securities, available for sale:
U.S. treasury securities $ 7,670 $ 7,140 $ 8,164
U.S. government agencies 2,216 1,994 --
---------- ---------- -----------
Total investment securities, available for sale $ 9,886 $ 9,134 $ 8,164
========== ========== ===========
Investment securities, held to maturity:
U.S. treasury securities $ 6,650 $ 7,153 $ 6,476
U.S. government agencies -- -- --
-- -- --
---------- ---------- -----------
Total investment securities, held to maturity $ 6,650 $ 7,153 $ 6,476
========== ========== ===========
</TABLE>
The following table sets forth the weighted average yield of the
investment portfolio of Marine as of March 31, 1998. The calculation of the
weighted average interest yields is based on yield, weighted by the respective
costs of the securities.
INVESTMENT CATEGORY AS OF MARCH 31, 1998
(Dollars in Thousands)
<TABLE>
<CAPTION>
Average
Amount Yield
------- -------
<S> <C> <C>
Investment Category:
Obligations of U.S. treasury and agencies-available for sale:
0-1 year $ 501 5.99%
1-5 years 8,882 6.18%
------- ----
Total 9,383 6.16%
======= ====
Obligations of U.S. treasury and agencies held to maturity:
0-1 year 2,993 5.68%
1-5 years 3,665 5,64%
5-10 years 495 6.09%
------- ----
Total 7,153 5.70%
------- ----
Total investment securities $16,536 6.06%
======= ====
</TABLE>
56
<PAGE> 60
DEPOSIT ACTIVITIES
Deposits are the major source of Marine's funds for lending and other
investment purposes. In addition to deposits, Marine derives funds from interest
payments, loan principal payments, and funds provided from operations. Scheduled
loan repayments are a relatively stable source of funds, while deposit inflows
are significantly influenced by general interest rates and money market
conditions. Marine may use borrowings on a short-term basis if necessary to
compensate for reductions in the availability of other sources of funds. They
also may be used on a longer-term basis for general business purposes.
Deposits are attracted principally from within Marine's primary market
area through the offering of a broad variety of deposit instruments including
checking accounts, money market accounts, regular savings accounts, term
certificate accounts (including "jumbo" certificates in denominations of
$100,000 or more) and retirement savings plans. As of March 31, 1998, jumbo
certificates accounted for approximately $14.8 million of Marine's deposits. Of
this amount, $9.8 million had a term of twelve months or less. Marine has not
aggressively attempted to obtain large denomination, high interest-bearing
certificates of deposit in the past.
Maturity terms, service fees and withdrawal penalties are established
by Marine on a periodic basis. The determination of rates and terms is
predicated on funds acquisition and liquidity requirements, rates paid by
competitors, growth goals and federal regulations.
Regulations promulgated by the FDIC pursuant to FDICIA place
limitations on the ability of insured depository institutions to accept, renew
or roll-over deposits by offering rates of interest which are significantly
higher than the prevailing rates of interest on deposits offered by other
insured depository institutions having the same type of charter in such
depository institution's normal market area. Under these regulations, "well
capitalized" depository institutions may accept, renew or roll such deposits
over without restriction, "adequately capitalized" depository institutions may
accept, renew or roll such deposits over with a waiver from the FDIC (subject to
certain restrictions on payment of rates), and "undercapitalized" depository
institutions may not accept, renew or roll such deposits over. The regulations
contemplate that the definitions of "well capitalized," "adequately capitalized"
and "undercapitalized" will be the same as the definitions adopted by the
agencies to implement the corrective action provisions of FDICIA. As of March
31, 1998, Marine met the definition of a "well capitalized" depository
institution.
The following table sets forth the average balances and average
weighted rates for Marine's categories of deposits for the periods indicated.
DEPOSITS
<TABLE>
<CAPTION>
Three Months Ended March 31, Fiscal Year Ended December 31,
1998 1997 1996
------------------------------ ------------------------------ ------------------------------
Average Average % of Total Average Average % of Total Average Average % of Total
Balance Rate Deposits Balance Rate Deposits Balance Rate Deposits
------- ---- ---------- ------- ---- ---------- ------- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-interest bearing demand
deposits $ 7,759 0.00% 16.46% $ 7,799 0.00% 17.09% $ 7,348 0.00% 16.87%
Interest bearing demand and
NOW deposits 5,109 2.35% 10.84% 4,676 2.37% 10.25% 4,073 2.38% 9.35%
Savings account deposits 1,246 2.25% 2.64% 1,267 2.29% 2.78% 1,165 2.23% 2.68%
Money market accounts
deposits 7,421 2.86% 15.75% 6,441 2.61% 14.11% 6,391 2.61% 14.68%
Time deposits 25,596 5.50% 54.31% 25,453 5.52% 55.77% 24,571 5.41% 56.42%
------- ------ ------- ------ ------- ------
Total $47,131 100.00% $45,636 100.00% $43,548 100.00%
======= ---- ====== ======= ---- ====== ======= ---- ======
Weighted Average Rate (All Deposits) 3.75% 3.75% 3.72%
==== ==== ====
</TABLE>
At December 31, 1997, certificates of deposit represented approximately
50.8% of Marine's total deposits, up from 57.7% at December 31, 1996.
Non-brokered time deposits over $100,000 represented 26.2% of total liabilities
at December 31, 1997. Marine does not have a concentration of deposits from any
one source, the loss of which would have a material adverse effect on the
business of Marine. Management believes that substantially all of Marine's
depositors are residents, either full or part time, in its primary market area.
57
<PAGE> 61
The following table indicates the amount of Marine's certificates of
deposit of $100,000 or more by time remaining until maturity at March 31, 1998.
<TABLE>
<CAPTION>
Certificates of
$100,000 or greater
-------------------
(Dollars in Thousands)
Maturity Period As of March 31, 1998
- ------------------------------------
<S> <C>
Under three months $ 4,337
Over three months through twelve months 5,451
Over twelve months 4,963
-------
Totals $14,751
=======
</TABLE>
RETURN ON EQUITY AND ASSETS
The following table sets forth Marine's performance ratios for the
periods indicated.
RETURN ON EQUITY AND ASSETS
<TABLE>
<CAPTION>
At December 31,
----------------------
1997 1996
------ ------
<S> <C> <C>
Return on average assets 1.76 1.72
Return on average equity 14.14 15.08
Dividend payout ratio 13.72 14.67
Year-end equity to year-end total assets 12.53 11.62
Average interest-earning assets to average interest bearing liabilities 132.10 130.38
Non-performing loans and other real estate owned to average total assets -- --
Non-performing loans to total loans -- --
Allowance for loan losses to total loans 1.59 1.61
Net charge-offs to average net loans -- --
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Marine's principal sources of funds are deposits, principal and
interest payments on loans, interest on investments, and sales of investments.
During 1997, Marine received $8.1 million from deposit growth. Management is
unaware of any trends in the sources or uses of cash by Marine that are expected
to have a material adverse impact on its liquidity position. Management believes
that it maintains a sufficient level of liquidity to meet current and future
liquidity requirements.
At March 31, 1998, shareholders' equity was approximately $7,599,000,
or 12.02% of total assets, compared to $7,332,000, or 12.53% of total assets, as
of December 31, 1997. At March 31, 1998, and December 31, 1997, respectively,
Marine's Tier I risk based capital ratios were 14.01% and 14.75%, its Tier II
capital ratios were 14.89% and 15.68%, and its leverage ratios were 12.39% and
12.72%, all in excess of guidelines for a "well capitalized" bank.
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related financial data concerning Marine
presented in this Proxy Statement/Prospectus have been prepared in accordance
with generally accepted accounting principles, which require the measurement of
financial position and operating results in terms of historical dollars without
considering changes in the relative purchasing power of money over time due to
inflation. The primary impact of inflation on the operations of Marine is
reflected in increased operating costs. Unlike most industrial companies,
virtually all of the assets and liabilities of a financial institution are
monetary in nature. As a result, changes in interest rates have a more
significant impact on the performance of a financial institution than do the
effects of changes in the general rate of inflation and changes in prices.
Interest rates do not necessarily move in the same direction or in the same
magnitude as the prices of goods and services.
58
<PAGE> 62
FEDERAL AND STATE TAXATION
Federal Income Taxation. Although a bank's income tax liability is
determined under provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), which is applicable to all taxpayers or corporations, Sections 581
through 597 of the Code apply specifically to financial institutions.
The two primary areas in which the treatment of financial institutions
differ from the treatment of other corporations under the Code are in the areas
of bond gains and losses and bad debt deductions. Bond gains and losses
generated from the sale or exchange of portfolio instruments are generally
treated for financial institutions as ordinary gains and losses as opposed to
capital gains and losses for other corporations, as the Code considers bond
portfolios held by banks to be inventory in a trade or business rather than
capital assets. Banks are allowed a statutory method for calculating a reserve
for bad debt deductions.
State Taxation. Marine files state income tax returns in Florida.
Florida taxes banks under primarily the same provisions as other corporations.
Generally, state taxable income is calculated under applicable Code sections
with some modifications required by state law.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
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, 1997 (including therein SouthTrust's Proxy Statement
for its Annual Meeting of Stockholders held April 15, 1998) (Commission
File No. 0-3613);
(ii) SouthTrust's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998 (Commission File No. 0-361B); and
(iii) SouthTrust's Current Report on Form 8-K, dated
January 12, 1998 (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 the discussion of consummated
and pending acquisitions set forth under the caption "SUMMARY - Parties to the
Merger - SouthTrust.
Copies of all documents with respect to SouthTrust incorporated by
reference (not including exhibits to the documents incorporated by reference
unless such exhibits are specifically incorporated into the documents
incorporated by reference) will be provided without charge to each person to
whom a copy of this Proxy Statement/Prospectus is delivered upon written or oral
request. Requests for such copies should be directed to: Mr. Aubrey D. Barnard,
Secretary, Treasurer and Controller, SouthTrust Corporation, 420 North 20th
Street, 34th Floor, Birmingham, Alabama, 35203, telephone number (205) 254-5000.
59
<PAGE> 63
LEGAL MATTERS
Certain legal matters in connection with the SouthTrust Common Stock
being offered hereby will be passed upon by Bradley Arant Rose & White LLP
Birmingham, Alabama, counsel for SouthTrust. As of March 31, 1998, the partners
and associates of the firm of Bradley Arant Rose & White LLP beneficially owned
approximately 3,052,500 shares of SouthTrust Common Stock.
EXPERTS
The consolidated financial statements of SouthTrust Corporation and
subsidiaries incorporated by reference in this Proxy Statement/Prospectus and
elsewhere in the Registration Statement, to the extent and for the periods
indicated in their reports, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, 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 Marine Bank included in this
Proxy Statement/Prospectus have been audited by Peel, Schatzel & Wells, P.A.,
independent certified public accountants, for the periods indicated in their
report thereon and are included herein in reliance upon the authority of said
firm as experts in giving said reports.
ADDITIONAL INFORMATION
OTHER BUSINESS
The Board of Directors of Marine does not know of any matter to be
brought before the Special Meeting other than as described in the Notice of
Special Meeting accompanying this Proxy Statement/Prospectus. If any other
matter comes before the Special Meeting, it is the intention of the persons
named in the accompanying proxy to vote the proxy in accordance with their best
judgment with respect to such other matters.
60
<PAGE> 64
MARINE BANK
Independent Auditor's Report
and
Audited Financial Statements
December 31, 1997, 1996 and 1995
Independent Accountant's Compilation Report
and
Compiled Financial Statements
March 31, 1998 and 1997
F-i
<PAGE> 65
INDEX TO THE FINANCIAL STATEMENTS OF MARINE BANK
MARINE BANK
<TABLE>
<CAPTION>
DECEMBER 31, 1997, 1996, 1995 AND MARCH 31, 1998 AND 1997
<S> <C>
INDEPENDENT ACCOUNTANT'S COMPILATION REPORT
AND INDEPENDENT AUDITOR'S REPORT F-1
INDEPENDENT AUDITOR'S REPORT F-1-A
FINANCIAL STATEMENTS
STATEMENTS OF CONDITION F-2
STATEMENTS OF INCOME F-3
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY F-4
STATEMENTS OF CASH FLOWS F-5
NOTES TO FINANCIAL STATEMENTS F-6 - F-16
</TABLE>
F-ii
<PAGE> 66
INDEPENDENT ACCOUNTANT'S COMPILATION REPORT
AND
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
of Marine Bank
We have compiled the accompanying statement of condition of Marine Bank (the
Bank) (a Florida corporation) as of March 31, 1998 and the related statements of
income and cash flows for the three months ended March 31, 1998 and 1997 and the
related statement of changes in stockholders' equity for the three months ended
March 31, 1998, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying March 31, 1998 and 1997 financial statements and,
accordingly, do not express an opinion or any other form of assurance on them.
The financial statements for the years ended December 31, 1997, 1996, and 1995
were audited by us, and we expressed an unqualified opinion on them in our
report dated February 18, 1998, but we have not performed auditing procedures
since December 31, 1997. This report is included (See Page 1-A).
/s/ PEEL, SCHATZEL & WELLS, P.A.
June 10, 1998
St. Petersburg, Florida
F-1
<PAGE> 67
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
of Marine Bank
We have audited the accompanying statements of condition of Marine Bank (the
Bank) (a Florida corporation) as of December 31, 1997, 1996, and 1995 and the
related statements of income, changes in stockholders' equity, and cash flows
for the years then ended. These financial statements are the responsibility of
the Bank's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Marine Bank as of December 31,
1997, 1996, and 1995 and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.
/s/ Peel, Schatzel & Wells, P.A.
February 18, 1998
St. Petersburg, Florida
F-1-A
<PAGE> 68
MARINE BANK
STATEMENTS OF CONDITION
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1996 1998
---- ---- -----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 1,935 $ 1,476 $ 1,961
Federal funds sold 3,500 3,400 7,550
------- ------- -------
Total cash and cash equivalents 5,435 4,876 9,511
Investment securities, available for sale, at market value 9,134 8,164 9,886
Investment securities, held to maturity, at adjusted cost
(market value equals $7,169, $6,437 and $6,696) 7,153 6,476 6,650
------- ------- -------
Total investments 16,287 14,640 16,536
Loans, less unearned income of $93, $60, and $90, and
allowance for possible loan losses of $575 35,395 34,991 35,878
Bank premises and equipment, at cost less allowance for
depreciation of $514, $480 and $521 753 773 754
Other assets 539 516 468
Deferred income taxes 75 62 66
Prepaid federal income taxes 15 3
------- ------- -------
TOTAL ASSETS $58,499 $55,861 $63,213
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $48,404 $47,216 $48,184
Federal funds purchased and securities sold under
repurchase agreements 2,440 1,861 7,144
Accrued interest and other liabilities 173 137 154
Dividends payable 134 134
Federal income taxes payable 114
State income taxes payable 16 21 18
------- ------- -------
TOTAL LIABILITIES $51,167 $49,369 $55,614
======= ======= =======
COMMITMENTS AND CONTINGENCIES - Note 11
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value - authorized 1,386,000 shares;
issued and outstanding 1,344,226 1,344 1,344 1,344
Capital surplus 5,000 4,500 5,000
Undivided profits 946 601 1,196
Unrealized gain on investment securities 42 47 59
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY 7,332 6,492 7,599
------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $58,499 $55,861 $63,213
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 69
MARINE BANK
STATEMENTS OF INCOME
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
Years Ended December 31, March 31,
--------------------------- -----------------
1997 1996 1995 1998 1997
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 3,429 $ 3,136 $ 2,942 $ 854 $ 843
Interest on investment securities
U.S. Treasury and Government Agencies 886 841 770 246 220
Interest on federal funds sold 144 144 224 68 33
------- ------- ------- ------- -------
TOTAL INTEREST INCOME 4,459 4,121 3,936 1,168 1,096
INTEREST EXPENSE
Interest on deposits 1,712 1,619 1,486 443 443
Interest on federal funds purchased and
securities sold under repurchase agreements 91 79 107 61 17
------- ------- ------- ------- -------
TOTAL INTEREST EXPENSE 1,803 1,698 1,593 504 460
------- ------- ------- ------- -------
NET INTEREST INCOME 2,656 2,423 2,343 664 636
PROVISION FOR POSSIBLE LOAN LOSSES -- -- 46 -- --
------- ------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 2,656 2,423 2,297 664 636
OTHER INCOME
Deposit account fees and other services 123 191 120 31 31
------- ------- ------- ------- -------
NET INTEREST AND OTHER INCOME AFTER
PROVISION FOR POSSIBLE LOAN LOSSES 2,779 2,615 2,417 695 667
OTHER EXPENSES
Salaries and employee benefits 618 593 629 161 157
Net occupancy expense 72 68 65 19 17
Furniture and equipment expense 71 65 61 14 16
Other operating expense 462 431 447 100 106
------- ------- ------- ------- -------
TOTAL OTHER EXPENSES 1,223 1,157 1,202 294 296
------- ------- ------- ------- -------
INCOME BEFORE PROVISION FOR
INCOME TAXES 1,556 1,458 1,215 401 371
PROVISION FOR INCOME TAXES 576 542 450 151 140
------- ------- ------- ------- -------
NET INCOME $ 980 $ 916 $ 765 $ 250 $ 231
======= ======= ======= ======= =======
NET INCOME PER SHARE $0.7289 $0.6854 $0.6105 $0.1859 $0.1722
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 70
MARINE BANK
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
Unrealized
Gain (Loss) On
Common Capital Undivided Investment
Stock Surplus Profits Securities Total
-------- -------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C>
BALANCE AS OF JANUARY 1, 1995 $ 1,092 $ 3,000 $ 793 $ (12) $ 4,873
Net income for the year 765 765
Cash dividend declared, $0.10 per share (133) (133)
Cash dividend paid on shares purchased (1) (1)
Stock dividend declared 221 (221) --
Employee stock options exercised 14 54 68
Adjustment to market value for investment
securities, available for sale 87 87
Transfer from undivided profits to capital surplus 667 (667) --
-------- -------- -------- -------- --------
BALANCE AS OF DECEMBER 31, 1995 $ 1,327 $ 3,500 $ 757 $ 75 $ 5,659
======== ======== ======== ======== ========
BALANCE AS OF JANUARY 1, 1996 $ 1,327 $ 3,500 $ 757 $ 75 $ 5,659
Net income for the year 916 916
Cash dividend declared, $0.10 per share (134) (134)
Employee stock options exercised 17 62 79
Adjustment to market value for investment
securities, available for sale (28) (28)
Transfer from undivided profits to capital surplus 938 (938) --
-------- -------- -------- -------- --------
BALANCE AS OF DECEMBER 31, 1996 $ 1,344 $ 4,500 $ 601 $ 47 $ 6,492
======== ======== ======== ======== ========
BALANCE AS OF JANUARY 1, 1997 $ 1,344 $ 4,500 $ 601 $ 46 $ 6,491
Net income for the year 980 980
Cash dividend declared, $0.10 per share (135) (135)
Adjustment to market value for investment
securities, available for sale (4) (4)
Transfer from undivided profits to capital surplus 500 (500) --
-------- -------- -------- -------- --------
BALANCE AS OF DECEMBER 31, 1997 $ 1,344 $ 5,000 $ 946 $ 42 $ 7,332
======== ======== ======== ======== ========
BALANCE AS OF JANUARY 1, 1998 $ 1,344 $ 5,000 $ 946 $ 42 $ 7,332
Net income for the three month period 250 250
Adjustment to market value for investment
securities, available for sale 17 17
-------- -------- -------- -------- --------
BALANCE AS OF MARCH 31, 1998 $ 1,344 $ 5,000 $ 1,196 $ 59 $ 7,599
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 71
MARINE BANK
STATEMENTS OF CASH FLOWS
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
Years Ended December 31, March 31,
--------------------------- -----------------
1997 1996 1995 1998 1997
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 980 $ 916 $ 765 $ 250 $ 231
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 54 48 47 12 12
Provision for loan losses 46
Other amortization and accretion, net 46 67 71 10 46
(Increase) decrease in other assets (45) (118) (8) 95 (122)
Increase in accrued interest and
other liabilities 32 27 5 97 108
------- ------- ------- ------ -------
Total Adjustments 87 24 161 214 44
------- ------- ------- ------ -------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,067 940 926 464 275
------- ------- ------- ------ -------
INVESTING ACTIVITIES
Net increase in loans (404) (4,152) (192) (483) (468)
Proceeds from maturities of
investment securities 3,300 3,500 2,500 500
Purchases of investment securities (5,000) (4,550) (4,013) (742)
Purchases of equipment (35) (21) (27) (13)
------- ------- ------- ------ -------
NET CASH USED BY INVESTING
ACTIVITIES $(2,139) (5,223) (1,732) (738) (468)
FINANCING ACTIVITIES
Net increase in deposit accounts 1,187 3,412 1,681 (220) (974)
Net increase (decrease) in federal funds purchased
and securities sold under repurchase agreements 578 (736) (1,043) 4,704 170
Sale of common stock 79 68
Dividends paid (134) (133) (111) (134) (134)
------- ------- ------- ------ -------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES 1,631 2,622 595 4,350 (938)
------- ------- ------- ------ -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENT 559 (1,661) (211) 4,076 (1,131)
CASH AND CASH EQUIVALENTS -
BEGINNING OF YEAR 4,876 6,537 6,748 5,435 4,876
------- ------- ------- ------ -------
CASH AND CASH EQUIVALENTS -
END OF YEAR $ 5,435 $ 4,876 $ 6,537 $9,511 $ 3,745
======= ======= ======= ====== =======
</TABLE>
Accounting Policies Note: Cash and cash equivalents include amounts due from
banks and federal funds sold. Generally, federal funds are purchased and sold
for one-day periods.
Deposits Note: The Bank paid $1,797 in 1997, $1,692 in 1996, $1,585 in 1995,
$504 for three months ended March 31, 1998, and $458 for three months ended
March 31, 1997, in interest on deposits and other borrowings.
Income Tax Note: The Bank paid income taxes of $582 in 1997, $505 in 1996, $448
in 1995, $20 for three months ended March 31, 1998, and $22 for three months
ended March 31, 1997.
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 72
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting principles followed and the methods of applying those principles
conform with generally accepted accounting principles and to general practices
in the banking industry. The significant policies are summarized as follows:
Nature of Operations
From one location in St. Petersburg, Florida, Marine Bank provides a variety of
financial services to individual and business customers throughout the Tampa Bay
area.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for losses on loans. In connection
with the determination of the estimated losses on loans, management makes an
evaluation based on the facts and circumstances of the loan portfolio as a
whole.
While management uses available information to recognize losses on loans,
further reductions in the carrying amounts of loans may be necessary. In
addition, regulatory agencies, as an integral part of their examination process,
periodically review the estimated losses on loans. Such agencies may require the
Bank to recognize additional losses based on their judgments about information
available to them at the time of their examination. Because of these factors, it
is reasonably possible that the estimated losses on loans may change materially
in the future. However, the amount of the change that is reasonably possible
cannot be estimated.
Investment Securities
Securities Held-to-Maturity: Government securities that management has the
positive intent and ability to hold to maturity are reported at cost, adjusted
for amortization of premiums and accretion of discounts that are recognized in
interest income using methods approximating the interest method over the period
to maturity.
Securities Available-for-Sale: Available-for-sale securities consist of
investment securities not classified as held-to- maturity securities. Unrealized
holding gains and losses, net of tax, on available-for-sale securities are
reported as a net amount in a separate component of stockholders' equity until
realized. Gains and losses on sale of available-for-sale securities are
determined using the specific-identification method. The amortization of
premiums and the accretion of discounts are recognized in interest income using
methods approximating the interest method over the period of maturity.
F-6
<PAGE> 73
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Declines in the fair value of individual held-to-maturity and available-for-sale
securities below their cost that are other than temporary result in write-downs
of the individual securities to their fair value. The related write-downs would
be included in earnings as realized losses.
Loans
Loans are stated at the amount of unpaid principal balances, reduced by unearned
discounts and an allowance for loan losses.
Unearned discounts on installment loans are recognized as income over the terms
of the loans using a method that approximates the interest method.
Loan origination fees which represent an adjustment to interest yield are
deferred and amortized over the estimated life of the loan.
Interest income generally is not recognized on specific impaired loans unless
the likelihood of further loss is remote. Interest payments received on such
loans are applied as a reduction of the loan principal balance. Interest income
on other impaired loans is recognized only to the extent of interest payments
received.
The allowance for loan losses is maintained at a level which, in management's
judgment, is adequate to absorb credit losses inherent in the loan portfolio.
The amount of the allowance is based on management's evaluation of the
collectibility of the loan portfolio, including the nature of the portfolio,
credit concentrations, trends in historical loss experience, specific impaired
loans, economic conditions and other risks inherent in the portfolio. Allowance
for impaired loans are generally determined based on collateral values or the
present value of estimated cash flows. The allowance is increased by a provision
for loan losses, which is charged to expense, and reduced by charge-offs, net of
recoveries.
Bank premises and equipment
Land is carried at cost. Other Bank premises and equipment are recorded at cost,
less accumulated depreciation. The provision for depreciation is computed on the
straight-line method over the estimated useful lives of the assets which range
as follows: Buildings - 40 years; furniture and business equipment - 8 years;
computer equipment - 5 years.
F-7
<PAGE> 74
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
Income taxes are provided for the tax effects of the transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of available-for-sale
securities, allowance for loan losses, accumulated depreciation and deferred
loan fees. The deferred tax assets and liabilities represent the future tax
return consequences of those differences, which will either be taxable or
deductible when the assets and liabilities are recovered or settled. Deferred
tax assets and liabilities are reflected at income tax rates applicable to the
period in which the deferred tax assets or liabilities are expected to be
realized or settled. As changes in tax laws or rates are enacted, deferred tax
assets and liabilities are adjusted through the provision for income taxes.
Off-Balance-Sheet Financial Instruments
In the ordinary course of business, the Bank has entered into off-balance-sheet
financial instruments consisting of commitments to extend credit, and standby
letters of credit. Such financial instruments are recorded in the financial
statements when they become payable.
Earnings per share
Earnings per share are calculated on the basis of the weighted average number of
shares outstanding. Month end averages were 1,344,226, 1,337,297 and 1,253,841
in 1997, 1996 and 1995 respectively. Month end averages were 1,344,226 for both
the three months ended March 31, 1998 and 1997.
Statements of Cash Flows
The Bank considers all cash and amounts due from banks and federal funds sold to
be cash equivalents for the purposes of the statements of cash flows.
