<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-41823
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH,
AND DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE COMMISSION. THIS
PRELIMINARY PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED JANUARY 5, 1998
PROSPECTUS SUPPLEMENT
- ------------------------------------
(TO PROSPECTUS DATED DECEMBER 18, 1997)
4,500,000 SHARES
(SOUTHTRUST CORPORATION LOGO)
COMMON STOCK
(PAR VALUE $2.50 PER SHARE)
---------------------
Of the 4,500,000 shares of Common Stock, par value $2.50 per share, offered
hereby by SouthTrust Corporation (the "Corporation"), 900,000 shares are being
offered initially outside the United States by the International Underwriter and
3,600,000 shares are being offered initially in a concurrent offering in the
United States by the U.S. Underwriters, subject to transfers between the U.S.
Underwriters and the International Underwriter (collectively, the
"Underwriters"). Such offerings are collectively referred to as the "Offering."
The price to public and underwriting discount per share will be identical for
both offerings. See "Underwriting."
The Common Stock of the Corporation is quoted on the Nasdaq National Market
("Nasdaq") under the symbol SOTR. On December 31, 1997, the last reported sale
price of the Common Stock of the Corporation on Nasdaq was $63 7/16 per share.
THESE SECURITIES 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
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-----------------------------------------------------
THE SECURITIES ARE NOT SAVINGS ACCOUNTS OR BANK DEPOSITS, ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF SOUTHTRUST CORPORATION,
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY AND INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
<TABLE>
<CAPTION>
===================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC DISCOUNT(1) CORPORATION(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share..................................... $ $ $
- -------------------------------------------------------------------------------------------------------------------
Total(3)...................................... $ $ $
===================================================================================================================
</TABLE>
(1) The Corporation has agreed to indemnify the Underwriters against certain
civil liabilities, including liabilities under the Securities Act of 1933.
See "Underwriting."
(2) Before deducting expenses payable by the Corporation estimated at $250,000.
(3) The Corporation has granted the U.S. Underwriters and the International
Underwriter options to purchase up to an aggregate additional 675,000
shares of Common Stock to cover over-allotments. If all of such shares are
purchased, the total Price to Public, Underwriting Discount and Proceeds to
the Corporation will be $ , $ and $ ,
respectively. See "Underwriting."
---------------------
The shares of Common Stock are offered by the International Underwriter,
subject to prior sale, when, as and if issued to and accepted by it, and subject
to certain other conditions. The International Underwriter reserves the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the shares of Common Stock will be made in New
York, New York on or about , 1998.
---------------------
MERRILL LYNCH INTERNATIONAL
---------------------
The date of this Prospectus Supplement is , 1998.
<PAGE> 2
The following map sets forth the banking offices of the Corporation as of
September 30, 1997:
[MAP OF STATES AND BANKING OFFICES]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING THE PURCHASE OF SHARES OF COMMON STOCK TO
COVER SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE "UNDERWRITING."
THIS PROSPECTUS SUPPLEMENT AND THE RELATED PROSPECTUS DO NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE COMMON STOCK IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE COMMON STOCK
MAY NOT BE OFFERED OR SOLD IN THE UNITED KINGDOM OTHER THAN TO PERSONS WHOSE
ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF
INVESTMENTS, WHETHER AS PRINCIPAL OR AGENT, FOR THE PURPOSES OF THEIR BUSINESSES
OR OTHERWISE IN CIRCUMSTANCES THAT DO NOT CONSTITUTE AN OFFER TO THE PUBLIC IN
THE UNITED KINGDOM WITHIN THE MEANING OF THE PUBLIC OFFERS OF SECURITIES
REGULATIONS 1995. THIS PROSPECTUS SUPPLEMENT AND THE RELATED PROSPECTUS MAY ONLY
BE ISSUED OR PASSED ON TO ANY PERSON IN THE UNITED KINGDOM IF THAT PERSON IS OF
A KIND DESCRIBED IN ARTICLE 11(3) OF THE FINANCIAL SERVICES ACT 1986 (INVESTMENT
ADVERTISEMENTS) (EXEMPTIONS) ORDER 1996 OR A PERSON TO WHOM THIS PROSPECTUS
SUPPLEMENT AND THE RELATED PROSPECTUS MAY OTHERWISE LAWFULLY BE PASSED ON.
NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE RELATED PROSPECTUS MAY BE COPIED OR
DISTRIBUTED OR OTHERWISE MADE AVAILABLE BY ANY RECIPIENT IN THE UNITED KINGDOM
WITHOUT THE PRIOR EXPRESS CONSENT OF MERRILL LYNCH INTERNATIONAL.
CERTAIN INFORMATION CONTAINED IN THIS PROSPECTUS AND THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, WHICH CAN BE
IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL,"
"SHOULD," "EXPECT," "ANTICIPATE," "ESTIMATE," "INTEND," "CONTINUE," OR
"BELIEVES" OR THE NEGATIVES THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE
TERMINOLOGY.
S-2
<PAGE> 3
SOUTHTRUST CORPORATION
SouthTrust Corporation (the "Corporation"), a bank holding company
headquartered in Birmingham, Alabama, engages in a full range of banking
services from over 530 banking locations in Alabama, Florida, Georgia,
Mississippi, North Carolina, South Carolina and Tennessee. The Corporation also
offers a range of other services, including mortgage banking services, fiduciary
and trust services and securities brokerage services. As of September 30, 1997,
the Corporation had consolidated total assets of $29.8 billion, which ranked it
as the largest bank holding company headquartered in Alabama.
Effective June 2, 1997, the Corporation, 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, North Carolina, Mississippi, Tennessee and South
Carolina into its largest banking subsidiary, SouthTrust Bank of Alabama,
National Association, and changed its name to SouthTrust Bank, National
Association ("SouthTrust Bank"). The bank consolidation was undertaken by the
Corporation 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.
The Corporation has pursued a strategy of acquiring banks and financial
institutions throughout the major growth areas of Florida, Georgia, Mississippi,
North Carolina, South Carolina and Tennessee. The purpose of this expansion is
to give the Corporation business development opportunities in metropolitan
markets with favorable prospects for population and per capita income growth.
As a routine part of its business, the Corporation evaluates opportunities
to acquire bank holding companies, banks and other financial institutions. In
addition, in the normal course of its business, the Corporation seeks out and
receives inquiries from financial institutions regarding the possible
acquisition of such institutions. The Corporation routinely evaluates these
opportunities. Thus, at any point in time, the number of acquisition
opportunities that may be available to the Corporation, as well as the stage of
development of such activity, are subject to change.
Since January 1, 1997 through the date hereof, the Corporation or one of
its affiliates has acquired, or executed agreements to acquire, six financial
institutions (or certain of their assets and/or assume certain of their
liabilities) having total assets of approximately $5.9 billion, total loans of
approximately $1.2 billion and total deposits of approximately $5.6 billion. The
aggregate consideration paid or payable by the Corporation or its affiliates in
these six transactions aggregates approximately 1.3 million shares of the
Corporation's Common Stock with a market value at the time of issuance of
approximately $49.3 million, and approximately $515.9 million of cash. These six
transactions serve to further the Corporation's strategy of expanding and
diversifying its customer base in selected markets with favorable prospects for
growth. Four of these transactions have been consummated as of the date of this
Prospectus Supplement, and as discussed below, two of these transactions are
scheduled to be consummated during the first two quarters of 1998 and are
subject to certain closing conditions and regulatory approvals.
On October 15, 1997, the Corporation executed an agreement with Barnett
Banks, Inc. to acquire First of America Bank-Florida, FSB for a purchase price
of $160 million payable in cash, recognizing related goodwill of approximately
$70 million which will be amortized over a twenty-year period on a straight-line
basis. Through this acquisition, the Corporation expects to add total assets,
loans and deposits of approximately $1.1 billion, $0.8 billion and $0.9 billion,
respectively, and 58 branches, primarily on the West Coast of Florida.
On December 3, 1997, the Corporation, through its subsidiary, SouthTrust
Bank, entered into an agreement to assume deposits and acquire certain assets
associated with 27 branches of Home Savings of America, FSB, a subsidiary of
H.F. Ahmanson & Company, for a deposit premium of approximately $300 million
payable in cash. This premium, which is tax deductible, will be amortized over a
ten-year period on a straight-line basis. The branches to be acquired are
located in various cities and metropolitan areas on the East Coast of Florida,
including Boca Raton, Coral Gables, Fort Lauderdale, Hollywood, Miami Beach and
South Miami Beach. In connection with the transaction, SouthTrust Bank will
assume approximately $3.4 billion in
S-3
<PAGE> 4
deposits and will acquire cash, the banking premises associated with such
branches and a limited amount of loans associated with the deposits. SouthTrust
Bank will receive approximately $3.3 billion in cash at closing. This cash may
be used to purchase investment securities or short-term investments, reduce
short-term borrowings, or increase loans; subject to demand for new loans and
depending on prevailing market interest rates for earning assets and
interest-bearing liabilities at that time.
The Corporation's headquarters are located at 420 North 20th Street,
Birmingham, Alabama 35203 and its telephone number is (205) 254-5000.
USE OF PROCEEDS
The Corporation intends to use the net proceeds from the sale of the shares
of Common Stock offered hereby primarily for general corporate and working
capital purposes, including funding investments in, or extensions of credit to,
its banking and nonbanking subsidiaries. In addition, some portion of the net
proceeds of the Offering may be used to fund the pending acquisitions discussed
above. Depending on market conditions, the type of acquisition opportunities
presented to the Corporation and other factors, some portion of such net
proceeds may be used to fund the acquisition of other financial institutions.
Pending such use, the Corporation may temporarily invest the net proceeds in
investment grade securities. The precise amounts and the timing of the
application of proceeds will depend upon the funding requirements of the
Corporation and its subsidiaries as well as the availability of other funds.
S-4
<PAGE> 5
CAPITALIZATION
The following table sets forth the actual consolidated capitalization of
the Corporation and its subsidiaries as of September 30, 1997 and as adjusted at
that date to give effect to the issuance by the Corporation of 2,593,800 shares
of Common Stock pursuant to the Corporation's Prospectus Supplement dated
October 9, 1997. Such shares of Common Stock were offered to the public at a
price of $51.00 per share and the Corporation received net proceeds from the
offering of $49.35 per share, or a total of $128,004,030. The as adjusted column
also reflects the issuance by the Corporation of the 4,500,000 shares of Common
Stock offered hereby and the related expenses.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT
Subordinated:
8 5/8% Subordinated Notes due May 15, 2004................ $ 100,000 $ 100,000
7% Debentures due May 15, 2003............................ 100,000 100,000
7 5/8% Subordinated Notes due May 1, 2004................. 100,000 100,000
9.95% Subordinated Capital Notes due June 1, 1999......... 75,000 75,000
7.74% Subordinated Notes due May 15, 2025................. 50,000 50,000
7.69% Subordinated Notes due May 15, 2025................. 100,000 100,000
7.00% Subordinated Notes due November 15, 2008............ 200,000 200,000
---------- ----------
Total subordinated........................................ 725,000 725,000
Other:
Bank Notes................................................ 250,000 250,000
Other..................................................... 6,893 6,893
---------- ----------
Total other............................................... 256,893 256,893
---------- ----------
Total long-term debt.............................. 981,893 981,893
---------- ----------
STOCKHOLDERS' EQUITY
Common Stock, par value $2.50 per share; 300,000,000
shares authorized; 100,451,728 shares issued and
107,545,528 shares issued as adjusted.................. 251,129 268,864
Capital surplus........................................... 491,986
Retained earnings......................................... 1,264,581 1,264,581
Unrealized gain on securities available for sale.......... 18,288 18,288
Treasury stock at cost (658,115 shares)................... (10,905) (10,905)
---------- ----------
Total stockholders' equity........................ 2,015,079
---------- ----------
Total long-term debt and stockholders' equity..... $2,996,972 $
========== ==========
</TABLE>
S-5
<PAGE> 6
MARKET PRICE AND DIVIDENDS
The Common Stock of the Corporation is quoted on Nasdaq under the symbol
SOTR. As of December 31, 1997, the Corporation had approximately 14,974 holders
of record of its Common Stock. The following table sets forth the high and low
closing price per share of the Common Stock as reported by Nasdaq and the per
share dividends declared by the Corporation for the quarters indicated. On
December 31, 1997, the last reported sale price of the Common Stock as reported
by Nasdaq was $63 7/16.
<TABLE>
<CAPTION>
PRICE* PER SHARE
------------------- DIVIDENDS
HIGH LOW DECLARED
-------- ------- ---------
<S> <C> <C> <C> <C> <C>
1996:
First Quarter....................................... 27 7/8 25 1/4 0.22
Second Quarter...................................... 28 1/2 26 7/8 0.22
Third Quarter....................................... 31 3/4 26 1/2 0.22
Fourth Quarter...................................... 36 1/8 30 7/8 0.22
1997:
First Quarter....................................... 41 5/8 34 1/2 0.25
Second Quarter...................................... 42 35 7/8 0.25
Third Quarter....................................... 50 15/16 39 3/8 0.25
Fourth Quarter...................................... 63 7/16 47 1/2 0.25
</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.
Dividends paid by the Corporation on its Common Stock are at the discretion
of the Board of Directors and are affected by certain legal restrictions on the
payment of dividends as described below, the Corporation's earnings and
financial condition and other relevant factors. The Corporation has increased
the dividend paid on its Common Stock for 27 consecutive years. The current
policy of the Corporation 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,
the Corporation anticipates that it will continue to pay regular quarterly
dividends with respect to the Common Stock.
There are certain limitations on the payment of dividends to the
Corporation by its bank subsidiary. As a national banking association, the
amount of dividends that the Corporation's subsidiary bank may declare in one
year, without approval of the Office of the Comptroller of the Currency (the
"Comptroller"), is the sum of the bank's 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 September 30, 1997,
approximately $403.9 million was available for payment of dividends to the
Corporation by its bank subsidiary.
S-6
<PAGE> 7
SELECTED FINANCIAL DATA
The following selected financial data are derived from the consolidated
financial statements of the Corporation. This information should be read in
conjunction with, and is qualified by reference to, the more detailed
information contained in the Consolidated Financial Statements of the
Corporation and Notes thereto included in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1996 and the Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, which are incorporated herein by
reference. The results of operations for the nine months ended September 30,
1997 and 1996 are not audited but, in the opinion of management, include all
adjustments necessary for a fair presentation of the results of operations for
such periods. The results for the nine months ended September 30, 1997,
including net interest margin and rate of return ratios which are stated on an
annualized basis, are not necessarily indicative of the results that may be
expected for the full year or any other interim period.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARIZED INCOME STATEMENT (IN
THOUSANDS):
Net interest income.................... $772,375 $630,001 $866,026 $693,200 $607,545 $529,808 $445,150
Provision for loan losses.............. 68,879 62,830 90,027 61,286 44,984 45,032 43,305
Non-interest income.................... 195,820 185,578 254,809 208,664 184,778 174,702 136,683
Non-interest expense................... 549,186 471,732 643,298 536,534 485,999 434,951 373,636
Income tax expense..................... 125,375 94,732 132,807 105,039 88,338 73,992 50,646
Net income............................. 224,755 186,285 254,703 199,005 173,002 150,535 114,246
PER SHARE DATA:
Net income............................. $ 2.25 $ 1.98 $ 2.69 $ 2.36 $ 2.15 $ 1.94 $ 1.66
Cash dividends declared................ 0.75 0.66 0.88 0.80 0.68 0.60 0.52
Stockholders' equity at period end..... 20.19 17.47 18.05 16.28 13.94 13.25 11.55
END OF PERIOD TOTALS (IN MILLIONS):
Loans, net of unearned income.......... $ 21,668 $ 18,058 $ 19,331 $ 14,655 $ 12,122 $ 9,448 $ 7,547
Total securities....................... 5,769 4,604 4,816 4,200 3,953 3,733 3,756
Total assets........................... 29,764 24,776 26,223 20,787 17,632 14,708 12,714
Deposits............................... 19,011 16,625 17,306 14,575 12,801 11,515 10,082
Long-term debt......................... 982 784 983 535 389 324 238
Stockholders' equity................... 2,015 1,678 1,735 1,431 1,135 1,052 860
Common shares outstanding (in
thousands)........................... 99,794 96,052 96,139 87,904 81,426 79,401 74,477
SELECTED FINANCIAL RATIOS(1):
Return on average total assets......... 1.07% 1.10% 1.09% 1.05% 1.09% 1.10% 1.04%
Return on average stockholders'
equity............................... 15.91 15.89 15.92 15.79 15.86 15.84 15.66
Net interest margin -- taxable
equivalent........................... 3.96 4.03 4.03 4.01 4.23 4.35 4.61
Efficiency ratio....................... 56.36 57.21 56.86 58.57 60.15 60.28 62.19
Non-interest expense as % of average
total assets......................... 2.62 2.78 2.76 2.83 3.05 3.19 3.39
Nonperforming assets as % of net loans
and other real estate owned.......... 0.81 0.79 0.72 0.83 0.84 1.19 1.69
Nonperforming loans as % of net
loans................................ 0.53 0.55 0.44 0.52 0.44 0.71 0.96
Allowance for loan losses as % of net
loans................................ 1.43 1.40 1.40 1.41 1.42 1.43 1.38
Allowance for loan losses as % of
nonperforming loans.................. 268.38 256.17 317.57 271.88 324.55 200.70 143.35
Net charge-offs as % of average net
loans................................ 0.23 0.29 0.28 0.22 0.19 0.29 0.49
Stockholders' equity to assets......... 6.77 6.77 6.62 6.88 6.44 7.15 6.77
REGULATORY CAPITAL RATIOS(2):
Tier I risk-based capital.............. 7.37% 7.57% 7.34% 7.76% 7.68% 8.55% 8.67%
Total risk-based capital............... 11.38 11.23 11.81 12.21 11.71 12.39 12.18
Leverage ratio......................... 6.14 6.37 6.21 6.35 6.10 6.51 6.48
</TABLE>
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(1) Interim period ratios are annualized where appropriate.
(2) Calculated under the risk-based and leverage capital guidelines of the
Federal Reserve Board applicable to bank holding companies. Under these
guidelines, regulatory required minimums are 4% and 8% for Tier I and Total
Capital ratios, respectively. The leverage ratio must be maintained at a
level generally considered to be in excess of 4% to 5%.
S-7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following should be read in conjunction with the financial statements
and the detailed financial information, including the related management's
discussion and analysis, contained in the Corporation's Annual Report on Form
10-K for the year ended December 31, 1996 and the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997 which are incorporated by reference in
this Prospectus Supplement.
EARNINGS SUMMARY
For the nine months ended September 30, 1997, net income was $224.8 million
or $2.25 per share, compared to $186.3 million or $1.98 per share for the nine
months ended September 30, 1996. Net income for the nine months ended September
30, 1997 resulted in returns on average total assets and average stockholders'
equity of 1.07% and 15.91%, respectively.
Net Interest Income. Net interest income is the difference between
interest income and interest expense and is the major component of net income of
the Corporation. For purposes of this discussion, income that is either exempt
from federal income taxes or taxed at a preferential rate has been adjusted to
fully taxable equivalent amounts, using a statutory federal tax rate of 35%.
Interest yields, net interest margins and net interest spreads are
calculated using the underlying earning assets' cost basis.
Net interest income for the nine months ended September 30, 1997 was $780.0
million, an increase of $140.9 million or 22% from $639.1 million for the nine
months ended September 30, 1996. During the year, total interest income
increased $329.3 million or 25% to $1,650.7 million in the nine months ended
September 30, 1997 compared to the comparable period in 1996. These increases
are primarily attributable to an increase in loans, net of unearned income, of
approximately $3.6 billion at September 30, 1997, compared to September 30,
1996.
Total interest expense increased $188.4 million or 28% for the nine months
ended September 30, 1997 to $870.7 million. This increase reflects an increase
in the level of average interest-bearing liabilities of 28% to $23,559.3 million
as of September 30, 1997. The average rate paid on interest-bearing liabilities
increased one basis point to 4.94% for the nine months ended September 30, 1997
compared to the comparable period in 1996.
The taxable equivalent net interest margin was 3.96% for the first nine
months of 1997 compared to 4.03% for the first nine months of 1996. The taxable
equivalent net interest spreads for the first nine months in 1997 and 1996 were
3.44% and 3.40%, respectively. The net interest spread is affected by
competitive pressures, Federal Reserve Bank monetary policies and the
composition of interest-earning assets and interest-bearing liabilities,
including the interest component of the Corporation's funding activity.
Provision For Loan Losses. The provision for loan losses for the nine
months ended September 30, 1997 was $68.9 million, an increase of $6.1 million
over the level of $62.8 million during the first nine months of 1996. This
increase was the result of overall growth in the loan portfolio. For the first
nine months of 1997, net charge-offs totaled $34.8 million or 0.23% of average
net loans. During the first nine months of 1996, net charge-offs were $35.2
million or 0.29% of average net loans.
Non-Interest Income. For the nine months ended September 30, 1997, total
non-interest income increased $10.2 million or 6% to $195.8 million. During the
period, service charges on deposit accounts increased $14.8 million or 19% to
$94.3 million. Mortgage banking fees were $20.0 million, a decrease of $10.8
million or 35% from 1996. Trust fees increased 13% to $17.9 million, bank card
fees increased $0.7 million or 5% to $17.1 million, other fee income increased
$4.4 million or 16% to $31.4 million, and other non-interest income decreased
15% to $13.6 million. Included in other non-interest income during the first
nine months of 1996 were gains from the sale of certain commercial and
commercial real estate loans totaling $5.6 million.
There were no other significant non-recurring non-interest income items
during the nine month periods ended September 30, 1997 and September 30, 1996.
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<PAGE> 9
Non-Interest Expense. Total non-interest expense for the nine months ended
September 30, 1997 was $549.2 million, an increase of $77.5 million or 16% over
the first nine months of 1996. The ratio of non-interest expense to average
total assets for the first nine months of 1997 was 2.62% compared to 2.78% in
the first nine months of 1996.
Salaries and employee benefits accounted for the largest portion of total
non-interest expense as well as the largest portion of the increase. Salaries
and employee benefits expense increased $56.5 million or 23% to $298.1 million
for 1997. The number of full time equivalent employees increased approximately
14% from September 30, 1996 to approximately 10,000 at September 30, 1997. Net
occupancy expense increased $6.3 million or 17% for the year, primarily as a
result of the growth in the number of banking offices to over 530 at September
30, 1997 from 505 at September 30, 1996. Equipment expense increased $6.3
million or 24% to $33.0 million for the nine month period ended September 30,
1997. All other non-interest expense items totaled $174.5 million for the nine
month period ended September 30, 1997, reflecting an increase of 5% over the
comparable period in 1996. Included in other expenses during the 1996 nine month
period were deposit insurance expenses totaling $20.5 million, which included a
special assessment of $14.0 million related to recapitalization of the Savings
Association Insurance Fund. There were no other significant non-recurring
non-interest expense items recorded in the nine month periods ended September
30, 1997 or September 30, 1996.
Income tax expense for the 1997 nine month period was $125.4 million for an
effective rate of 35.8% compared to $94.7 million or an effective rate of 33.7%
in the 1996 nine month period. The statutory federal income tax rate was 35% in
1997 and 1996. The 1996 effective tax rate was lower than the 1997 rate
primarily due to the reversal of approximately $4.5 million of accrued tax that
will not be paid as a result of legislation enacted during the third quarter of
1996 which rescinded a previous law requiring the recapture of certain bad debt
deductions previously deducted by thrift institutions upon their conversion from
a thrift charter to a bank charter.
SUMMARY OF FINANCIAL CONDITION
Total assets at September 30, 1997 were $29.8 billion, representing an
increase of $5.0 billion or 20% from September 30, 1996. At December 31, 1996,
total assets were $26.2 billion. During the nine month period ended September
30, 1997, $1.5 billion in assets were added through the acquisition of four
financial institutions. The remaining increase in total assets resulted from
internally generated growth. Average total assets for the first nine months of
1997 were $28.0 billion compared to $22.7 billion for the comparable period in
1996.
Year-to-date average earning assets at September 30, 1997 were $26.3
billion, representing an increase of 24% over the September 30, 1996 level of
$21.2 billion. Average interest-bearing liabilities through September 30, 1997
were $25.7 billion, up 24% over the September 30, 1996 level of $20.7 billion.
Loans. Loans, net of unearned income at September 30, 1997 totaled
$21,667.8 million compared to $19,331.1 million at December 31, 1996.
S-9
<PAGE> 10
The following table presents loans by type and percent of total at the end
of the periods presented.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
------------------- ----------------- -----------------
AMOUNT % AMOUNT % AMOUNT %
---------- ------ --------- ----- --------- -----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural.................. $ 6,971.4 32.0% $ 6,847.5 35.2% $ 5,965.9 40.4%
Real estate construction........ 2,539.6 11.6 1,930.6 9.9 1,245.8 8.4
Commercial real estate
mortgage...................... 3,516.3 16.1 3,008.9 15.5 2,264.7 15.4
Residential real estate
mortgage...................... 5,593.2 25.6 4,687.5 24.0 3,221.4 21.8
--------- ----- --------- ----- --------- -----
Total real estate loans....... 11,649.1 53.3 9,627.0 49.4 6,731.9 45.6
Loans to individuals............ 3,196.2 14.7 2,992.1 15.4 2,059.3 14.0
--------- --------- ---------
21,816.7 100.0 19,466.6 100.0 14,757.1 100.0
----- ----- -----
Unearned income................. (148.9) (135.5) (101.9)
--------- --------- ---------
Loans, net of unearned income... 21,667.8 19,331.1 14,655.2
Allowance for loan losses..... (310.7) (269.9) (206.6)
--------- --------- ---------
Net loans..................... $21,357.1 $19,061.2 $14,448.6
========= ========= =========
</TABLE>
Non-Performing Assets. Non-performing assets at September 30, 1997 were
$175.9 million or 0.81% of net loans and other real estate owned, representing
an increase of $36.9 million from the December 31, 1996 level of $139.0 million.
Included in non-performing assets at September 30, 1997 were $115.2 million of
loans on non-accrual status, $60.1 million of other real estate owned and other
repossessed assets, and $0.6 million of restructured loans. Loans 90 days past
due and accruing were $50.9 million at September 30, 1997 compared to $40.4
million at December 31, 1996.
Allowance for Loan Losses. The allowance for loan losses at September 30,
1997 was $310.7 million or 1.43% of net loans compared to $269.9 million or
1.40% at December 31, 1996. While deterioration of the economy or rising
interest rates could have a near-term effect on the Corporation's earnings,
management has taken into consideration present and expected economic
conditions, the level of risk in the portfolio, the level of non-performing
assets, potential problem loans, and delinquencies in assessing the allowance
for loan losses and considers the allowance for loan losses to be adequate.
Held-to-maturity and Available-for-sale Securities. At September 30, 1997,
total securities were $5,768.9 million. Held-to-maturity securities amounted to
$2,419.1 million and securities classified as available-for-sale amounted to
$3,349.8 million.
Held-to-maturity securities increased 24% from the year-end 1996 level to
$2,419.1 million, and included U.S. Treasury securities of $1.5 million, U.S.
Government agency securities of $1,680.2 million, collateralized mortgage
obligations (CMOs) and other mortgage-backed securities of $521.7 million,
state, county and municipal securities of $180.0 million and other securities of
$35.7 million.
Available-for-sale securities included U.S. Treasury securities of $217.8
million, U.S. Government agency securities of $809.3 million, CMOs and other
mortgage backed securities of $2,000.7 million, state, county and municipal
securities of $4.4 million and other securities of $317.6 million.
At September 30, 1997, the Corporation's investment portfolio included
$879.7 million in CMOs. CMOs present some degree of risk that the mortgages
collateralizing them may be prepaid, thereby affecting the yield of the
securities and their carrying amounts. Such an occurrence is most likely in
periods of declining interest rates when many borrowers refinance their
mortgages, creating prepayments on their existing mortgages.
The Company's investment in structured notes and derivative investment
securities is nominal and would not have a significant effect on the Company's
net interest margin.
S-10
<PAGE> 11
The amortized cost and approximate fair value of the Corporation's
held-to-maturity and available-for-sale securities at September 30, 1997 and
September 30, 1996 are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
--------------------- ----------------------------------------------
1997 1996 1995
--------------------- --------------------- ---------------------
AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE COST VALUE
--------- -------- --------- -------- --------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Held-to-maturity
securities............... $2,419.1 $2,452.0 $1,956.6 $1,979.1 $1,585.6 $1,619.1
Available-for-sale
securities............... 3,320.8 3,349.8 2,871.0 2,859.0 2,630.4 2,614.8
-------- -------- -------- -------- -------- --------
Total.................... $5,739.9 $5,801.8 $4,827.6 $4,838.1 $4,216.0 $4,233.9
======== ======== ======== ======== ======== ========
</TABLE>
Short-Term Investments. Short-term investments at September 30, 1997
totaled $461.7 million, reflecting an increase of $236.2 million from the
December 31, 1996 level of $225.5 million. At September 30, 1997, short-term
investments consisted of $72.1 million in federal funds sold and securities
purchased under resale agreements, $19.6 million in time deposits with other
banks and $370.1 million in assets held for sale. Assets held for sale consisted
of $333.7 million in mortgage loans in the process of being securitized and sold
to third party investors and $36.3 million in securities held for trading
purposes. Mortgage loans held for sale are carried at the lower of cost or fair
value. Trading account securities are carried at fair value with unrealized
gains and losses recognized in net income.
The Corporation's Asset/Liability Management Committee monitors current and
future expected economic conditions, as well as the Corporation's liquidity
position in determining desired balances of short-term investments and
alternative uses of such funds.
Other Assets. Other assets at September 30, 1997 were $1,339.9 million
compared to $1,217.7 million at December 31, 1996. At September 30, 1997, other
assets included premises and equipment of $575.0 million, due from customers on
acceptances of $9.3 million, other real estate owned and other repossessed
assets of $60.1 million, mortgage servicing rights of $35.6 million, other
intangible assets of $234.0 million and other non-earning assets of $425.9
million.
Cash and due from banks was $836.7 million at September 30, 1997, a
decrease of $66.4 million from $903.1 million at December 31, 1996.
FUNDING
The Corporation's funding sources can be divided into four broad
categories: deposits, short-term borrowings, Federal Home Loan Bank advances and
long-term debt.
Deposits. Deposits are the Corporation's primary source of funding. Total
deposits at September 30, 1997 were $19,010.9 million, up 10% from the December
31, 1996 level of $17,305.5 million. At September 30, 1997, total deposits
included interest-bearing deposits of $16,890.2 million and other deposits of
$2,120.7 million.
Core deposits, defined as demand deposits and time deposits less than
$100,000, totaled $16,345.1 million or 86.0% of total deposits at September 30,
1997. This compares to core deposits of $14,954.3 million or 86.4% of total
deposits at December 31, 1996.