NOTE 2 - CASH AND CASH EQUIVALENTS
A summary of cash and cash equivalents is as follows:
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1996 1998
------ ------ ----------
<S> <C> <C> <C>
Cash and due from banks
Cash $ 179 $ 294 $ 243
Due from banks 1,756 1,182 1,718
------ ------ ------
1,935 1,476 1,961
Federal Funds Sold 3,500 3,400 7,550
------ ------ ------
$5,435 $4,876 $9,511
====== ====== ======
</TABLE>
F-8
<PAGE> 75
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
NOTE 3 - INVESTMENT SECURITIES
Investment securities have been classified according to management's intent. The
amortized cost of securities and their approximate fair values are as follows:
<TABLE>
<CAPTION>
Available For Sale
- ------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1997
U.S. Treasury securities $ 7,067 $ 74 $ 1 $ 7,140
U.S. Government Agencies 1,999 5 1,994
---------- ---------- ---------- ----------
$ 9,066 $ 74 $ 6 $ 9,134
========== ========== ========== ==========
DECEMBER 31, 1996
U.S. Treasury securities $ 8,089 $ 85 $ 10 $ 8,164
========== ========== ========== ==========
MARCH 31, 1998
(Unaudited)
U.S. Treasury securities $ 7,578 $ 95 $ 3 $ 7,670
U.S. Government Agencies 2,214 2 2,216
---------- ---------- ---------- ----------
$ 9,792 $ 97 $ 3 $ 9,886
========== ========== ========== ==========
<CAPTION>
Held To Maturity
- ----------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1997
U.S. Treasury securities $ 7,153 $ 32 $ 16 $ 7,169
========== ========== ========== ==========
DECEMBER 31, 1996
U.S. Treasury securities $ 6,476 $ 9 $ 48 $ 6,437
========== ========== ========== ==========
MARCH 31, 1998
(Unaudited)
U.S. Treasury securities $ 6,650 $ 51 $ 5 $ 6,696
========== ========== ========== ==========
</TABLE>
F-9
<PAGE> 76
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
NOTE 3 - INVESTMENT SECURITIES (CONTINUED)
The maturities of investment securities were as follows:
December 31, 1997
<TABLE>
<CAPTION>
Securities held-to-maturity Securities available-for-sale
----------------------------- -----------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Due in one year or less $ 3,491 $ 3,488 $ 499 $ 500
Due in one to five years 2,166 2,158 8,567 8,634
Due in five to ten years 1,496 1,523
----------- ----------- ----------- -----------
$ 7,153 $ 7,169 $ 9,066 $ 9,134
=========== =========== =========== ===========
</TABLE>
March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Securities held-to-maturity Securities available-for-sale
----------------------------- -----------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Due in one year or less $ 2,993 $ 2,995 $ 500 $ 501
Due in one to five years 3,162 3,194 9,292 9,385
Due in five to ten years 495 507
----------- ----------- ----------- -----------
$ 6,650 $ 6,696 $ 9,792 $ 9,886
=========== =========== =========== ===========
</TABLE>
Investment securities with a carrying amount of $7,196 (market value $7,204) as
of December 31, 1997, $3,987 (market value $3,954) as of December 31, 1996 and
$9,220 (market value $9,293) were pledged to secure public deposits and
securities sold under agreements to repurchase and for other purposes required
or permitted by law. There were no realized gains or losses for the years ended
December 31, 1997 and 1996 or for the three months ended March 31, 1998 and
1997.
F-10
<PAGE> 77
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
NOTE 4 - LOANS
A summary of loans outstanding by category is as follows:
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1996 1998
------- ------- -------
<S> <C> <C> <C>
Real estate $25,575 $25,088 $25,769
Commercial 7,485 7,325 7,669
Installment 1,842 2,317 1,923
All other 1,161 896 1,182
------- ------- -------
Total Gross Loans 36,063 35,626 36,543
Less: unearned income 93 60 90
------- ------- -------
35,970 35,566 36,453
Less: allowance for possible loan loss 575 575 575
------- ------- -------
$35,395 $34,991 $35,878
======= ======= =======
</TABLE>
The maturities and repricing data for loans are as follows:
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1998
------------ -----------
<S> <C> <C>
Fixed rate loans with maturity of:
Three months or less $ 1,294 $ 2,295
Over three months to twelve months 5,862 7,346
Over one year to five years 16,226 14,128
Over five years 695 694
------- -------
24,077 24,463
Floating rate loans with a repricing frequency of:
Quarterly or more frequently 11,986 12,080
------- -------
Total Gross Loans $36,063 $36,543
======= =======
</TABLE>
F-11
<PAGE> 78
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
NOTE 5 - ALLOWANCE FOR POSSIBLE LOAN LOSSES
Changes in the allowance for possible loan losses are as follows:
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1996 1998
--------- --------- ---------
<S> <C> <C> <C>
Balance - Beginning of Year $ 575 $ 575 $ 575
Provision charged to operating expenses - - -
Loans charged off - - -
Recoveries on loans previously charged off - - -
--------- --------- ---------
Balance - End of Year $ 575 $ 575 $ 575
========= ========= =========
</TABLE>
Allowance for possible loan losses for tax purposes are maintained at the
maximum allowable by the Internal Revenue Code.
NOTE 6 - BANK PREMISES AND EQUIPMENT
A summary of bank premises and equipment by classification is as follows:
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1996 1998
--------- --------- ---------
<S> <C> <C> <C>
Land $ 318 $ 318 $ 318
Building 409 409 410
Furniture and fixtures 269 269 269
Business equipment 77 46 83
Computer equipment 194 211 195
--------- --------- ---------
1,267 1,253 1,275
Less: Accumulated depreciation 514 480 521
--------- --------- ---------
$ 753 $ 773 $ 754
========= ========= =========
</TABLE>
Depreciation expense amounted to $54, $48 and $47 in 1997, 1996 and 1995,
respectively and $12 for both the three month periods ended March 31, 1998 and
1997.
F-12
<PAGE> 79
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
NOTE 7 - DEPOSITS
Deposit account balances are summarized as follows:
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1996 1998
----------------------- ----------------------- -----------------------
Amount % Amount % Amount %
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Demand deposits $ 10,452 21.6% $ 7,733 16.4% $ 8,010 16.6%
NOW accounts 5,507 11.4 4,305 9.1 5,091 10.6
Savings 1,084 2.2 1,105 2.3 1,275 2.6
Money market 6,782 14.0 6,840 14.5 7,542 15.7
Time, $100,000 and over 13,385 27.7 15,471 32.8 15,014 31.2
Other time 11,194 23.1 11,762 24.9 11,252 23.3
-------- -------- -------- -------- -------- --------
$ 48,404 100.0% $ 47,216 100.0% $ 48,184 100.0%
======== ======== ======== ======== ======== ========
</TABLE>
Scheduled maturities of certificates of deposit are as follows:
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1998
------------ ----------
<S> <C> <C>
1998 $ 16,170 $ 17,146
1999 4,322 6,065
2000 3,030 1,834
2001 564 644
2002 and thereafter 493 577
--------- ---------
$ 24,579 $ 26,266
========= =========
</TABLE>
F-13
<PAGE> 80
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
NOTE 8 - FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER
REPURCHASE AGREEMENTS
Federal funds purchased and securities sold under agreements to repurchase are
generally for one-day periods. Information concerning securities sold under
agreements to repurchase is summarized as follows:
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1996 1998
------- ------- ----------
<S> <C> <C> <C>
Average balance during the period $ 2,140 $ 1,991 $ 5,350
Average interest rate during the period 4.26% 3.94% 4.64%
Maximum month-end balance during the period $ 4,216 $ 2,446 $ 7,144
</TABLE>
NOTE 9 - INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1997 1996 1998
------- ------- -----------
<S> <C> <C> <C>
Current
Federal $ 515 $ 474 $ 129
State 72 69 22
------- ------- -------
587 543 151
Deferred
Federal (9) (1)
State (2)
------- ------- -------
(11) (1)
------- ------- -------
$ 576 $ 542 $ 151
======= ======= =======
</TABLE>
The deferred tax asset is related to the allowance for possible loan losses and
deferred loan fees net of the use of accelerated methods of depreciation of
property and equipment and adjustment to market value for investment securities
available for sale. The Bank uses as its method of accounting for income taxes
Financial Accounting Standards Board Statement No. 109, Accounting for Income
Taxes.
F-14
<PAGE> 81
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
NOTE 10 - INCENTIVE STOCK OPTION PLAN
On February 19, 1987, the Bank adopted a qualified incentive stock option plan
under which options to purchase shares of common stock may be granted to key
employees at not less than fair market value, which for the options granted
approximated book value per share on the date of grant. There is an aggregate of
105,000 shares of common stock available for option under this plan. On June 16,
1994, 56,465 options for shares were offered to key employees at the greater of
book value on day exercised or $4.37 per share for a period of two years. On
January 10, 1995, options were exercised for the purchase of 14,330 shares of
common stock at an option price of $4.76 per share under the incentive stock
option plan. On May 20, 1996, options were exercised for the purchase of 16,630
shares of common stock at an option price of $4.73 per share under the incentive
stock option plan. As of December 31, 1996 all unused incentive stock options
have expired.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Bank makes various commitments and incurs
certain contingent liabilities that are not presented in the accompanying
financial statements. The commitments and contingent liabilities include various
guarantees, commitments to extend credit, and standby letters of credit.
Commitments under standby letters of credit as of December 31, 1997, 1996, and
March 31, 1998 amounted to $440, $495 and $561 respectively. The Bank does not
anticipate any material losses as a result of the commitments and contingent
liabilities.
NOTE 12 - RELATED PARTY TRANSACTIONS
Directors, significant shareholders, and their affiliates were indebted to the
Bank as of December 31, 1997, 1996, and March 31, 1998 in the aggregate amount
of $3,246, $3,225 and $4,398 respectively. All such loans were made in the
ordinary course of business.
The Bank has also entered into repurchase agreements with certain aforementioned
parties. The aggregate amount as of December 31, 1997 and 1996, and March 31,
1998 is $643, $505 and $1,448 respectively. These repurchase agreements were
made in the ordinary course of business.
NOTE 13 - DIVIDENDS
On December 18, 1997, the Bank declared a cash dividend of $135 ($.10 per share)
payable January 26, 1998, to stockholders of record as of January 16, 1998.
On December 19, 1996, the Bank declared a cash dividend of $134 ($.10 per share)
payable January 16, 1997, to stockholders of record as of January 3, 1997.
F-15
<PAGE> 82
NOTE 14 - CONCENTRATIONS OF CREDIT
MARINE BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995 and March 31, 1998 and 1997
Information with respect to March 31, 1998 and 1997 is unaudited.
All of the Bank's loans, commitments and standby letters of credit have been
granted to customers in the Bank's market area. The concentrations of credit by
type of loan are set forth in Note 4. The distribution of commitments to extend
credit approximates the distribution of loans outstanding. Standby letters of
credit were granted primarily to commercial borrowers. The Bank, as a matter of
policy, does not extend credit to any single borrower or group of related
borrowers in excess of its legal lending limit which was $1,823, $1,611 and
$1,885 as of December 31, 1997 and 1996, and March 31, 1998 respectively.
NOTE 15 - EMPLOYEE BENEFITS
The Bank has a deferred compensation plan qualifying under Internal Revenue
Service Code Section 401(k), for substantially all full-time employees. Salaries
and employee benefits expense for the plan includes $12, $13 and $13 for the
years ended December 31, 1997, 1996 and 1995 respectively. The expense includes
$3 for both the three months ended March 31, 1998 and 1997. Contributions under
the plan are made at the discretion of the Board of Directors which opted to
match up to 4% of eligible employees gross salaries.
NOTE 16 - REGULATORY MATTERS
The Bank, as a member of FDIC, is required to maintain minimum amounts of
capital to assets, as defined by banking regulators. The Bank is required to
have a minimum Tier 1 and Tier 2 capital ratios of 8.00%. The Bank's actual
ratios as of December 31, 1997 and 1996, and March 31, 1998 were 15.68%, 14.68%,
and 14.89% respectively.
F-16
<PAGE> 83
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
OF
SOUTHTRUST BANK,
NATIONAL ASSOCIATION
AND
MARINE BANK
JOINED IN BY
SOUTHTRUST OF ALABAMA, INC.
AND
SOUTHTRUST CORPORATION
A-i
<PAGE> 84
ARTICLE I
THE MERGER
<TABLE>
<S> <C> <C>
Section 1.1 Constituent Corporations; Consummation of Merger; Closing Date.......................A-1
Section 1.2 Effect of Merger.....................................................................A-2
Section 1.3 Further Assurances...................................................................A-3
ARTICLE II
CONVERSION OF CONSTITUENTS' CAPITAL SHARES
Section 2.1 Manner of Conversion of Marine Shares................................................A-3
Section 2.2 Fractional Shares....................................................................A-4
Section 2.3 Effectuating Conversion ............................................................A-4
Section 2.4 Laws of Escheat......................................................................A-5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MARINE
Section 3.1 Corporate Organization...............................................................A-6
Section 3.2 Capitalization.......................................................................A-6
Section 3.3 Financial Statements; Filings........................................................A-6
Section 3.4 Loan Portfolio; Reserves.............................................................A-7
Section 3.5 Certain Loans and Related Matters....................................................A-7
Section 3.6 Authority; No Violation..............................................................A-8
Section 3.7 Consents and Approvals...............................................................A-8
Section 3.8 Broker's Fees........................................................................A-8
Section 3.9 Absence of Certain Changes or Events.................................................A-8
Section 3.10 Legal Proceedings; Etc...............................................................A-9
Section 3.11 Taxes and Tax Returns................................................................A-9
Section 3.12 Employee Benefit Plans..............................................................A-10
Section 3.13 Title and Related Matters...........................................................A-10
Section 3.14 Real Estate.........................................................................A-15
Section 3.15 Environmental Matters...............................................................A-11
Section 3.16 Commitments and Contracts...........................................................A-12
Section 3.17 Regulatory and Accounting Matters...................................................A-17
Section 3.18 Registration Obligations............................................................A-12
Section 3.19 State Takeover Laws.................................................................A-13
Section 3.20 Insurance...........................................................................A-13
Section 3.21 Labor...............................................................................A-13
Section 3.22 Compliance with Laws................................................................A-13
Section 3.23 Transactions with Management........................................................A-13
Section 3.24 Derivative Contracts................................................................A-13
Section 3.25 Deposits............................................................................A-14
Section 3.26 Accounting Controls.................................................................A-14
Section 3.27 Proxy Materials.....................................................................A-14
Section 3.28 Deposit Insurance...................................................................A-14
Section 3.29 Untrue Statements and Omissions.....................................................A-14
</TABLE>
A-ii
<PAGE> 85
<TABLE>
<CAPTION>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
SOUTHTRUST, ST-SUB AND ST-BANK
<S> <C> <C>
Section 4.1 Organization and Related Matters of SouthTrust......................................A-14
Section 4.2 Organization and Related Matters of ST-Sub..........................................A-15
Section 4.3 Organization and Related Matters of ST-Bank.........................................A-15
Section 4.4 Capitalization......................................................................A-15
Section 4.5 Authorization.......................................................................A-15
Section 4.6 Financial Statements................................................................A-16
Section 4.7 Absence of Certain Changes or Events................................................A-16
Section 4.8 Legal Proceedings, Etc..............................................................A-16
Section 4.9 Consents and Approvals..............................................................A-16
Section 4.10 Accounting, Tax, Regulatory Matters.................................................A-16
Section 4.11 Proxy Materials.....................................................................A-17
Section 4.12 No Broker's or Finder's Fees........................................................A-17
Section 4.13 Untrue Statements and Omissions.....................................................A-17
<CAPTION>
ARTICLE V
COVENANTS AND AGREEMENTS
<S> <C> <C>
Section 5.1 Conduct of the Business of Marine...................................................A-17
Section 5.2 Current Information.................................................................A-18
Section 5.3 Access to Properties; Personnel and Records.........................................A-19
Section 5.4 Approval of Shareholders............................................................A-19
Section 5.5 No Other Bids.......................................................................A-19
Section 5.6 Notice of Deadlines.................................................................A-20
Section 5.7 Affiliates..........................................................................A-20
Section 5.8 Maintenance of Properties...........................................................A-20
Section 5.9 Environmental Audits................................................................A-20
Section 5.10 Title Insurance.....................................................................A-20
Section 5.11 Surveys.............................................................................A-20
Section 5.12 Exemption Under Anti-Takeover Statutes..............................................A-21
Section 5.13 Conforming Accounting and Reserve Policies..........................................A-21
Section 5.14 Press Releases......................................................................A-21
Section 5.15 Pre-Acquisition Investigation and Review............................................A-21
<CAPTION>
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
<S> <C> <C>
Section 6.1 Best Efforts; Cooperation...........................................................A-21
Section 6.2 Regulatory Matters..................................................................A-21
Section 6.3 Other Matters.......................................................................A-22
Section 6.4 Indemnification; Insurance..........................................................A-22
Section 6.5 Current Information.................................................................A-23
Section 6.6 Registration Statement..............................................................A-23
Section 6.7 Reservation of Shares...............................................................A-23
Section 6.8 Consideration.......................................................................A-23
</TABLE>
A-iii
<PAGE> 86
<TABLE>
<CAPTION>
ARTICLE VII
MUTUAL CONDITIONS TO CLOSING
<S> <C> <C>
Section 7.1 Shareholder Approval................................................................A-23
Section 7.2 Regulatory Approvals................................................................A-23
Section 7.3 Legal Proceedings...................................................................A-23
Section 7.4 Registration Statement and Listing..................................................A-23
<CAPTION>
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF SOUTHTRUST, ST-SUB AND ST-BANK
<S> <C> <C>
Section 8.1 Representations and Warranties......................................................A-24
Section 8.2 Performance of Obligations..........................................................A-24
Section 8.3 Certificate Representing Satisfaction of Conditions.................................A-24
Section 8.4 Absence of Adverse Facts............................................................A-24
Section 8.5 Opinion of Counsel..................................................................A-24
Section 8.6 Consents Under Agreements...........................................................A-24
Section 8.7 Material Condition..................................................................A-24
Section 8.8 Matters Relating to Employment Agreements...........................................A-24
Section 8.9 Outstanding Shares of Marine........................................................A-25
Section 8.10 Dissenters..........................................................................A-25
Section 8.11 Pooling.............................................................................A-25
Section 8.12 Certification of Claims.............................................................A-25
Section 8.13 Litigation..........................................................................A-25
<CAPTION>
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF MARINE
<S> <C> <C>
Section 9.1 Representations and Warranties......................................................A-25
Section 9.2 Performance of Obligations..........................................................A-25
Section 9.3 Certificate Representing Satisfaction of Conditions.................................A-25
Section 9.4 Absence of Adverse Facts............................................................A-25
Section 9.5 Consents Under Agreements...........................................................A-26
Section 9.6 Opinion of Counsel..................................................................A-26
Section 9.7 SouthTrust Shares...................................................................A-26
Section 9.8 Tax Opinion.........................................................................A-26
<CAPTION>
ARTICLE X
TERMINATION, WAIVER AND AMENDMENT
<S> <C> <C>
Section 10.1 Termination.........................................................................A-26
Section 10.2 Effect of Termination...............................................................A-27
Section 10.3 Amendments..........................................................................A-28
Section 10.4 Waivers.............................................................................A-28
Section 10.5 Non-Survival of Representations and Warranties......................................A-28
<CAPTION>
ARTICLE XI
MISCELLANEOUS
<S> <C> <C>
Section 11.1 Entire Agreement....................................................................A-28
Section 11.2 Definitions.........................................................................A-28
Section 11.3 Notices.............................................................................A-29
Section 11.4 Severability........................................................................A-30
Section 11.5 Costs and Expenses..................................................................A-30
Section 11.6 Captions............................................................................A-30
Section 11.7 Counterparts........................................................................A-30
Section 11.8 Governing Law.......................................................................A-30
Section 11.9 Persons Bound; No Assignment........................................................A-30
Section 11.10 Exhibits and Schedules..............................................................A-30
Section 11.11 Waiver..............................................................................A-30
Section 11.12 Construction of Terms...............................................................A-30
</TABLE>
A-iv
<PAGE> 87
AGREEMENT AND PLAN OF MERGER
OF
SOUTHTRUST BANK, NATIONAL ASSOCIATION
AND
MARINE BANK
JOINED IN BY
SOUTHTRUST OF ALABAMA, INC.
AND
SOUTHTRUST CORPORATION
This AGREEMENT AND PLAN OF MERGER, dated as of the 24th day of
March, 1998 (this "Agreement"), by and between SouthTrust Bank, National
Association, a national banking association ("ST-Bank"), and Marine Bank, a
Florida banking corporation ("Marine"), and joined in by SouthTrust of Alabama,
Inc., an Alabama corporation ("ST-Sub"), and SouthTrust Corporation, a Delaware
corporation ("SouthTrust").
WITNESSETH THAT:
WHEREAS, ST-Sub wishes to acquire the assets and business of
Marine in exchange for stock of SouthTrust, the parent corporation of ST-Sub, in
a transaction that qualifies as a reorganization pursuant to Section
368(a)(1)(C) of the Internal Revenue Code of 1986 (the "Code");
WHEREAS, ST-Sub desires to effect such acquisition through its
wholly-owned subsidiary, ST-Bank, by causing Marine to be merged with and into
ST-Bank;
WHEREAS, ST-Sub has directed, adopted and approved the
acquisition of the assets and business of Marine by merger through ST-Bank, the
wholly-owned subsidiary of ST-Sub;
WHEREAS, the respective Boards of Directors of ST-Bank and
Marine deem it in the best interests of ST-Bank and of Marine, respectively, and
of their respective shareholders, that ST-Bank and Marine merge pursuant to this
Agreement (the "Merger");
WHEREAS, the Boards of Directors of ST-Bank and Marine have
approved this Agreement and have directed that this Agreement be submitted to
their respective shareholders for approval and adoption in accordance with the
laws of the State of Florida and the United States; and
WHEREAS, SouthTrust, on behalf of and as the sole shareholder of
ST-Sub, will deliver, or cause to be delivered, to the shareholders of Marine
the consideration to be paid pursuant to the Merger in accordance with the terms
of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements herein contained, the
parties agree that Marine will be merged with and into ST-Bank and that the
terms and conditions of the Merger, the mode of carrying the Merger into effect,
including the manner of converting the shares of common stock of Marine, par
value $1.00 per share, into shares of common stock of SouthTrust, par value of
$2.50 per share, shall be as hereinafter set forth.
ARTICLE I
THE MERGER
Section 1.1 Constituent Corporations; Consummation of Merger; Closing
Date.
(a) Subject to the provisions hereof, Marine shall be merged
with and into ST-Bank (which has heretofore and shall hereinafter be referred to
as the "Merger") pursuant to Sections 655.412 and 658.40 through 658.45 of the
Florida Banking Code (the "Florida Code") and 12 U.S.C. ss. 215a (the "National
Bank Act") and ST-Bank shall be the surviving corporation (sometimes hereinafter
referred to as "Surviving Corporation" when reference is made
A-1
<PAGE> 88
to it after the Effective Time of the Merger (as defined below)). The Merger
shall become effective on the date and at the time on which the Merger is deemed
effective by the Office of the Comptroller of the Currency (such time is
hereinafter referred to as the "Effective Time of the Merger"). Subject to the
terms and conditions hereof, unless otherwise agreed upon by SouthTrust and
Marine, the Effective Time of the Merger shall occur as soon as practicable
following the later to occur of (i) the effective date (including expiration of
any applicable waiting period) of the last required Consent (as defined below)
of any Regulatory Authority (as defined below) having authority over the
transactions contemplated under this Agreement and (ii) the date on which the
shareholders of Marine, to the extent that their approval is required by
applicable law, approve the transactions contemplated by this Agreement, or such
other time as the parties may agree.
(b) The closing of the Merger (the "Closing") shall take place
at the principal offices of Marine at 10:00 a.m. local time on the day that the
Effective Time of the Merger occurs, or such other date and time and place as
the parties hereto may agree (the "Closing Date"). Subject to the provisions of
this Agreement, at the Closing there shall be delivered to each of the parties
hereto the opinions, certificates and other documents and instruments required
to be so delivered pursuant to this Agreement.
(c) The main office of Marine is located at 9400 Ninth Street
North, St. Petersburg, Florida 33702. The main office of ST-Bank is located at
Birmingham, Alabama.
(d) The proposed main office of the Surviving Corporation shall
be located at Birmingham, Alabama. The branch offices of the Surviving
Corporation shall be the existing branch offices of ST-Bank and the existing
main and branch offices of Marine.
(e) From and after the Effective Time of the Merger, until
replaced pursuant to applicable laws and under the provisions of the Articles of
Association and Bylaws of the Surviving Corporation, the persons who shall serve
as directors and executive officers, as the case may be, of the Surviving
Corporation shall be those persons who are serving in such capacity immediately
prior to the Effective Time of the Merger, and such additional persons as
SouthTrust, or ST-Sub may, at or prior to the Effective Time of the Merger,
designate in writing.
(f) After the Effective Time of the Merger, the Surviving
Corporation shall have 1,020,000 shares of Common Stock, par value $8.83 per
share ("ST-Bank Common Stock"), authorized, 1,020,000 shares of which shall be
issued and outstanding and no shares of which shall be held as treasury stock.
The total amount of capital stock of the Surviving Corporation shall be
$9,006,600, and the total capital of the Surviving Corporation shall consist of
such capital stock, plus the combined capital and surplus of Marine (including
unrealized losses on securities available for resale) and ST-Bank (as stated in
Section 1.1(g) hereof), adjusted, however, for earnings (losses) between
December 31, 1997 and the Effective Time of the Merger.
(g) As of December 31, 1997, ST-Bank had total capital of
$2,193,123,000 divided into 1,020,000 shares of ST-Bank Common Stock, and
surplus and undivided profits and net unrealized holding gains (losses) on
available for sale securities of $2,184,117,000. As of December 31, 1997, Marine
had total capital of $7,332,214 divided into 1,368,000 shares of authorized
Common Stock, par value $1.00, of which 1,344,226 are issued and outstanding and
of which none are held as treasury stock, and surplus and undivided profits and
net unrealized holding gains (losses) on available for sale securities of
$5,987,988.
(h) The Surviving Corporation shall have trust powers.
(i) The Articles of Association under which the Surviving
Corporation will operate shall be the Articles of Association of ST-Bank.
Section 1.2 Effect of Merger. (a) At the Effective Time of the
Merger, Marine shall be merged with and into ST-Bank and the separate existence
of Marine shall cease. The Articles of Association and Bylaws of ST-Bank, as in
effect on the date hereof and as otherwise amended prior to the Effective Time
of the Merger, shall be the Articles of Association and the Bylaws of the
Surviving Corporation until further amended as provided therein and in
accordance with applicable law. The Surviving Corporation shall have all the
rights, privileges, immunities and powers and shall be subject to all the duties
and liabilities of a national banking association organized under the laws of
the United States and shall thereupon and thereafter possess all other
privileges, immunities and franchises of a private, as well as of a public
nature, of each of the constituent corporations, including the tradenames and
servicemarks of Marine. All property (real, personal and mixed) and all debts on
whatever account, including subscriptions to shares, and all choses
A-2
<PAGE> 89
in action, all and every other interest, of or belonging to or due to each of
the constituent corporations so merged shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed. The title to any real estate, or any interest therein, vested in any of
the constituent corporations shall not revert or be in any way impaired by
reason of the Merger. The Surviving Corporation shall thenceforth be responsible
and liable for all the liabilities and obligations of each of the constituent
corporations so merged and any claim existing or action or proceeding pending by
or against either of the constituent corporations may be prosecuted as if the
Merger had not taken place or the Surviving Corporation may be substituted in
its place. Neither the rights of creditors nor any liens upon the property of
any constituent corporation shall be impaired by the Merger.
(b) The shares of ST-Bank Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger shall remain outstanding
and unchanged after the Merger and shall thereafter constitute all of the issued
and outstanding shares of capital stock of the Surviving Corporation. The Marine
Shares (as hereinafter defined) shall be treated in the Merger as specified in
Article II.
Section 1.3 Further Assurances. From and after the Effective Time of the
Merger, as and when requested by the Surviving Corporation, the officers and
directors of Marine last in office shall execute and deliver or cause to be
executed and delivered in the name of Marine such deeds and other instruments
and take or cause to be taken such further or other actions as shall be
necessary in order to vest or perfect in or confirm of record or otherwise to
the Surviving Corporation title to and possession of all of the property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of Marine.
ARTICLE II
CONVERSION OF CONSTITUENTS' CAPITAL SHARES
Section 2.1 Manner of Conversion of Marine Shares. Subject to the
provisions hereof (including, specifically, without limitation, the right of
SouthTrust to increase the Conversion Ratio upon the occurrence of certain
conditions as specified in Section 10.1(f) hereof) as of the Effective Time of
the Merger and by virtue of the Merger and without any further action on the
part of SouthTrust, ST-Sub, ST-Bank, Marine or the holder of any shares thereof,
the shares of the constituent corporations shall be converted as follows:
(a) Each share of capital stock of ST-Bank outstanding
immediately prior to the Effective Time of the Merger shall, after the Effective
Time of the Merger, remain outstanding and unchanged and thereafter shall
constitute all of the issued and outstanding shares of capital stock of the
Surviving Corporation.
(b) Each share of common stock of Marine (the "Marine Shares")
held by Marine or by SouthTrust (or any of their subsidiaries), other than in a
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired and no consideration shall be paid or delivered in exchange
therefor.
(c) Except with regard to Dissenting Marine Shares (as
hereinafter defined) and the Marine Shares excluded in (b) above, each Marine
Share outstanding immediately prior to the Effective Time of the Merger shall be
converted into the right to receive 0.355 shares of common stock of SouthTrust
(and the rights associated therewith issued pursuant to a Rights Agreement dated
February 22, 1989 between SouthTrust and Mellon Bank, N.A.) (together, the
"SouthTrust Shares")(such number, as may be adjusted as provided herein, being
hereinafter referred to as the "Conversion Ratio"). The Conversion Ratio,
including the number of SouthTrust Shares issuable in the Merger, shall be
subject to an appropriate adjustment in the event of any stock split, reverse
stock split, dividend payable in SouthTrust Shares, reclassification or similar
distribution whereby SouthTrust issues SouthTrust Shares or any securities
convertible into or exchangeable for SouthTrust Shares without receiving any
consideration in exchange therefor, provided that the record date of such
transaction is a date after the date of the Agreement and prior to the Effective
Time of the Merger.
(d) Each outstanding Marine Share, the holder of which has
demanded and perfected his demand for payment of the "fair or appraised" value
of such share in accordance with Sections 607.1301 and 607.1320 of the Florida
Business Corporation Act, Section 658.44 of the Florida Code and the provisions
of the National Bank Act (collectively the "Dissent Provisions"), to the extent
each is applicable, and has not effectively withdrawn or lost his right to such
appraisal (the "Dissenting Marine Shares"), shall not be converted into or
represent a right to receive
A-3
<PAGE> 90
the SouthTrust Shares issuable in the Merger but the holder thereof shall be
entitled only to such rights as are granted by the Dissent Provisions. Marine
shall give SouthTrust prompt notice upon receipt by Marine of any written
objection to the Merger and any written demands for payment of the fair or
appraised value of Marine Shares, and of withdrawals of such demands, and any
other instruments provided to Marine pursuant to the Dissent Provisions (any
shareholder duly making such demand being hereinafter called a "Dissenting
Shareholder"). Each Dissenting Shareholder who becomes entitled, pursuant to the
Dissent Provisions, to payment of fair or appraised value for any Marine Shares
held by such Dissenting Shareholder shall receive payment therefor from the
Surviving Corporation (but only after the amount thereof shall have been agreed
upon or at the times and in the amounts required by the Dissent Provisions) and
all of such Dissenting Shareholder's Marine Shares shall be canceled. Neither
Marine nor the Surviving Corporation shall, except with the prior written
consent of SouthTrust, voluntarily make any payment with respect to, or settle
or offer to settle, any demand for payment by any Dissenting Shareholder. If any
Dissenting Shareholder shall have failed to perfect or shall have effectively
withdrawn or lost such right to demand payment of fair or appraised value, the
Marine Shares held by such Dissenting Shareholder shall thereupon be deemed to
have been converted into the right to receive the consideration to be issued in
the Merger as provided by this Agreement.
(e) With respect to each Dissenting Shareholder, on or
immediately prior to the Effective Time of the Merger, Marine shall deposit with
the Escrow Agent an amount in cash equal to 150% of the consideration (with the
SouthTrust Shares being valued in the manner set forth in Section 2.2) such
Dissenting Shareholder would have received in the Merger but for the exercise of
the Dissent Provisions (the "Dissent Escrow"). The Escrow Agent shall disburse
the Dissent Escrow to such Dissenting Shareholders in accordance with the
Dissent Provisions. Any and all funds remaining in the Dissent Escrow after such
disbursement shall be remitted to the Surviving Corporation.
Section 2.2 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of Marine Shares converted pursuant to the Merger, who
would otherwise have been entitled to receive a fraction of a SouthTrust Share
(after taking into account all certificates delivered by such holder), shall
receive, in lieu thereof, cash (without interest) in an amount equal to such
fractional part of such SouthTrust Share, multiplied by the market value of one
SouthTrust Share at the Effective Time of the Merger. The market value of one
SouthTrust Share at the Effective Time of the Merger shall be the last sale
price of such SouthTrust Share, as reported by the Nasdaq National Market
("NASDAQ") on the last trading day preceding the Effective Time of the Merger
or, if the SouthTrust Shares hereafter become listed for trading on any national
securities exchange registered under the Securities Exchange Act of 1934, the
last sale price of such SouthTrust Shares on the applicable date as reported on
the principal securities exchange on which the SouthTrust Shares are then listed
for trading. No such holder will be entitled to dividends, voting rights or any
other rights as a shareholder in respect of any fractional share.
Section 2.3 Effectuating Conversion (a) SouthTrust shall designate such
institution as it may select, including SouthTrust or one of its affiliates, to
serve as the exchange agent (the "Exchange Agent") pursuant to this Agreement.
The Exchange Agent may employ sub-agents in connection with performing its
duties. As of the Effective Time of the Merger, SouthTrust will deliver or cause
to be delivered to the Exchange Agent the consideration to be paid by SouthTrust
for the Marine Shares, along with appropriate cash payment in lieu of fractional
interests in SouthTrust Shares. As promptly as practicable after the Effective
Time of the Merger, the Exchange Agent shall send or cause to be sent to each
former holder of record of Marine Shares transmittal materials (the "Letter of
Transmittal") for use in exchanging their certificates formerly representing
Marine Shares for the consideration provided for in this Agreement. The Letter
of Transmittal will contain instructions with respect to the surrender of
certificates representing the Marine Shares and the receipt of the consideration
contemplated by this Agreement and will require each holder of Marine Shares to
transfer good and marketable title to such Marine Shares to SouthTrust, free and
clear of all liens, claims and encumbrances. Amounts that would have been
payable to Dissenting Shareholders for Marine Shares but for the fact of their
dissent in accordance with the provisions of Section 2.1(d) hereof shall be
returned by the Exchange Agent to SouthTrust as promptly as practicable.
(b) At the Effective Time of the Merger, the stock transfer
books of Marine shall be closed as to holders of Marine Shares immediately prior
to the Effective Time of the Merger and no transfer of Marine Shares by any such
holder shall thereafter be made or recognized and each outstanding certificate
formerly representing Marine Shares shall, without any action on the part of any
holder thereof, no longer represent Marine Shares. If, after the Effective Time
of the Merger, certificates are properly presented to the Exchange Agent, such
A-4
<PAGE> 91
certificates shall be promptly exchanged for the consideration contemplated by
this Agreement into which the Marine Shares represented thereby were converted
in the Merger.
(c) In the event that any holder of record as of the Effective
Time of the Merger of Marine Shares is unable to deliver the certificate which
represents such holder's Marine Shares, ST-Sub, in the absence of actual notice
that any Marine Shares theretofore represented by any such certificate have been
acquired by a bona fide purchaser, may, in its discretion, deliver to such
holder the consideration contemplated by this Agreement and the amount of cash
representing fractional SouthTrust Shares to which such holder is entitled in
accordance with the provisions of this Agreement upon the presentation of all of
the following:
(i) An affidavit or other evidence to the reasonable
satisfaction of SouthTrust that any such
certificate has been lost, wrongfully taken or
destroyed;
(ii) Such security and indemnity as may be reasonably
requested by SouthTrust to indemnify and hold
SouthTrust harmless in respect of such stock
certificate(s); and
(iii) Evidence to the satisfaction of SouthTrust that
such holder is the owner of the Marine Shares
theretofore represented by each certificate
claimed by such holder to be lost, wrongfully
taken or destroyed and that such holder is the
person who would be entitled to present each such
certificate for exchange pursuant to this
Agreement.
(d) In the event that the delivery of the consideration
contemplated by this Agreement and the amount of cash representing fractional
SouthTrust Shares are to be made to a person other than the person in whose name
any certificate representing Marine Shares surrendered is registered, such
certificate so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer), with the signature(s) appropriately
guaranteed, and otherwise in proper form for transfer, and the person requesting
such delivery shall pay any transfer or other taxes required by reason of the
delivery to a person other than the registered holder of such certificate
surrendered or establish to the satisfaction of SouthTrust that such tax has
been paid or is not applicable.
(e) No holder of Marine Shares shall be entitled to receive any
dividends or distributions declared or made with respect to the SouthTrust
Shares with a record date before the Effective Time of the Merger. After the
Effective Time of the Merger, and until properly surrendered and exchanged
pursuant to this Agreement, each outstanding certificate representing Marine
Shares, subject to this Section 2.4(e), shall be deemed to represent and
evidence for all corporate purposes only the right to receive the consideration
into which such Marine Shares were converted as of the Effective Time of the
Merger. Accordingly, among other matters, neither the consideration contemplated
by this Agreement, any amount of cash representing fractional SouthTrust Shares
nor any dividend or other distribution with respect to SouthTrust Shares where
the record date thereof is on or after the Effective Time of the Merger shall be
paid, and SouthTrust shall not be obligated to pay, to the holder of any
unsurrendered certificate or certificates representing Marine Shares until such
holder shall surrender the certificate or certificates representing the Marine
Shares as provided for by this Agreement, and until such holder becomes the
record holder of the SouthTrust Shares issuable in the Merger, such holder shall
not be entitled to vote such SouthTrust Shares in respect of any matter coming
before the stockholders of SouthTrust. Subject to applicable laws, following
surrender of any such certificate or certificates, there shall be paid to the
holder of the certificate or certificates then representing SouthTrust Shares
issued in the Merger, without interest at the time of such surrender, the
consideration contemplated by this Agreement, the amount of any cash
representing fractional SouthTrust Shares and the amount of any dividends or
other distributions with respect to SouthTrust Shares to which such holder is
entitled as a holder of SouthTrust Shares.
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Section 2.4 Laws of Escheat. If any of the consideration due or other
payments to be paid or delivered to the holders of Marine Shares is not paid or
delivered within the time period specified by any applicable laws concerning
abandoned property, escheat or similar laws, and if such failure to pay or
deliver such consideration occurs or arises out of the fact that such property
is not claimed by the proper owner thereof, SouthTrust or the Exchange Agent
shall be entitled to dispose of any such consideration or other payments in
accordance with applicable laws concerning abandoned property, escheat or
similar laws. Any other provision of this Agreement notwithstanding, none of
Marine, SouthTrust, ST-Sub, ST-Bank, the Exchange Agent nor any other person
acting on their behalf shall be liable to a holder of Marine Shares for any
amount paid or property delivered in good faith to a public official pursuant to
and in accordance with any applicable abandoned property, escheat or similar
law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MARINE
Marine hereby represents and warrants to ST-Bank, ST-Sub and SouthTrust as
follows as of the date hereof and as of all times up to and including the
Effective Time of the Merger (except as otherwise provided):
Section 3.1 Corporate Organization. (a) Marine is a banking corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. Marine has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as such business
is now being conducted, and Marine is duly licensed or qualified to do business
in Florida and elsewhere where the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on the Condition
of Marine. True and correct copies of the Articles of Incorporation of Marine
and the Bylaws of Marine, each as amended to the date hereof, have been
delivered to SouthTrust.
(b) Each of Marine and its Subsidiaries has in effect all
federal, state, local and foreign governmental, regulatory and other
authorizations, permits and licenses necessary to own or lease its properties
and assets and to carry on its business as now conducted, the absence of which,
either individually or in the aggregate, would have a Material Adverse Effect on
Marine.
(c) Marine does not own any capital stock of any subsidiary, nor
does it have any interest in any partnership or joint venture, except as set
forth in Disclosure Schedule 3.1(c); for purposes of this Agreement, a
"Subsidiary" means any corporation or other entity of which the party referred
to beneficially owns, controls, or has the power to vote, directly or
indirectly, more than 5% of the outstanding equity securities.
(d) The minute books of Marine and its Subsidiaries contain
complete and accurate records in all material respects of all meetings and other
corporate actions held or taken by its shareholders and Board of Directors
(including all committees thereof).
Section 3.2 Capitalization. The authorized capital stock of Marine
consists of 1,368,000 shares of common stock, par value $1.00 (hereinbefore and
hereinafter referred to as "Marine Shares"), 1,344,226 shares of which as of the
date hereof are issued and outstanding (none of which are held in the treasury
of Marine). All of the issued and outstanding Marine Shares have been duly
authorized and validly issued and all such shares are fully paid and
nonassessable. As of the date hereof, there are no outstanding options,
warrants, commitments or other rights or instruments to purchase or acquire any
shares of the capital stock of Marine, or any securities or rights convertible
into or exchangeable for shares of capital stock of Marine.
Section 3.3 Financial Statements; Filings. (a) Marine has previously
delivered to SouthTrust copies of the financial statements of Marine as of and
for each of the three fiscal years ended immediately prior to this Agreement and
the interim unaudited financial statements of Marine as of and for the periods
ended after the end of the most recent fiscal year and prior to the date of this
Agreement, and Marine shall deliver to SouthTrust, as soon as practicable
following the preparation of additional financial statements for each subsequent
fiscal quarter (or other reporting period) or year of Marine, the financial
statements of Marine as of and for such subsequent fiscal quarter
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(or other reporting period) or year (such financial statements, unless otherwise
indicated, being hereinafter referred to collectively as the "Financial
Statements of Marine").
(b) Marine has previously delivered to SouthTrust copies of the
Call Reports of Marine as of and for each of the three fiscal years ended
immediately prior to this Agreement and the Call Reports of Marine as of and for
the periods after the end of the most recent fiscal year and prior to the date
of this Agreement, and Marine shall deliver to SouthTrust, as soon as
practicable following the preparation of additional Call Reports for each
subsequent fiscal quarter (or other reporting period) or year of Marine, the
Call Reports of Marine as of and for each such subsequent fiscal quarter (or
other reporting period) or year (such Call Reports, unless otherwise indicated,
being hereinafter referred to collectively as the "Call Reports of Marine").
(c) Each of the Financial Statements of Marine and each of the
Call Reports of Marine (including the related notes, where applicable) have been
or will be prepared in all material respects in accordance with generally
accepted accounting principles or regulatory accounting principles, whichever is
applicable, which principles have been or will be consistently applied during
the periods involved, except as otherwise noted therein, and the books and
records of Marine, and its Subsidiaries have been, are being, and will be
maintained in all material respects in accordance with applicable legal and
accounting requirements and reflect only actual transactions. Each of the
Financial Statements of Marine and each of the Call Reports of Marine (including
the related notes, where applicable) fairly present or will fairly present the
financial position of Marine on a consolidated basis as of the respective dates
thereof and fairly present or will fairly present the results of operations of
Marine on a consolidated basis for the respective periods therein set forth.
(d) To the extent not prohibited by law, Marine has heretofore
delivered or made available, or caused to be delivered or made available, to
SouthTrust all reports and filings made or required to be made by Marine, with
the Regulatory Authorities, and will from time to time hereafter furnish to
SouthTrust, upon filing or furnishing the same to the Regulatory Authorities,
all such reports and filings made after the date hereof with the Regulatory
Authorities. As of the respective dates of such reports and filings, all such
reports and filings did not and shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(e) Except as reflected on Disclosure Schedule 3.3(e) hereto,
since December 31, 1997, neither Marine nor any of its Subsidiaries has incurred
any obligation or liability (contingent or otherwise) that has or might
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Marine except obligations and liabilities (i) which are
accrued or reserved against in the Financial Statements of Marine or the Call
Reports of Marine, or reflected in the notes thereto, (ii) which were incurred
after December 31, 1997, in the ordinary course of business consistent with past
practices. Since December 31, 1997, neither Marine nor any of its Subsidiaries
have incurred or paid any obligations or liability which would have a Material
Adverse Effect on Marine, except as may have been incurred or paid in the
ordinary course of business, consistent with past practices.
Section 3.4 Loan Portfolio; Reserves. Except as set forth in Disclosure
Schedule 3.4, (i) all evidences of indebtedness in original principal amount in
excess of $10,000 reflected as assets in the Financial Statements of Marine and
the Call Reports of Marine as of and for the year ended December 31, 1997 were
as of such dates in all respects the binding obligations of the respective
obligors named therein in accordance with their respective terms, and were not
subject to any defenses, setoffs, or counterclaims, except as may be provided by
bankruptcy, insolvency or similar laws or by general principles of equity; (ii)
the allowances for possible loan losses shown on the Financial Statements of
Marine and the Call Reports of Marine as of and for the year ended December 31,
1997 were, and the allowance for possible loan losses to be shown on the
Financial Statements of Marine and the Call Reports of Marine as of any date
subsequent to the execution of this Agreement will be, as of such dates,
adequate to provide for possible losses, net of recoveries relating to loans
previously charged off, in respect of loans outstanding (including accrued
interest receivable) of Marine and other extensions of credit (including letters
of credit or commitments to make loans or extend credit); (iii) the reserve for
losses with respect to other real estate owned ("OREO Reserve") shown on the
Financial Statements and the Call Reports of Marine as of and for the year ended
December 31, 1997 were, and the OREO Reserve to be shown on the Financial
Statements and the Call Reports of
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Marine as of any date subsequent to the execution of this Agreement will be, as
of such dates, adequate to provide for losses relating to the other real estate
owned portfolio of Marine as of the dates thereof; (iv) the reserve for losses
in respect of litigation ("Litigation Reserve") shown on the Financial
Statements and Call Reports of Marine as of and for the year ended December 31,
1997 were, and the Litigation Reserve to be shown on the Financial Statements
and Call Reports of Marine as of any date subsequent to the execution of this
Agreement will be, as of such dates, adequate to provide for losses relating to
or arising out of all pending or threatened litigation applicable to Marine and
its Subsidiaries as of the dates thereof, and (v) each such allowance or reserve
described above has been established in accordance with the accounting
principles described in Section 3.3(c) and applicable regulatory requirements
and guidelines.
Section 3.5 Certain Loans and Related Matters. Except as set forth in
Disclosure Schedule 3.5, neither Marine nor any of its Subsidiaries is a party
as of the date of this Agreement to any written or oral: (i) loan agreement,
note or borrowing arrangement, other than credit card loans and other loans the
unpaid balance of which does not exceed $10,000 per loan, under the terms of
which the obligor is sixty (60) days delinquent in payment of principal or
interest or is in default of any other provision as of the date hereof; (ii)
loan agreement, note or borrowing arrangement which has been classified or, in
the exercise of reasonable diligence by Marine or any Regulatory Authority,
should have been classified as "substandard", "doubtful", "loss," "other loans
especially mentioned," "other assets especially mentioned" or any comparable
classification; (iii) loan agreement, note or borrowing arrangement, including
any loan guaranty, with any director or executive officer of Marine or any ten
percent (10%) shareholder of Marine, or any person, corporation or enterprise
controlling, controlled by or under common control with any of the foregoing; or
(iv) loan agreement, note or borrowing arrangement in violation of any law,
regulation or rule applicable to Marine or its Subsidiaries including, but not
limited to, those promulgated, interpreted or enforced by any of the Regulatory
Authorities and which violation could have a Material Adverse Effect on Marine.
As of the date of any Financial Statement or Call Report of Marine subsequent to
the execution of this Agreement, including the date of the Financial Statements
and Call Reports of Marine that immediately precede the Effective Time of the
Merger, there shall not have been any material increase in the loan agreements,
notes or borrowing arrangements described in (i) through (iv) above and
Disclosure Schedule 3.5.
Section 3.6 Authority; No Violation. (a) Marine has full corporate power
and authority to execute and deliver this Agreement and, subject to the approval
of the shareholders of Marine and to the receipt of the Consents of the
Regulatory Authorities and the other Consents referred to in Section 3.7 hereof,
to consummate the transactions contemplated hereby. The Board of Directors of
Marine has duly and validly approved this Agreement and the transactions
contemplated hereby, has authorized the execution and delivery of this
Agreement, has directed that this Agreement and the transactions contemplated
hereby be submitted and recommended to Marine' shareholders for approval at a
meeting of such shareholders and, except for the adoption of such Agreement by
its shareholders, no other corporate proceedings on the part of Marine are
necessary to consummate the transactions so contemplated. This Agreement, when
duly and validly executed by Marine and delivered by Marine, will constitute a
valid and binding obligation of Marine, and will be enforceable against Marine
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
(b) Neither the execution and delivery of this Agreement by
Marine nor the consummation by Marine of the transactions contemplated hereby,
nor compliance by Marine with any of the terms or provisions hereof, will (i)
violate any provision of the Articles of Incorporation or Bylaws of Marine (ii)
assuming that the Consents of the Regulatory Authorities and approvals referred
to herein are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Marine or
any of its Subsidiaries or any of its properties or assets, or (iii) violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by or result in the creation of any lien, security interest, charge or
other encumbrance upon any of the respective properties or assets of Marine or
any of its Subsidiaries under, any of the terms, conditions or provisions of any
material note, bond, mortgage, indenture, deed of trust, license, permit,
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lease, agreement or other instrument or obligation to which Marine or any of its
Subsidiaries is a party, or by which Marine or any of its Subsidiaries or any of
its properties or assets may be bound or affected.
Section 3.7 Consents and Approvals. Except for (i) the vote of the
shareholders of Marine in connection with any proxy statement of Marine relating
to the meeting of the shareholders of Marine at which the Merger is to be
considered (the "Proxy Statement"); (ii) the Consent of the OCC and, if
required, the Consent of the Florida Department of Banking and Finance; (iii)
approval of this Agreement by the shareholders of ST-Bank and Marine; (iv)
filing of this Agreement and certified resolutions with the OCC; and (v) as set
forth in Disclosure Schedule 3.7, no Consents of any person are necessary in
connection with the execution and delivery by Marine of this Agreement, and the
consummation by Marine of the Merger and the other transactions contemplated
hereby.
Section 3.8 Broker's Fees. None of Marine or any of its Subsidiaries nor
any of their respective officers or directors, has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement.
Section 3.9 Absence of Certain Changes or Events. Except as set forth in
Disclosure Schedule 3.9, since December 31, 1997, there has not been (i) any
declaration, payment or setting aside of any dividend or distribution (whether
in cash, stock or property) in respect of the Marine Shares or (ii) any change
or any event involving Marine which has had, or is reasonably likely to have, a
Material Adverse Effect on Marine or any of its Subsidiaries generally,
including, without limitation any change in the administration or supervisory
standing or rating of Marine or any of its Subsidiaries with any Regulatory
Authority, and no fact or condition exists as of the date hereof which might
reasonably be expected to cause any such event or change in the future.
Section 3.10 Legal Proceedings; Etc. Except as set forth in Disclosure
Schedule 3.10, neither Marine nor any of its Subsidiaries is a party to any, and
there are no pending or, to the knowledge of Marine or any of its Subsidiaries,
threatened, judicial, administrative, arbitral or other proceedings, claims,
actions, causes of action or governmental investigations against Marine or any
of its Subsidiaries challenging the validity of the transactions contemplated by
this Agreement and, to the knowledge of Marine and its Subsidiaries as of the
date hereof, there is no material proceeding, claim, action or governmental
investigation against Marine or any of its Subsidiaries; no judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator is outstanding against Marine or any of
its Subsidiaries which has or might reasonably be expected to have a Material
Adverse Effect on Marine; to the knowledge of Marine and its Subsidiaries there
is no default by Marine or any of its Subsidiaries under any material contract
or agreement to which Marine or any of its Subsidiaries is a party; and none of
Marine or its Subsidiaries is a party to any agreement, order or memorandum in
writing by or with any Regulatory Authority restricting the operations of Marine
or any of its Subsidiaries and neither Marine nor any of its Subsidiaries has
been advised by any Regulatory Authority that any such Regulatory Authority is
contemplating issuing or requesting the issuance of any such order or memorandum
in the future.
Section 3.11 Taxes and Tax Returns. (a) Marine has previously delivered or
made available to SouthTrust copies of the federal, state and local income tax
returns of Marine and, if consolidated returns do not exist for all periods, of
Marine and each of its Subsidiaries, for the years 1994, 1995, and 1996 and all
schedules and exhibits thereto, and, will provide SouthTrust with a copy of its
federal, state and local income tax return for the year 1997, with all schedules
and exhibits thereto, when such returns are filed, and, such returns have not
been subjected to an audit by the Internal Revenue Service or any other taxing
authority. Except as reflected in Disclosure Schedule 3.11, Marine and its
Subsidiaries have duly filed in correct form all federal, state and local
information returns and tax returns required to be filed on or prior to the date
hereof, and Marine and its Subsidiaries have duly paid or made adequate
provisions for the payment of all taxes and other governmental charges which are
owed by Marine or any of its Subsidiaries to any federal, state or local taxing
authorities, whether or not reflected in such returns (including, without
limitation, those owed in respect of the properties, income, business, capital
stock, deposits, franchises, licenses, sales and payrolls of Marine and its
Subsidiaries), other than taxes and other charges which (i)(A) are not yet
delinquent or (B) are being contested in good faith or (ii) have not been
finally determined. The amounts set forth as liabilities for taxes on the
Financial Statements of Marine and the Call Reports of Marine are sufficient, in
the aggregate, for the payment of all unpaid federal, state and local taxes
(including any interest or penalties thereon), whether or not disputed, accrued
or applicable, for the periods then ended, and have been computed in accordance
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with generally accepted accounting principles consistent with past practices.
Neither Marine nor any of its Subsidiaries is responsible for the taxes of any
other person other than Marine, under Treasury Regulation 1.1502-6 or any
similar provision of federal, state or foreign law.
(b) Except as disclosed in Disclosure Schedule 3.11, neither
Marine nor any Subsidiary has executed an extension or waiver of any statute of
limitations on the assessment or collection of any Tax due that is currently in
effect, and deferred taxes of Marine or any Subsidiary, have been adequately
provided for in the financial statements of Marine.