Short-Term Borrowings. Short-term borrowings at September 30, 1997 were
$4,779.1 million and included federal funds purchased of $2,233.9 million,
securities sold under agreements to repurchase of $1,399.4 million and other
borrowed funds of $1,145.8 million. At September 30, 1997, total short-term
borrow.ings were 16.1% of total liabilities and stockholders' equity. This
compares to total short-term borrowings of $4,071.0 million or 15.5% of total
liabilities and stockholders' equity at December 31, 1996.
Federal Home Loan Bank Advances. The Company uses Federal Home Loan Bank
(FHLB) advances as an alternative to increasing its liability in certificates of
deposits or other deposit programs with similar maturities. These advances
generally offer more attractive rates when compared to other mid-term financing
options. FHLB advances totaled $2,532.4 million at September 30, 1997. The
current quarter end balance increased $788.2 million or 45% from the level
outstanding at December 31, 1996.
Long-Term Debt. At September 30, 1997, total long-term debt was $981.9
million representing a decrease of $1.3 million, resulting from repayments, from
the December 31, 1996 level of $983.2 million.
S-11
<PAGE> 12
During the first nine months of 1997, the Corporation and its subsidiary bank
issued no additional long-term debt.
CAPITAL
At September 30, 1997, total stockholders' equity was $2,015.1 million or
6.8% of total assets compared to $1,734.9 million or 6.6% at December 31, 1996.
During the first nine months net income added $224.8 million to capital. Sales
of Common Stock through the Corporation's Dividend Reinvestment Plan and various
stock purchase and stock option plans of the Corporation for an aggregate
issuance price of $7.9 million resulted in the issuance of 317,918 additional
shares. The Corporation issued 57,653 shares through its Long-Term Incentive
Plan, adding $1.4 million to equity. An offering of 2,023,012 shares of Common
Stock increased equity by $72.1 million. Equity added in business combinations
increased equity by $23.4 million or 1,270,031 shares of Common Stock. Treasury
stock purchases for 13,807 shares of Common Stock reduced equity by $0.5
million. Dividends declared during the period were $0.75 per share and
aggregated $74.6 million. The net unrealized gain on securities available for
sale increased $25.8 million from the $7.5 million unrealized loss at December
31, 1996 to $18.3 million at September 30, 1997.
Pursuant to a Prospectus Supplement dated October 9, 1997, the Corporation
completed an offering of 2,593,800 shares of Common Stock, increasing equity by
$128.0 million in the fourth quarter of 1997.
The Corporation is subject to the capital adequacy guidelines adopted by
the Federal Reserve Board, which is the regulatory agency that governs bank
holding companies. The Corporation's capital ratios and those of the subsidiary
bank are in excess of these regulatory requirements and management expects that
these ratios will continue to be maintained well above the minimum levels
required by the regulators.
At September 30, 1997 the Corporation had a total risk-based capital ratio
of 11.38%, consisting of a Tier I capital ratio of 7.37% and supplemental
capital elements of 4.01%. The leverage ratio was 6.14%.
COMMITMENTS
The Corporation's subsidiary bank had standby letters of credit outstanding
of approximately $605.6 million at September 30, 1997 and $595.1 million at
December 31, 1996. The Corporation's subsidiary bank had outstanding commitments
to extend credit of approximately $6,748.3 million at September 30, 1997 and
$6,319.9 million at December 31, 1996. The Corporation's policies as to
collateral and assumption of credit risk for off-balance sheet commitments are
essentially the same as those for extension of credit to its customers.
Presently the Corporation has no commitments for significant capital
expenditures.
The Corporation's subsidiaries regularly originate and sell loans,
consisting primarily of mortgage loans sold to third party investors, which
contain various recourse provisions to the seller. Losses historically realized
through the repurchase or other satisfaction of these recourse provisions are
insignificant. The total amount of loans outstanding subject to recourse was
$1,152.3 million at September 30, 1997 and $1,163.6 million at December 31,
1996. Under terms of the recourse agreements, the Corporation would be required
to repurchase certain loans if they become non-performing. All such loans sold
had a loan-to-collateral ratio of 80% or less, or mortgage insurance to cover
losses up to 80% of the collateral value, at the times the various loans were
originated. The underlying collateral to these mortgages are generally
one-to-four family residential properties. Potential losses under these recourse
agreements are affected by the collateral value of the particular loans
involved. Estimates of losses are recognized when the mortgages are sold.
INTEREST RATE RISK MANAGEMENT
The Corporation's asset/liability strategies are designed to optimize net
interest income while minimizing fluctuations caused by changes in the interest
rate environment. To achieve this, the Corporation uses various modeling
techniques to simulate interest rate stress on interest-earning assets and
interest-bearing liabilities that will reprice during the next year. Important
elements of these modeling techniques include the mix of floating versus fixed
rate assets and liabilities, and the scheduled, as well as expected, repricing
and maturing volumes and rates of the existing balance sheet.
In conjunction with the Corporation's asset/liability management
strategies, the Corporation utilizes interest rate swap agreements ("Swaps") to
hedge certain longer-term liabilities, converting the effective rate
S-12
<PAGE> 13
paid on the hedged liabilities to a floating rate from a fixed rate. All Swaps
employed by the Corporation represent end-user activities designed as hedges
and, accordingly, fluctuations in the fair values of such contracts are not
included in the results of operations. At September 30, 1997, the contractual
maturities of Swaps ranged from September 1998 to June 2009 with aggregated
notional amounts of $945.0 million.
CONTINGENCIES
Certain of the Corporation's subsidiaries are defendants in various
proceedings arising in the normal course of business. These claims relate to the
lending and investment advisory services provided by the Corporation and include
alleged compensatory and punitive damages.
In addition, subsidiaries of the Corporation have been named as defendants
in suits that allege fraudulent, deceptive or collusive practices in connection
with certain financing activities. Some of these suits are filed as class
actions. These suits are typical of complaints that have been filed in recent
years challenging financial transactions between plaintiffs and various
financial institutions. The complaints in such cases frequently seek punitive
damages in transactions involving fairly small amounts of actual damages, and in
recent years, have resulted in large punitive damage awards to plaintiffs.
Although it is not possible to determine, with any certainty at this point
in time, the potential exposure related to punitive damages in connection with
these suits, the Corporation, in the opinion of management, and based upon
consultation with legal counsel, believes that the ultimate resolutions of these
proceedings will not have a material adverse effect on the Corporation's
financial statements.
S-13
<PAGE> 14
TAXATION OF NON-U.S. STOCKHOLDERS
The rules governing U.S. federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and certain other
foreign stockholders (collectively, "Non-U.S. stockholders") are extensive and
complex. Set forth below is a summary of only some of the salient provisions of
such rules. PROSPECTIVE NON-U.S. STOCKHOLDERS ARE ADVISED TO CONSULT WITH THEIR
OWN TAX ADVISORS TO DETERMINE THE IMPACT OF FEDERAL, STATE, FOREIGN AND LOCAL
INCOME TAX LAWS WITH REGARD TO AN INVESTMENT IN THE COMMON STOCK, INCLUDING ANY
REPORTING REQUIREMENTS.
Distributions to Non-U.S. stockholders with respect to the Common Stock
will be treated as dividends to the extent that they are made out of current or
accumulated earnings and profits of the Corporation. Such distributions
ordinarily will be subject to a withholding tax equal to 30% of the gross amount
of the distribution unless an applicable tax treaty reduces that tax. However,
if income from the investment in the Common Stock is treated as effectively
connected with the Non-U.S. stockholder's conduct of a U.S. trade or business,
the Non-U.S. stockholder generally will be subject to U.S. federal income tax at
graduated rates in the same manner as U.S. stockholders are taxed with respect
to such distributions (and also may be subject to the 30% branch profits tax in
the case of a Non-U.S. stockholder that is a non-U.S. corporation). The
Corporation expects to withhold U.S. federal income tax at the rate of 30% on
the gross amount of any such distributions made to a Non-U.S. stockholder unless
(i) a lower treaty rate applies and any required form evidencing eligibility for
that reduced rate is filed with the Corporation or (ii) the Non-U.S. stockholder
files an IRS Form 4224 with the Corporation claiming that the distribution is
effectively connected income. The United States Treasury Department has issued
regulations regarding the withholding rules as applied to Non-U.S. stockholders
that unify current certification procedures and forms and unify reliance
standards but generally do not substantially alter the current system of
withholding compliance. These regulations will be generally effective with
respect to distributions made after December 31, 1998, subject to certain
transition rules.
Distributions in excess of current and accumulated earnings and profits of
the Corporation will not be taxable to a Non-U.S. stockholder to the extent that
such distributions do not exceed the adjusted basis of the stockholder's Common
Stock, but rather will reduce the adjusted basis of such shares. To the extent
that distributions in excess of current and accumulated earnings and profits
exceed the adjusted basis of a Non-U.S. stockholder's Common Stock, such
distributions will give rise to U.S. federal income tax liability if the
Non-U.S. stockholder would otherwise be subject to U.S. federal income tax on
any gain from the sale or disposition of the Common Stock. Because it generally
cannot be determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the entire amount of any distribution normally will be subject to withholding at
the same rate as a dividend. Amounts so withheld are refundable to the extent it
is determined subsequently that such distribution was, in fact, in excess of
current and accumulated earnings and profits of the Corporation.
Gain realized by a Non-U.S. stockholder on the sale, exchange, redemption
or other disposition of Common Stock is not subject to U.S. federal income tax
unless (1) the gain is effectively connected with a United States trade or
business of the Non-U.S. stockholder, in which case the gain is generally
subject to graduated U.S. federal income tax, (2) in the case of a Non-U.S.
stockholder who is a non-resident alien individual, the individual is present in
the United States for 183 days or more during the year of disposition and either
has a United States tax home or the gain is attributable to an office or other
fixed place of business maintained by the individual within the United States,
in which case the gain is subject to 30% U.S. federal income tax, or (3)(a) the
Corporation is or has been during certain periods preceding the disposition a
"U.S. real property holding corporation" for U.S. federal income tax purposes
(which the Corporation does not believe it is or is likely to become) and, (b)
assuming that the Common Stock will be "regularly traded on an established
securities market" for tax purposes, the Non-U.S. stockholder held, directly or
indirectly, at any time during the five-year period ending on the date of
disposition, more than 5% of the outstanding Common Stock of the Corporation.
On October 6, 1997, the Internal Revenue Service issued final regulations
relating to withholding, information reporting and backup withholding that unify
current certification procedures and forms and clarify
S-14
<PAGE> 15
reliance standards (the "Final Regulations"). The Final Regulations generally
will be effective with respect to payments made after December 31, 1998. Except
as provided below, this section describes rules applicable to payments made on
or before December 31, 1998.
United States backup withholding tax generally will not apply to dividends
paid on Common Stock to a Non-U.S. stockholder at an address outside the United
States. The Corporation must report annually to the Internal Revenue Service and
to each Non-U.S. stockholder the amount of dividends paid to, and the tax
withheld with respect to, such holder, regardless of whether any tax was
actually withheld. This information may also be made available to the tax
authorities in the Non-U.S. stockholder's country of residence.
Upon the sale or other taxable disposition of Common Stock by a Non-U.S.
stockholder to or through a United States office of a broker, the broker must
backup withhold at a rate of 31% and report the sale to the Internal Revenue
Service, unless the holder certifies its Non-U.S. status under penalties of
perjury or otherwise establishes an exemption. Upon the sale or other taxable
disposition of Common Stock by a Non-U.S. stockholder to or through the foreign
office of a United States broker, or a foreign broker with certain types of
relationships to the United States, the broker must report the sale to the
Internal Revenue Service (but not backup withhold), unless the broker has
documentary evidence in its files that the seller is a Non-U.S. stockholder
and/or certain other conditions are met, or the holder otherwise establishes an
exemption.
Amounts withheld under the backup withholding rules generally are allowable
as a credit against such Non-U.S. stockholder's U.S. federal income tax
liability (if any), which may entitle such Non-U.S. stockholder to a refund,
provided that the required information is furnished to the Internal Revenue
Service.
The Final Regulations eliminate the general prior legal presumption that
dividends paid to an address in a foreign country are paid to a resident of that
country. In addition, the Final Regulations impose certain certification and
documentation requirements on Non-U.S. stockholders claiming the benefit of a
reduced withholding rate with respect to dividends under a tax treaty or
otherwise claiming a reduction of, or exemption from, the withholding obligation
described above.
PROSPECTIVE PURCHASERS OF THE COMMON STOCK ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS AS TO THE EFFECT, IF ANY, OF THE FINAL REGULATIONS ON THEIR
PURCHASE, OWNERSHIP AND DISPOSITION OF THE COMMON STOCK.
Common Stock owned or treated as owned by an individual Non-U.S.
stockholder who is not a citizen or resident (as specially defined for U.S.
federal estate tax purposes) of the United States at the time of death will be
included in such individual's gross estate for the U.S. federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
S-15
<PAGE> 16
UNDERWRITING
Subject to the terms and conditions set forth in each of the U.S.
Underwriting Agreement and the International Underwriting Agreement
(collectively, the "Underwriting Agreements"), the Corporation has agreed to
sell to each of the Underwriters named below, and each of the U.S. Underwriters,
for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated is acting as
representative (the "Representative"), and Merrill Lynch International (the
"International Underwriter") have severally agreed to purchase from the
Corporation, the respective number of shares of Common Stock set forth below
opposite the name of such Underwriter:
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
----------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
---------
U.S. Total.................................... 3,600,000
---------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL UNDERWRITER SHARES
------------------------- ---------
<S> <C>
Merrill Lynch International.................................
---------
International Total........................... 900,000
---------
Total....................................... 4,500,000
=========
</TABLE>
The Common Stock will be offered simultaneously in the United States by the
U.S. Underwriters and abroad by the International Underwriter subject to the
terms and conditions set forth in the International Underwriting Agreement
between the International Underwriter and the Corporation as described herein.
The Corporation has been informed that the Underwriters have entered into
an agreement (the "Intersyndicate Agreement") providing for the coordination of
their activities. Under the terms of the Intersyndicate Agreement, the U.S.
Underwriters and the International Underwriter are permitted to sell shares of
Common Stock to each other for purposes of resale.
S-16
<PAGE> 17
The Underwriters are committed to purchase all of such shares if any are
purchased. Under certain circumstances the commitments of nondefaulting
Underwriters may be increased as set forth in the Underwriting Agreements.
The Corporation has granted the Underwriters an option, exercisable for
thirty days after the date of this Prospectus Supplement, to purchase up to an
aggregate of 675,000 additional shares of Common Stock to cover over-allotments,
if any, at the public offering price less the underwriting discount. If the
Underwriters exercise this option, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase approximately the same
percentage thereof which the number of shares of Common Stock purchased by it in
the foregoing table is of the 4,500,000 shares of Common Stock initially offered
hereby. The Underwriters may exercise such option only to cover over-allotments
in connection with the sale of the 4,500,000 shares offered hereby.
The Underwriters propose initially to offer the shares to the public at the
public offering price set forth on the cover page of this Prospectus Supplement
and to certain dealers at such price less a concession not in excess of $
per share. The Underwriters may allow, and such dealers may reallow, a discount
not in excess of $ per share on sales to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
Certain of the Underwriters, including the Representative, have from time
to time performed investment banking services for the Corporation for which they
received customary fees.
The Corporation has agreed that it will not, with certain exceptions,
offer, sell or otherwise dispose of any shares of Common Stock, or any
securities convertible into, or exchangeable for, Common Stock, for 90 days from
the date of this Prospectus Supplement without the prior written consent of the
Representative. This prohibition does not apply to shares issued by the
Corporation in connection with conversion rights in effect as of the date of the
Underwriting Agreement, employee benefit or shareholder plans of the Corporation
existing on the date of the Underwriting Agreement, or acquisitions by the
Corporation.
Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the Underwriters to bid for and purchase the
Common Stock. As an exception to these rules, the Underwriters are permitted to
engage in certain transactions that stabilize the price of the Common Stock.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the offering (i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus Supplement), they may
reduce that short position by purchasing Common Stock in the open market. The
Underwriters may also elect to reduce any short position through the exercise of
all or part of the over-allotment options described above.
The Representative may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representative purchases
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, it may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Corporation nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Common Stock. In
addition, neither the Corporation nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
S-17
<PAGE> 18
In connection with this Offering, the Underwriters or their respective
affiliates and selling group members (if any) who are qualified market makers on
Nasdaq may engage in "passive market making" in the Common Stock on Nasdaq in
accordance with Rule 103 of Regulation M under the Exchange Act. Rule 103
permits, upon the satisfaction of certain conditions, underwriters and selling
group members participating in a distribution that are also Nasdaq market makers
in the security being distributed (or a related security) to engage in limited
market making transactions during the period when Regulation M under the
Exchange Act would otherwise prohibit such activity. Rule 103 prohibits
underwriters and selling group members engaged in passive market making
generally from entering a bid or effecting a purchase at a price that exceeds
the highest bid for those securities displayed on Nasdaq by a market maker that
is not participating in the distribution. Under Rule 103, each underwriter or
selling group member engaged in passive market making is subject to a daily net
purchase limitation equal to 30% of such entity's average daily trading volume
during the two full consecutive calendar months immediately preceding the date
of the filing of the registration statement under the Securities Act pertaining
to the security to be distributed (or such related security).
Merrill Lynch International has represented and agreed that (a) it has not
offered or sold and, prior to the expiry of six months from the offering, will
not offer or sell in the United Kingdom any Common Stock to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (whether as principal
or agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulation
1995 or the Financial Services Act 1986 (the "1986 Act"), (b) it has complied
and will comply with all applicable provisions of the 1986 Act with respect to
anything done by it in relation to the Common Stock in, from or otherwise
involving the United Kingdom, and (c) it has only issued or passed on, and will
only issue or pass on, in the United Kingdom, any document received by it in
connection with the issue of the Common Stock, other than any document which
consists of or any part of listing particulars, supplementary listing
particulars or any other document required or permitted to be published by
listing rules under Part IV or the 1986 Act, to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom the document may
otherwise lawfully be issued or passed on.
The Corporation has agreed to indemnify the Underwriters against certain
civil liabilities, including liabilities under the Securities Act, or to
contribute to payments the Underwriters may be required to make in respect
thereof.
LEGAL OPINIONS
The legality of the shares offered hereby will be passed upon for the
Corporation by Bradley Arant Rose & White LLP and for the Underwriters by
Stroock & Stroock & Lavan LLP. As of September 30, 1997, the partners and
associates of Bradley Arant Rose & White LLP beneficially owned approximately
2,035,000 shares of Common Stock of the Corporation.
S-18
<PAGE> 19
PROSPECTUS
(SOUTHTRUST CORPORATION LOGO)
SouthTrust Corporation (the "Corporation") may offer from time to time up
to $600,000,000 of (i) its notes, debentures or other evidences of unsecured
indebtedness (the "Debt Securities") in one or more currencies on terms to be
determined at the time of sale, (ii) its preferred stock, par value $1.00 per
share (the "Preferred Stock"), in one or more currencies on terms to be
determined at the time of sale; and (iii) its common stock, par value $2.50 per
share (the "Common Stock"), in one or more currencies on terms to be determined
at the time of sale. The Preferred Stock and Common Stock are collectively
referred to as the "Equity Securities," and the Debt Securities and the Equity
Securities are collectively referred to as the "Offered Securities." The Debt
Securities may be either senior in priority of payment (the "Senior Securities")
or subordinated in right of payment (the "Subordinated Securities"). When
Offered Securities are sold, a supplement to this Prospectus (the "Prospectus
Supplement") will be delivered, which will set forth the amount and terms of the
Offered Securities and of the sale. The Offered Securities may be sold for U.S.
Dollars, foreign currencies or foreign currency units, and the principal of or
any interest on the Debt Securities may be payable in U.S. Dollars, foreign
currencies or foreign currency units.
When Debt Securities are offered, any applicable Prospectus Supplement will
set forth the specific terms such as, where applicable, the specific
designation, aggregate principal amount, denominations and currency or currency
unit for which the Debt Securities may be purchased, the currency or currency
rate in which the principal and any interest is payable, maturity, interest rate
(which may be fixed or variable), and time of payment of interest, if any, terms
for redemption (which either may be at the option of the Corporation or the
holder), terms for sinking fund payments, initial public offering price, names
of and principal amounts to be purchased by underwriters and compensation of
such underwriters, and information about any listing on a securities exchange of
such Debt Securities as are being offered thereby. When Equity Securities are
offered, any applicable Prospectus Supplement will set forth, in the case of
Preferred Stock, the specifications, such as, where applicable, the specific
title and stated value, any dividend and liquidation rights, voting rights and
the initial public offering price, and, in the case of Common Stock, the initial
public offering price and the aggregate number of shares offered.
The Debt Securities may be issued in registered or bearer form. In
addition, all or a portion of the Debt Securities of a series may be issuable in
temporary or permanent global form. Debt Securities in bearer form will be
offered and sold only outside the United States to non-U.S. Persons and to
foreign branches of certain United States financial institutions. See
"Limitations on Issuance of Bearer Securities."
The Offered Securities may be sold to underwriters for public offering
pursuant to terms of offering fixed at the time of sale. The name of any
underwriter or agent of the Corporation involved in the sale of Offered
Securities will be set forth in any applicable Prospectus Supplement. In
addition, the Offered Securities may be sold by the Corporation directly or
through agents. Any underwriters, dealers or agents participating in the
offering may be deemed "underwriters" within the meaning of the Securities Act
of 1933, as amended (the "Securities Act"). See "Plan of Distribution."
---------------------
THESE SECURITIES 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 PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DEBT SECURITIES WILL BE UNSECURED OBLIGATIONS OF THE CORPORATION AND WILL
NOT BE OBLIGATIONS OF A BANK INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER FEDERAL AGENCY.
---------------------
The date of this Prospectus is December 18, 1997.
<PAGE> 20
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. THIS PROSPECTUS AND ANY APPLICABLE PROSPECTUS SUPPLEMENT DO NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH THEY RELATE OR
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY WITHIN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OF SOLICITATION WITHIN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY APPLICABLE
PROSPECTUS SUPPLEMENT NOR ANY SALES MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE CORPORATION SINCE THE DATE HEREOF OR THEREOF OR THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO SUCH DATE.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the offices of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street N.W., Washington,
D.C. 20549, as well as at the following regional offices of the Commission: The
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and Seven World Trade Center, Suite 1300, New York, New
York 10048. The Commission also maintains a web site that contains reports,
proxy and information statements and other information regarding the Corporation
which files such information electronically with the Commission. The address of
this web site is http://www.sec.gov. Copies of such material can be obtained
from the Commission's Public Reference Section, Room 1024, Judiciary Plaza, 450
Fifth Street N.W., Washington, D.C. 20549 upon payment of prescribed rates. In
addition, reports, proxy statements, information statements and other
information concerning the Corporation may be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street N.W.,
Washington, D.C. 20096. This Prospectus does not contain all information set
forth in the Registration Statement and Exhibits thereto which the Corporation
has filed with the Commission under the Securities Act and to which reference is
hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Corporation are
incorporated, as of their respective filing dates, by reference in this
Prospectus:
(a) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996; and
(b) The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997 and the
Corporation's Current Reports on Form 8-K dated October 8, 1997 and
December 5, 1997.
All reports and definitive proxy or information statements filed by the
Corporation with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus and prior to the termination
of the offering of the Offered Securities offered hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document all or a
portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
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 Prospectus.
2
<PAGE> 21
The Corporation will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus and any applicable Supplement
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents described above, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference
therein). Written requests should be addressed to Aubrey D. Barnard, SouthTrust
Corporation, SouthTrust Tower, 420 North 20th Street, Birmingham, Alabama 35203.
Telephone requests may be directed to Mr. Barnard at (205) 254-5000.
SOUTHTRUST CORPORATION
The Corporation, a bank holding company headquartered in Birmingham,
Alabama, was incorporated under the laws of Delaware in 1968 in order to acquire
all of the outstanding capital stock of the predecessor of SouthTrust Bank of
Alabama, National Association. The Corporation engages in a full range of
banking services from more than 530 banking locations in Alabama, Florida,
Georgia, Mississippi, North Carolina, South Carolina and Tennessee. The
Corporation also offers a range of other services, including mortgage banking
services, fiduciary and trust services and securities brokerage services. As of
September 30, 1997, the Corporation had consolidated total assets of
approximately $29.8 billion, which ranked it as the largest bank holding company
headquartered in Alabama.
Effective June 2, 1997, the Corporation, pursuant to the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking
Act"), consolidated its banking subsidiaries located in the states of Alabama,
Florida, Georgia, North Carolina, Mississippi, Tennessee and South Carolina into
its largest banking subsidiary, SouthTrust Bank of Alabama, National Association
and changed the name of such banking subsidiary to SouthTrust Bank, National
Association ("SouthTrust Bank"). The consolidation was undertaken by the
Corporation in order to obtain the benefits of the Interstate Banking Act,
which, subject to certain limitations, since 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. See "Regulatory Matters -- The
Riegle-Neal Interstate Bank and Branching Efficiency Act."
As a bank holding company, the Corporation is subject to regulation and
supervision by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the Bank Holding Company Act of 1956, as amended
(the "Holding Company Act"). As of December 31, 1996, the capital ratios of the
Corporation and SouthTrust Bank were in excess of the fully phased-in risk-based
and leverage capital guidelines of the Federal Reserve Board, the Office of the
Comptroller of the Currency (the "Comptroller"), and the Federal Deposit
Insurance Corporation (the "FDIC"), as applicable. SouthTrust Bank and the bank-
related subsidiaries of the Corporation are subject to regulation and
supervision by the Comptroller, the Federal Reserve Board and the FDIC, as
applicable. The amount of dividends that SouthTrust Bank may pay is limited by
regulation. See "Regulatory Matters." The Corporation has pursued a strategy of
acquiring banks and financial institutions throughout the major growth areas of
Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee. The
purpose of this expansion is to give the Corporation access to metropolitan
markets with favorable prospects for growth of population, per capita income,
and business development opportunities.
As a routine part of its business, the Corporation evaluates opportunities
to acquire bank holding companies, banks and other financial institutions. In
addition, in the normal course of its business, the Corporation seeks out and
receives inquiries from financial institutions regarding the possible
acquisition of such institutions. The Corporation routinely evaluates these
opportunities. Thus, at any point in time, the number of acquisition
opportunities that may be available to the Corporation, as well as the stage of
development of such activity, is subject to change.
Since January 1, 1997 through the date hereof, the Corporation or one of
its affiliates has acquired, or executed agreements to acquire, six financial
institutions (or certain of their assets and/or assume certain of their
liabilities) having total assets of approximately $5.9 billion, total loans of
approximately $1.2 billion and total deposits of approximately $5.6 billion. The
aggregate consideration paid or payable by the Corporation or its affiliates in
these six transactions aggregates approximately 1.3 million shares of the
Corporation's Common
3
<PAGE> 22
Stock with a market value at the time of issuance of approximately $49.3
million, and approximately $515.9 million of cash. As discussed below, two of
these transactions are scheduled to be consummated during the first two quarters
of 1998 and are subject to certain closing conditions and regulatory approvals.
These six transactions serve to further the strategy of expanding and
diversifying the Corporation's customer base in selected markets with favorable
prospects for growth.
On December 4, 1997, the Corporation entered into an agreement to assume
and acquire deposits and certain assets associated with 27 branches of Home
Savings of America, FSB, a subsidiary of H. F. Ahmanson & Company for a premium
of $300 million payable in cash. These branches are located in various cities
and metropolitan areas on the East Coast of Florida, including Boca Raton, Coral
Gables, Fort Lauderdale, Hollywood, Miami Beach and South Miami Beach. In
connection with the transaction, an affiliate of the Corporation will assume
approximately $3.4 billion in deposits and will acquire cash, the banking
premises associated with such branches and a limited amount of loans associated
with the deposits.
On October 15, 1997, the Corporation executed an agreement with Barnett
Banks, Inc. for the purchase of First of America Bank, Florida FSB for a
purchase price of $160 million payable in cash. Through this acquisition, the
Corporation expects to add total asset, loans and deposits of approximately $1.1
billion, $0.8 billion and $0.9 billion, respectively, and 58 branches, primarily
on the West Coast of Florida.
The Corporation's headquarters are located at 420 North 20th Street,
Birmingham, Alabama 35203 and its telephone number is (205) 254-5000.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following are the consolidated ratios of earnings to fixed charges for
each of the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------- --------------
1996 1995 1994 1993 1992 1997 1996
---- ---- ---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS TO FIXED CHARGES
Including Interest on Deposits........... 1.41x 1.38x 1.51x 1.56x 1.42x 1.40x 1.41x
Excluding Interest on Deposits........... 2.27 2.27 3.00 4.27 4.23 2.05 2.29
</TABLE>
For purposes of computing the consolidated ratios, earnings represent net
income applicable to Common Stock, plus applicable income taxes and fixed
charges less capitalized interest. Fixed charges represent interest expense,
capitalized interest, amortization of debt expense and the interest portion of
rent expense. The ratios of earnings to combined fixed charges and preferred
stock dividends are identical to the ratios of earnings to fixed charges listed
above because no shares of Preferred Stock of the Corporation were outstanding
during the periods indicated above.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities will be used for
general corporate purposes, including the Corporation's working capital needs,
the funding of investments in, or extensions of credit to, SouthTrust Bank and
the Corporation's nonbanking subsidiaries, possible acquisitions of other
financial institutions or their assets or liabilities, possible acquisitions of
or investments in other businesses of a type eligible for bank holding companies
or banks and possible reduction of outstanding indebtedness. Pending such use,
the Corporation may temporarily invest the net proceeds in investment grade
securities. The Corporation may, from time to time, engage in additional capital
financings of a character and in amounts to be determined by the Corporation in
light of its need at such time or times and in light of prevailing market
conditions. If the Corporation elects at the time of issuance of the Offered
Securities to make different or more specific use of proceeds other than that
set forth herein, such use will be described in the applicable Prospectus
Supplement.
4
<PAGE> 23
REGULATORY MATTERS
The Corporation is a bank holding company within the meaning of the Holding
Company Act, and is registered with the Federal Reserve Board. SouthTrust Bank,
the Corporation's banking subsidiary, is subject to restrictions under federal
law which limit the transfer of funds by SouthTrust Bank to the Corporation and
its nonbanking subsidiaries, whether in the form of loans, extensions of credit,
investments or asset purchases. Such transfers by SouthTrust Bank to the
Corporation or any nonbanking subsidiary are limited in amount to 10% of
SouthTrust Bank's capital and surplus and, with respect to the Corporation and
all such nonbanking subsidiaries, to an aggregate of 20% of SouthTrust Bank's
capital and surplus. Furthermore, such loans and extensions of credit are
required to be secured in specified amounts. The Holding Company Act also
prohibits, subject to certain exceptions, a bank holding company from engaging
in or acquiring direct or indirect control of more than 5% of the voting stock
of any company engaged in 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, the Corporation is required to file with the
Federal Reserve Board semi-annual reports and such additional information as the
Federal Reserve Board may require. The Federal Reserve Board may also make
examinations of the Corporation and each of its subsidiaries.