(c) Except as disclosed in Disclosure Schedule 3.11, neither
Marine nor any Subsidiary has made any payment, is obligated to make any payment
or is a party to any contract, agreement or other arrangement that could
obligate it to make any payment that would be disallowed as a deduction under
Section 280(G) or 162(m) of the Code.
(d) There has not been an ownership change, as defined in
Section 382(G) or the Code, of Marine or any Subsidiary that occurred during or
after any taxable period in which Marine or any subsidiary incurred an operating
loss that carries over to any taxable period ending after the fiscal year of
Marine immediately preceding the date of this Agreement.
(e) (i) Proper and accurate amounts have been withheld by Marine
and its Subsidiaries from their employees and others for all prior periods in
compliance in all material respects with the tax withholding provisions of all
applicable federal, state and local laws and regulations, and proper due
diligence steps have been taken in connection with back-up withholding, (ii)
federal, state and local returns have been filed by Marine and its subsidiaries
for all periods for which returns were due with respect to withholding, Social
Security and unemployment Taxes and (iii) the amounts shown on such returns to
be due and payable have been paid in full or adequate provision therefor has
been included by Marine in the Financial Statements of Marine.
Section 3.12 Employee Benefit Plans. (a) None of Marine or any of its
Subsidiaries has or maintains any "employee benefit plan," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), except as described in Disclosure Schedule 3.12(a).
(b) None of Marine or any of its Subsidiaries (or any pension
plan maintained by it) has incurred any liability to the Pension Benefit
Guaranty Corporation ("PBGC") or the Internal Revenue Service with respect to
any pension plan qualified under Section 401 of the Code, except liabilities to
the PBGC pursuant to Section 4007 of ERISA, all which have been fully paid. No
reportable event under Section 4043(b) of ERISA (including events waived by PBGC
regulation) has occurred with respect to any such pension plan.
(c) None of Marine or any of its Subsidiaries has incurred any
material liability under Section 4201 of ERISA for a complete or partial
withdrawal from, or agreed to participate in, any multi-employer plan as such
term is defined in Section 3(37) of ERISA.
(d) All "employee benefit plans," as defined in Section 3(3) of
ERISA, that are maintained by Marine and its Subsidiaries comply in both form
and operation, in all material respects, with ERISA and the Code that are
applicable, or intended to be applicable, to such "employee benefit plans." All
documents, summaries, forms or other information required to be provided to
participants in such employee benefit plans or to be filed with or provided to
any governmental agency have been so filed or provided. Neither Marine nor any
of its Subsidiaries have any material liability under any such plan that is not
reflected in the Financial Statements of Marine or the Call Reports of Marine.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)
has occurred with respect to any employee benefit plan maintained by Marine or
any of its Subsidiaries (i) which would result in the imposition, directly or
indirectly, of a material excise tax under Section 4975 of the Code or a
material civil penalty under Section 502(i) of ERISA, or (ii) the correction of
which would have a material adverse effect on the Condition of Marine or any of
its Subsidiaries; and no actions have occurred which could result in the
imposition of a penalty under any section or provision of ERISA.
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(f) No employee benefit plan which is a defined benefit pension
plan has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan exceeds the plan's "benefit liabilities," as that term is defined in
Section 4001(a)(16) of ERISA, when determined under actuarial factors that would
apply if the plan terminated in accordance with all applicable legal
requirements.
(g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or any
officer or employee of Marine or any of its Subsidiaries under any benefit plan
or otherwise, (ii) materially increase any benefits otherwise payable under any
benefit plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits to any material extent.
(h) Neither Marine nor any Subsidiary maintains any employee
benefit plan providing for medical or life insurance benefits to retired or
terminated employees, or dependants thereof, except as may be required by Part 6
of Subtitle B of Title I of ERISA or Section 4980B of the Code.
Section 3.13 Title and Related Matters. (a) Except as set forth in
Disclosure Schedule 3.13(a), Marine and its Subsidiaries have good title, and as
to owned real property, have good and marketable title in fee simple absolute,
to all assets and properties, real or personal, tangible or intangible,
reflected as owned by it or carried under its name on the Financial Statements
of Marine, or the Call Reports of Marine or acquired subsequent thereto (except
to the extent that such assets and properties have been disposed of for fair
value in the ordinary course of business since December 31, 1996), free and
clear of all liens, encumbrances, mortgages, security interests, restrictions,
pledges or claims, except for (i) those liens, encumbrances, mortgages, security
interests, restrictions, pledges or claims reflected in the Financial Statements
of Marine and the Call Reports of Marine or incurred in the ordinary course of
business after December 31, 1996, (ii) statutory liens for amounts not yet
delinquent or which are being contested in good faith, and (iii) liens,
encumbrances, mortgages, security interests, pledges, claims and title
imperfections that do not in the aggregate have a Material Adverse Effect on
Marine.
(b) All agreements pursuant to which Marine or any of its
Subsidiaries leases, subleases or licenses material real or material personal
properties from others are valid, binding and enforceable in accordance with
their respective terms, and there is not, under any of such leases or licenses,
any existing default or event of default, or any event which with notice or
lapse of time, or both, would constitute a default or force majeure, or provide
the basis for any other claim of excusable delay or nonperformance, except for
defaults which individually or in the aggregate would not have a Material
Adverse Effect on Marine. Except as set forth in Disclosure Schedule 3.13(b),
Marine and its Subsidiaries have all right, title and interest as a lessee under
the terms of each lease or sublease, free and clear of all liens, claims or
encumbrances (other than the rights of the lessor), as of the Effective Time of
the Merger, shall have the right to transfer each lease or sublease pursuant to
this Agreement.
(c) Other than real estate owned, acquired by foreclosure or
voluntary deed in lieu of foreclosure (i) all of the buildings, structures and
fixtures owned, leased or subleased by Marine and its Subsidiaries, are in good
operating condition and repair, subject only to ordinary wear and tear and/or
minor defects which do not interfere with the continued use thereof in the
conduct of normal operations, and (ii) all of the material personal properties
owned, leased or subleased by Marine and its Subsidiaries, are in good operating
condition and repair, subject only to ordinary wear and tear and/or minor
defects which do not interfere with the continued use thereof in the conduct of
normal operations.
Section 3.14 Real Estate. (a) Disclosure Schedule 3.14(a) identifies and
sets forth a complete legal description for each parcel of real estate or
interest therein owned, leased or subleased by Marine or any of its Subsidiaries
or in which Marine or any of its Subsidiaries have any ownership or leasehold
interest.
(b) Disclosure Schedule 3.14(b) lists or otherwise describes
each and every written or oral lease or sublease under which Marine or any of
its Subsidiaries is the lessee of any real property and which relates in any
manner to the operation of the businesses of Marine or any of its Subsidiaries.
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(c) None of Marine or any of its Subsidiaries have violated, and
is not currently in violation of, any law, regulation or ordinance relating to
the ownership or use of the real estate and real estate interests described in
Disclosure Schedules 3.14(a) and 3.14(b) including, but not limited to any law,
regulation or ordinance relating to zoning, building, occupancy, environmental
or comparable matter which individually or in the aggregate would have a
Material Adverse Effect on Marine.
(d) As to each parcel of real property owned or used by Marine
or any of its Subsidiaries, none of Marine or any of its Subsidiaries have
received notice of any pending or, to the knowledge of Marine, threatened
condemnation proceedings, litigation proceedings or mechanics or materialmen's
liens.
Section 3.15 Environmental Matters.
(a) Each of Marine, its Subsidiaries, the Participation
Facilities (as defined below), and the Loan Properties (as defined below) are,
and, to the knowledge of Marine, have been, in compliance with all applicable
laws, rules, regulations, standards and requirements of the United States
Environmental Protection Agency and all state and local agencies with
jurisdiction over pollution or protection of the environment, except for
violations which, individually or in the aggregate, will not have a Material
Adverse Effect on Marine.
(b) There is no litigation pending or, to the knowledge of
Marine, threatened before any court, governmental agency or board or other forum
in which Marine, its Subsidiaries, or any Participation Facility has been or,
with respect to threatened litigation may be, named as defendant (i) for alleged
noncompliance (including by any predecessor), with any Environmental Law (as
defined below) or (ii) relating to the release into the environment of any
Hazardous Material (as defined below) or oil, whether or not occurring or on a
site owned or leased or operated by Marine, any of its Subsidiaries, or any
Participation Facility, except for such litigation pending or threatened that
will not, individually or in the aggregate, have a Material Adverse Effect on
Marine.
(c) There is no litigation pending or, to the knowledge of
Marine, threatened before any court, governmental agency or board or other forum
in which any Loan Property (or Marine or any of its Subsidiaries in respect of
such Loan Property) has been or, with respect to threatened litigation, may be,
named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law (as
defined below) or (ii) relating to the release into the environment of any
Hazardous Material (as defined below) or oil, whether or not occurring at, on or
involving a Loan Property, except for such litigation pending or threatened that
will not individually or in the aggregate, have a Material Adverse Effect on
Marine.
(d) To the knowledge of Marine and its Subsidiaries, there is no
reasonable basis for any litigation of a type described in 3.15(b), of this
Agreement, except as will not have, individually or in the aggregate, a Material
Adverse Effect on Marine.
(e) During the period of (i) ownership or operation by Marine or
any of its Subsidiaries of any of their respective current properties, or (ii)
participation by Marine or any of its Subsidiaries in the management of any
Participation Facility, to the knowledge of Marine, or (iii) holding by Marine
or any of its Subsidiaries of a security interest in a Loan Property, to the
knowledge of Marine, there have been no releases of Hazardous Material or oil
in, on, under or affecting such properties, except where such releases have not
and will not, individually or in the aggregate, have a Material Adverse Effect
on Marine.
(f) Except as set forth on Disclosure Schedule 3.15(f), prior to
the period of (i) ownership or operation by Marine or any of its Subsidiaries of
any of their respective current properties, (ii) participation by Marine or any
of its Subsidiaries in the management of any Participation Facility, or (iii)
holding by Marine or any of its Subsidiaries of a security interest in any Loan
Property, to the knowledge of Marine, there were no releases of Hazardous
Material or oil in, on, under or affecting any such property, Participation
Facility or Loan Property, except where such releases have not and will not,
individually or in the aggregate, have a material adverse effect on Marine.
Section 3.16 Commitments and Contracts. Except as set forth in Disclosure
Schedule 3.16, none of Marine or any of its Subsidiaries is a party or subject
to any of the following (whether written or oral, express or implied):
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(a) Any employment contract or understanding (including any
agreement or plan with respect to severance or termination pay liabilities or
fringe benefits) with any present or former officer, director, employee,
including in any such person's capacity as a consultant (other than those which
either are terminable at will without any further amount being payable
thereunder or as a result of such termination by Marine or any of its
Subsidiaries);
(b) Any labor contract or agreement with any labor union;
(c) Any contract covenants which limit the ability of Marine or
any of its Subsidiaries to compete in any line of business or which involve any
restriction of the geographical area in which Marine or any of its Subsidiaries
may carry on its business (other than as may be required by law or applicable
regulatory authorities);
(d) Any lease (other than real estate leases described on
Disclosure Schedule 3.14(b)) or other agreements or contracts with annual
payments aggregating $5,000 or more; or
(e) Any other contract or agreement which would be required to
be disclosed in reports filed by Marine with the SEC, the FRB, or the FDIC and
which has not been so disclosed.
Section 3.17 Regulatory and Accounting Matters. None of Marine or any of
its Subsidiaries have agreed to take any action or has any knowledge of any fact
or has agreed to take any action or has any knowledge of any fact or has agreed
to any circumstances that would materially impede or delay receipt of any
Consents of any Regulatory Authorities referred to in this Agreement, including
matters relating to the Community Reinvestment Act and protests thereunder; and
none of Marine or any of its Subsidiaries have agreed to take any action or has
knowledge of any fact that would materially impede the ability of SouthTrust to
account for the transactions contemplated by this Agreement as a pooling of
interests.
Section 3.18 Registration Obligations. None of Marine or any of its
Subsidiaries is under any obligation, contingent or otherwise, which will
survive the Merger, to register any of its securities under the Securities Act
of 1933 or any state securities laws.
Section 3.19 State Takeover Laws. This Agreement and the transactions
contemplated hereby are not restricted by any applicable state anti-takeover
statute.
Section 3.20 Insurance. Marine is presently insured, and during each of
the past three calendar years has been insured, for reasonable amounts against
such risks as companies or institutions engaged in a similar business would, in
accordance with good business practice, customarily be insured. To the knowledge
of Marine and its Subsidiaries, the policies of fire, theft, liability and other
insurance maintained with respect to the assets or businesses of Marine and its
Subsidiaries provide adequate coverage against loss, and the fidelity bonds in
effect as to which Marine or any of its Subsidiaries is named an insured are
sufficient for their purpose. Such policies of insurance are listed and
described in Disclosure Schedule 3.20.
Section 3.21 Labor. No work stoppage involving Marine or any of its
Subsidiaries is pending as of the date hereof or, to the knowledge of Marine and
its Subsidiaries, threatened. None of Marine or any of its Subsidiaries is
involved in, or, to the knowledge of Marine and its Subsidiaries, threatened
with or affected by, any proceeding asserting that Marine or any of its
Subsidiaries has committed an unfair labor practice or any labor dispute,
arbitration, lawsuit or administrative proceeding which might reasonably be
expected to have a Material Adverse Effect on the Condition of Marine. No union
represents or claims to represent any employees of Marine or its Subsidiaries,
and, to the knowledge of Marine and its Subsidiaries, no labor union is
attempting to organize employees of Marine or its Subsidiaries.
Section 3.22 Compliance with Laws. Each of Marine and its Subsidiaries has
conducted its business in accordance with all applicable federal, foreign, state
and local laws, regulations and orders, and is in compliance with such laws,
regulations and orders, except for such violations or non-compliance, which when
taken together as a whole, will not have a Material Adverse Effect on the
Condition of Marine. Except as disclosed in Disclosure Schedule 3.22, none of
Marine or any of its Subsidiaries:
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(a) is in violation of any laws, orders or permits applicable to
its business or the employees or agents or representatives
conducting its business, except for violations which
individually or in the aggregate do not have and will not have
a Material Adverse Effect on Marine; and
(b) has received a notification or communication from any
agency or department of federal, state or local government or
the Regulatory Authorities or the staff thereof (i) asserting
that Marine or any of its Subsidiaries is not in compliance
with any laws or orders which such governmental authority or
Regulatory Authority enforces, where such noncompliance is
reasonably likely to have a Material Adverse Effect on Marine,
(ii) threatening to revoke any permit, the revocation of which
is reasonably likely to have a Material Adverse Effect on
Marine, (iii) requiring Marine or any of its Subsidiaries to
enter into any cease and desist order, formal agreement,
commitment or memorandum of understanding, or to adopt any
resolutions or similar undertakings, or (iv) directing,
restricting or limiting, or purporting to direct, restrict or
limit in any manner, the operations of Marine or any of its
Subsidiaries, including, without limitation, any restrictions
on the payment of dividends.
Section 3.23 Transactions with Management. Except for (a) deposits, all of
which are on terms and conditions comparable to those made available to other
customers of Marine at the time such deposits were entered into, (b) the
agreements listed on Disclosure Schedule 3.16, and (c) the items described on
Disclosure Schedule 3.23, there are no contracts with or commitments to present
or former stockholders, directors, officers or employees involving the
expenditure of more than $1,000 as to any one individual, including, any
business directly or indirectly controlled by any such person, or $5,000 for all
such contracts or commitments in the aggregate for all such individuals.
Section 3.24 Derivative Contracts. Marine is not a party to nor has it
agreed to enter into an exchange-traded or over-the-counter swap, forward,
future, option, cap, floor or collar financial contract or agreement, or any
other contract or agreement not included in Financial Statements of Marine which
is a financial derivative contract (including various combinations thereof)
("Derivative Contracts"), except for those Derivative Contracts set forth in
Disclosure Schedule 3.24.
Section 3.25 Deposits. To the best of Marine's knowledge, none of the
deposits of the Bank is a "brokered" deposit or is subject to any encumbrance,
legal restraint or other legal process, and no portion of such deposits
represents a deposit of any affiliate of Marine's except as set forth in
Disclosure Schedule 3.25.
Section 3.26 Accounting Controls. Marine has devised and maintained
systems of internal accounting control sufficient to provide reasonable
assurances that: (i) all material transactions are executed in accordance with
general or specific authorization of the Board of Directors and the duly
authorized executive officers of Marine; (ii) all material transactions are
recorded as necessary to permit the preparation of financial statements in
conformity with generally accepted accounting principles consistently applied
with respect to institutions such as Marine or any other criteria applicable to
such financial statements, and to maintain proper accountability for items
therein; (iii) access to the material profit and assets of Marine is permitted
only in accordance with general or specific authorization of the Board of
Directors and the duly authorized executive officers of Marine; and (iv) the
recorded accountability for items is compared with the actual levels at
reasonable intervals and appropriate actions taken with respect to any
differences.
Section 3.27 Proxy Materials. None of the information relating to Marine
or any of its Subsidiaries to be included in the Proxy Statement which is to be
mailed to the shareholders of Marine in connection with the solicitation of
their approval of this Agreement will, at the time such Proxy Statement is
mailed or at the time of the meeting of shareholders to which such Proxy
Statement relates, be false or misleading with respect to any material fact, or
omit to state any material fact, necessary in order to make a statement therein
not false or misleading. The legal responsibility for the contents of such Proxy
Statement (other than the information supplied by SouthTrust concerning
SouthTrust or any of its Subsidiaries) shall remain with Marine and its
Subsidiaries.
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Section 3.28 Deposit Insurance. The deposit accounts of Marine are insured
by the Bank Insurance Fund ("BIF") in accordance with the provisions of the
Federal Deposit Insurance Act (the "Act"); Marine has paid all regular premiums
and special assessments and filed all reports required under the Act.
Section 3.29 Untrue Statements and Omissions. No representation or
warranty contained in Article III of this Agreement or in the Disclosure
Schedules of Marine contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
SOUTHTRUST, ST-SUB AND ST-BANK
SouthTrust, ST-Sub and ST-Bank hereby jointly and severally represent and
warrant to Marine as follows as of the date hereof and as of all times up to and
including the Effective Time of the Merger (except as otherwise provided):
Section 4.1 Organization and Related Matters of SouthTrust. (a) SouthTrust
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. SouthTrust has the corporate power and authority
to own or lease all of its properties and assets and to carry on its business as
now conducted, or as proposed to be conducted pursuant to this Agreement, and
SouthTrust is licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by SouthTrust, or the character or location
of the properties and assets owned or leased by SouthTrust makes such licensing
or qualification necessary, except where the failure to be so licensed or
qualified (or steps necessary to cure such failure) would not have a Material
Adverse Effect on SouthTrust. SouthTrust is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended. True and correct
copies of the Restated Certificate of Incorporation of SouthTrust and the Bylaws
of SouthTrust, each as amended to the date hereof, have been delivered to
Marine.
(b) SouthTrust has in effect all federal, state, local and
foreign governmental, regulatory and other authorizations, permits and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted, the absence of which, either individually or in the
aggregate, would have a Material Adverse Effect on SouthTrust.
Section 4.2 Organization and Related Matters of ST-Sub. (a) ST-Sub is, or
as of the Effective Time of the Merger, will be, a corporation duly organized,
validly existing and in good standing under the laws of the state of
incorporation. ST-Sub has, or as of the Effective Time of the Merger, will have,
the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as now conducted, or as proposed to be
conducted pursuant to this Agreement, and ST-Sub is, or as of the Effective Time
of the Merger will be, licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted or to be conducted by ST-Sub, or
the character or location of the properties and assets owned or leased, or to be
owned or leased, by ST-Sub makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified (or steps necessary to
cure such failure) would not have a Material Adverse Effect on SouthTrust. True
and correct copies of the Articles of Incorporation of ST-Sub and the Bylaws of
ST-Sub, each as amended to the date hereof, will be made available to Marine.
(b) ST-Sub has, or as of the Effective Time of the Merger, will
have, in effect all federal, state, local and foreign governmental, regulatory
and other authorizations, permits and licenses necessary for it to own or lease
its properties and assets and to carry on its business as proposed to be
conducted, the absence of which, either individually or in the aggregate, would
have a Material Adverse Effect on SouthTrust.
Section 4.3 Organization and Related Matters of ST-Bank. (a) ST-Bank is a
national banking association duly organized, validly existing and in good
standing under the laws of the United States. ST-Bank has, or will have, as of
the Effective Time of the Merger, the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as now
conducted, or as proposed to be conducted pursuant to this
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Agreement, and ST-Bank is or will be licensed or qualified to do business in
each jurisdiction which the nature of the business conducted or to be conducted
by ST-Bank, or the character or location or the properties and assets owned or
leased by ST-Bank make such licensing or qualification necessary, except where
the failure to be so licensed or qualified (or steps necessary to cure such
failure) would not have a Material Adverse Effect on SouthTrust. True and
correct copies of the Articles of Association and Bylaws of ST-Bank, as each may
be amended to the date hereof, have been delivered Marine.
(b) ST-Bank, as of the Effective Time of the Merger, will have
in effect all federal, state, local and foreign governmental, regulatory or
other authorizations, permits and licenses necessary for it to own or lease its
properties and assets and to carry on its business as proposed to be conducted,
the absence of which, either individually or in the aggregate, would have a
Material Adverse Effect on SouthTrust.
Section 4.4 Capitalization. As of February 27, 1998, the authorized
capital stock of SouthTrust consisted of 300,000,000 shares of common stock, par
value $2.50 per share, 160,420,982 shares (which includes the rights associated
with such shares pursuant to that certain Rights Agreement dated as of February
22, 1989 between SouthTrust and Mellon Bank, N.A.) of which are issued and
outstanding (exclusive of any such shares held in the treasury of SouthTrust as
of the date hereof), and 5,000,000 shares of preferred stock, par value $1.00
per share, none of which is issued and outstanding as of the date hereof. All
issued and outstanding SouthTrust Shares have been duly authorized and validly
issued, and all such shares are fully paid and nonassessable.
Section 4.5 Authorization. The execution, delivery, and performance of
this Agreement, and the consummation of the transactions contemplated hereby and
in any related agreements, have been or, as of the Effective Time of the Merger,
will have been duly authorized by the Boards of Directors of SouthTrust, ST-Sub
and ST-Bank, and by the Shareholders of ST-Sub and ST-Bank, and no other
corporate or shareholder proceedings on the part of SouthTrust, ST-Sub or
ST-Bank are or will be necessary to authorize this Agreement and the
consummation of the transactions contemplated hereby. This Agreement, when duly
authorized, will be the valid and binding obligation of SouthTrust, ST-Sub and
ST-Bank enforceable against each in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought. Neither the execution,
delivery or performance of this Agreement nor the consummation of the
transactions contemplated hereby will (i) violate any provision of the Restated
Certificate of Incorporation or Bylaws of SouthTrust, the Articles of
Incorporation or Bylaws of ST-Sub or the Articles of Association or Bylaws of
ST- Bank or, (ii) to SouthTrust's knowledge and assuming that any necessary
Consents are duly obtained, (A) violate, conflict with, result in a breach of
any provisions of, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of, accelerate the performance required by or result in the creation of any
lien, security interest, charge or other encumbrance upon any of the properties
or assets of SouthTrust, ST-Sub or ST-Bank under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
permit, lease, agreement or other instrument or obligation to which SouthTrust,
ST-Sub or ST-Bank is a party, or by which SouthTrust, ST-Sub or ST-Bank or any
of their respective properties or assets may be bound or affected, (B) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to SouthTrust, ST-Sub or ST-Bank or any of their
respective material properties or assets, except for (X) such conflicts,
breaches or defaults as are set forth in Disclosure Schedule 4.5; and (Y) with
respect to (B) and (C) above, such as individually or in the aggregate will not
have a Material Adverse Effect on SouthTrust.
Section 4.6 Financial Statements. (a) SouthTrust has made available to
Marine copies of the consolidated financial statements of SouthTrust as of and
for the two fiscal years ended immediately prior to the date of this Agreement,
and as of and for the period ended after the most recent fiscal year and prior
to the date of this Agreement. SouthTrust will make available to Marine, as soon
as practicable following the preparation of additional consolidated financial
statements for each subsequent fiscal period or year of SouthTrust, the
consolidated financial statements of SouthTrust as of and for such subsequent
fiscal period or year (such consolidated financial statements, unless otherwise
indicated, being hereinafter referred to collectively as the "Financial
Statements of SouthTrust").
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(b) Each of the Financial Statements of SouthTrust (including
the related notes) have been or will be prepared in all material respects in
accordance with generally accepted accounting principles, which principles have
been or will be consistently applied during the periods involved, except as
otherwise noted therein, and the books and records of SouthTrust have been, are
being, and will be maintained in all material respects in accordance with
applicable legal and accounting requirements and reflect only the actual
transactions. Each of the Financial Statements of SouthTrust (including the
related notes) fairly presents or will fairly present the consolidated financial
position of SouthTrust as of the respective dates thereof and fairly presents or
will fairly present the results of operations of SouthTrust for the respective
periods therein set forth.
(c) Since December 31, 1997, SouthTrust has not incurred any
obligation or liability (contingent or otherwise) that has or might reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on SouthTrust, except obligations and liabilities (i) which are accrued or
reserved against in the Financial Statements of SouthTrust or reflected in the
notes thereto, and (ii) which were incurred after December 31, 1997 in the
ordinary course of business consistent with past practices. Since December 31,
1997, and except for the matters described in (i) and (ii) above, SouthTrust has
not incurred or paid any obligation or liability which would be material to the
Condition of SouthTrust on a consolidated basis.
Section 4.7 Absence of Certain Changes or Events. Since December 31, 1997,
there has not been any Material Adverse Effect on SouthTrust, and to the
knowledge of SouthTrust, no fact or condition exists which might reasonably be
expected to cause such a Material Adverse Effect on SouthTrust in the future.
Section 4.8 Legal Proceedings, Etc. Except as set forth on Disclosure
Schedule 4.8 hereto, or as disclosed in any registration statement filed by
SouthTrust with the SEC and made available to the Company hereunder, neither
SouthTrust nor any of its affiliates is a party to any, and there are no
pending, or, to the knowledge of SouthTrust, threatened, legal, administrative,
arbitral or other proceedings, claims, actions, causes of action or governmental
investigations of any nature against SouthTrust challenging the validity or
propriety of the transactions contemplated by this Agreement or which would be
required to be reported by SouthTrust pursuant to Item 103 of Regulation S-K
promulgated by the SEC.
Section 4.9 Consents and Approvals. Except for (i) the Consents of the
Regulatory Authorities; (ii) approval of this Agreement by the respective
shareholders of ST-Bank and Marine; (iii) issuance of a Certificate of Merger by
the OCC; and (iv) as disclosed in Disclosure Schedule 4.9, no consents or
approvals by, or filings or registrations with, any third party or any public
body, agency or authority are necessary in connection with the execution and
delivery by SouthTrust and ST-Bank or, to the knowledge of SouthTrust, by Marine
of this Agreement, and the consummation of the Merger and the other transactions
contemplated hereby.