The approval of the Comptroller is required for any dividend proposed to be
paid by SouthTrust Bank to the Corporation if the total of all dividends
declared by SouthTrust Bank in any calendar year would exceed the total of its
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 September 30, 1997, approximately $403.9 million was
available for payment of dividends to the Corporation declared by SouthTrust
Bank during the final quarter of 1997. The payment of dividends by SouthTrust
Bank may also be affected by other factors, such as the maintenance of adequate
capital for SouthTrust 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 the Corporation, 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 December 31,
1996, all of the Corporation's then existing subsidiary banks, which, effective
June 2, 1997, were consolidated into SouthTrust Bank, were 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 ("Tier 2 capital"). SouthTrust Bank is subject to
similar capital requirements adopted by the Comptroller. In addition, the
Federal Reserve Board, the Comptroller and the FDIC have adopted a minimum
leverage ratio (Tier 1 capital to adjusted quarter 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
September 30, 1997,
5
<PAGE> 24
the Corporation had a Tier 1 capital ratio of 7.37%, a total risk-based capital
ratio of 11.38% and a leverage ratio of 6.14%.
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
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 acquirer 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
6
<PAGE> 25
more of the deposits nationwide. State-level deposit caps are not preempted as
long as they do not discriminate against out-of-state acquirers, 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, the Corporation, 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 agencies. The likelihood and timing of any such changes
and the impact such changes might have on the Corporation and its subsidiaries,
however, cannot be determined at this time.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
applicable Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by any applicable Prospectus Supplement (the "Offered Debt
Securities") and the extent, if any, to which such general provisions may apply
to the Debt Securities so offered will be described in the Prospectus Supplement
relating to such Offered Debt Securities.
The Senior Securities will be issued under an Indenture (the "Senior
Indenture") between the Corporation and a Trustee to be named in any applicable
Prospectus Supplement (the "Senior Debt Trustee"). The Subordinated Securities
will be issued under an Indenture (the "Subordinated Indenture") between the
Corporation and a Trustee to be named in any applicable Prospectus Supplement
(the "Subordinated Debt Trustee"). Copies of the forms of Senior Indenture and
the Subordinated Indenture (collectively, the "Indentures") are filed as
exhibits to this Registration Statement.
The following summaries of the Debt Securities and the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Indentures, including the
applicable definitions therein of certain terms used in this Prospectus. All
capitalized terms not defined in this Prospectus shall have the definitions
ascribed to them in the Indentures.
GENERAL
The Debt Securities will be direct, unsecured obligations of the
Corporation. The Indentures do not limit the amount of Debt Securities that may
be issued thereunder and provide that Debt Securities may be issued thereunder
from time to time in one or more series. The amount of Debt Securities that may
be offered and sold pursuant to this Prospectus, however, is limited to the
aggregate initial offering price of the securities registered under the
Registration Statement of which this Prospectus forms a part.
Any applicable Prospectus Supplement will describe the following terms of
the Offered Debt Securities: (l) the title of the Offered Debt Securities; (2)
any limit on the aggregate principal amount of the Offered Debt Securities; (3)
the date or dates on which the Offered Debt Securities may be issued and are or
will be payable; (4) the rate or rates per annum (which may be fixed or
variable) at which the Offered Debt Securities will bear interest, if any, or
the method by which such rate or rates shall be determined, and the date or
dates from which such interest, if any, will accrue; (5) the date or dates on
which such interest, if any, on the Offered Debt Securities will be payable and
the Regular Record Dates for any such Interest Payment Dates, and the extent to
which, or the manner in which, any interest payable on a temporary or permanent
global Debt Security ("Global Notes") on an Interest Payment Date will be paid
if other than in the manner described under the heading "-- Global
Notes -- Issuance of Global Notes" below; (6) each office or agency where,
subject to the terms of the relevant Indenture as described below under "Payment
and Paying Agents," the principal of, and premium, if any, and any interest on
the Offered Debt Securities will be payable and each office or agency where,
subject to the terms of the relevant Indenture as described below under
"-- Denomi-
7
<PAGE> 26
nations, Registration and Transfer", the Offered Debt Securities may be
presented for registration of transfer or exchange and, if applicable,
conversion; (7) the period or periods within which, the price or prices at
which, and the terms and conditions upon which the Offered Debt Securities may
be redeemed at the option of the Corporation; (8) the obligation or option, if
any, of the Corporation to redeem, to repay or purchase the Offered Debt
Securities pursuant to any sinking fund or similar provisions or at the option
of a Holder thereof and the period or periods within which, the price or prices
at which and the terms and conditions upon which the Offered Debt Securities
will be redeemed, repaid or purchased pursuant to any such obligation; (9)
whether the Offered Debt Securities are to be issued with original issue
discount within the meaning of Section 1273(a) of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations thereunder and the amount of
such discount; (10) provisions, if any, for the defeasance of the Offered Debt
Securities; (11) whether the Offered Debt Securities are to be issued as
Registered Securities or Bearer Securities, or both, and if Bearer Securities
are issued, whether Coupons will be attached thereto, whether Bearer Securities
may be exchanged for Registered Securities and the circumstances and places for
such exchange, if permitted, and any United States tax consequences to foreign
investors in Offered Debt Securities; (12) whether the Offered Debt Securities
are to be issued in whole or in part in the form of one or more temporary or
permanent Global Notes in registered or bearer form and, if so, the identity of
the depositary, if any, for such Global Note or Notes; (13) any provisions for
payment of additional amounts for taxes, and any provisions for redemption in
the event the Corporation must comply with reporting requirements in respect of
an Offered Debt Security other than a Floating Rate Security ("Affected
Security") or must pay such additional amounts in respect of any Offered Debt
Security; (14) if other than in U.S. Dollars, the Foreign Currency or Currencies
in which the Debt Securities may be denominated and the principal of, and
premium, if any, and any interest on the Offered Debt Securities shall or may be
paid and, if applicable, whether at the election of the Corporation and/or the
Holder, and the conditions and manner of determining the exchange rate or rates;
(15) any index used to determine the amount of payment of principal of and
premium, if any, and any interest on the Offered Debt Securities; (16) the
applicable Overdue Rate, if any; (17) any addition to, or modification or
deletion of, any Events of Default or covenants provided for with respect to the
Offered Debt Securities; (18) the priority of payment of such Offered Debt
Securities; and (19) any other detailed terms and provisions of the Offered Debt
Securities which are not inconsistent with the relevant Indenture. Any
applicable Prospectus Supplement will also describe any special provisions for
the payment of additional amounts with respect to the Offered Debt Securities
and terms relevant to Offered Debt Securities denominated in a currency other
than U.S. Dollars.
Debt Securities may be issued as Discount Securities to be sold at a
substantial discount below their principal amount. Discount Securities mean any
Debt Securities issued with an "original issue discount" within the meaning of
Section 1273(a) of the Code and the regulations thereunder. Special United
States income tax and other considerations applicable to Discount Securities
will be described in any applicable Prospectus Supplement relating thereto.
Discount Securities may provide for the declaration of acceleration of the
Maturity of an amount less than the principal amount thereof upon the occurrence
of an Event of Default and the continuation thereof.
DENOMINATIONS, REGISTRATION AND TRANSFER
Each Debt Security may be denominated in U.S. Dollars or in other
currencies, European Currency Units ("ECU") or other composite currencies (the
"Specified Currency"), all as set forth in any applicable Prospectus Supplement.
See "-- Currency Risks."
Debt Securities of a series may be issuable as Registered Securities, as
Bearer Securities with or without Coupons attached or as both Registered
Securities and Bearer Securities. Debt Securities of a series may be issuable in
whole or in part in the form of one or more Global Notes, as described below
under "Global Notes." Unless otherwise provided in an applicable Prospectus
Supplement with respect to a series of Debt Securities, the Debt Securities will
be issuable as Registered Securities without Coupons and in denominations (a) if
denominated in U.S. Dollars, of $1,000 or any integral multiple thereof, or (b)
if denominated in a Specified Currency other than U.S. Dollars, as set forth in
the applicable Prospectus Supplement. One or
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more Global Notes may be issued in a denomination or aggregate denominations
equal to the aggregate principal amount of Outstanding Debt Securities of the
series to be represented by such Global Note or Notes.
In connection with the sale during the restricted period (referred to under
"Limitations on Issuance of Bearer Securities"), no Bearer Security may be
mailed or otherwise delivered to any location in the United States (as defined
under "Limitations on Issuance of Bearer Securities") and a Bearer Security may
be delivered only if the Person entitled to receive such Bearer Security
furnishes written certification, in the form required by the applicable
Indenture, to the effect that such Bearer Security is not owned by or on behalf
of a U.S. Person (as defined under "Limitations on Issuance of Bearer
Securities"), or, if a beneficial interest in such Bearer Security is owned by
or on behalf of a U.S. Person, that such U.S. Person (i) acquired and holds such
Bearer Securities through a foreign branch of a financial institution, (ii) is a
financial institution purchasing for its own accounts and, in the case of either
(i) or (ii), such financial institution agrees to comply with the requirements
of Section 165(j) (3)(A), (B) or (C) of the Code and the regulations thereunder,
or (iii) is a financial institution purchasing for resale during the restricted
period only to non-U.S. Persons outside the United States. See "-- Global
Notes -- Bearer Debt Securities" and "Limitations on Issuance of Bearer
Securities."
Registered Securities of any series (other than a Global Note) will be
exchangeable for other Registered Securities of the same series and a like
aggregate principal amount and tenor of different authorized denominations. In
addition, if so provided in any applicable Prospectus Supplement, Bearer
Securities of any series which are registrable as to principal and interest may,
at the option of the Holder and subject to the terms of the applicable
Indenture, be exchangeable into Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount and tenor. Any
Bearer Security surrendered for exchange shall be surrendered with all unmatured
Coupons and all matured Coupons in default except that any Bearer Security
surrendered in exchange for a Registered Security between a Regular Record Date
or a Special Record Date and the relevant date for payment of interest shall be
surrendered without the Coupon relating to such date for payment of interest and
interest will not be payable in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such Coupon when due in accordance with the terms of the applicable Indenture.
Except as provided in an applicable Prospectus Supplement, Bearer Securities
will not be issued in exchange for Registered Securities.
Debt Securities may be presented for exchange as provided above, and
Registered Securities (other than Global Notes) may be presented for
registration of transfer (with the form of transfer endorsed thereon duly
executed), at the office of the Security Registrar or co-Security Registrar
designated by the Corporation for such purpose with respect to any series of
Debt Securities and referred to in an applicable Prospectus Supplement, without
service charge and upon payment of any taxes and other governmental charges as
described in the applicable Indenture. Such transfer or exchange will be
effected upon the Security Registrar or co-Security Registrar being satisfied
with the documents of title and identity of the person making the request. The
Corporation has appointed the Senior Debt Trustee and the Subordinated Debt
Trustee (the Senior Debt Trustee and the Subordinated Debt Trustee are herein
collectively referred to as the "Trustees") as Security Registrars in respect of
Debt Securities issued under the Senior Indenture and the Subordinated Indenture
respectively.
CURRENCY RISKS
Debt Securities denominated or payable in foreign currencies may entail
significant risks. These risks include, without limitation, the possibility of
significant fluctuations in the foreign currency markets, the imposition or
modification of foreign exchange controls and potential illiquidity. These risks
will vary depending upon the Currency or Currencies involved and will be more
fully described in any applicable Prospectus Supplement.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in any applicable Prospectus Supplement, payment
of principal of, and premium, if any, and any interest on Bearer Securities will
be payable, subject to any applicable laws and
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regulations, at the offices of such Paying Agent or Paying Agents outside the
United States as the Corporation may designate from time to time. Unless
otherwise indicated in any applicable Prospectus Supplement, payment of interest
on Bearer Securities on any Interest Payment Date will be made only against
surrender of the Coupon relating to such Interest Payment Date. No payment with
respect to any Bearer Security will be made at any office or agency of the
Corporation in the United States or by check mailed to any address in the United
States or by transfer to an account maintained in the United States. Payments
will not be made in respect of Bearer Securities or Coupons pursuant to
presentation to the Corporation or its designated Paying Agents within the
United States or the making of any other demand for payment to the Corporation
or its designated Paying Agents within the United States. Notwithstanding the
foregoing, payment of principal of, and premium, if any, and interest on Bearer
Securities denominated and payable in U.S. Dollars will be made at the office of
the Corporation's Paying Agent in The City of New York if (but only if) payment
of the full amount thereof in U.S. Dollars at all offices or agencies outside
the United States is illegal or effectively precluded by exchange controls or
other similar restrictions.
Unless otherwise indicated in any applicable Prospectus Supplement, payment
of principal of, and premium, if any, and any interest on Registered Securities
will be made at the office of such Paying Agent or Paying Agents as the
Corporation may designate from time to time, except that at the option of the
Corporation payment of any interest may be made (i) by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register or (ii) by wire transfer to an account maintained by the
Person entitled thereto. Unless otherwise indicated in any applicable Prospectus
Supplement, payment of any installment of interest on Registered Securities will
be made to the Person in whose name such Registered Security is registered at
the close of business on the Regular Record Date for such interest.
Unless otherwise indicated in any applicable Prospectus Supplement, the
relevant Trustee will act as the Corporation's sole Paying Agent through its
principal office in The City of New York, with respect to Offered Debt
Securities which are issuable solely as Registered Securities. Any Paying Agents
outside the United States and other Paying Agents in the United States initially
designated by the Corporation for the Offered Debt Securities will be named in
any applicable Prospectus Supplement. The Corporation may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except that,
if Debt Securities of a series are issuable only as Registered Securities, the
Corporation will be required to maintain a Paying Agent in each Place of Payment
for such series and, if Debt Securities of a series may be issuable as Bearer
Securities, the Corporation will be required to maintain (i) a Paying Agent in
The City of New York for payments with respect to any Registered Securities of
the series (and for payments with respect to Bearer Securities of the series in
the circumstances described above, but not otherwise), and (ii) a Paying Agent
in a Place of Payment located outside the United States where Debt Securities of
such series and any Coupons appertaining thereto may be presented and
surrendered for payment; provided that if the Debt Securities of such series are
listed on The Stock Exchange of the United Kingdom and the Republic of Ireland
or the Luxembourg Stock Exchange or any other stock exchange located outside the
United States and such stock exchange shall so require, the Corporation will
maintain a Paying Agent in London or Luxembourg or any other required city
located outside the United States, as the case may be, for the Debt Securities
of such series.
All monies paid by the Corporation to the Trustees or a Paying Agent for
the payment of principal of, and premium, if any, and any interest on any Debt
Securities which remain unclaimed at the end of two years after such principal,
premium or interest shall have become due and payable will be repaid to the
Corporation and the Holder of such Debt Securities or any Coupon will thereafter
look only to the Corporation for payment thereof.
GLOBAL NOTES
Issuance of Global Notes
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Notes that will be deposited with or on behalf of a
depositary located in the United States or a common depositary
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located outside the United States identified in any applicable Prospectus
Supplement relating to such series. Global Notes may be issued in either
registered or bearer form and in either temporary or permanent form.
The specific terms of the depositary arrangement with respect to any
Offered Debt Securities of a series will be described in any applicable
Prospectus Supplement relating to such series. The Corporation anticipates that
the following provision will apply to all depositary arrangements pertaining to
bearer form Global Notes. For depositary arrangements pertaining to registered
notes, see "Book-Entry Only Issuance of Offered Securities."
Bearer Debt Securities
Unless otherwise specified in any applicable Prospectus Supplement, all
Bearer Securities of a series initially will be issued in the form of a single
temporary Global Note, to be deposited with a common depositary in London for
the operator of the Euroclear System ("Euroclear Operator") or Cedel Bank,
societe anonyme ("Cedel Bank"), for credit to the designated accounts.
Commencing 40 days after the issue date of a temporary Global Note, the Debt
Securities represented by such temporary Global Note will be exchangeable for
definitive Debt Securities or for interests in a permanent Global Note, without
interest Coupons, representing Debt Securities having the same interest rate and
Stated Maturity but in each such case only upon written certification in the
form and to the effect described above under "-- Denominations, Registration and
Transfer." The beneficial owner of a Debt Security represented by a temporary
Global Note or a permanent Global Note, on or after the applicable exchange date
and upon 30 days' notice to the relevant Trustee given through the Euroclear
Operator or Cedel Bank, may exchange its interest for definitive Bearer
Securities or definitive Registered Securities of any authorized denomination.
No Bearer Security delivered in exchange for a portion of a temporary Global
Note or a permanent Global Note shall be mailed or otherwise delivered to any
location in the United States in connection with such exchange.
Unless otherwise specified in any applicable Prospectus Supplement,
interest in respect of any portion of a temporary Global Note payable in respect
of an Interest Payment Date occurring prior to the date on which Debt Securities
represented by such temporary Global Note are exchangeable for definitive Debt
Securities or for interests in a permanent Global Note will be paid to each of
the Euroclear Operator and Cedel Bank with respect to the portion of the
temporary Global Note held for its account. Each of the Euroclear Operator and
Cedel Bank, will undertake in such circumstances to credit such interest
received by it in respect of a temporary Global Note to the respective accounts
for which it holds such temporary Global Note only upon receipt in each case of
written certification in the form and to the effect described above under
"-- Denominations, Registration and Transfer."
LIMITATIONS ON THE CORPORATION AND CERTAIN SUBSIDIARIES
The Indentures prohibit the sale, assignment, transfer or other disposition
of any shares of, or securities convertible into, or options, warrants or rights
to subscribe for or purchase shares of, Voting Stock of a Major Constituent
Bank, and further prohibits a Major Constituent Bank from issuing any shares of,
or securities convertible into, or options, warrants or rights to subscribe for
or purchase shares of, such Voting Stock, if, after giving effect to the
transaction and to the issuance of the maximum number of shares of Voting Stock
issuable upon all such convertible securities, options, warrants or rights, the
Major Constituent Bank would cease to be a Controlled Subsidiary, as provided in
the Indentures. The Indentures further prohibit the merger or consolidation of
any Major Constituent Bank with or into any other corporation, or the other
disposition of all or substantially all of its properties and assets to any
Person, if, after giving effect to such transaction, its successor in the merger
or consolidation, or the person that acquires all or substantially all of its
assets or properties will become a Controlled Subsidiary; provided, however,
that the Corporation may sell, assign, transfer or otherwise dispose of any
shares of, or securities convertible into, or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock of a Major Constituent Bank,
(i) in compliance with an order of a court or regulatory authority of competent
jurisdiction; or (ii) where the proceeds, if any, from such sale, assignment or
disposition are, within a reasonable period of time, invested in any Controlled
Subsidiary engaged in the banking business or any other business in which bank
holding companies may legally engage,
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pursuant to an understanding or agreement in principle reached at the time of
such sale, assignment or disposition.
SENIOR SECURITIES
The Senior Securities will be direct, unsecured obligations of the
Corporation and will rank pari passu with all outstanding, unsecured, senior
indebtedness of the Corporation.
EVENTS OF DEFAULT
The following are Events of Default under the Senior Indenture with respect
to Senior Securities of any series: (a) default in the payment of any interest
on any Senior Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days; (b) default in the payment
of the principal of or any premium on any Senior Security of such series at its
maturity; (c) default in the deposit of any sinking fund payment, when and as
due by the terms of any Senior Security of that series; (d) failure of the
Corporation, subject to the terms of the Indenture, to perform any other
covenant of the Corporation in the Senior Indenture unless the Holders of a
majority in principal of outstanding Senior Securities waives compliance with
such covenant; (e) default in the performance, or breach, of any covenant or
warranty of the Corporation (other than a covenant included in such Indenture
solely for the benefit of a series of Debt Securities other than that series),
and continuance of such default or breach for 90 days after written notice as
provided in such Indenture; (f) certain events involving bankruptcy, insolvency
or reorganization of the Corporation or a Major Constituent Bank whether
voluntary or involuntary; (g) indebtedness for borrowed money of the Corporation
or any Major Constituent Bank in excess of $5,000,000 (whether such indebtedness
now exists or is hereafter created) is not paid at final maturity or becomes or
is declared due and payable prior to the date or dates on which such
indebtedness would otherwise have become due and payable as a result of the
occurrence of one or more events of default as defined in any mortgages,
indentures, or instruments under which such indebtedness may have been issued or
by which such indebtedness may have been secured ("acceleration"), and such
failure at final maturity to pay or acceleration or accelerations, as the case
may be, shall not be rescinded, annulled, or cured prior to the expiration of 30
days after the date such failure to pay at final maturity or acceleration or
accelerations occurred; and (h) any other event of default provided for with
respect to Debt Securities of that series.
If any Event of Default (other than an Event of Default specified in clause
(f) above) occurs and is continuing with respect to Senior Securities of any
series at the time outstanding, either the Senior Debt Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Debt Securities of
that series may declare the principal amount (or, if the Debt Securities of that
series are Discount Securities, such portion of the principal amount as may be
specified in the terms of that series) of all the Debt Securities of that series
to be due and payable immediately in the Currency in which such Senior
Securities are denominated. If an Event of Default specified in clause (f) above
occurs, such principal amount shall become immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder. At any
time after a declaration of acceleration with respect to Senior Securities of
any series has been made, but before a judgment or decree based on acceleration
has been obtained, the Holders of a majority in aggregate principal amount of
Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration.
The Senior Indenture provides that upon the occurrence of an Event of
Default specified in items (a), (b) or (c) above, the Corporation will, upon
demand of the Senior Debt Trustee, pay to the Senior Debt Trustee, for the
benefit of the Holder of any such Senior Security, the whole amount then due and
payable on such Senior Securities or matured Coupons for principal, premium, if
any, and interest. The Senior Indenture further provides that if the Corporation
fails to pay such amount forthwith upon such demand, the Senior Debt Trustee
may, among other things, institute a judicial proceeding for the collection
thereof.
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SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured obligations of the
Corporation and will rank pari passu with all outstanding, unsecured,
subordinated indebtedness of the Corporation.
Subordination
The Subordinated Securities will be subordinate and junior in right of
payment, to the extent set forth in the Subordinated Indenture, to all Senior
Indebtedness (as defined below) of the Corporation. In the event that the
Corporation shall default in the payment of any principal of or interest on any
Senior Indebtedness when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration or otherwise, then, unless
and until such default shall have been cured or waived or shall have ceased to
exist, no direct or indirect payment (in cash, property, securities, by set-off
or otherwise) will be made or agreed to be made for principal of or interest on
the Subordinated Securities, or in respect of any redemption, retirement,
purchase or other acquisition of any of the Subordinated Securities. "Senior
Indebtedness" means (i) any obligation of the Corporation to its creditors
whether now outstanding or subsequently incurred, as to which, in the creating
instrument, it is provided that such obligation is Senior Indebtedness, (ii) the
Corporation's 8 5/8% Subordinated Notes due May 15, 2004, (iii) the
Corporation's 7% Debentures due May 15, 2003, and (iv) the Corporation's 7 5/8%
Subordinated Notes due May 1, 2004.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Corporation, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Corporation, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Corporation for the benefit of creditors or (iv) any
other marshalling of the assets of the Corporation, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) will be paid in full before any payment or distribution, whether in
cash, securities or other property, is made on account of the principal of or
interest on the Subordinated Securities. In such event, any payment or
distribution on account of the principal of or interest on the Subordinated
Securities, whether in cash, securities or other property (other than securities
of the Corporation or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in the subordination provisions with respect to the
Subordinated Securities, to the payment of all Senior Indebtedness at the time
outstanding, and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), which would otherwise (but for the
subordination provisions) be payable or deliverable in respect of the
Subordinated Securities, will be paid or delivered directly to the holders of
Senior Indebtedness in accordance with the priorities then existing among such
holders until all Senior Indebtedness (including any interest thereon accruing
after the commencement of any such proceedings) has been paid in full. If any
payment or distribution on account of the principal of or interest on the
Subordinated Securities of any character or any security, whether in cash,
securities or other property (other than securities of the Corporation or any
other corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinate, at least to the extent provided in the
subordination provisions with respect to the Subordinated Securities, to the
payment of all Senior Indebtedness at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment), shall be received by any Holder of any Subordinated Securities in
contravention of any of the terms of the Subordinated Indenture and before all
the Senior Indebtedness shall have been paid in full, such payment or
distribution or security will be received in trust for the benefit of, and will
be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full. In the event of any such proceeding, after payment in full
of all sums owing with respect to Senior Indebtedness, the Holders of
Subordinated Securities, together with the holders of any obligations of the
Corporation ranking on a parity with the Subordinated Securities, will be
entitled to be repaid from the remaining assets of the Corporation the amounts
at that time due and owing on account of unpaid principal of or any premium and
interest on the Subordinated Securities and such other obligations before any
payment or other distribution, whether in cash, property or otherwise, shall be
made on
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account of any capital stock or obligations of the Corporation ranking junior to
the Subordinated Securities and such other obligations. By reason of such
subordination, in the event of the insolvency of the Corporation, holders of
Senior Indebtedness may receive more, ratably, and Holders of the Subordinated
Securities having a claim pursuant to such Subordinated Securities may receive
less, ratably, than the other creditors of the Corporation. Such subordination
will not prevent the occurrence of an Event of Default in respect of the
Subordinated Securities. See "-- Events of Default and Limited Rights of
Acceleration" for limitations on the right of acceleration.
Events of Default and Limited Rights of Acceleration
The Subordinated Indenture defines an Event of Default as being certain
events involving the bankruptcy, insolvency or reorganization of the Corporation
and, if specified in the resolution adopted by the Board of Directors with
respect to a series, certain other events. If an Event of Default occurs and is
continuing, either the Subordinated Debt Trustee or the Holders of at least 25%
in aggregate principal amount of the Outstanding Subordinated Securities of that
series (or, if the Subordinated Securities of that series are Discount
Securities, such portion of the principal amount as may be specified in the
terms of the series) may declare the principal amount of all the Subordinated
Securities of that series to be due and payable immediately in the Currency in
which such Subordinated Securities are denominated. The foregoing provision
would be subject as to enforcement to the broad equity powers of a federal
bankruptcy court and to the determination by that court of the nature of the
rights of the Holders of the Subordinated Securities. At any time after a
declaration of acceleration with respect to the Subordinated Securities has been
made, but before a judgment or decree based on acceleration has been obtained,
the Holders of a majority in aggregate principal amount of outstanding
Subordinated Securities may, under certain circumstances, rescind and annul such
acceleration.
Any applicable Prospectus Supplement relating to a series of Subordinated
Securities may provide for a right of acceleration of the payment of principal
of the Subordinated Securities, or certain series thereof, upon a default in the
payment of principal or interest or in the performance of any covenant or
agreement in the Subordinated Securities or Subordinated Indenture. If not so
provided, in the event of a default in the payment of principal or accrued
interest or the performance of any covenant or agreement in the Subordinated
Securities or Subordinated Indenture, the Subordinated Debt Trustee may, subject
to certain limitations and conditions, seek to enforce payment of such principal
or accrued interest or the performance of such covenant or agreement.
MISCELLANEOUS RIGHTS AND OBLIGATIONS OF TRUSTEES
The Indentures provide that, subject to the duty of the Trustees during
default to act with the required standard of care, the respective Trustee will
be under no obligation to exercise any of its rights or powers under the
relevant Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to such Trustee reasonable security or indemnity
against costs, expenses and liabilities which might be incurred by such Trustee.
Subject to such provisions for the indemnification of the Trustees, the Holders
of a majority in aggregate principal amount of the Outstanding Debt Securities
of any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the relevant Trustee, or
exercising any trust or power conferred on such Trustee, with respect to the
Debt Securities of that series.
The Corporation is required to furnish the Trustees annually with a
statement as to the performance by the Corporation of certain of its obligations
under the relevant Indentures and as to any default in such performance and to
file with the relevant Trustee written notice of the occurrence of any default
or Event of Default within ten business days of the Corporation becoming aware
of such default or Event of Default.
MODIFICATION AND WAIVER
Modifications of and amendments to an Indenture may be made by the
Corporation and the relevant Trustee with the consent of the Holders of not less
than a majority in principal amount of the Outstanding
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Debt Securities of each series affected by such modification or amendment voting
separately; provided, however, that no such modification or amendment may,
without the consent of the Holder of each Outstanding Debt Security affected
thereby, (a) change the Stated Maturity of the principal of, or any installment
of principal or interest on, any Debt Security, (b) reduce the principal amount
of, or any premium or interest on, any Debt Security, (c) reduce the amount of
principal of a Discount Security payable upon acceleration of the Maturity
thereof, (d) change the Currency in which principal of, or any premium or
interest on, any Debt Security is denominated or payable, (e) adversely affect
the right of repayment or repurchase, if any, at the option of the Holder, (f)
reduce the amount of or postpone the date fixed for any payment under any
sinking fund or similar provisions, (g) impair the right to institute suit for
the enforcement of any payment on or with respect to any Debt Security, (h)
reduce the percentage in principal amount of Outstanding Debt Securities of any
series, the consent of whose Holders is required for modification or amendment
of the relevant Indenture or for waiver of compliance with certain provisions of
such Indenture or for waiver of certain defaults, (i) limit the obligation of
the Corporation to maintain a paying agency outside the United States for Bearer
Securities, (j) limit the obligation of the Corporation to redeem an Affected
Security, or (k) modify the provisions of an Indenture relating to the
modification of the Indenture, or the circumstances under which the Holders may
waive past defaults by and certain covenants of the Corporation.
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of each series may, on behalf of all Holders of Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Corporation with certain covenants of the relevant Indenture
and any Event of Default resulting in acceleration of such Debt Securities in
specified circumstances. The Holders of a majority in aggregate principal amount
of the Outstanding Debt Securities of each series may, on behalf of all Holders
of Debt Securities of that series, waive any past default under the relevant
Indenture with respect to Debt Securities of that series, except a default, (i)
in the payment of principal, premium, if any, or interest or in the payment of
any sinking fund installment or analogous obligation, or (ii) in respect of a
covenant or provision that cannot be modified or amended without the consent of
the Holders of each Outstanding Debt Security affected thereby.