Section 4.10 Accounting, Tax, Regulatory Matters. SouthTrust has not
agreed to take any action, has no knowledge of any fact and has not agreed to
any circumstance that would (i) prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368 of the Code, (ii) materially impede or delay receipt of any Consent
from any Regulatory Authority referred to in the Agreement, or (iii) materially
impede the ability of SouthTrust to account for the transactions contemplated by
this Agreement as a pooling of interests.
Section 4.11 Proxy Materials. None of the information relating solely to
SouthTrust or any of its Subsidiaries to be included or incorporated by
reference in the Proxy Statement which is to be mailed to the shareholders of
Marine in connection with the solicitation of their approval of this Agreement
will, at the time such Proxy Statement is mailed or at the time of the meeting
of shareholders of Marine to which such Proxy Statement relates, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make a statement therein not false or misleading. The
legal responsibility for the contents of the information supplied by SouthTrust
and relating solely to SouthTrust which is either included or incorporated by
reference in the Proxy Statement shall be and remain with SouthTrust.
Section 4.12 No Broker's or Finder's Fees. Neither SouthTrust, ST-Sub nor
ST-Bank or any of their Subsidiaries, affiliates or employers has employed any
broker or finder or incurred any liability for any broker's fees,
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commissions or finder's fees in connection with this Agreement or the
consummation of any of the transactions contemplated herein.
Section 4.13 Untrue Statements and Omissions. No representation or
warranty contained in Article IV of this Agreement or in the Disclosure
Schedules of SouthTrust, ST-Sub or ST-Bank contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of the Business of Marine. (a) During the period from
the date of this Agreement to the Effective Time of the Merger, Marine shall and
shall cause each of its Subsidiaries to (i) conduct its business in the usual,
regular and ordinary course consistent with past practice and prudent banking
and business principles, (ii) use its best efforts to maintain and preserve
intact its business organization, employees, goodwill with customers and
advantageous business relationships and retain the services of its officers and
key employees, and (iii) except as required by law or regulation, take no action
which would adversely affect or delay the ability of Marine or SouthTrust to
obtain any Consent from any Regulatory Authorities or other approvals required
for the consummation of the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement.
(b) During the period from the date of this Agreement to the
Effective Time of the Merger, except as required by law or regulation, Marine
shall not and it shall not permit any of its Subsidiaries, without the prior
written consent of SouthTrust, to:
(i) change, delete or add any provision of or to the Articles of
Incorporation or Bylaws of Marine or any of its
Subsidiaries;
(ii) change the number of shares of the authorized, issued or
outstanding capital stock of Marine, including any issuance,
purchase, redemption, split, combination or reclassification
thereof, or issue or grant any option, warrant, call,
commitment, subscription, right or agreement to purchase
relating to the authorized or issued capital stock of
Marine, declare, set aside or pay any dividend or other
distribution with respect to the outstanding capital stock
of Marine;
(iii) incur any material liabilities or material obligations
(other than deposit liabilities and short-term borrowings in
the ordinary course of business), whether directly or by way
of guaranty, including any obligation for borrowed money, or
whether evidenced by any note, bond, debenture, or similar
instrument, except in the ordinary course of business
consistent with past practice;
(iv) make any capital expenditures individually in excess of
$25,000, or in the aggregate in excess of $50,000 other than
pursuant to binding commitments existing on December 31,
1997 and disclosed in a Disclosure Schedule delivered
pursuant to Article III of this Agreement or in the annexed
Disclosure Schedule 5.1(b)(iv) and other than expenditures
necessary to maintain existing assets in good repair;
(v) sell, transfer, convey or otherwise dispose of any real
property (including "other real estate owned") or interest
therein or any tangible or intangible personal property
having a book value in excess of or in exchange for
consideration in excess of $25,000 for each such parcel or
interest;
(vi) pay any bonuses to any executive officer or director except
pursuant to the terms of an enforceable agreement as
reflected in Disclosure Schedule 5.1(b)(vi); enter
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into any new, or amend in any respect any existing,
employment, consulting, non-competition or independent
contractor agreement with any person; alter the terms of any
existing incentive bonus or commission plan; adopt any new
or amend in any material respect any existing employee
benefit plan, except as may be required by law; grant any
general increase in compensation to its employees as a class
or to its officers except for non-executive officers in the
ordinary course of business and consistent with past
practices and policies or except in accordance with the
terms of an enforceable written agreement; grant any
material increases in fees or other increases in
compensation or in other benefits to any of its directors;
or effect any change in any material respect in retirement
benefits to any class of employees or officers, except as
required by law;
(vii) enter into or extend any agreement, lease or license
relating to real property, tangible or intangible personal
property or any service or other function (including,
without limitation), data processing or bankcard functions
relating to Marine or its subsidiaries that involves an
aggregate of $25,000; or
(viii) increase or decrease the rate of interest paid on time
deposits or on certificates of deposit, except in a manner
and pursuant to policies consistent with Marine's past
practices;
(ix) purchase or otherwise acquire any investment securities for
its own account having an average remaining life to maturity
greater than five years, or any asset- backed security,
other than those issued or guaranteed by the Government
National Mortgage Association, the Federal National Mortgage
Association or Home Loan Mortgage Corporation, or any
Derivative Contract;
(x) acquire twenty percent (20%) or more of the assets or equity
securities of any person or acquire direct or indirect
control of any person, other than in connection with (A) any
internal reorganization or consolidation involving existing
Subsidiaries of Marine which has been approved in advance in
writing by SouthTrust, (B) foreclosures in the ordinary
course of business, (C) acquisitions of control by Marine in
a fiduciary capacity or (D) the creation of new subsidiaries
organized to conduct and continue activities otherwise
permitted by this Agreement; or
(xi) commence any cause of action or proceeding other than in
accordance with past practice or settle any action, claim,
arbitration, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing,
inquiry or other proceeding against Marine or any of its
Subsidiaries for material money damages or restrictions upon
any of their operations.
Section 5.2 Current Information. During the period from the date of this
Agreement to the Effective Time of the Merger or the time of termination or
abandonment of this Agreement, Marine will cause one or more of its designated
representatives to confer on a regular and frequent basis with representatives
of SouthTrust and to report the general status of the ongoing operations of
Marine. Marine will promptly notify SouthTrust of any material change in the
normal course of business or the operations or the properties of Marine or any
of its Subsidiaries, any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated) affecting Marine or
any of its Subsidiaries, the institution or the threat of material litigation,
claims, threats or causes of action involving Marine or any of its Subsidiaries,
and will keep SouthTrust fully informed of such events. Marine will furnish to
SouthTrust, promptly after the preparation and/or receipt by Marine thereof,
copies of its unaudited periodic financial statements and call reports for the
applicable periods then ended, and such financial statements and call reports
shall, upon delivery to SouthTrust, be treated, for purposes of Section III.3
hereof, as among the Financial Statements of Marine and the Call Reports of
Marine.
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Section 5.3 Access to Properties; Personnel and Records. (a) So long as
this Agreement shall remain in effect, Marine and its Subsidiaries shall permit
SouthTrust or its agents full access upon 24 hours notice by SouthTrust, during
normal business hours, to the properties of Marine and its Subsidiaries, and
shall disclose and make available (together with the right to copy) to
SouthTrust and to its internal auditors, loan review officers, attorneys,
accountants and other representatives, all books, papers and records relating to
the assets, stock, properties, operations, obligations and liabilities of Marine
or any of its Subsidiaries, including all books of account (including the
general ledger), tax records, minute books of directors' and shareholders'
meetings, organizational documents, bylaws, contracts and agreements, filings
with any regulatory agency, examination reports, correspondence with regulatory
or taxing authorities, documents relating to assets, titles, abstracts,
appraisals, consultant's reports, plans affecting employees, securities transfer
records and stockholder lists, and any other assets, business activities or
prospects in which SouthTrust may have a reasonable interest, and Marine and its
Subsidiaries shall use their reasonable best efforts to provide SouthTrust and
its representatives access to the work papers of Marine's accountants. Marine
and its Subsidiaries shall not be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of any customer, would contravene any law, rule, regulation, order or
judgment or would violate any confidentiality agreement; provided that Marine
and its Subsidiaries shall cooperate, to the extent it does not incur undue
cost, with SouthTrust in seeking to obtain Consents from appropriate parties
under whose rights or authority access is otherwise restricted. The foregoing
rights granted to SouthTrust shall not, whether or not and regardless of the
extent to which the same are exercised, affect the representations and
warranties made in this Agreement by Marine and its Subsidiaries.
(b) All information furnished by the parties hereto pursuant to
this Agreement shall be treated as the sole property of the party providing such
information until the consummation of the Merger contemplated hereby and, if
such transaction shall not occur, the party receiving the information shall
return to the party which furnished such information, all documents or other
materials containing, reflecting or referring to such information, shall use its
best efforts to keep confidential all such information, and shall not directly
or indirectly use such information for any competitive or other commercial
purposes. The obligation to keep such information confidential shall continue
for two (2) years from the date the proposed transactions are abandoned but
shall not apply to (i) any information which (A) the party receiving the
information was already in possession of prior to disclosure thereof by the
party furnishing the information, (B) was then available to the public, or (C)
became available to the public through no fault of the party receiving the
information; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction or regulatory
agency; provided that the party which is the subject of any such legal
requirement or order shall use its best efforts to give the other party at least
ten (10) business days prior notice of any such required disclosure. Each party
hereto acknowledges and agrees that a breach of any of their respective
obligations under this Section 5.3 would cause the other irreparable harm for
which there is no adequate remedy at law, and that, accordingly, each is
entitled to injunctive and other equitable relief for the enforcement thereof in
addition to damages or any other relief available at law.
Section 5.4 Approval of Shareholders. Marine will take all steps necessary
under applicable laws to call, give notice of, convene and hold a meeting of its
shareholders at such time as may be mutually agreed to by the parties for the
purpose of approving this Agreement and the transactions contemplated hereby and
for such other purposes consistent with the complete performance of this
Agreement as may be necessary or desirable. The Board of Directors of Marine
will recommend to its shareholders the approval of this Agreement and the
transactions contemplated hereby and Marine will use its best efforts to obtain
the necessary approvals by its shareholders of this Agreement and the
transactions contemplated hereby.
Section 5.5 No Other Bids. Marine, acting through any director or officer
or other agent shall not now, nor shall it knowingly permit any of its
Subsidiaries to, nor shall it authorize or knowingly permit any officer,
director or employee of, or any investment banker, attorney, accountant or other
representative retained by Marine or any of its Subsidiaries, to solicit or
encourage, including by way of furnishing information, any inquiries or the
making of any proposal which may reasonably be expected to lead to any takeover
proposal with respect to Marine. Marine shall promptly advise SouthTrust orally
and in writing of any such inquiries or proposals received by Marine after the
date hereof. As used in this Section 5.5, "takeover proposal" shall mean any
proposal for a merger or other business combination involving Marine or any of
its Subsidiaries or for the acquisition of a significant equity interest
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in Marine or any of its Subsidiaries or for the acquisition of a significant
portion of the assets or liabilities of Marine or any of its Subsidiaries.
Section 5.6 Notice of Deadlines. Marine shall use its best efforts to
notify SouthTrust in writing of any deadline to exercise an extension or
termination of any material lease, agreement or license (including specifically
real property leases and data processing agreements) to which Marine is a party,
at least ten (10) days prior to such deadline.
Section 5.7 Affiliates. Concurrently with the execution of this Agreement,
Marine shall deliver to SouthTrust a letter identifying all persons who are
anticipated to be, at the time this Agreement is submitted for approval to the
shareholders of Marine, "affiliates" of Marine for purposes of Rule 145 under
the Securities Act of 1933. In addition, Marine shall use its reasonable efforts
to cause each person who is an "affiliate" in the letter referred to above to
deliver to SouthTrust not later than ten (10) days following execution of this
Agreement, a written agreement, providing that such person will not sell,
pledge, transfer, or otherwise dispose of the Marine Shares held by such person,
except as contemplated by such agreement or by this Agreement, and will not
sell, pledge, transfer, or otherwise dispose of the SouthTrust Shares to be
received by such person upon consummation of the Merger except in compliance
with applicable provisions of the Securities Act of 1933, and the rules and
regulations thereunder until such time as the financial results covering at
least thirty (30) days of combined operations of SouthTrust and Marine 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, the SouthTrust Shares issued to such
affiliates of Marine in exchange for the Marine Shares shall not be transferable
until such time as the financial results covering at least thirty (30) days of
combined operations of SouthTrust and Marine have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies regardless of whether each such person has provided the written
agreement referred to in this Section 5.7. SouthTrust shall not be required to
maintain the effectiveness of the Registration Statement under the Securities
Act of 1933 for the purposes of resale of SouthTrust Shares by such persons.
Section 5.8 Maintenance of Properties. Marine and its Subsidiaries will
maintain their respective properties and assets in satisfactory condition and
repair for the purposes for which they are intended in all material respects,
ordinary wear and tear excepted.
Section 5.9 Environmental Audits. At the election of SouthTrust, Marine
will, at the expense of SouthTrust, with respect to each parcel of real property
that Marine or any of its Subsidiaries owns, leases or subleases, procure and
deliver to SouthTrust, at least thirty (30) days prior to the Effective Time of
the Merger, an environmental audit, which audit shall be reasonably acceptable
to and shall be conducted by a firm reasonably acceptable to SouthTrust.
Section 5.10 Title Insurance. At the election of SouthTrust, Marine will,
at its own expense, with respect to each parcel of real property that Marine or
any of its Subsidiaries owns, leases or subleases, procure and deliver to
SouthTrust, at least thirty (30) days prior to the Effective Time of the Merger,
owner's title insurance issued in such amounts and by such insurance company
reasonably acceptable to SouthTrust, which policy shall be free of all material
exceptions to SouthTrust's reasonable satisfaction.
Section 5.11 Surveys. At the election of SouthTrust, with respect to each
parcel of real property as to which a title insurance policy is to be procured
pursuant to Section 5.10, Marine, at its own expense, will procure and deliver
to SouthTrust at least thirty (30) days prior to the Effective Time of the
Merger, a survey of such real property, which survey shall be reasonably
acceptable to and shall be prepared by a licensed surveyor reasonably acceptable
to SouthTrust, disclosing the locations of all improvements, easements,
sidewalks, roadways, utility lines and other matters customarily shown on such
surveys and showing access affirmatively to public streets and roads and
providing the legal description of the property in a form suitable for recording
and insuring the title thereof (the "Survey"). The Survey shall not disclose any
survey defect or encroachment from or onto such real property that has not been
cured or insured over prior to the Effective Time of the Merger.
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Section 5.12 Exemption Under Anti-Takeover Statutes. Prior to the
Effective Time of the Merger, Marine will use its best efforts to take all steps
required to exempt the transactions contemplated by this Agreement from any
applicable state anti-takeover law.
Section 5.13 Conforming Accounting and Reserve Policies. At the request of
SouthTrust, Marine shall immediately prior to Closing establish and take such
reserves and accruals as SouthTrust reasonably shall request to conform Marine's
loan, accrual, reserve and other accounting policies to the policies of ST-Bank,
provided however, such requested conforming adjustment shall not be taken into
account as having a Material Adverse Effect on Marine.
Section 5.14 Press Releases. Prior to the Effective Time of the Merger,
the Company and SouthTrust 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 5.14 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 obligation imposed by any law.
Section 5.15 Pre-Acquisition Investigation and Review. SouthTrust will
initiate a pre-acquisition investigation and review of the books, records and
facilities of Marine and its Subsidiaries and will complete such pre-acquisition
investigation by April 27, 1998. SouthTrust shall advise Marine at the
conclusion of such pre-acquisition investigation of all matters then known to
SouthTrust which are either (i) inconsistent in any material and adverse respect
with any of the representations and warranties of Marine contained in this
Agreement, or (ii) in the reasonable judgment of SouthTrust, either (A) to be of
such significance as to materially and adversely affect the Condition of Marine
or (B) to deviate materially and adversely from Marine's audited financial
statements for the year ended December 31, 1997. Until 12:00 midnight
Birmingham, Alabama time on April 27, 1998 (the "Due Diligence Completion
Date"), SouthTrust shall have the right to terminate this Agreement for any or
no reason with no liability
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
Section 6.1 Best Efforts; Cooperation. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts
promptly to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or otherwise, including attempting to obtain all necessary
Consents, to consummate and make effective, as soon as practicable, the
transactions contemplated by this Agreement.
Section 6.2 Regulatory Matters. (a) Promptly following the execution and
delivery of this Agreement, SouthTrust and Marine shall cause to be prepared and
filed all required applications and filings with the Regulatory Authorities
which are necessary or contemplated for the obtaining of the Consents of the
Regulatory Authorities or consummation of the Merger. Such applications and
filings shall be in such form as may be prescribed by the respective government
agencies and shall contain such information as they may require. The parties
hereto will cooperate with each other and use their best efforts to prepare and
execute all necessary documentation, to effect all necessary or contemplated
filings and to obtain all necessary or contemplated permits, consents,
approvals, rulings and authorizations of government agencies and third parties
which are necessary or contemplated to consummate the transactions contemplated
by this Agreement, including, without limitation, those required or contemplated
from the Regulatory Authorities, and the shareholders of Marine. Each of the
parties shall have the right to review and approve in advance, which approval
shall not be unreasonably withheld, any filing made with, or written material
submitted to, any government agency in connection with the transactions
contemplated by this Agreement.
(b) Each party hereto will furnish the other party with all
information concerning itself, its Subsidiaries, directors, trustees, officers,
shareholders and depositors, as applicable, and such other matters as may be
necessary or advisable in connection with any statement or application made by
or on behalf of any such party to any governmental body in connection with the
transactions, applications or filings contemplated by this Agreement. Upon
request, the parties hereto will promptly furnish each other with copies of
written communications received
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by them or their respective Subsidiaries from, or delivered by any of the
foregoing to, any governmental body in respect of the transactions contemplated
hereby.
Section 6.3 Other Matters. (a) The parties acknowledge that nothing in
this Agreement shall be construed as constituting an employment agreement
between SouthTrust or any of its affiliates and any officer or employee of
Marine or any of its Subsidiaries or obligation on the part of SouthTrust or any
of its affiliates to employ any such officers or employees.
(b) The parties agree that, except as otherwise provided in
paragraph (c) below, appropriate steps shall be taken to terminate all employee
benefit plans of Marine as of the Effective Time of the Merger or as promptly as
practicable thereafter. Following the termination of all such plans, and except
as otherwise provided in Section 6.3(c) below, SouthTrust agrees that, except as
otherwise provided in paragraph (c) below, the officers and employees of Marine
who the Surviving Corporation employs shall be eligible to participate in
SouthTrust's employee benefit plans, including welfare and fringe benefit plans
on the same basis 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 Marine'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
(ii) subject to Section 6.3(c)(ii), credit for
each such employee's past service with Marine or any of its
Subsidiaries prior to the Effective Time of the Merger ("Past
Service Credit") shall be given by SouthTrust to employees for
purposes of:
(1) determining vacation and sick leave
benefits and accruals, in accordance with the
established policies of SouthTrust;
(2) except as otherwise provided in
paragraph (c) below, establishing eligibility for
participation in and vesting under SouthTrust's
employee benefit plans (including welfare and
fringe benefit plans), and for purposes of
determining the scheduling of vacations and other
determinations which are made based on length of
service, provided, however, notwithstanding
anything contained in this Agreement to the
contrary, Past Service Credit shall not be given
to any such employee for purposes of establishing
eligibility for participation in the 1990
Discounted Stock Plan of SouthTrust;
(3) determining satisfaction of applicable
waiting periods under said plans for pre-existing
conditions.
(c) The parties further agree that the Marine 401(k) Plan will
either be merged into the SouthTrust Corporation Employee's Profit Sharing Plan
(the "STPS Plan") effective as of January 1 of the year following the Effective
Time of the Merger or, if so elected by SouthTrust, terminated as of a date
prior to, on or after the Effective Time of the Merger and prior to such January
1. The determination as to whether the Marine 401(k) Plan shall be terminated or
merged into the STPS Plan shall be made by SouthTrust. From and after the
January 1 following the Effective Time of the Merger, for purposes of
determining eligibility to participate in, and vesting in accrued benefits
under, the STPS Plan and the SouthTrust Corporation Revised Retirement Income
Plan (the "ST Retirement Plan") employment by Marine shall be credited as if it
were employment by SouthTrust, but such service shall not be credited for
purposes of determining benefit accrual under the ST Retirement Plan.
Section 6.4 Indemnification; Insurance. (a) For a period of three years
after the Effective Time of the Merger, SouthTrust shall, and shall cause
ST-Bank, to indemnify, defend and hold harmless each person entitled to
indemnification from Marine (each, an "Indemnified Party") against all
liabilities arising out of actions or omissions occurring at or prior to the
Effective Time of the Merger (including, without limitation, the transactions
contemplated by this Agreement) to the same extent and subject to the conditions
set forth in Marine's Bylaws and
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in those certain Indemnification Agreements between Marine and each of the
directors of Marine, in each case as in effect on the date hereof.
(b) If SouthTrust or any of its successors or assigns shall
consolidate with or merge into any other person and shall not be the continuing
and 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
provisions shall be made so that the successors and assigns of SouthTrust shall
assume the obligations set forth in this Section 6.4.
Section 6.5 Current Information. During the period from the date of this
Agreement to the Effective Time of the Merger or the time of termination or
abandonment hereunder, SouthTrust will cause one or more of its designated
representatives to confer on a regular and frequent basis with Marine and to
report with respect to the general status and the ongoing operations of
SouthTrust.
Section 6.6 Registration Statement. As soon as practicable after the
execution of this Agreement, SouthTrust shall file a Registration Statement on
Form S-4 relating to the SouthTrust Shares issuable in the Merger with the SEC
and any required state securities authority. SouthTrust shall take all
appropriate steps and will use its best efforts to cause such Registration
Statement to become effective with the SEC and any such state securities
authority prior to the Effective Time of the Merger, which Registration
Statement shall permit all the shareholders of Marine who receive SouthTrust
Shares in the Merger to receive unlegended, freely transferable securities;
provided, however, that certain of such shares shall be subject to restrictions
on their transfer by certain former shareholders of Marine as set forth in
Section 5.7 hereof. Marine will furnish to SouthTrust the information required
to be included in the Registration Statement with respect to its business and
affairs before it is filed with the SEC and again before any amendments are
filed. SouthTrust shall take all actions required to qualify or obtain
exemptions from such qualifications for the SouthTrust Shares to be issued in
connection with the transactions contemplated by this Agreement under applicable
federal securities laws and state blue sky securities laws, as appropriate.
Section 6.7 Reservation of Shares. SouthTrust, on behalf of ST-Sub, shall
reserve for issuance such number of SouthTrust Shares as shall be necessary to
pay the consideration contemplated in this Agreement. If at any time the
aggregate number of SouthTrust Shares remaining unissued (or in treasury) shall
not be sufficient to meet such obligation, SouthTrust shall take all appropriate
actions to increase the amount of its authorized common stock.
Section 6.8 Consideration. SouthTrust shall issue the SouthTrust Shares
and shall pay or cause to be paid all cash payments as and when the same shall
be required to be issued and paid pursuant to this Agreement.
ARTICLE VII
MUTUAL CONDITIONS TO CLOSING
The obligations of SouthTrust, ST-Sub and ST-Bank, on the one hand, and
Marine, on the other hand, to consummate the transactions provided for herein
shall be subject to the satisfaction of the following conditions, unless waived
as hereinafter provided for:
Section 7.1 Shareholder Approval. The Merger shall have been approved by
the requisite vote of the shareholders of Marine and the sole shareholder of
ST-Bank.
Section 7.2 Regulatory Approvals. All necessary Consents of the
Regulatory Authorities shall have been obtained and all notice and waiting
periods required by law to pass after receipt of such Consents shall have
passed, and all conditions to consummation of the Merger set forth in such
Consents shall have been satisfied.
Section 7.3 Legal Proceedings. No court or governmental or regulatory
authority of any competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, order or similar restriction (whether temporary,
preliminary or permanent) or taken any other action which prohibits or makes
illegal the consummation of the transactions contemplated by this Agreement.
Section 7.4 Registration Statement and Listing. The Registration
Statement shall have become effective and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
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action, suit, proceeding or investigation by the SEC to suspend the
effectiveness of the Registration Statement shall have been initiated or
threatened by the SEC or any other regulatory authority. SouthTrust shall have
received all federal and state securities laws, or "Blue Sky" permits or other
authorizations or confirmations as to the availability of exemptions from
registration requirements, as may be necessary to issue the SouthTrust Shares
pursuant to the terms of this Agreement. The SouthTrust Shares issuable pursuant
to the Merger shall have been approved for listing on NASDAQ subject only to
official notice of issuance.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF SOUTHTRUST, ST-SUB AND ST-BANK
The obligations of SouthTrust, ST-Sub and ST-Bank to consummate the Merger
are subject to the fulfillment of each of the following conditions, unless
waived as hereinafter provided for:
Section 8.1 Representations and Warranties. The representations and
warranties of Marine set forth in this Agreement and in any certificate or
document delivered pursuant hereto shall be true and correct as of the date of
this Agreement and as of all times up to and including the Effective Time of the
Merger (as though made on and as of the Effective Time of the Merger except to
the extent such representations and warranties are by their express provisions
made as of a specified date and except for changes therein contemplated by this
Agreement).
Section 8.2 Performance of Obligations. Marine shall have performed all
covenants, obligations and agreements required to be performed by it under this
Agreement prior to the Effective Time of the Merger.
Section 8.3 Certificate Representing Satisfaction of Conditions. Marine
shall have delivered to SouthTrust, ST-Sub and ST-Bank a certificate dated as of
the Closing Date as to the satisfaction of the matters described in Sections 8.1
and 8.2 hereof, and such certificate shall be deemed to constitute additional
representations, warranties, covenants, and agreements of Marine under Article
III of this Agreement; and (b) certified copies of resolutions duly adopted by
the Company'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,
in each case, in such reasonable detail as SouthTrust's counsel shall request.
Section 8.4 Absence of Adverse Facts. There shall have been no
determination by SouthTrust that any fact, event or condition exists or has
occurred that, in the judgment of SouthTrust, (a) would have a Material Adverse
Effect on, or which may be foreseen to have a Material Adverse Effect on, Marine
or the consummation of the transactions contemplated by this Agreement, (b)
would be of such significance with respect to the business or economic benefits
expected to be obtained by SouthTrust pursuant to this Agreement as to render
inadvisable the consummation of the transactions pursuant to this Agreement, (c)
would be materially adverse to the interests of SouthTrust on a consolidated
basis or (d) would render the Merger or the other transactions contemplated by
this Agreement impractical because of any state of war, national emergency,
banking moratorium or general suspension of trading on NASDAQ, the New York
Stock Exchange, Inc. or other national securities exchange.
Section 8.5 Opinion of Counsel. SouthTrust shall have received an opinion
of counsel from Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A. or other
counsel to Marine acceptable to SouthTrust in substantially the form set forth
in Exhibit 8.5 hereof.
Section 8.6 Consents Under Agreements. Marine shall have obtained the
consent or approval of each person (other than the Consents of the Regulatory
Authorities) whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation to any obligation, right or interest of
Marine under any loan or credit agreement, note, mortgage, indenture, lease,
license, or other agreement or instrument, except those for which failure to
obtain such consents and approvals would not in the opinion of SouthTrust,
individually or in the aggregate, have a Material Adverse Effect on the
Surviving Corporation or upon the consummation of the transactions contemplated
by this Agreement.
Section 8.7 Material Condition. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger by any Regulatory Authority which, in
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connection with the grant of any Consent by any Regulatory Authority, imposes,
in the judgment of SouthTrust, any material adverse requirement upon SouthTrust
or its Subsidiaries, including, without limitation, any requirement that
SouthTrust sell or dispose of any significant amount of the assets of Marine or
any other banking or other Subsidiary of SouthTrust, provided that, except for
any such requirement relating to the above-described sale or disposition of any
significant assets of Marine or any banking or other Subsidiary of SouthTrust,
no such term or condition imposed by any Regulatory Authority in connection with
the grant of any Consent by any Regulatory Authority shall be deemed to be a
material adverse requirement unless it materially differs from terms and
conditions customarily imposed by any such entity in connection with the
acquisition of banks under similar circumstances.
Section 8.8 Matters Relating to Employment Agreements. All employment
agreements, whether written or oral, between Marine and any executive or
employee thereof shall be terminated in their entirety as of the Effective Time
of the Merger, and at the election of SouthTrust, replacement employment
agreements, which are satisfactory to SouthTrust and such employees, between
each of such executives or employees and SouthTrust or the Surviving Corporation
shall have been executed and delivered.
Section 8.9 Outstanding Shares of Marine. The total number of Marine
Shares outstanding as of the Effective Time of the Merger and the total number
of Marine Shares covered by any option, warrant, commitment, or other right or
instrument to purchase or acquire any Marine Shares that are outstanding and
fully exercisable as of the Effective Time of the Merger, including any
securities or rights convertible into or exchangeable for Marine Shares, shall
not exceed 1,344,226 shares in the aggregate.
Section 8.10 Dissenters. The holders of not more than [five percent (5%)]
of the outstanding Marine Shares shall have elected to exercise their right to
dissent from the Merger and demand payment in cash for the fair or appraised
value of their shares.
Section 8.11 Pooling. SouthTrust, in the exercise of its reasonable
discretion, and after taking into account the holders of the outstanding Marine
Shares who shall have elected to exercise their right to dissent from the Merger
and demand payment in cash for the fair or appraised value of their shares,
shall not have determined that the transactions contemplated by this Agreement
fail to qualify for pooling of interests accounting treatment.
Section 8.12 Certification of Claims. Marine shall have delivered a
certificate to SouthTrust that Marine is not aware of any pending or threatened
claim under the directors and officers insurance policy or the fidelity bond
coverage of Marine.
Section 8.13 Litigation. There shall be no actual or threatened causes of
action, investigations or proceedings (i) challenging the validity or legality
of this Agreement or the consummation of the transactions contemplated by this
Agreement, or (ii) seeking damages in connection with the transactions
contemplated by this Agreement, or (iii) seeking to restrain or invalidate the
transactions contemplated by this Agreement, which, in the case of (i) through
(iii), and in the reasonable judgment of SouthTrust, based upon advice of
counsel, would have a Material Adverse Effect with respect to the interests of
SouthTrust.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF MARINE
The obligation of Marine to consummate the Merger as contemplated herein
is subject to each of the following conditions, unless waived as hereinafter
provided for:
Section 9.1 Representations and Warranties. The representations and
warranties of SouthTrust, ST-Sub and ST-Bank contained in this Agreement or in
any certificate or document delivered pursuant to the provisions hereof shall be
true and correct as of the Effective Time of the Merger (as though made on and
as of the Effective Time of the Merger).
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Section 9.2 Performance of Obligations. SouthTrust, ST-Sub and ST-Bank
shall have performed all covenants, obligations and agreements required to be
performed by them and under this Agreement prior to the Effective Time of the
Merger.
Section 9.3 Certificate Representing Satisfaction of Conditions.
SouthTrust, ST-Sub and ST-Bank shall have delivered to Marine a certificate
dated as of the Effective Time of the Merger as to the satisfaction of the
matters described in Sections 9.1 and 9.2 hereof, and such certificate shall be
deemed to constitute additional representations, warranties, covenants, and
agreements of SouthTrust, ST-Sub and ST-Bank under Article IV of this Agreement,
and (b) certified copies of resolutions duly adopted by the board of directors
of SouthTrust, ST-Sub and ST-Bank and by the shareholders of ST-Sub and ST-Bank,
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, in each case in such reasonable detail as
Marine's counsel shall request.
Section 9.4 Absence of Adverse Facts. There shall have been no
determination by Marine that any fact, event or condition exists or has occurred
that, in the judgment of Marine, (a) would have a Material Adverse Effect on, or
which may be foreseen to have a Material Adverse Effect on, the Condition of
SouthTrust on a consolidated basis or the consummation of the transactions
contemplated by this Agreement, or (b) would render the Merger or the other
transactions contemplated by this Agreement impractical because of any state of
war, national emergency, banking moratorium, or a general suspension of trading
on NASDAQ, the New York Stock Exchange, Inc. or other national securities
exchange.
Section 9.5 Consents Under Agreements. SouthTrust, ST-Sub and ST-Bank
shall have obtained the consent or approval of each person (other than the
Consents of Regulatory Authorities) whose consent or approval shall be required
in connection with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease, license or other agreement or
instrument, except those for which failure to obtain such consents and approvals
would not, in the judgment of Marine, individually or in the aggregate, have a
Material Adverse Effect upon the consummation of the transactions contemplated
hereby.
Section 9.6 Opinion of Counsel. Marine shall have received the opinion of
Bradley Arant Rose & White LLP counsel to SouthTrust, dated the Effective Time
of the Merger in substantially the form set forth in Exhibit 9.6 hereof.
Section 9.7 SouthTrust Shares. The SouthTrust Shares to be issued in
connection herewith shall be duly authorized and validly issued and, fully paid
and nonassessable, issued free of preemptive rights and free and clear of all
liens and encumbrances created by or through SouthTrust.
Section 9.8 Tax Opinion. Marine shall have received an opinion of Bradley
Arant Rose & White LLP on or before the date on which the Proxy Statement of
Marine is to be mailed to holders of Marine Shares, to the effect, among others,
that the Merger will constitute a tax-free reorganization within the meaning of
Section 368 of the Code and that no gain or loss will be recognized by the
shareholders of Marine to the extent that they receive SouthTrust Shares in
exchange for their Marine Shares in the Merger.
ARTICLE X
TERMINATION, WAIVER AND AMENDMENT
Section 10.1 Termination. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time of the Merger:
(a) by the mutual consent in writing of SouthTrust, ST-Sub,
ST-Bank and Marine; or
(b) by SouthTrust, ST-Sub, ST-Bank or Marine if the Merger shall
not have occurred on or prior to the record date, as announced by SouthTrust,
for the SouthTrust third quarter dividend for 1998, provided that the failure to
consummate the Merger on or before such date is not accompanied by any breach of
any of the
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representations, warranties, covenants or other agreements contained herein by
the party electing to terminate pursuant to this Section 10.1(b);
(c) by SouthTrust or Marine (provided that the terminating party
is not then in breach of any representation, warranty, covenant or other
agreement contained herein) in the event that any of the conditions precedent to
the obligations of the nonterminating party to consummate the Merger cannot be
satisfied or fulfilled;
(d) by SouthTrust if: (i) SouthTrust shall have determined that
any fact, event or condition exists that, in the judgment of SouthTrust, (A) is
materially at variance with any warranty or representation of Marine set forth
in the Agreement or is a material breach of any covenant or agreement of Marine
contained in the Agreement, (B) has a Material Adverse Effect or can be
reasonably foreseen to have a Material Adverse Effect upon the Condition of
Marine on a consolidated basis or upon the consummation of the transactions
contemplated by the Agreement, (C) would be materially adverse to the interests
of SouthTrust and ST-Sub on a consolidated basis, (D) would be of such
significance with respect to the business or economic benefits expected to be
obtained by SouthTrust under this Agreement so as to render inadvisable
consummation of the transactions contemplated by the Agreement, or (E) renders
the Merger or the other transactions contemplated by this Agreement impractical
because of any state of war, national emergency, banking moratorium or general
suspension of trading on NASDAQ, the New York Stock Exchange, Inc. or any other
national securities exchange; or (ii) there shall be any litigation or threat of
litigation (A) challenging the validity or legality of this Agreement or the
consummation of the transactions contemplated by this Agreement, (B) seeking
damages in connection with the consummation of the transactions contemplated by
this Agreement or (C) seeking to restrain or invalidate the consummation of the
transactions contemplated by this Agreement.
(e) by Marine if (i) Marine shall have determined that any fact,
event or condition exists that, in the judgment of Marine, (A) is materially at
variance with any warranty or representation of SouthTrust, ST-Sub or ST-Bank
contained in the Agreement or is a material breach of any covenant or agreement
of SouthTrust, ST-Sub or ST-Bank contained in the Agreement, (B) has a Material
Adverse Effect or can be reasonably seen to have a Material Adverse Effect upon
the consummation of the transactions contemplated by the Agreement; (ii) Marine
shall have determined that any fact, event or condition exists that, in the
judgment of Marine, would render the Merger and the other transactions
contemplated by this Agreement impractical because of any state of war, national
emergency, banking moratorium or general suspension of trading on NASDAQ, the
New York Stock Exchange, Inc. or other national securities exchange.
(f) by majority vote of the members of the entire Board of
Directors of Marine at any time during the five-business-day period commencing
on the first day following the end of the Determination Period, if the Average
Closing Price of SouthTrust Shares for the Determination Period multiplied by
the Conversion Ratio shall be less than $13.75; subject, however, to the
following three sentences. If Marine elects to terminate this Agreement pursuant
to this Section 10.1(f), it shall give prompt written notice thereof to
SouthTrust; provided, that such notice of election to terminate may be withdrawn
at any time within the aforementioned five-business-day period. During the
five-business-day period commencing with its receipt of such notice, SouthTrust
shall have the option to elect to increase the Conversion Ratio such that the
increased Conversion Ratio multiplied by the Average Closing Price is greater
than or equal to $13.75. If SouthTrust makes an election contemplated by the
preceding sentence within such five-business-day period, it shall give prompt
written notice to Marine of such election and the revised Conversion Ratio,
whereupon no termination shall have occurred pursuant to this Section 10.1(f)
and this Agreement shall remain in effect in accordance with its terms (except
as the Conversion Ratio shall have been so modified), and any references in this
Agreement to "Conversion Ratio" shall thereafter be deemed to refer to the
Conversion Ratio as adjusted pursuant to this Section 10.1(f).
For purposes of this Section 10.1(f), the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the daily last
sales prices of SouthTrust Shares as reported on NASDAQ (as reported by The Wall
Street Journal or, if not reported thereby, another authoritative source as
chosen by SouthTrust) for the ten consecutive full trading days in which such
shares are traded on the NASDAQ ending at the close of trading on the
Determination Date.
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"Determination Period" shall mean the ten-trading-day period
beginning 30 days prior to the Closing Date.
(g) by SouthTrust at any time prior to the Due Diligence
Completion Date, with no liability to SouthTrust.
Section 10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, the
Agreement shall terminate and have no effect, except that:
(a) The provisions of this Section 10.2, Section 10.5 and
Article 11 of this Agreement shall survive any such termination and abandonment;
(b) If this Agreement is terminated by SouthTrust after the Due
Diligence Completion Date for any reason other than as provided in Section
10.1(b), and Marine is not in breach of any of its representations, warranties,
covenants or other agreements contained herein, then SouthTrust shall pay to
Marine a termination fee in an amount equal to $250,000.00. Such payment shall
be made within one business day following the notice of termination of this
Agreement.
(c) If this Agreement is terminated by Marine for any reason
other than as provided in Section 10.1(b), and SouthTrust is not in breach of
any of its representations, warranties, covenants or other agreements contained
herein, then Marine shall pay to SouthTrust a termination fee in an amount equal
to $250,000.00. Such payment shall be made within one business day following the
notice of termination of this Agreement.
Section 10.3 Amendments. To the extent permitted by law, this Agreement
may be amended by a subsequent writing signed by each of SouthTrust, ST-Sub,
ST-Bank and Marine.
Section 10.4 Waivers. Subject to Section 11.11 hereof, prior to or at the
Effective Time of the Merger, SouthTrust, ST-Sub and ST-Bank, on the one hand,
and Marine, on the other hand, shall have the right to waive any default in the
performance of any term of this Agreement by the other, to waive or extend the
time for the compliance or fulfillment by the other of any and all of the
other's obligations under this Agreement and to waive any or all of the
conditions to its obligations under this Agreement, except any condition, which,
if not satisfied, would result in the violation of any law or any applicable
governmental regulation.
Section 10.5 Non-Survival of Representations and Warranties. No
representations, warranties, covenants or agreements in this Agreement or in any
instrument delivered by SouthTrust, ST-Sub, ST-Bank or Marine shall survive the
Merger; provided, however, that (a) Sections 5.3(b), 6.3(b), 6.4 and 6.6 of this
Agreement shall survive the Merger, and (b) any representation or warranty in
any agreement, contract, report, opinion, undertaking or other document or
instrument delivered hereunder in whole or in part by any person other than
SouthTrust, ST-Sub, ST-Bank, Marine (or directors and officers thereof in their
capacities as such) shall not so terminate and shall not be so extinguished; and
provided further, that no representation or warranty of SouthTrust, ST-Sub,
ST-Bank, or Marine contained herein shall be deemed to be terminated or
extinguished so as to deprive SouthTrust, ST-Sub or ST-Bank, on the one hand,
and Marine, on the other hand, of any defense at law or in Marine which any of
them otherwise would have to any claim against them by any person, including,
without limitation, any shareholder or former shareholder of either party. No
representation or warranty in this Agreement shall be affected or deemed waived
by reason of the fact that SouthTrust, ST-Sub, ST-Bank, Marine and/or its
representatives knew or should have known that any such representation or
warranty was, is, might be or might have been inaccurate in any respect.
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Entire Agreement. This Agreement and the documents referred
to herein contain the entire agreement among SouthTrust, ST-Sub, ST-Bank and
Marine with respect to the transactions contemplated hereunder and this
Agreement supersedes all prior arrangements or understandings with respect
thereto, whether written or oral. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person, firm, corporation or entity,
other than the parties hereto and their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Section 11.2 Definitions. Except as otherwise provided herein, the
capitalized terms set forth below (in their singular and plural forms as
applicable) shall have the following meanings:
"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 of such person, (ii) any officer, director, partner,
employer or direct or indirect beneficial owner of any 10% or greater equity of
voting interest of such person or (iii) any other persons for which a person
described in clause (ii) acts in any such capacity.
"Condition" shall mean the business, assets, operations,
financial condition or results of operations of the respective entity.
"Consent" shall mean a consent, approval or authorization,
waiver, clearance, exemption or similar affirmation by any person pursuant to
any contract, permit, law, regulation or order, and "Regulatory Authorities"
shall mean, collectively, the Federal Trade Commission (the "FTC"), the United
States Department of Justice (the "Justice Department"), the Board of Governors
of the Federal Reserve System (the "FRB"), the Office of the Comptroller of the
Currency (the "OCC"), the Federal Deposit Insurance Corporation (the "FDIC"),
and all state regulatory agencies having jurisdiction over the parties, the
National Association of Securities Dealers, Inc., all national securities
exchanges and the Securities and Exchange Commission (the "SEC").
"Environmental Law" means any applicable federal, state or local
law, statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree or injunction relating to (i) the
protection, preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water supply,
surface soil, subsurface soil, plant and animal life or any other natural
resource), and/or (ii) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of any substance presently listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether by
type or by substance as a component; "Loan Property" means any property owned by
Marine or any of its Subsidiaries, or in which Marine or any of its Subsidiaries
holds a security interest, and, where required by the context, includes the
owner or operator of such property, but only with respect to such property;
"Hazardous Material" means any pollutant, contaminant, or hazardous substance
within the meaning of the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. ss. 9601 et seq., or any similar federal, state or
local law; and "Participation Facility" means any facility in which Marine or
any of its Subsidiaries has engaged in Participation in the Management of such
facility, and, where required by the context, includes the owner or operator of
such facility, but only with respect to such facility; "Participation in the
Management" of a facility has the meaning set forth in 40 C.F.R. ss.
300.1100(c).
"Material Adverse Effect," with respect to any party, shall mean
any event, change or occurrence which, 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 and the other transactions contemplated by
this Agreement.
Section 11.3 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by first class or registered or certified mail, postage
prepaid, telegram or telex or other facsimile transmission addressed as follows:
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If to Marine:
Marine Bank
9400 Ninth Street North
St. Petersburg, Florida 33742
Attention: Norris Counts
Fax: (813) 577-2026
with a copy to:
Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A.
911 Chestnut Street
Clearwater, Florida 33757
Attention: Michael T. Cronin, Esq.
Fax: (813) 441-8617
If to ST-Bank, ST-Sub or SouthTrust, then to:
SouthTrust Corporation
420 North 20th Street
Birmingham, Alabama 35203
Attention: John D. Buchanan, Esq.
Fax (205) 254-5022
with a copy to:
Bradley Arant Rose & White LLP
2001 Park Place, Suite 1400
Birmingham, Alabama 35203
Attention: C. Larimore Whitaker, Esq.
Fax (205) 521-8800
All such notices or other communications shall be deemed to have
been delivered (i) upon receipt when delivery is made by hand, (ii) on the third
(3rd) business day after deposit in the United States mail when delivery is made
by first class, registered or certified mail, and (iii) upon transmission when
made by telegram, telex or other facsimile transmission if evidenced by a sender
transmission completed confirmation.
Section 11.4 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other competent authority to be invalid, void or unenforceable or against public
or regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and in no way shall be affected, impaired or invalidated, if, but only if,
pursuant to such remaining terms, provisions, covenants and restrictions the
Merger may be consummated in substantially the same manner as set forth in this
Agreement as of the later of the date this Agreement was executed or last
amended.
Section 11.5 Costs and Expenses. Expenses incurred by Marine on the one
hand and SouthTrust on the other hand, in connection with or related to the
authorization, preparation and execution of this Agreement, the solicitation of
shareholder approval and all other matters related to the closing of the
transactions contemplated hereby, including all fees and expenses of agents,
representatives, counsel and accountants employed by either such party or its
affiliates, shall be borne solely and entirely by the party which has incurred
same.
Section 11.6 Captions. The captions as to contents of particular articles,
sections or paragraphs contained in this Agreement and the table of contents
hereto are inserted only for convenience and are in no way to
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be construed as part of this Agreement or as a limitation on the scope of the
particular articles, sections or paragraphs to which they refer.
Section 11.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document with the same force and
effect as though all parties had executed the same document.
Section 11.8 Governing Law. This Agreement is made and shall be governed
by and construed in accordance with the laws of the State of Florida without
respect to its conflicts of laws principles.
Section 11.9 Persons Bound; No Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors, distributees, and assigns, but notwithstanding the foregoing, this
Agreement may not be assigned by any party hereto unless the prior written
consent of the other parties is first obtained (other than by ST-Bank to another
affiliate of SouthTrust).
Section 11.10 Exhibits and Schedules. Each of the exhibits and schedules
attached hereto is an integral part of this Agreement and shall be applicable as
if set forth in full at the point in the Agreement where reference to it is
made. Any matter disclosed in any of the Schedules to the Agreement shall be
deemed incorporated by reference into each other Schedule thereto and disclosed
in each such Schedule.
Section 11.11 Waiver. The waiver by any party of the performance of any
agreement, covenant, condition or warranty contained herein shall not invalidate
this Agreement, nor shall it be considered a waiver of any other agreement,
covenant, condition or warranty contained in this Agreement. A waiver by any
party of the time for performing any act shall not be deemed a waiver of the
time for performing any other act or an act required to be performed at a later
time. The exercise of any remedy provided by law, Marine or otherwise and the
provisions in this Agreement for any remedy shall not exclude any other remedy
unless it is expressly excluded. The waiver of any provision of this Agreement
must be signed by the party or parties against whom enforcement of the waiver is
sought. This Agreement and any exhibit, memorandum or schedule hereto or
delivered in connection herewith may be amended only by a writing signed on
behalf of each party hereto.
Section 11.12 Construction of Terms. Whenever used in this Agreement, the
singular number shall include the plural and the plural the singular. Pronouns
of one gender shall include all genders. Accounting terms used and not otherwise
defined in this Agreement have the meanings determined by, and all calculations
with respect to accounting or financial matters unless otherwise provided for
herein, shall be computed in accordance with generally accepted accounting
principles, consistently applied. References herein to articles, sections,
paragraphs, subparagraphs or the like shall refer to the corresponding articles,
sections, paragraphs, subparagraphs or the like of this Agreement. The words
"hereof", "herein", and terms of similar import shall refer to this entire
Agreement. Unless the context clearly requires otherwise, the use of the terms
"including", "included", "such as", or terms of similar meaning, shall not be
construed to imply the exclusion of any other particular elements. Unless
expressly provided otherwise in this Agreement, references to a party's
"judgment" mean that party's reasonable judgment, and references to the
"approval" or "consent" of a party mean that party's approval or consent which
shall not be unreasonably withheld.
[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered, and their respective seals hereunto affixed, by their
officers thereunto duly authorized, and have caused this Agreement
to be dated as of the date and year first above written.
MARINE BANK
By: /s/ Norris E. Counts
--------------------------
Norris E. Counts
ATTEST: Its President
By: /s/ Ty Hinson
------------------------
Its Cashier
[CORPORATE SEAL]
SOUTHTRUST BANK,
NATIONAL ASSOCIATION
By: /s/ Alton E. Yother
--------------------------
Alton E. Yother
Senior Vice President
ATTEST:
By: /s/ Frances L. Sanders
------------------------
Assistant Secretary
[CORPORATE SEAL]
SOUTHTRUST OF ALABAMA, INC.
By: /s/ Alton E. Yother
--------------------------
Alton E. Yother
ATTEST: Its Vice President
By: /s/ William L. Prater
------------------------
Assistant Secretary
[CORPORATE SEAL]
SOUTHTRUST CORPORATION
By: /s/ Alton E. Yother
--------------------------
Alton E. Yother
ATTEST: Its Senior Vice President
By: /s/ William L. Prater
------------------------
Assistant Secretary
[CORPORATE SEAL]
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EXHIBIT B
NATIONAL BANKS
CONSOLIDATION AND MERGER
Title 12 United States Code
SS. 215a. MERGER OF NATIONAL BANKS OR STATE BANKS INTO NATIONAL BANKS.
(b) Dissenting shareholders
If a merger shall be voted for at the called meetings by the necessary
majorities of the shareholders of each association or State bank participating
in the plan of merger, and thereafter the merger shall be approved by the
Comptroller, any shareholder of any association or State bank to be merged into
the receiving association who has voted against such merger at the meeting of
the association or bank of which he is a stockholder, or has given notice in
writing at or prior to such meeting to the presiding officer that he dissents
from the plan of merger, shall be entitled to receive the value of the shares so
held by him when such merger shall be approved by the Comptroller upon written
request made to the receiving association at any time before thirty days after
the date of consummation of the merger, accompanied by the surrender of his
stock certificates.
(c) Valuation of shares
The value of the shares of any dissenting shareholder shall be
ascertained, as of the effective date of the merger, by an appraisal made by a
committee of three persons, composed of (1) one selected by the vote of the
holders of the majority of the stock, the owners of which are entitled to
payment in cash; (2) one selected by the directors of the receiving association;
and (3) one selected by the two so selected. The valuation agreed upon by any
two of the three appraisers shall govern. If the value so fixed shall not be
satisfactory to any dissenting shareholder who has requested payment, that
shareholder may, within five days after being notified of the appraised value of
his shares, appeal to the Comptroller, who shall cause a reappraisal to be made
which shall be final and binding as to the value of the shares of the appellant.
(d) Application to shareholders of merging associations; appraisal by
Comptroller; expenses of receiving association; sale and resale
of shares; State appraisal and merger law
If, within ninety days from the date of consummation of the merger, for
any reason one or more of the appraisers is not selected as herein provided, or
the appraisers fail to determine the value of such shares, the Comptroller shall
upon written request of any interested party cause an appraisal to be made which
shall be final and binding on all parties. The expenses of the Comptroller in
making the reappraisal or the appraisal, as the case may be, shall be paid by
the receiving association. The value of the shares ascertained shall be promptly
paid to the dissenting shareholders by the receiving association. The shares of
stock of the receiving association which would have been delivered to such
dissenting shareholders had they not requested payment shall be sold by the
receiving association at an advertised public auction, and the receiving
association shall have the right to purchase any of such shares at such public
auction, if it is the highest bidder therefor, for the purpose of reselling such
shares within thirty days thereafter to such person or persons and at such price
not less than par as its board of directors by resolution may determine. If the
shares are sold at public auction at a price greater than the amount paid to the
dissenting shareholders, the excess in such sale price shall be paid to such
dissenting shareholders. The appraisal of such shares of stock in any State bank
shall be determined in the manner prescribed by the law of the State in such
cases, rather than as provided in this section, if such provision is made in the
State law; and no such merger shall be in contravention of the law of the State
under which such bank is incorporated. The provisions of this subsection shall
apply only to shareholders of (and stock owned by them in) a bank or association
being merged into the receiving association.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation and the Bylaws of Registrant
provide that Registrant shall indemnify its officers, directors, employees and
agents to the extent permitted by the General Corporation Law of the State of
Delaware, which permits a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, against expenses
(including attorney's fees), judgments, fines and settlements incurred by him in
connection with any such suit or proceeding, if he acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of the
corporation, and, in the case of a derivative action on behalf of the
corporation, if he was not adjudged to be liable for negligence or misconduct.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<S> <C>
2 Agreement and Plan of Merger by and among SouthTrust Bank, N.A. and
Marine Bank and joined in by SouthTrust Corporation and SouthTrust
of Alabama, Inc. (included as Exhibit A to the Proxy
Statement/Prospectus filed as part of this Registration Statement).
* 3(a) Composite Restated Bylaws of SouthTrust Corporation, which were
filed as Exhibit 4(e) to SouthTrust Corporation's Registration
Statement on Form S-4 (Registration No. 33-615572).
3(b) Composite Restated Certificate of Incorporation of SouthTrust
Corporation.
* 4(a) Certificate of Adoption of Resolutions designating Series A
Junior Participating Preferred Stock, adopted February 22, 1989,
which was filed as Exhibit 1 to SouthTrust Corporation's
Registration Statement on Form 8-A (File No. 1-3613).
* 4(b) Stockholders' Rights Agreement, dated as of February 22, 1989,
between SouthTrust Corporation and Mellon Bank, N.A., Rights Agent,
which was filed as Exhibit 1 to SouthTrust Corporation's
Registration Statement on Form 8-A (File No. 1-3613).
* 4(c) Indenture, dated as of May 1, 1987 between SouthTrust Corporation
and National Westminster Bank USA, which was filed as Exhibit 4(a)
to SouthTrust Corporation's Registration Statement on Form S-3
(Registration No. 33-13637).
* 4(d) Subordinated Indenture, dated as of May 1, 1992, between SouthTrust
Corporation and Chemical Bank, which was filed as Exhibit 4(1)(ii)
to the Registration Statement on Form S-3 of SouthTrust Corporation
(Registration No. 33-44857).