The Corporation may, with the consent of its Board of Directors and the
Trustee, change the terms of an Indenture through an indenture supplement
without the consent of any Holders only for the following purposes: (i) to
evidence the succession of another corporation to the Corporation and the
assumption by any such successor of the covenants of the Corporation under the
relevant Indenture; (ii) to add to the covenants of the Corporation for the
benefit of the Holders or to surrender any right or power herein conferred upon
the Corporation; (iii) to add any additional Events of Default; (iv) to add to
or change any of the provisions of the relevant Indenture to facilitate the
issuance of Debt Securities in bearer form; (v) to change or eliminate any of
the relevant Indenture's provisions, provided that there are no Debt Securities
outstanding which are entitled to the benefit of such provision; (vi) to secure
the Debt Securities; (vii) to supplement any of the provisions of the relevant
Indenture to such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Debt Securities provided that any such
action shall not adversely affect the interests of the Holders of Debt
Securities of such series or any other series of Debt Securities; (viii) to
establish the form or terms of the Debt Securities and Coupons, if any, as
permitted by the relevant Indenture; (ix) to evidence and provide for the
acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under the relevant Indenture by more than one
Trustee; (x) to make any modifications, amendments or supplements to any
provisions herein which modifications, amendments or supplements are required
pursuant to any amendment of the Trust Indenture Act of 1939 enacted, or any of
the rules promulgated thereunder, after the date hereof; and (xi) to cure any
ambiguity, any defect or any inconsistent provision, provided such action shall
not adversely affect the Holders' interests in any material respect.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Both Indentures provide that the Corporation shall not consolidate with or
merge into any other corporation or convey, transfer or lease its properties and
assets substantially to any Person, and shall not permit any person to
consolidate with or merge into the Corporation or convey, transfer or lease its
properties
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and assets substantially to the Corporation, unless (i) the corporation into
which the Corporation is merged or consolidation or to which substantially all
of the Corporation's assets or properties are conveyed, transferred or leased,
or the corporation resulting from such merger or consolidation, expressly
assumes the payment of the principal (and premium, if any) and interest on all
the Debt Securities and the performance of every covenant of the Indentures;
(ii) no Event of Default, and no event which after notice of lapse of time, or
both, would become an Event of Default, shall happen or be continuing upon the
occurrence of such transaction; (iii) the Corporation formed by such
consolidation or into which the Corporation shall have been merged or the Person
to which such sale, lease or other disposition shall have been made is a banking
institution or a bank holding company subject to Federal or State authority; and
(iv) the Corporation delivers to the respective Trustee an Officers' Certificate
and an Opinion of Counsel stating that the consolidation, merger, conveyance,
transfer or lease required in connection with such transaction, and the
supplemental indenture, if any, complies with the Indentures and all conditions
precedent have been complied with.
DEFEASANCE
If so specified in any applicable Prospectus Supplement with respect to the
Offered Debt Securities of any series, the Corporation, at its option, (i) will
be discharged from any and all obligations in respect of the Offered Debt
Securities of such series (except for certain obligations to register the
transfer or exchange of Offered Debt Securities of such series, to replace
stolen, lost or mutilated Offered Debt Securities of such series, to maintain
paying agencies and to hold moneys for payment in trust) or (ii) will not be
subject to provisions of the relevant Indenture concerning limitations upon the
disposition of Voting Stock of Major Constituent Banks, and the consolidation,
merger and sale of assets in each case if the Corporation deposits with the
relevant Trustee, in trust, money or U.S. Government Obligations which through
the payment of interest thereon and principal thereof in accordance with their
terms will provide money in an amount sufficient to pay all the principal,
premium, if any, and interest on the Offered Debt Securities of such series on
the dates such payments are due in accordance with the terms of such Offered
Debt Securities. To exercise either such option, the Corporation is required,
among other things, to deliver to the relevant Trustee an opinion of counsel to
the effect that (1) the Corporation has received from or there has been
published by the United States Internal Revenue Service a ruling to the effect
that the deposit and related defeasance would not cause the Holders of the
Offered Debt Securities of such series to recognize income, gain or loss for
United States income tax purposes and (2) if the Offered Debt Securities of such
series are then listed on any national securities exchange, such Offered Debt
Securities would not be delisted from such exchange as a result of the exercise
of such option. Notwithstanding the foregoing, no discharge or defeasance
described above shall affect the obligations, if applicable, of the Corporation
with respect to the conversion of Debt Securities of a given series into Common
Stock.
NOTICES
Except as otherwise provided in the Indentures, notices to Holders of
Bearer Securities will be given by publication at least twice in a daily
newspaper in The City of New York and, if Debt Securities of such series are
then listed on The Stock Exchange of the United Kingdom and the Republic of
Ireland or the Luxembourg Stock Exchange or any other stock exchange located
outside the United States and such stock exchange shall so require, in a daily
newspaper in London or Luxembourg or any other required city located outside the
United States, as the case may be, or, if not practicable, elsewhere in Europe.
Notices to Holders of Registered Securities will be given by mail to the address
of such Holders as they appear in the Security Register.
GOVERNING LAW
The Indentures, the Offered Securities and the Coupons, if any, will be
governed by, and construed in accordance with, the laws of the State of New
York. A judgment for money damages awarded by courts in the United States,
including a money judgment based on an obligation expressed in a Foreign
Currency, ordinarily will be rendered only in U.S. Dollars.
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REGARDING THE TRUSTEES
The Corporation and certain subsidiaries from time to time may borrow from
the Trustees, maintain deposit accounts and conduct other banking transactions
with them in the ordinary course of their business.
U.S. FEDERAL TAXATION
The Prospectus Supplement will contain a brief summary of the relevant
United States federal income taxation laws applicable to the Offered Debt
Securities.
DESCRIPTION OF CAPITAL STOCK
The following summaries of the Preferred Stock and the Common Stock do not
purport to be complete and are subject to and qualified in their entirety by
reference to the applicable provisions of the Delaware General Corporation Law
and the Company's Restated Certificate of Incorporation, including the
Certificate of Designations describing the Series A Junior Participating
Preferred Stock, and the Corporation's Restated Bylaws.
The authorized capital stock of the Corporation consists of 300,000,000
shares of Common Stock, and 5,000,000 shares of Preferred Stock. As of September
30, 1997, 99,793,613 shares of Common Stock were issued and outstanding and no
shares of Preferred Stock were outstanding. As of December 31, 1996, 6,514,374
shares of Common Stock were reserved for issuance pursuant to employee benefit
plans of the Corporation. In addition, 500,000 shares of Preferred Stock
designated as Series A Junior Participating Preferred Stock were reserved for
issuance upon the exercise of certain rights described below under
"-- Stockholders' Rights Plan."
Since the Corporation is a holding company, the right of the Corporation,
and hence the right of creditors and stockholders of the Corporation, to
participate in any distribution of assets of any subsidiary (including
SouthTrust Bank) upon its liquidation or reorganization or otherwise necessarily
is subject to the prior claims of creditors of the subsidiary, except to the
extent that claims of the Corporation itself as a creditor of the subsidiary may
be recognized.
DESCRIPTION OF PREFERRED STOCK
The following descriptions of the terms of the Preferred Stock sets forth
certain general items and provisions of the Preferred Stock to which any
applicable Prospectus Supplement may relate. The specific terms of any series of
the Preferred Stock offered by any applicable Prospectus Supplement will be
described in any applicable Prospectus Supplement relating to such series of the
Preferred Stock. If so indicated in any applicable Prospectus Supplement, the
terms of any such series may differ from the terms set forth below. The
description of certain provisions of the Preferred Stock set forth below and in
any applicable Prospectus Supplement does not purport to be complete and is
subject to and qualified in its entirety by reference to the Certificate of
Designations relating to each series of the Preferred Stock which will be filed
with the Commission.
General
Under the Corporation's Restated Certificate of Incorporation, the Board of
Directors is authorized without further stockholder action to provide for the
issuance of up to 5,000,000 shares of 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, noncumulative or partially
cumulative. The holders of the Preferred Stock would not have any preemptive
right to subscribe for any shares issued by the Corporation. It is not possible
to state the actual effect of the authorization and issuance of Preferred Stock
upon the rights of holders of the Common Stock unless and until the Board of
Directors determines the price and specific rights of the holders of a series of
the Preferred Stock. Such effects might include, however, (i) restrictions on
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dividends on the Common Stock if dividends on Preferred Stock have not been
paid; (ii) dilution of the voting power of the Common Stock to the extent that
the Preferred Stock has voting rights, or that any Preferred Stock series is
convertible into Common Stock; (iii) dilution of the equity interest of the
Common Stock unless the Preferred Stock is redeemed by the Corporation; and (iv)
the Common Stock not being entitled to share in the Corporation's assets upon
liquidation until satisfaction of any liquidation preference granted the
Preferred Stock. While the ability of the Corporation to issue Preferred Stock
is, in the judgment of the Corporation'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 the Corporation.
In connection with the adoption of the Stockholder's Rights Plan described
below, the Corporation's Board of Directors designated 500,000 shares of the
Corporation's authorized but unissued Preferred Stock as Series A Junior
Participating 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 to 100 shares of Common Stock. No shares of Series A
Preferred Stock have been issued as of the date of the Prospectus.
DESCRIPTION OF COMMON STOCK
Dividend Rights
Subject to any prior rights of any Preferred Stock of the Corporation
outstanding, holders of the Common Stock are entitled to dividends when, as and
if declared by the Board of Directors out of funds legally available therefor.
Under Delaware law, the Corporation 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 the
Corporation are its subsidiaries. The Corporation's primary subsidiary is a bank
and therefore, payments made by such subsidiary to the Corporation are limited
by law and regulations of the bank regulatory authorities. See "Regulatory
Matters."
Voting Rights and Other Matters
The holders of the Common Stock are entitled to one vote per share on all
matters brought before the stockholders. The holders of the Common Stock do not
have the right to cumulate their shares of Common Stock in the election of
directors. The Restated Certificate of Incorporation of the Corporation 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 the Corporation or an affiliate of such a holder) pursuant to
which the Corporation would be merged into or with another corporation or
securities of the Corporation would be issued in a transaction which would
permit control of the Corporation 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 the Corporation, 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 who are unaffiliated with the Interested Stockholder and who were
directors before the Interested Stockholder became an Interested Stockholder.
The Common Stock does not have any conversion rights, nor are there any
redemption or sinking fund provisions applicable thereto. Holders of Common
Stock are not entitled to any preemptive rights.
Liquidation Rights
In the event of liquidation, holders of the 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 hereafter
issued by the Corporation.
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Provisions with Respect to Board of Directors
The Restated Certificate of Incorporation of the Corporation provides that
the members of the 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, roughly one-third of the members of the
Board of Directors will be elected for a three-year term. The other directors
will remain in office until their three year terms expire. Therefore, control of
the Board of Directors cannot be changed in one year, and at least two annual
meetings must be held before a majority of the members of the Board of Directors
can be changed.
Special Vote Requirements for Certain Amendments to Restated Certificate of
Incorporation
The General Corporation Law of the State of Delaware and the Restated
Certificate of Incorporation and Bylaws of the Corporation provide that a
director, or the entire Board of Directors, may be removed by the stockholders
only for cause. The Restated Certificate of Incorporation and Bylaws of the
Corporation 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 the Corporation 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 outstanding voting stock of the Corporation.
Possible Effect of Special Provisions
Certain of the provisions contained in the Restated Certificate of
Incorporation and Bylaws of the Corporation described above have the effect of
making it more difficult to change the Board of Directors, and may make the
Board of Directors less responsive to stockholder control. These provisions also
may tend to discourage attempts by third parties to acquire the Corporation,
and, as a result, may adversely affect the price that a potential purchaser
would be willing to pay for the capital stock of the Corporation, thereby
reducing the amount a stockholder might realize in, for example, a tender offer
for the capital stock of the Corporation.
Stockholders' Rights Plan
On February 22, 1989, the Board of Directors of the Company by resolution
declared a dividend to holders of 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 Common Stock outstanding on the Record Date.
Each Right entitles the holder thereof to purchase from the Corporation one
one-hundredth of a share of 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 Common Stock as provided in the Rights
Agreement referred to below, the appropriate number of Rights shall be issued
with each share of Common Stock issued after March 6, 1989. The number of Rights
attached to or to be issued with each share of Common Stock of the Corporation
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 the Corporation
on January 24, 1992, and a three-for-two stock split effected by the Corporation
on May 19, 1993. Accordingly, at the present time four-ninths of a Right is
attached to each share of Common Stock of the Corporation.
The Rights will expire on February 22, 1999, unless redeemed earlier, and
will not be exercisable or transferable separately from the shares of 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 Common Stock of the Corporation (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
Common Stock of the Corporation; or (iii) the tenth day after the Board of
Directors declares, upon a determination by at least a majority of the
Corporation's independent directors, that a person, alone or with affiliates and
associates (an "Adverse
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Person"), has become the beneficial owner of a substantial amount (not to be
less than 10%) of outstanding Common Stock of the Corporation and that such
person's ownership either is intended to cause the Corporation to take action
adverse to its long-term interests or may cause a material adverse impact on the
Corporation to the detriment of the Corporation's Stockholders.
In the event that (i) the Board of Directors determines that a person is an
Adverse Person; (ii) the Corporation is the surviving corporation in a merger
with an Acquiring Person and the Corporation'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 the Corporation,
greater than that received by other stockholders of the Corporation or that
which would have resulted from arms-length negotiations; (iv) a person becomes
the beneficial owner of 30% or more of the outstanding Common Stock of the
Corporation (except pursuant to a "Fair Offer" as determined by the independent
directors); or (v) while there is an Acquiring Person, an event involving the
Corporation 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 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 the Corporation 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,
the Corporation is acquired in a merger or other business combination in which
the Corporation is not the surviving corporation or in which the Common Stock of
the Corporation 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 the Corporation 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 the 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), the Corporation may redeem the
Rights in whole, but not in part, at a price of $.01 per Right. Prior to the
Distribution Date, the Corporation may, except with respect to the Purchase
Price, the redemption price or the date of expiration of the Rights, amend the
Rights in any manner. At any time after the Distribution Date, the Corporation
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 the Corporation. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Corporation. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors of the Corporation 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 $.01 per Right.
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 (the "Rights Agreement") between the Corporation and Mellon
Bank, N.A. (now known as ChaseMellon Shareholder Services LLC), as Rights Agent,
a copy of which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and the Certificate of Designation for the Series
A Preferred Stock.
Transfer Agent
The transfer agent for the Common Stock is ChaseMellon Shareholder Services
LLC.
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BOOK-ENTRY ONLY ISSUANCE OF OFFERED SECURITIES
Unless otherwise specified in any applicable Prospectus Supplement, Offered
Securities which are to be issued in book-entry only form will be represented by
one or more global securities (each a "Global Security") held through The
Depository Trust Company ("DTC") or its nominee (in the United States), or
through Cedel Bank or Euroclear (abroad), Offered Securities held through DTC
will be registered in the name of Cede & Co., as nominee of DTC. Cedel Bank and
Euroclear will hold omnibus positions on behalf of Cedel Bank Participants (as
defined below) and Euroclear Participants (as defined below), respectively,
through customers' securities accounts in Cedel Bank's and Euroclear's names,
respectively, on the books of their respective depositaries, which in turn, will
hold such positions on the books of DTC.
Under the book-entry system of DTC, purchases of Offered Securities must be
made by or through institutions that have accounts with DTC or its nominee
("Participants") or persons that may hold interests through Participants
("Indirect Participants"). Upon the issuance and deposit of a Global Security,
DTC will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Offered Securities represented by such
Global Security to the accounts of Participants as designated by the
underwriters or by the Corporation if such Offered Securities are offered by the
Corporation. The ownership of beneficial interests in such Global Security will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee (with respect to interests of
Participants) and the records of Participants (with respect to interests of
Indirect Participants) and Indirect Participants. So long as DTC, or its
nominee, is the registered holder of a Global Security, DTC or its nominee will
be considered the sole owner or holder of the Offered Securities represented by
such Global Security. Except as provided below, owners of beneficial interests
in a Global Security will not be entitled to have Offered Securities registered
in their names, will not receive or be entitled to receive physical delivery of
such Offered Securities in certificated form and will not be considered the
owners or holders thereof. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such transfer restrictions and such laws may impair the
ability to own, transfer or pledge beneficial interests in a Global Security.
DTC has advised the Corporation as follows: DTC is a limited-purpose trust
company organized under New York law, a "banking organization" within the
meaning of New York law, a member of the Federal Reserve system, a "clearing
corporation" within the meaning of the Uniform Commercial Code as in effect in
the State of New York and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act, as amended. DTC was created to
hold securities deposited by its Participants and to facilitate the clearance
and settlement of securities transactions among Participants in such securities
through electronic computerized book-entry changes in accounts of the
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC's direct Participants include securities brokers and dealers
(including the underwriters), banks (including certain subsidiaries of the
Corporation), trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) have ownership
interests in DTC. DTC is owned by a number of its Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc. and the NASD.