5 Opinion of Bradley Arant Rose & White LLP as to the legality of the
securities being registered.
8 Form of Opinion of Bradley Arant Rose & White LLP regarding certain
tax matters.
23(a) Consent of Arthur Andersen LLP (with respect to SouthTrust
Corporation).
23(b) Consent of Peel, Schatzel & Wells, P.A. (with respect to Marine
Bank)
23(c) Consent of Bradley Arant Rose & White LLP (included in Exhibit 5).
24 Powers of Attorney.
99 Form of Proxy for Marine Bank
</TABLE>
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* Incorporated by reference.
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ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment
to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not
exceed that which was registered) and any
deviation from the low or high end of the
estimated maximum offering range may be
reflected in the form of prospectus filed
with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes
in volume and price represent no more than
a 20 percent change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in
the effective Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to
be a new Registration Statement relating to the
securities offered therein, and the offering of
such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement
relating to the securities offered therein, and the
offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) (1) The undersigned registrant hereby undertakes as
follows: that prior to any public reoffering of the
securities registered hereunder through use of a
prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c), the
registrant undertakes that such reoffering prospectus
will contain the information called for by the
applicable registration form with respect to
reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other
items of the applicable form.
(2) The registrant undertakes that every prospectus: (i)
that is filed pursuant to paragraph (1) immediately
preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is
used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not
be used until such amendment is effective, and that,
for purposes of determining any liability under the
Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering
thereof.
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<TABLE>
<S> <C>
(d) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant
to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant
in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
(e) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11, or 13 of
this Form, within one business day of receipt of such
request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the
effective date of the registration statement through the
date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information
concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included
in the registration statement when it became effective.
</TABLE>
II-3
<PAGE> 124
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Birmingham,
State of Alabama, on June 29, 1998.
SOUTHTRUST CORPORATION
By: /s/ WALLACE D. MALONE
----------------------------------
Wallace D. Malone, Jr.
Its Chairman of the Board of
Directors, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ WALLACE D. MALONE Chairman, President, Chief Executive June 29, 1998
- ------------------------------- Officer, Director
Wallace D. Malone, Jr. (Principal Executive Officer)
/s/ AUBREY D. BARNARD Secretary, Treasurer and June 29, 1998
- ------------------------------- Controller (Principal
Aubrey D. Barnard Accounting and
Financial Officer)
Director
- ------------------------------- (Chairman and Chief Executive
Julian W. Banton Officer, SouthTrust Bank, N.A.)
Director
- -------------------------------
Allen J. Keesler, Jr.
* Director June 29, 1998
- -------------------------------
Van L. Richey
* Director June 29, 1998
- -------------------------------
Carl F. Bailey
Director
- -------------------------------
Rex J. Lysinger
* Director June 29, 1998
- -------------------------------
William C. Hulsey
* Director June 29, 1998
- -------------------------------
John M. Bradford
* Director June 29, 1998
- -------------------------------
Wm. Kendrick Upchurch, Jr.
* Director June 29, 1998
- -------------------------------
H. Allen Franklin
* Director June 29, 1998
- -------------------------------
F. Crowder Falls
*By AUBREY D. BARNARD June 29, 1998
- -------------------------------
Aubrey D. Barnard
Attorney-in-fact
</TABLE>
II-4
<PAGE> 125
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C> <C>
2 Agreement and Plan of Merger by and among SouthTrust Bank, N.A. and
Marine Bank and joined in by SouthTrust Corporation and SouthTrust
of Alabama, Inc. (included as Exhibit A to the Proxy
Statement/Prospectus filed as part of this Registration Statement).
* 3(a) Composite Restated Bylaws of SouthTrust Corporation, which were
filed as Exhibit 4(e) to SouthTrust Corporation's Registration
Statement on Form S-4 (Registration No. 33-61557).
3(b) Composite Restated Certificate of Incorporation of SouthTrust
Corporation.
* 4(a) Certificate of Adoption of Resolutions designating Series A Junior
Participating Preferred Stock, adopted February 22, 1989, which was
filed as Exhibit 1 to SouthTrust Corporation's Registration
Statement on Form 8-A (File No. 1-3613).
* 4(b) Stockholders' Rights Agreement, dated as of February 22, 1989,
between SouthTrust Corporation and Mellon Bank, N.A., Rights Agent,
which was filed as Exhibit 1 to SouthTrust Corporation's
Registration Statement on Form 8-A (File No. 1-3613).
* 4(c) Indenture, dated as of May 1, 1987 between SouthTrust Corporation
and National Westminster Bank USA, which was filed as Exhibit 4(a)
to SouthTrust Corporation's Registration Statement on Form S-3
(Registration No. 33-13637).
* 4(d) Subordinated Indenture, dated as of May 1, 1992, between SouthTrust
Corporation and Chemical Bank, which was filed as Exhibit 4(1)(ii)
to the Registration Statement on Form S-3 of SouthTrust Corporation
(Registration No. 33-44857).
5 Opinion of Bradley Arant Rose & White LLP as to the legality of
the securities being registered.
8 Form of Opinion of Bradley Arant Rose & White LLP regarding certain
tax matters.
23(a) Consent of Arthur Andersen LLP (with respect to SouthTrust
Corporation).
23(b) Consent of Peel, Schatzel & Wells, P.A. (with respect to Marine
Bank)
23(c) Consent of Bradley Arant Rose & White LLP (included in Exhibit 5).
24 Powers of Attorney.
99 Form of Proxy for Marine Bank
</TABLE>
- --------------------
* Incorporated by reference.
<PAGE> 1
EXHIBIT 3(B)
COMPOSITE
RESTATED CERTIFICATE OF INCORPORATION
OF
SOUTHTRUST CORPORATION
In accordance with the provisions of the General
Corporation Law of the State of Delaware, including, without limitation,
Sections 103, 242 and 245 thereof, SouthTrust Corporation, a corporation
organized and existing under the laws of the State of Delaware, which was
originally incorporated under the name BTNB Corporation (which name was
subsequently changed to The Alabama Financial Group, Inc., then to Southern
Bancorporation, and then to Southern Bancorporation of Alabama before the change
to the present name) by its original Certificate of Incorporation filed with the
Secretary of State of Delaware on October 8, 1968, hereby certifies (i) that
this Restated Certificate of Incorporation of SouthTrust Corporation has been
proposed by the board of directors of SouthTrust Corporation and duly adopted by
the stockholders of SouthTrust Corporation in accordance with the provisions of
Section 245 of the General Corporation Law of the State of Delaware and (ii)
that the Restated Certificate of Incorporation of SouthTrust Corporation reads
as follows:
FIRST. The name of the corporation is SouthTrust
Corporation.
SECOND. The address of its registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware. Without limiting in any manner the scope and
generality of the foregoing, the Corporation shall have the following purposes
and powers:
(1) To acquire by purchase, subscription, or otherwise, and
to receive, hold, own, guarantee, sell, assign, exchange, transfer,
mortgage, pledge or otherwise dispose of or deal in and with any
and all securities, as such term is hereinafter defined, issued or
created by any corporation, firm, organization, association or
other entity, public or private, whether formed under the laws of
the United States of America or of any state, commonwealth,
territory, dependency or possession thereof, or of any foreign
country or of any political subdivision, territory, dependency,
possession or municipality thereof, or issued or created by the
United States of America or any state or commonwealth thereof or
any foreign country, or by any agency, subdivision, territory,
dependency, possession or municipality of any of the foregoing, and
as owner thereof to possess and exercise all the rights, powers and
privileges of ownership, including the right to execute consents
and vote thereon.
The term "securities" as used in this Certificate of
Incorporation shall mean any and all notes, stocks, treasury
stocks, bonds, debentures, evidences of indebtedness, certificates
of interest or participation in any profit-sharing agreement,
collateral-trust certificate, pre-organization certificates or
subscriptions, transferable shares, investment contracts, voting
trust certificates, certificates of deposit for a security,
fractional undivided interests in oil, gas, or other mineral
rights, or, in general, any interests or instruments commonly known
as "securities", or any and all certificates of interest or
participation in, temporary or interim certificates for, receipts
for, guaranties of, or warrants or rights to subscribe to or
purchase, any of the foregoing.
<PAGE> 2
(2) To make, establish and maintain investments in
securities, and to supervise and manage such investments.
(3) To cause to be organized under the laws of the United
States of America or of any state, commonwealth, territory,
dependency or possession thereof, or of any foreign country or of
any political subdivision, territory, dependency, possession or
municipality thereof, one or more corporations, firms,
organizations, associations or other entities and to cause the same
to be dissolved, wound up, liquidated, merged or consolidated.
(4) To acquire by purchase or exchange, or by transfer to
or by merger or consolidation with the Corporation or any
corporation, firm, organization, association or other entity owned
or controlled, directly or indirectly, by the Corporation, or to
otherwise acquire, the whole or any part of the business, good
will, rights, or other assets of any corporation, firm,
organization, association or other entity, and to undertake or
assume in connection therewith the whole or any part of the
liabilities and obligations thereof, to effect any such acquisition
in whole or in part by delivery of cash or other property,
including securities issued by the Corporation, or by any other
lawful means.
(5) To make loans and give other forms of credit, with or
without security, and to negotiate and make contracts and
agreements in connection therewith.
(6) To aid by loan, subsidy, guaranty or in any other
lawful manner any corporation, firm, organization, association or
other entity of which any securities are in any manner directly or
indirectly held by the Corporation or in which the Corporation or
any such corporation, firm, organization, association or entity may
be or become otherwise interested; to guarantee the payment of
dividends on any stock issued by any such corporation, firm,
organization, association or entity; to guarantee or, with or with
recourse against any such corporation, firm, organization,
association or entity, to assume the payment of the principal of,
or the interest on, any obligations issued or incurred by such
corporation, firm, organization, association or entity; to do any
and all other acts and things for the enhancement, protection or
preservation of any securities which are in any manner, directly or
indirectly, held, guaranteed or assumed by the Corporation, and to
do any and all acts and things designed to accomplish any such
purpose.
(7) To borrow money for any business, object or purpose of
the Corporation from time to time, without limit as to amount; to
issue any kind of indebtedness, whether or not in connection with
borrowing money, including evidences of indebtedness convertible
into stock of the Corporation, to secure the payment of any
evidence of indebtedness by the creation of any interest in any of
the property or rights of the Corporation, whether at that time
owned or thereafter acquired.
(8) To render service, assistance, counsel and advice to,
and to act as representative or agent in any capacity (whether
managing, operating, financial, purchasing, selling, advertising or
otherwise) of, any corporation, firm, organization, association, or
other entity.
(9) To engage in any commercial, financial, mercantile,
industrial, manufacturing, marine, exploration, mining,
agricultural, research, licensing, servicing, or agency business
not prohibited by law, and any, some or all of the foregoing.
The purposes and powers specified in the foregoing
paragraphs shall, except where otherwise expressed, be in nowise limited or
restricted by reference to, or inference from the terms of any other paragraph
in
<PAGE> 3
this Certificate of Incorporation, but the purposes and powers specified in each
of the foregoing paragraphs of this Article shall be regarded as independent
purposes and powers.
The Corporation shall possess and may exercise all powers
and privileges necessary or convenient to effect any or all of the foregoing
purposes, or to further any or all of the foregoing powers, and the enumeration
herein of any specific purposes or powers shall not be held to limit or restrict
in any manner the exercise by the Corporation of the general powers now or
hereafter conferred by the laws of the State of Delaware upon corporations
formed under the General Corporation Law of Delaware.
FOURTH. The total number of shares of all classes of stock
which the Corporation shall have the authority to issue is five hundred five
million (505,000,000) shares, of which five million (5,000,000) shares, par
value $1.00 per share, are to be preferred stock (hereinafter called "Preferred
Stock"), and five hundred million (300,000,000) shares, par value of $2.50 per
share, are to be common stock (hereinafter called "Common Stock").
A. The Preferred Stock may be issued in such one or more
series as shall from time to time be created and authorized to be issued by the
board of directors as hereinafter provided.
The board of directors is hereby expressly authorized, by
resolution or resolutions from time to time adopted providing for the issuance
of Preferred Stock, to fix and state, to the extent not fixed by the provisions
hereinafter set forth, the designations, voting powers, if any, preferences and
relative, participating, optional and other special rights of the shares of each
series of Preferred Stock, and the qualifications, limitations and restrictions
thereof, including (but without limiting the generality of the foregoing) any of
the following with respect to which the board of directors may make specific
provisions:
(1) the distinctive name and any serial designations;
(2) the annual dividend rate or rates and the dividend
payment dates;
(3) with respect to the declaration and payment of
dividends upon each series of the Preferred Stock, whether such
dividends are to be cumulative or noncumulative, preferred,
subordinate or equal to dividends declared and paid upon other
series of the Preferred Stock or upon any other shares of stock of
the Corporation, and the participating or other special rights, if
any, of such dividends;
(4) the redemption provisions, if any, with respect to any
series, and if any series is subject to redemption, the manner and
time of redemption and the redemption price or prices;
(5) the amount or amounts of preferential or other payment
to which any series of Preferred Stock is entitled over any other
series of Preferred Stock or over the Common Stock on voluntary or
involuntary liquidation, dissolution or winding-up, subject to the
provisions set forth in clause (2) of paragraph C of this Article
FOURTH;
(6) any sinking fund or other retirement provisions and
the extent to which the charges therefor are to have priority
over the payment of dividends on or the making of sinking fund or
other like retirement provisions for shares of any other series of
Preferred Stock or for shares of the Common Stock;
(7) any conversion, exchange, purchase or other privileges
to acquire shares of any other series of Preferred Stock or of the
Common Stock;
(8) the number of shares of such series; and
<PAGE> 4
(9) the voting rights, if any, of such series, subject to
the provisions set forth in clause (1) of paragraph C of this
Article FOURTH.
Each share of each series of Preferred Stock shall have the
same relative rights and be identical in all respects with all the other shares
of the same series.
Before the Corporation shall issue any shares of Preferred
Stock of any series authorized as hereinbefore provided, a certificate setting
forth a copy of the resolution or resolutions with respect to such series
adopted by the board of directors of the Corporation pursuant to the foregoing
authority vested in said board shall be made, filed and recorded in accordance
with the then applicable requirements, if any, of the laws of the State of
Delaware, or, if no certificate is then so required, such certificate shall be
signed and acknowledged on behalf of the Corporation by its chairman of the
board, president or a vice president and its corporate seal shall be affixed
thereto and attested by its secretary or an assistant secretary and such
certificate shall be filed and kept on file at the principal office of the
Corporation in the State of Delaware and in such other place or places as the
board of directors shall designate.
Shares of any series of Preferred Stock which shall be
issued and thereafter acquired by the Corporation through purchase, redemption,
conversion or otherwise, may, as may be provided by resolution or resolutions of
the board of directors and upon compliance with applicable law, be returned to
the status of authorized but unissued Preferred Stock, undesignated as to
series, or to the status of authorized but unissued Preferred Stock of the same
series.
Unless otherwise provided in the resolution or resolutions
of the board of directors providing for the issue thereof, the number of
authorized shares of stock of any such series may be increased or decreased (but
not below the number of shares thereof then outstanding) by resolution or
resolutions of the board of directors, and the filing and recording of a
certificate, setting forth that such increase or decrease has been authorized by
the board of directors, in accordance with applicable law. In case the number of
shares of any such series of Preferred Stock shall be decreased in accordance
with the immediately preceding sentence, the shares representing such decrease
shall, unless otherwise provided in the resolution or resolutions of the board
of directors providing for the issuance thereof, resume the status of the
authorized but unissued Preferred Stock, undesignated as to series.
B. The authority of the board of directors to provide for
the issuance of any shares of the Corporation's stock shall include, but shall
not be limited to, authority to issue shares of stock of the Corporation for any
purpose and in any manner (including issuance pursuant to rights, warrants or
other options) permitted by law, for delivery as all or part of the
consideration for or in connection with the acquisition of all or part of the
stock of another corporation or of all or part of the assets of another
corporation or enterprise, irrespective of the amount by which the issuance of
such stock shall increase the number of shares outstanding (but not in excess of
the number of shares authorized).
C. The following powers, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, of the stock of the Corporation are fixed as follows:
(1) Voting Rights.
(a) Common Stock. At all elections of directors of the
Corporation and in respect of all other matters as to which the
vote or consent of stockholders of the Corporation shall be
required to be taken, the holders of the Common Stock shall be
entitled to one (1) vote for each share held by them.
(b) Preferred Stock. The holders of each series of the
Preferred Stock shall have such voting rights as may be fixed by
resolution or by resolutions of the board of directors
<PAGE> 5
providing for the issuance of such series; provided, however, that
the holders of each series of the Preferred Stock shall not have
more than one (1) vote for each share held by them at all elections
of directors of the Corporation and in respect of all other matters
as to which the vote or consent of stockholders of the Corporation
shall be required to be taken; provided, further, that except as
set forth in the resolution of the board of directors providing for
its issuance or as otherwise required by law, the holders of the
Preferred Stock, or any series thereof, shall not vote separately
as a class but shall vote on all matters as a single class with the
holders of the Common Stock and any other class of capital stock of
the Corporation voting with the Common Stock.
(2) Liquidation, Dissolution, etc. In the event of any
voluntary or involuntary liquidation, dissolution or winding-up of
the Corporation, the assets of the Corporation available for
distribution to the stockholders (whether from capital or surplus)
shall be distributed among those of the respective series of the
outstanding Preferred Stock, if any, as may be entitled to any
preferential amounts and among the respective holders thereof in
accordance with the preferences, relative, participating and other
special rights and limitations and restrictions, if any, fixed for
each such series and the holders thereof by resolution or
resolutions of the board of directors providing for the issue of
each such series of the Preferred Stock; and after payment in full
of the amounts payable in respect of the Preferred Stock, if any,
the holders of any series of the outstanding Preferred Stock who
are not entitled to preferential treatment pursuant to resolutions
of the board of directors providing for the issue thereof and the
holders of the outstanding Common Stock shall be entitled (to the
exclusion of the holders of any series of the outstanding Preferred
Stock entitled to preferential treatment pursuant to resolutions of
the board of directors providing for the issue thereof) to share
ratably in all the remaining assets of the Corporation available
for distribution to its stockholders.
A consolidation, merger or reorganization of the
Corporation with or into one or more other corporations, or a sale,
lease or other transfer of all or substantially all of the assets
of the Corporation that does not result in the termination of the
enterprise and distribution of the assets of the Corporation of the
stockholders, shall not be deemed to constitute a liquidation,
dissolution or winding-up of the Corporation within the meaning of
this clause (2) of this paragraph C of this Article FOURTH,
notwithstanding the fact that the Corporation may cease to exist
and may surrender its certificate of incorporation.
(3) Dividends. Dividends on any stock of the Corporation
shall be payable only out of earnings or assets of the Corporation
legally available for the payment of such dividends and only as and
when declared by the board of directors.
D. No holder of any share or shares of any class of stock
of the Corporation shall have any preemptive or preferential right to subscribe
for any shares of stock of any class of the Corporation now or hereafter
authorized or for any securities convertible into or carrying any optional
rights to purchase or subscribe for any shares of stock of any class of the
corporation now or hereafter authorized; provided, however, that no provision of
this certificate of incorporation shall be deemed to deny to the board of
directors the right, in its discretion, to grant to the holders of shares of any
class of stock at the time outstanding the right to purchase or subscribe for
shares of stock of any class or any other securities of the Corporation now or
hereafter authorized at such prices and upon such other terms and conditions as
the board of directors, in its discretion, may fix.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. A. Number, election and terms. The business and
affairs of the Corporation shall be managed by or under the direction of a board
of directors consisting of not less than three (3) nor more than sixteen (16)
persons. The exact number of directors within the minimum and maximum
limitations specified in the preceding sentence shall be fixed from time to time
by the board of directors pursuant to a resolution adopted by a majority of the
entire board of directors. At the annual meeting of stockholders of the
Corporation held in 1983, the directors
<PAGE> 6
shall be divided into three classes, as nearly equal in number as possible, with
the term of office of the first class of directors to expire at the annual
meeting of stockholders of the Corporation to be held in 1984, the term of
office of the second class of directors to expire at the annual meeting of
stockholders of the Corporation to be held in 1985 and the term of office of the
third class of directors to expire at the annual meeting of stockholders of the
Corporation to be held in 1986. At each annual meeting of stockholders of the
Corporation following such initial classification and election, directors
elected to succeed those directors whose terms expire at such annual meeting
shall be elected for a term of office to expire at the third succeeding annual
meeting of stockholders of the Corporation after their election.
B. Newly created directorships and vacancies. Subject to
the rights of the holders of any series of Preferred Stock then outstanding,
newly created directorships resulting from any increase in the authorized number
of directors or any vacancies in the board of directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
shall be filled by a majority vote of the directors then in office, and
directors so chosen shall hold office until the annual meeting of stockholders
of the Corporation at which the term of the class of directors to which they
have been elected expires. No decrease in the number of directors constituting
the board of directors shall shorten the term of any incumbent director.
C. Continuance in Office. Notwithstanding the foregoing
provisions of this Article SIXTH, any director whose term of office has expired
shall continue to hold office until his successor shall be elected and qualify.
D. Removal. Subject to the rights of the holders of any
series of Preferred Stock then outstanding, any director, or the entire board of
directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least seventy percent (70%) of the
voting power of all of the shares of the Corporation entitled to vote for the
election of directors.
E. Nomination of Directors By Stockholders. In addition to
the right of the board of directors of the Corporation to make nominations for
the election of directors, nominations for the election of directors may be made
by any stockholder entitled to vote for the election of directors if that
stockholder complies with all of the following provisions of this paragraph E:
(1) Advance notice of such proposed nomination shall be
received by the Secretary of the Corporation not less than fourteen
(14) days nor more than fifty (50) days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if fewer than twenty-one (21) days' notice of the
meeting is given to stockholders, such written notice shall be
received by the Secretary of the Corporation not later than the
close of the tenth day following the day on which notice of the
meeting was mailed to stockholders.
(2) Each notice under clause (1) of this paragraph E shall
set forth (i) the name, age, citizenship, business address and
residence address of each nominee proposed in such notice, (ii) the
principal occupation or employment of each such nominee for the
five years preceding such meeting, (iii) the number of shares of
stock of the Corporation which are owned, directly or indirectly,
by each such nominee, and (iv) all such other information with
respect to each such nominee as would be required to be disclosed
in a proxy statement soliciting votes with respect to the election
of directors which complies with the Securities Exchange Act of
1934 and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations).
(3) The nomination made by a stockholder may only be made
in a meeting of the stockholders of the Corporation called for the
election of directors at which such stockholder is present in
person or by proxy, and can only be made by a stockholder who
<PAGE> 7
has theretofore complied with the notice provisions of the
foregoing clauses (1) and (2) of this paragraph E.
(4) The chairman of the stockholders' meeting may determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedures, which determination if so
made shall be conclusive and binding upon the stockholders, and if
he should so determine, he shall so declare to the meeting and such
nomination shall be disregarded.
F. Powers of Directors. In furtherance and not in
limitation of the powers conferred by statute, the board of directors is
expressly authorized:
(1) To make, alter or repeal the by-laws of the
Corporation.
(2) To authorize and cause to be executed mortgages and
liens upon the real and personal property of the Corporation.
(3) To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper
purpose and to abolish any such reserve in the manner in which it
was created.
(4) By a majority of the whole board, to designate one or
more committees, each committee to consist of two or more of the
directors of the Corporation. The board may designate one or more
directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the resolution or in
the by-laws of the Corporation, shall have and may exercise the
powers of the board of directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it;
provided, however, the by-laws may provide that in the absence or
disqualification of any member of such committee or committees, the
member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or
disqualified member.
G. Ballot. Election of directors need not be by written
ballot unless the by-laws so provide.
H. Amendment, repeal, etc. Notwithstanding any other
provisions of this Certificate of Incorporation or the by-laws of the
Corporation (and notwithstanding the fact that some lesser percentage may be
specified by law, this Certificate of Incorporation or the by-laws of the
Corporation), the affirmative vote of the holders of at least seventy percent
(70%) of the voting power of all of the shares of the Corporation entitled to
vote for the election of directors at the time of such action shall be required
to amend or repeal, or to adopt any provisions inconsistent with, this Article
SIXTH.
SEVENTH. Any action required or permitted to be taken by
the stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders of the Corporation and may not be effected by
any consent in writing by such stockholders. Special meetings of stockholders of
the Corporation may be called only by the board of directors pursuant to a
resolution approved by a majority of the entire board of directors, upon not
less than ten nor more than fifty days' written notice. Notwithstanding any
other provisions of this Certificate of Incorporation or the by-laws of the
Corporation (and notwithstanding the fact that some lesser percentage may be
specified by law, this Certificate of Incorporation or the by-laws of the
Corporation), the affirmative vote of the holders of at least seventy percent
(70%) of the voting power of all of the shares of the Corporation entitled to
vote
<PAGE> 8
for the election of directors at the time of such action shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article
SEVENTH.
EIGHTH. The Corporation shall indemnify its officers,
directors, employees, and agents to the extent permitted by the General
Corporation Law of Delaware.
NINTH. Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or stockholder thereof, or on
the application of any receiver or receivers appointed for this Corporation
under the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
TENTH. Meetings of stockholders may be held within or
without the State of Delaware, as the by-laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the by-laws of the Corporation.
ELEVENTH.
A. Definitions.
For the purpose of this Article ELEVENTH:
(1) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in
effect on March 15, 1983.
(2) "Announcement Date" means, with respect to any Business
Combination, the date of first public announcement of such Business
Combination.
(3) A person shall be a "beneficial owner" of any Voting
Stock:
(a) which such person or any of its Affiliates or
Associates beneficially own, directly or indirectly; or
(b) which such person or any of its Affiliates or
Associates have (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote pursuant to any
agreement, arrangement or understanding; or
<PAGE> 9
(c) which are beneficially owned, directly or indirectly,
by any other person with which such person or any of its Affiliates
or Associates have any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any
shares of capital stock of the Corporation.
(4) For the purposes of determining whether a person is an
Interested Stockholder pursuant to clause (11) of this paragraph A,
the number of outstanding shares of Voting Stock shall include
shares deemed owned through application of clause (3) of this
paragraph A but shall not include any other shares of Voting Stock
which may be issuable pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or otherwise.
(5) "Board" means the board of directors of the
Corporation.
(6) A "Business Combination" shall mean any one or more of
the following:
(a) any merger or consolidation of the Corporation or any
Subsidiary with or into (i) any Interested Stockholder or (ii) any
other corporation (whether or not itself an Interested Stockholder)
which, after such merger or consolidation, would be an Affiliate of
an Interested Stockholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate Fair Market Value
of $1,000,000 or more; or
(c) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value of $1,000,000 or
more; or
(d) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on
behalf of an Interested Stockholder or an Affiliate of any
Interested Stockholder; or
(e) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation, or
any merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with or
into or otherwise involving an Interested Stockholder) which has
the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary which
is directly or indirectly owned by any Interested Stockholder or
any Affiliate of any Interested Stockholder.
(7) "Consummation Date" means, with respect to any Business
Combination, the date on which such Business Combination is
effected.
(8) "Continuing Director" means any member of the Board who
is unaffiliated with the Interested Stockholder and was a member of
the Board prior to the
<PAGE> 10
time that the Interested Stockholder became an Interested
Stockholder, and any successor of a Continuing Director who is a
member of the Board and who is unaffiliated with the Interested
Stockholder and was recommended to succeed a Continuing Director by
a majority of Continuing Directors on the Board at the time of such
recommendation.
(9) "Determination Date" means, with respect to any
Interested Stockholder, the date on which such Interested
Stockholder first became an Interested Stockholder.
(10) "Fair Market Value" means (a) in the case of stock,
the highest closing sale price during the thirty-day period
immediately preceding the date in question of a share of such stock
on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which such stock is listed,
or, if such stock is not listed on any such exchange, the closing
bid quotation with respect to a share of such stock on such date as
reported by the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use, or if no
such quotations are available, the fair market value on such date
of a share of such stock as determined by the Board in good faith;
and (b) in the case of property other than cash or stock, the fair
market value of such property as determined by the Board in good
faith.
(11) "Interested Stockholder" shall mean, in respect of any
Business Combination, any person (other than the Corporation or any
Subsidiary) who or which, as of the date of the first public
announcement of such Business Combination, or on the day
immediately prior to the consummation of any such Business
Combination:
(a) is the beneficial owner, directly or indirectly, of
more than ten percent (10%) of the voting power of the outstanding
Voting Stock; or
(b) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner, directly
or indirectly, of ten percent (10%) or more of the voting power of
the then outstanding Voting Stock; or
(c) is an assignee of or has otherwise succeeded to any
shares of Voting Stock of the Corporation which were at any time
within the two-year period immediately prior to the date in
question beneficially owned by any Interested Stockholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(12) A "person" shall mean any individual, firm,
corporation or other entity.
(13) "Protected Stock" means all Voting Stock and all other
shares of capital stock of the Corporation having, or which may
have upon the happening of some contingency, the right to vote for
the election of some or all of the directors of the Corporation,
regardless of whether at the time in question such shares then have
a present right to so vote.
(14) "Subsidiary" means any corporation of which a majority
of any class of equity security is owned, directly or indirectly,
by the Corporation; provided, however, that for the purposes of the
definition of Interested Stockholder set forth in clause (11) of
this paragraph A, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security is
owned, directly or indirectly, by the Corporation.
<PAGE> 11
(15) "Voting Stock" means, at any time, all shares of
capital stock of the Corporation entitled to vote generally in the
election of directors, considered for the purpose of this Article
ELEVENTH as one class.
(16) In the event of any Business Combination in which the
Corporation survives, the phrase "other consideration to be
received" as used in subclauses (a) and (b) of clause (2) of
paragraph C of this Article ELEVENTH shall include the shares of
Common Stock and/or the shares of any other class of outstanding
Protected Stock retained by the holders of such shares.
B. Higher Vote for Certain Business Combinations. In
addition to any affirmative vote required by law or this Certificate of
Incorporation, and except as otherwise expressly provided in paragraph C of this
Article ELEVENTH, any Business Combination shall require the affirmative vote of
the holders of at least seventy percent (70%) of the then outstanding shares of
Voting Stock. Such affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that some lesser percentage may be specified,
by law or under the rules of, or in any agreement with, any United States
securities exchange registered under the Securities Exchange Act of 1934, or any
successor act thereto, on which any of the Voting Stock is listed, or otherwise.
C. When Higher Vote Is Not Required.
The provisions of paragraph B of this Article ELEVENTH
shall not be applicable to any particular Business Combination, and such
Business Combination shall require only such affirmative vote, if any, as is
required by law and any other Article of this Certificate of Incorporation, if
all of the conditions specified in either of the following clauses (1) and (2)
are met:
(1) Approval by the Board of Directors. The Business
Combination shall have been approved by a majority of the
Continuing Directors.
(2) Price and Procedure Requirements. All of the following
conditions shall have been met:
(a) Common Stock. The aggregate amount of the cash and the
Fair Market Value as of the Consummation Date of consideration
other than cash to be received by holders of the Common Stock of
the Corporation in such Business Combination, computed on a per
share basis, shall be at least equal to the higher of the
following:
(i) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any shares of Common
Stock acquired by it (I) within the two-year period
immediately prior to the Announcement Date, (II) in the
transaction or transactions by which it became an
Interested Stockholder, (III) on the Announcement Date, or
(IV) within the period from the Announcement Date to and
including the Consummation Date, whichever is highest; or
(ii) The Fair Market Value per share of the Common Stock on the
Announcement Date or the Determination Date, whichever is
higher.
(b) Protected Stock. The aggregate amount of the cash and
the Fair Market Value as of the Consummation Date of consideration
other than cash to be received per share by holders of shares of
any other class of outstanding Protected Stock regardless of
whether the Interested Stockholder has previously acquired any
shares of a particular class of such Protected Stock shall be at
least equal to the highest of the following:
<PAGE> 12
(i) The highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any shares of such
class of Protected Stock acquired by it (I) within the
two-year period immediately prior to the Announcement Date,
(II) in the transaction or transactions by which it became
an Interested Stockholder, (III) on the Announcement Date,
or (IV) within the period from the Announcement Date to and
including the Consummation Date, whichever is highest;
(ii) The highest preferential amount per share to which the
holders of shares of such class of Protected Stock are
entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(iii) The Fair Market Value per share of such class of Protected
Stock on the Announcement Date or the Determination Date,
whichever is higher; or
(iv) the price per share equal to the per share price determined
pursuant to subclause (a) of this clause (2) of this
paragraph C multiplied by the ratio of (I) the Fair Market
Value per share of such class of Protected Stock on the
Announcement Date to (II) the Fair Market Value per share
of the Common Stock on such date.
(c) Form of Consideration. The consideration to be received
by holders of a particular class of outstanding Protected Stock
(including Common Stock) shall be in cash or in the same form as
the Interested Stockholder has paid for shares of such class of
Protected Stock prior to the Consummation Date. If the Interested
Stockholder has paid for shares of any class of Protected Stock
with varying forms of consideration, the form of consideration for
such class of Protected Stock shall be either cash or the form used
to acquire the largest number of shares of such class of Protected
Stock previously acquired by it.
(d) Maintain Dividends. After such Interested Stockholder
has become an Interested Stockholder and prior to the consummation
of such Business Combination: (i) except as approved by a majority
of the Continuing Directors, there shall have been no failure to
declare and pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on any outstanding preferred
stock of the Corporation; and (ii) there shall have been (I) no
reduction in the annual rate of dividends paid on the Common Stock
except as necessary to reflect any subdivision of the Common Stock,
except as approved by a majority of the Continuing Directors, and
(II) an increase in such annual rate of dividends as necessary to
reflect any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which
has the effect of reducing the number of outstanding shares of the
Common Stock unless the failure so to increase such annual rate is
approved by a majority of the Continuing Directors.
(e) No Disproportionate Benefits. After such Interested
Stockholder has become an Interested Stockholder, such Interested
Stockholder shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or any
tax credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise.
(f) Furnish Information. A proxy or information statement
describing the proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934 and the rules
and regulations thereunder (or any subsequent provisions replacing
such Act, rules or regulations) shall be mailed to public
stockholders of this Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed pursuant to
such Act or subsequent provisions).
<PAGE> 13
D. Powers of Board of Directors.
A majority of the directors of the Corporation shall have
the power and duty to determine for the purposes of this Article ELEVENTH on the
basis of the information known to them after reasonable inquiry, (1) the number
of shares of Voting Stock beneficially owned by any person, (2) whether a person
is an Affiliate or Associate of another, (3) whether a person has an agreement,
arrangement or understanding with another as to the matters referred to in
clause (3) of paragraph A of this Article ELEVENTH or (4) whether the assets
which are the subject of any Business Combination have, or the consideration to
be received for the issuance or transfer of securities by the Corporation or any
Subsidiary in any Business Combination has, an aggregate Fair Market Value of
$1,000,000 or more.
E. No Effect on Fiduciary Obligations of Interested
Stockholders.
Nothing contained in this Article ELEVENTH shall be
construed to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
F. Amendment, Repeal, Etc.
Notwithstanding any other provisions of this Certificate of
Incorporation or the by-laws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, this Certificate of
Incorporation or the by-laws of the Corporation), the affirmative vote of the
holders of seventy percent (70%) or more of the shares of the then outstanding
Voting Stock shall be required to amend or repeal, or adopt any provisions
inconsistent with, this Article ELEVENTH of this Certificate of Incorporation.
TWELFTH. A director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, as the same exists or may be hereafter
amended, or (iv) for any transaction from which the director derived an improper
personal benefit. If the General Corporation Law of the State of Delaware is
hereafter amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the corporation, in
addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the General Corporation Law of the
State of Delaware, as amended. Any repeal or modification of this Article
TWELFTH by the stockholders of the corporation shall be prospective only and
shall not adversely affect any limitation on the personal liability of a
director of the corporation existing at the time of such repeal or modification.
THIRTEENTH. Except as otherwise herein provided and subject
to the requirements provided in Article SIXTH, SEVENTH and ELEVENTH of this
Certificate of Incorporation, the Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
<PAGE> 1
EXHIBIT 5
June 29, 1998
SouthTrust Corporation
420 North 20th Street
Birmingham, Alabama 35203
Ladies and Gentlemen:
In our capacity as counsel for SouthTrust Corporation, a Delaware
corporation ("SouthTrust"), we have examined the Registration Statement on Form
S-4 (the "Registration Statement"), in form as proposed to be filed by
SouthTrust with the Securities and Exchange Commission under the provisions of
the Securities Act of 1933, relating to the proposed merger (the "Merger") of
Marine Bank, a Florida corporation ("Marine") with and into SouthTrust Bank,
National Association, and the issuance of up to 477,200 shares of common stock,
par value $2.50 per share, of SouthTrust (the "Shares") in connection with the
Merger. Pursuant to the Merger, each holder of shares of common stock of Marine
will receive shares of SouthTrust common stock. In this connection, we have
examined such records, documents and proceedings as we have deemed relevant and
necessary as a basis for the opinions expressed herein.
Upon the basis of the foregoing, we are of the opinion that:
(i) the Shares to be offered under the Registration Statement, to
the extent actually issued pursuant to the Merger, will have been duly and
validly authorized and issued and will be fully paid and nonassessable; and
(ii) under the laws of the State of Delaware, no personal liability
will attach to the ownership of the Shares.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement. In
addition, we hereby consent to the inclusion of the statements made in reference
to our firm under the caption Legal Matters in the Proxy Statement/Prospectus
which is a part of the Registration Statement.
Very truly yours,
/s/ BRADLEY ARANT ROSE & WHITE LLP
<PAGE> 1
EXHIBIT 8
FORM OF TAX OPINION OF BRADLEY ARANT ROSE & WHITE LLP
July ___, 1998
Marine Bank
9400-9th Street North
St. Petersburg, Florida 33702
Re: Agreement and Plan of Merger of SouthTrust Bank, National
Association and Marine Bank, joined in by SouthTrust Corporation
and SouthTrust of Alabama, Inc.
Ladies and Gentlemen:
You have requested the opinion of Bradley Arant Rose & White LLP,
as counsel to SouthTrust Corporation, a Delaware corporation ("SouthTrust"),
regarding the transactions contemplated by that certain Agreement and Plan of
Merger dated March 24, 1998 (the "Merger Agreement"), of SouthTrust Bank,
National Association ("ST-Bank") and Marine Bank, joined in by SouthTrust and
SouthTrust of Alabama, Inc., an Alabama corporation and a wholly-owned
subsidiary of SouthTrust ("ST- Sub"). Specifically, you have requested us to
opine that the merger of Marine with and into ST-Bank (the "Merger") pursuant to
the Merger Agreement will constitute a tax-free reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
no gain or loss will be recognized by the stockholders of Marine upon the
receipt solely of SouthTrust voting common stock in exchange for their Marine
stock upon consummation of the Merger.
This opinion is being rendered pursuant to Section 9.8 of the
Merger Agreement and the requirements of Item 21(a) of the registration
statement on Form S-4 (the "Registration Statement") which is being filed on
SouthTrust's behalf with the Securities and Exchange Commission under the
Securities Act of 1933, as amended. Capitalized terms used herein and not
otherwise defined herein have the meanings given to them in the Merger
Agreement.
In rendering the opinion set forth below, we have examined and
relied upon originals or copies of the Merger Agreement, and upon
representations given to us by letter from Marine of even date herewith and from
SouthTrust of even date herewith, each as described in the representation
section of this letter (the "Representation Letters"), and such other documents
and materials as we have deemed necessary as a basis for such opinion. In
connection with such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents, agreements and instruments
submitted to us as originals, the conformity to original documents, agreements
and instruments of all documents, agreements and instruments submitted to us as
copies or specimens and the authenticity of the originals of such documents,
agreements and instruments submitted to us as copies or specimens, and, as to
factual matters, the veracity of written statements made by officers and other
representatives of Marine and SouthTrust included in the Merger Agreement and
the Representation Letters.
The opinion stated below is based upon the relevant provisions of
the Code, regulations promulgated pursuant thereto by the Department of the
Treasury and the Internal Revenue Service (the "IRS"), current administrative
rulings and applicable judicial decisions, all of which are subject to change.
Neither SouthTrust, ST-Sub, ST-Bank nor Marine has requested or will receive an
advance ruling from the IRS as to any of the federal income tax effects to
holders of Marine stock of the Merger, or of any of the federal income tax
effects to SouthTrust, ST-Sub, ST-Bank or Marine of the Merger. Our opinion set
forth below is not binding upon the IRS, and there can be no assurance, and none
hereby is given, that the IRS will not take a position contrary to one or more
of the positions reflected herein, or that our opinion will be upheld by the
courts if challenged by the IRS.
<PAGE> 2
FACTS
SouthTrust is a registered bank holding company and is the common
parent of an affiliated group of corporations, including ST-Bank, that file
consolidated federal income tax returns on the calendar year basis. SouthTrust
Common Stock is publicly held and publicly traded through the Automated
Quotation System of the Nasdaq Stock Market.
In accordance with resolutions of SouthTrust's Board of Directors
adopted on February 22, 1989, each share of SouthTrust Common Stock issued and
outstanding carries with it eight twenty-sevenths of a right to purchase from
SouthTrust one one-hundredth of a share of SouthTrust Preferred Stock designated
as the Series A Junior Participating Preferred Stock at a purchase price of
$75.00 (a "Right"). These Rights will expire on February 22, 1999 unless
redeemed earlier and are not exercisable or transferable separately from the
shares of SouthTrust Common Stock until the occurrence of certain events
associated with an acquisition of a substantial amount of SouthTrust Common
Stock. The provisions of the Rights are more fully described in the Rights
Agreement between SouthTrust and Mellon Bank, N.A. (now known as ChaseMellon
Shareholder Services LLC), 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.
Immediately prior to the Merger, SouthTrust will own 100% of the
capital stock of ST-Sub, and ST-Sub will own 100% of the capital stock of
ST-Bank. Both of ST-Sub and ST-Bank are included in the consolidated federal
income tax return of SouthTrust.
Marine is a corporation organized pursuant to the laws of the State
of Florida and a registered bank holding company. As of March 31, 1998, the
authorized capital stock of Marine consisted of 1,368,000 shares of common
stock, par value $1.00 per share, of which 1,344,226 shares were issued and
outstanding (the "Marine Common Stock"). Marine is an accrual method taxpayer
using a calendar year accounting period.
THE PROPOSED TRANSACTIONS
Pursuant to the Merger Agreement the following transactions will
take place:
(1) ST-Sub will acquire all of the assets and liabilities of Marine
in exchange for voting common stock of SouthTrust in a transaction in which
ST-Sub directs that all of the assets and liabilities of Marine will be
transferred to ST-Bank by means of a statutory merger of Marine into ST-Bank
pursuant to the Merger Agreement.
(2) Marine will merge with and into ST-Bank in accordance with
Sections 655.412 and 658.40 through 658.45 of the Florida Financial Institutions
Code and in accordance with 12 U.S.C. ss. 215a, and ST-Bank shall be the
surviving corporation. ST-Bank will acquire all of the assets and assume all of
the liabilities of Marine, and the separate corporate existence of Marine will
terminate.
(3) SouthTrust will issue a total of 477,200 shares of SouthTrust
Common Stock in exchange for all of the issued and outstanding Marine Common
Stock. As of the date of the Merger Agreement, a total of 1,344,226 shares
of Marine Common Stock would be issued and outstanding.
(4) Each share of Marine Common Stock will become and be converted
into the right to receive 0.355 shares of SouthTrust Common Stock, and eight
twenty-sevenths of a Right will be issued with each share of SouthTrust
Common Stock exchanged in the Merger for Marine Common Stock.
(5) No fractional shares of SouthTrust Common Stock will be issued
in the Merger; each holder of Marine Common Stock who would otherwise be
entitled to receive a fractional share interest, if any, will receive cash in
lieu of a fractional share.
(6) Any holder of Marine Common Stock who dissents from the Merger
will be entitled to receive from the surviving corporation the fair value of his
or her shares in cash. Immediately prior to the Effective Time of the Merger,
Marine will establish an escrow account with an amount of cash equal to One
Hundred and Fifty Percent (150%) of the value of the SouthTrust Common Stock
which the dissenting shareholders would have been entitled to receive in the
Merger but for the exercise of their rights of dissent (the "Dissent Escrow").
The escrow agent will
<PAGE> 3
disburse the escrowed funds to the dissenting shareholders in accordance with
the Dissent Provisions. Any and all funds remaining in the Dissent Escrow after
such disbursement will be remitted to ST-Bank as the surviving corporation.
REPRESENTATIONS
Officers of Marine and SouthTrust each have made certain written
representations to us on behalf of their respective institutions by letters each
of even date herewith (the "Representation Letters"), and with your consent, we
have relied upon the accuracy and validity of these representations provided in
the Representation Letters in offering the opinions expressed below.
OPINION
Upon the basis of the foregoing facts and representations, and
solely for purposes of the Code, we are of the opinion that:
(i) For federal income tax purposes the Merger will be viewed as
an acquisition by ST-Sub of substantially all of the assets of Marine solely in
exchange for SouthTrust voting common stock and the assumption of all the
liabilities of Marine by ST-Sub, followed by the transfer of the assets of
Marine to ST-Bank and the assumption by ST-Bank of the liabilities of Marine.
(ii) The acquisition by ST-Sub of substantially all of the assets
of Marine in exchange solely for shares of SouthTrust voting common stock and
the assumption by ST-Sub of Marine' s liabilities, as described above, will
constitute a reorganization within the meaning of Section 368(a)(1)(C) of the
Code. For purposes of this opinion, "substantially all" means at least ninety
percent (90%) of the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets of Marine. Pursuant
to Section 368(a)(2)(C) of the Code, the acquisition by ST-Sub of substantially
all of the assets of Marine will not be disqualified under Section 368(a)(1)(C)
of the Code solely by reason of the fact that the assets of Marine that were
acquired by ST-Sub are transferred to ST- Bank. SouthTrust, ST-Sub and Marine
each will be a "party to the reorganization" within the meaning of Section
368(b) of the Code. The requirement under Section 368(a)(2)(G) of the Code that
Marine distribute the stock, securities, and other properties it receives, as
well as its other properties, in pursuance of the plan of reorganization will be
satisfied by reason of the issuance by ST-Sub of the merger consideration
directly to the holders of Marine Common Stock, and by reason of the cessation
of the separate corporate existence of Marine pursuant to the Merger Agreement
and the applicable provisions of the Florida Code.
(iii) No gain or loss will be recognized by the shareholders of
Marine upon the receipt of SouthTrust Common Stock (including the Rights
associated therewith) solely in exchange for their shares of Marine Common
Stock. In addition, no gain or loss will be recognized by Marine shareholders
upon the receipt of the Rights attached to the SouthTrust Common Stock.
(iv) The basis of the SouthTrust Common Stock to be received by
the Marine shareholders will be the same as the basis of Marine Common Stock
surrendered in exchange therefor, except for the basis allocated to any
fractional shares.
(v) The holding period of the shares of SouthTrust Common Stock
to be received by the shareholders of Marine will include the period during
which Marine Common Stock surrendered in exchange therefor was held; provided
that the shares of Marine Common Stock were held as capital assets within the
meaning of Section 1221 of the Code as of the Effective Time.
(vi) Marine shareholders who exercise dissenters' rights, and as a
result of which receive only cash, will be treated as having received such cash
as a distribution in redemption of their Marine Common Stock, subject to the
provisions and limitations of Section 302 of the Code. Those Marine shareholders
who hold no SouthTrust Common Stock, directly or indirectly through the
application of Section 318(a) of the Code, following the Merger shall be treated
as having a complete termination of interest within the meaning of Section
302(b)(3) of the Code, and the cash received will be treated as a distribution
in full payment in exchange for Marine Common Stock as provided in Section
302(a) of the Code. As provided in Section 1001 of the Code, gain will be
realized and recognized by such shareholders
<PAGE> 4
measured by the difference between the redemption price and the adjusted basis
of the Marine shares surrendered as determined under Section 1011 of the Code.
Provided Section 341 of the Code (relating to collapsible corporations) is
inapplicable and the Marine Common Stock is a capital asset in the hands of such
shareholders, the gain, if any, will constitute capital gain. Such gain will
constitute a long-term capital gain if the surrendered Marine shares were held
by the shareholder for a period greater than one year prior to the Merger; if
the surrendered Marine shares where held by such shareholder for a period of one
year or less, the gain will constitute short-term capital gain.
(vii) The payment of cash to an Marine 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.
Our opinion, as stated above, is based upon our analysis of the
Code, the regulations issued thereunder, current case law, and published rulings
of the Internal Revenue Service; the foregoing are subject to change, and such
changes may be given retroactive effect. In the event of such changes, our
opinion set forth above may be affected and may not be relied upon. Furthermore,
no opinion is expressed as to the federal tax treatment of the transaction under
any other provisions of the Code and regulations, or as to 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.
This opinion is rendered solely with respect to certain federal
income tax consequences of the Merger under the Code, and does not extend to the
income or other tax consequences of the Merger under the laws of any state or
any political subdivision of any state; nor does it extend to any tax effects or
consequences of the Merger to SouthTrust, ST-Sub or ST-Bank other than those
expressly stated in the above opinion.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement. We also consent to the references to this firm under
the heading "Certain Federal Income Tax Consequences" in the Registration
Statement and in the prospectus which is included as part of the Registration
Statement.
Yours very truly,
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated February 13, 1998,
included in SouthTrust Corporation's Form 10-K for the year ended December
31, 1997, and to all references to our Firm included in this Registration
Statement.
/s/ ARTHUR ANDERSEN LLP
Birmingham, Alabama
June 23, 1998
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
/s/ PEEL, SCHATZEL & WELLS, P.A.
St. Petersburg, Florida
June 26, 1998
<PAGE> 1
EXHIBIT 24
STATE OF ALABAMA )
COUNTY OF JEFFERSON )
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director whose
signature appears below hereby constitutes and appoints Aubrey D. Barnard and
William L. Prater, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign a registration
statement of SouthTrust Corporation (the "Company") on Form S-4 relating to
shares of the Company proposed to be issued in connection with the Company's
proposed acquisition of Marine Bank, including all additional amendments to such
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and with any state securities commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
<TABLE>
<S> <C>
Dated as of this ____ day of June, 1998. ------------------------------
Allen J. Keesler, Jr.
Dated as of this 29th day of June, 1998. /s/ VAN L. RICHEY
------------------------------
Van L. Richey
Dated as of this 29th day of June, 1998. /s/ CARL F. BAILEY
------------------------------
Carl F. Bailey
Dated as of this ___ day of June, 1998. ------------------------------
Rex J. Lysinger
Dated as of this 29th day of June, 1998. /s/ WILLIAM C. HULSEY
------------------------------
William C. Hulsey
Dated as of this 29th day of June, 1998. /s/ JOHN M. BRADFORD
------------------------------
John M. Bradford
Dated as of this 29th day of June, 1998. /s/ WM. KENDRICK UPCHURCH, JR.
------------------------------
Wm. Kendrick Upchurch, Jr.
Dated as of this 29th day of June, 1998. /s/ H. ALLEN FRANKLIN
------------------------------
H. Allen Franklin
Dated as of this 29th day of June, 1998. /s/ F. CROWDER FALLS
------------------------------
F. Crowder Falls
</TABLE>
<PAGE> 1
EXHIBIT 99
MARINE BANK
9400 - 9TH STREET NORTH
ST. PETERSBURG, FLORIDA 33702
-----------------------------------------
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS - AUGUST 3, 1998
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MARINE BANK)
The undersigned shareholder of Marine Bank ("Marine") hereby appoints
Dennis G. Ruppel and Charles H. Block, and each or either of them, with full
power of substitution, as attorneys and proxies to vote all of the shares of
common stock which the undersigned is entitled to vote, with all powers which
the undersigned would possess if personally present at the Special Meeting of
the Shareholders of Marine to be held in the principal banking office of Marine
at 9400 - 9th Street North, St. Petersburg, Florida, on Monday, August 3, 1998,
at 4:00 p.m., and at any adjournment or postponement thereof, upon the matters
set forth in the Notice of the Special Meeting, the Proxy Statement/Prospectus,
and in their discretion, upon such other matters as may properly come before
the meeting. The undersigned hereby acknowledges receipt of the accompanying
Notice of Special Meeting of Shareholders and Proxy Statement/Prospectus.
This Proxy, when properly executed and returned to Marine, will be voted
as directed
(1) PROPOSAL TO MERGE MARINE INTO SOUTHTRUST BANK, NATIONAL ASSOCIATION
FOR [ ] AGAINST [ ] ABSTAIN [ ]
With respect to the approval of that certain Agreement and Plan of Merger
(the "Merger Agreement") of SouthTrust Bank, National Association ("ST-Bank")
and Marine, joined into by SouthTrust Corporation ("SouthTrust"), and SouthTrust
of Alabama, Inc., a wholly-owned subsidiary of SouthTrust and the parent of
ST-Bank ("ST-Sub"), whereby Marine will be merged with and into ST-Bank and the
holders of Marine common stock will receive 0.355 shares of SouthTrust common
stock, with cash being paid in lieu of issuing fractional shares, for each
share of Marine common stock, all pursuant to and in accordance with the terms
and conditions of the Merger Agreement, all as more fully described in the
Proxy Statement/Prospectus dated July (____), 1998; and
(2) IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE SPECIAL MEETING OF SHAREHOLDERS OR ANY ADJOURNMENT OR POSTPONEMENTS
THEREOF.
UNLESS OTHERWISE SPECIFIED, THE PROXY WILL BE VOTED FOR PROPOSAL (1). PLEASE
RETURN THIS PROXY IN THE SELF-ADDRESSED POSTAGE PAID ENVELOPE PROVIDED AS
PROMPTLY AS PRACTICAL, REGARDLESS OF WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING IN PERSON. IF YOU DO ATTEND, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN
PERSON SHOULD YOU SO DESIRE.
Dated:
, 1998
--------------------------- ----------------------------
(Signature(s) of Shareholder)
, 1998
--------------------------- ----------------------------
(co-owner, if any)
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.