Indirect access to DTC's book-entry system is also available to Indirect
Participants, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. The rules applicable to DTC and its Participants are on file with
the Commission.
To facilitate subsequent transfers, all securities deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit of
securities with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual beneficial
owners of securities deposited with it such as the Offered Securities; DTC's
records reflect only the identity of the Participants to whose accounts such
securities are credited, which may or may not be the beneficial owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers. Conveyance of notices and other communications by DTC
to Participants, by Participants to Indirect Participants and by Participants
and Indirect Participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. Neither DTC nor Cede & Co. will consent or vote with
respect to securities held by DTC. Under its usual
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procedures, DTC mails an omnibus proxy to an issuer as soon as possible after
the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting
rights to those Participants to whose accounts the securities are credited on
the record date (identified in a listing attached to the omnibus proxy).
DTC can act only on behalf of Participants, who in turn act on behalf of
Indirect Participants. Owners of beneficial interests in a Global Security that
are not Participants or Indirect Participants but desire to purchase, sell or
otherwise transfer ownership of such interests may do so only through
Participants and Indirect Participants. In addition, the ability of owners of
beneficial interests in a Global Security to pledge such interests to persons or
entities that do not participate in the DTC system may be limited due to the
lack of certificates for the Offered Securities.
Transfers between Cedel Bank Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding securities directly or
indirectly through DTC in the United States, on the one hand, and directly or
indirectly through Cedel Bank Participants or Euroclear Participants, on the
other, will be effected by DTC in accordance with DTC rules on behalf of the
relevant European international clearing system by its depositary; however, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
depositary to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. Cedel
Bank Participants and Euroclear Participants may not deliver instructions
directly to the depositaries.
Because of time-zone differences, credits for securities in Cedel Bank or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Bank Participant or Euroclear Participant on such business day. Cash received in
Cedel Bank or Euroclear as a result of sales of securities by or through a Cedel
Bank Participant or a Euroclear Participant to a DTC Participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedel Bank or Euroclear cash account only as of the business day
following settlement in DTC.
Cedel Bank is incorporated under the laws of Luxembourg as a professional
depository. Cedel Bank holds securities for its participating organizations
("Cedel Bank Participants") and facilitates the clearance and settlement of
securities transactions between Cedel Bank Participants through electronic
book-entry changes in accounts of Cedel Bank Participants, thereby eliminating
the need for physical movement of certificates. Transactions may be settled by
Cedel Bank in any of 28 currencies, including United States dollars. Cedel Bank
provides to its Cedel Bank Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel Bank interfaces with
domestic markets in several countries. As a professional depository, Cedel Bank
is subject to regulation by the Luxembourg Monetary Institute. Cedel Bank
Participants are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations and may include one or more of the
underwriters of the Offered Securities. Indirect access to Cedel Bank is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Cedel Bank
Participant, either directly or indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating
the need for physical movement of certificates and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in any of 32 currencies, including United States dollars. The Euroclear System
includes various other services, including securities lending and borrowing and
interfaces with
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domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. The Euroclear System is
operated by the Euroclear Operator, under contract with Euroclear Clearance
System, S.C., a Belgian cooperative corporation (the "Cooperative"). All
operations are conducted by the Euroclear Operator, and all Euroclear securities
clearance accounts and Euroclear cash accounts are accounts with the Euroclear
Operator, not the Cooperative. The Cooperative establishes policy for the
Euroclear System on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include one or more of the
underwriters of the Offered Securities. Indirect access to the Euroclear System
is also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Brussels branch of a New York banking
corporation which is a member bank of the Federal Reserve system. As such, it is
regulated and examined by the Federal Reserve Board and the New York State
Banking Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to the Offered Securities held through Cedel
Bank or Euroclear will be credited to the cash accounts of Cedel Bank
Participants or Euroclear Participants in accordance with the relevant system's
rules and procedures, to the extent received by its depositary. Such
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. United States federal income tax
consequences to foreign investors will be further discussed in an applicable
Prospectus Supplement. Cedel Bank or the Euroclear Operator, as the case may be,
will take any other action permitted to be taken by a holder of the Offered
Securities on behalf of a Cedel Bank Participant or a Euroclear Participant only
in accordance with its relevant rules and procedures and subject to its
depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedel Bank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of the Offered Securities among
participants of DTC, Cedel Bank and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
Except as otherwise provided herein, the holder of a Global Security shall
be the only person entitled to receive payments with respect to Offered
Securities represented by such Global Security. Accordingly, payments of
principal of, premium, if any, and any interest on Offered Securities
represented by a Global Security will be made only to DTC or its nominee, as the
case may be, as the registered holder of the Global Security representing such
Offered Securities. The Corporation expects that, upon receipt of any payment of
principal, premium or interest in respect of a Global Security, DTC will credit
Participants' accounts in accordance with their respective holdings with respect
to a Global Security as shown on DTC's records. The Corporation also expects
that payments by Participants to beneficial owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name." Such
instructions will be the responsibility of such Participant and not of DTC, the
underwriters, the Corporation or the Trustees; subject to any statutory or
regulatory requirements as may be in effect from time to time. The Corporation
will in every case be discharged by payment to, or to the order of, DTC or its
nominee as the holder of such Global Security, of the amount so paid. Each of
the persons shown in the records of DTC or its nominee as an owner of a
beneficial interest therein must look solely to DTC or its nominee, as the case
may be, for its share of any such payment so made by the Corporation. None
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<PAGE> 42
of the Corporation, the Trustees, any Paying Agent, the Security Registrar or
transfer agent for the Offered Securities will have any responsibility or
liability for any aspect if the records relating to or payments made on account
of owners of beneficial interests in a Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
Although DTC has agreed to the foregoing procedure in order to facilitate
transfers of beneficial interests in Global Securities among its Participants,
it is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time.
A Global Security may not be transferred except as a whole by DTC for such
Global Security to or among a nominee or successor. If DTC is at any time
unwilling, unable or ineligible to continue as a depositary and a successor
depositary is not appointed by the Corporation within 90 days, the Corporation
will issue registered Offered Securities in certificated form in exchange for
beneficial interest in each Global Security. In addition, the Corporation may at
any time and in its sole discretion determine not to have Offered Securities
represented by Global Securities and, in such event, will issue registered
Offered Securities in certificated form in exchange for beneficial interests in
Global Securities. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery in certificated form of an
Offered Security or Offered Securities equal in liquidation amount to such
beneficial interest and to have such Offered Security or Offered Securities
registered in its name.
In the event that the Offered Securities are issued in certificated form,
the Trustees, if applicable, will appoint a paying and transfer agent in
Luxembourg at whose office such Offered Securities in certificated form may be
presented for payment and/or transfer for so long as they are outstanding. The
paying and transfer agent that is expected to be appointed in such circumstances
is: Banque Generale du Luxembourg, 14 rue Aldringen, L2951 Luxembourg. In
addition, upon redemption of the Offered Securities, such Offered Securities in
certificated form may be presented for payment at the offices of such paying and
transfer agent in Luxembourg up to two years after the date of redemption of the
Offered Securities. If Offered Securities in certificated form are issued,
notices to holders of the Offered Securities will also be given by mail to the
addresses of such holders as they appear on the security register.
Any notices required to be given to holders of the Offered Securities will
be given to DTC or its nominee, as the registered holder of the Offered
Securities, and by publication in a daily newspaper in Luxembourg, which is
expected to be the Luxemburger Wort. Until such time as any Offered Securities
are issued in certificated form, there may be substituted for publication in
such newspaper the delivery of the relevant notice to Euroclear and Cedel Bank
for communication to their Participants except that, so long as the Offered
Securities are listed on the Luxembourg Stock exchange and the rules of the
Luxembourg Stock Exchange so require, notices will also be published in the
Luxemburger Wort. Any such notice to Euroclear and Cedel Bank shall be deemed to
have been given to their Participants on the seventh day after the day on which
the said notice was given to Euroclear and Cedel Bank.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities may not be offered or sold during the restricted period (as defined
in Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury Regulations,
which is generally the first 40 days after the closing date, and with respect to
unsold allotments, until sold) or delivered in connection with a sale during the
restricted period, directly or indirectly, in the United States or to U.S.
Persons other than to foreign branches of United States financial institutions
(as defined in United States Treasury Regulations Section 1.165-12(c)(1)(v))
purchasing for their own account or for resale during the restricted period,
which institutions agree in writing to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Code, and the regulations thereunder. A sale of
Bearer Securities may be made during the restricted period to a U.S. Person who
acquired and holds the Bearer Security through a foreign branch of the United
States financial institution that agrees to comply with the requirements of
Section 165(j)(3)(A), (B) or (C) and the regulations thereunder. Any
underwriters, agents and dealers participating in the offering of Debt
Securities, directly or indirectly, must agree that they
24
<PAGE> 43
will not offer or sell, directly or indirectly, any Bearer Securities in the
United States or to U.S. Persons (other than the financial institutions
described above).
Bearer Securities (other than temporary global securities) and any Coupons
which may be detached therefrom will bear a legend substantially to the
following effect: "Any U.S. Person who holds this obligation will be subject to
limitations under the United States income tax laws, including the limitations
provided in Sections 165(j) and 1287(a) of the Internal Revenue Code." The
sections referred to in such legend provide that a U.S. Person (other than a
United States Financial Institution described above or a U.S. Person holding
through such a financial institution) who holds Bearer Securities or Coupons
appertaining thereto will not be allowed to deduct any loss realized on Bearer
Securities and any gain (which might otherwise be characterized as capital gain)
recognized on any sale or disposition (including the receipt of principal) of
such Bearer Securities will be treated as ordinary income.
Purchasers of Bearer Securities also may be affected by certain limitations
under United States tax laws which will be described in an applicable Prospectus
Supplement.
PLAN OF DISTRIBUTION
The Corporation may sell the Offered Securities being offered hereby in one
or more of the following ways: through underwriters or dealers, through agents
or directly to one or more purchasers. The applicable Prospectus Supplement will
set forth the terms of the offering of the Offered Securities to which such
Prospectus Supplement relates, including the name or names of any underwriters
or agents with whom the Corporation has entered into arrangements with respect
to the sale of such Offered Securities, the public offering or purchase price of
such Offered Securities and the net proceeds to the Corporation from such sale,
any underwriting discounts and other items constituting underwriters'
compensation, any discounts and commissions allowed or paid to dealers, if any,
any commissions allowed or paid to agents, and the securities exchanges, if any,
on which the Offered Securities will be listed. Dealer trading may take place in
the Offered Securities, including Offered Securities not listed on any
securities exchange.
The Offered Securities may be purchased to be re-offered to the public
through underwriting syndicates led by one or more managing underwriters, or
through one or more underwriters. The underwriter or underwriters with respect
to an underwritten offering of the Offered Securities will be named in any
applicable Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover page of any applicable Prospectus Supplement. Unless
otherwise set forth in any applicable Prospectus Supplement, the obligations of
the underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and each of the underwriters with respect to a sale of the
Offered Securities will be obligated to purchase all of its allocated Offered
Securities if any are purchased. Any initial public offering price and any
discount or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
Offered Securities may be offered and sold by the Corporation, directly or
through agents designated by the Corporation from time to time, which agents may
be affiliates of the Corporation. Any agent involved in the offer and sale of
the Offered Securities in respect of which this Prospectus is being delivered
will be named, and any commissions payable by the Corporation to such agent will
be set forth, in any applicable Prospectus Supplement. If sold through agents,
the Offered Securities may be sold from time to time by means of ordinary
brokers' transactions, block transactions, "fixed price offerings" or any
combination of such offerings at the prevailing market prices at the time of
sale or in negotiated sales. Unless otherwise indicated in any applicable
Prospectus Supplement, any such agent will be acting on a reasonable effort
basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Corporation
may authorize underwriters, dealers or agents to solicit offers by certain
institutions to purchase Offered Securities from the Corporation at the public
offering price set forth in such Prospectus Supplement pursuant to delayed
delivery contracts ("Delayed Delivery Contracts") providing for payment and
delivery on the date or dates stated in the Prospectus Supplement. Each Delayed
Delivery Contract will be for an amount of Offered Securities not less than and,
unless the Corporation otherwise agrees, the aggregate amount of Offered
Securities sold pursuant to Delayed Delivery Contracts shall be not more than
the respective minimum and maximum amounts stated
25
<PAGE> 44
in the Prospectus Supplement. The obligations of the purchaser under any Delayed
Delivery Contract to pay for and take delivery of Offered Securities will not be
subject to any conditions except that (i) the purchase of Offered Securities by
such institution shall not at the time of delivery be prohibited under the laws
of the jurisdiction to which such institution is subject; and (ii) any related
sale of Offered Securities to underwriters shall have occurred. A commission set
forth in the Prospectus Supplement will be paid to underwriters soliciting
purchases of Offered Securities pursuant to Delayed Delivery Contracts accepted
by the Corporation. The underwriters will not have any responsibility in respect
of the validity or performance of Delayed Delivery Contracts.
The Debt Securities and Preferred Stock will be new issues of securities
with no established trading market. Any underwriters to whom such Debt
Securities or Preferred Stock are sold by the Corporation for public offering
and sale may make a market in such Debt Securities or Preferred Stock, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any Offered Securities.
Any underwriter or agent participating in the distribution of the Offered
Securities may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the Offered Securities so offered and sold and any discounts
or commissions received by them from the Corporation and any profit realized by
them on the sale or resale of the Offered Securities may be deemed to be
underwriting discounts and commissions under the Securities Act or to be the
contribution with respect to payments which the underwriters or agents may be
required to make in respect thereof.
Underwriters, agents and their controlling persons may be entitled, under
agreements entered into with the Corporation, to indemnification by the
Corporation against certain civil liabilities, including liabilities under the
Securities Act or to contribution with respect to payments which the
underwriters or agents may be required to make in respect thereof.
LEGAL OPINIONS
The legality of the Offered Securities being offered hereby will be passed
upon for the Corporation by Bradley Arant Rose & White LLP, Birmingham, Alabama,
and, for the underwriters by Stroock & Stroock & Lavan LLP, New York, New York.
As of September 30, 1997, the partners and associates of Bradley Arant Rose &
White LLP beneficially owned approximately 2,035,000 shares of Common Stock of
the Corporation.
EXPERTS
The consolidated financial statements of the Corporation and its
subsidiaries incorporated by reference in this Prospectus and elsewhere in this
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
included herein in reliance upon the authority of said firm as experts in giving
said reports.
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======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE UNDERWRITERS. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION SINCE THE DATE
HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER
OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
SouthTrust Corporation................ S-3
Use of Proceeds....................... S-4
Capitalization........................ S-5
Market Price and Dividends............ S-6
Selected Financial Data............... S-7
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... S-8
Taxation of Non-U.S. Stockholders..... S-14
Underwriting.......................... S-16
Legal Opinions........................ S-18
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
SouthTrust Corporation................ 3
Use of Proceeds....................... 4
Regulatory Matters.................... 5
Description of Debt Securities........ 7
Description of Capital Stock.......... 17
Book-Entry Only Issuance of Offered
Securities.......................... 21
Limitations on Issuance of Bearer
Securities.......................... 24
Plan of Distribution.................. 25
Legal Opinions........................ 26
Experts............................... 26
</TABLE>
======================================================
======================================================
4,500,000 SHARES
(SOUTHTRUST CORPORATION LOGO)
COMMON STOCK
(PAR VALUE $2.50 PER SHARE)
------------------------------
PROSPECTUS SUPPLEMENT
------------------------------
MERRILL LYNCH INTERNATIONAL
, 1998
======================================================
