<PAGE> 1
As filed with the Securities and Exchange Commission on November 2, 2000
Registration No. {_________}
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
----------------------------
SOUTHTRUST CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 6711 63-0574085
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
420 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 254-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
----------------------------
ALTON E. YOTHER
SOUTHTRUST CORPORATION
420 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 254-5000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to:
PAUL S. WARE, ESQ. BEN H. WILKINSON, ESQ.
BRADLEY ARANT ROSE & WHITE LLP PENNINGTON, MOORE, WILKINSON,
2001 PARK PLACE, SUITE 1400 BELL & DUNBAR, P.A.
BIRMINGHAM, AL 35203 215 SOUTH MONROE STREET, 2ND FL.
(205) 521-8000 TALLAHASSEE, FL 32301
(850) 222-3533
---------------------------------------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]__________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]____________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate offering Amount of
securities to be registered registered per unit price registration fee
---------------------------------------- -------------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, par value
$2.50 per share....................... 736,644 Shares(1) * $9,102,738(3) $2,403.12
Rights to Purchase Series 1999 Junior
Participating Preferred Stock.......... 736,644 Rights(2)
</TABLE>
* Not Applicable
(1) This registration statement covers (i) the maximum number of shares of the
common stock of the registrant which is expected to be issued in connection
with the merger of First Bank Holding Company with and into a subsidiary of
the registrant based on a conversion ratio known at the time of filing this
registration statement, and (ii) the maximum number of shares of common
stock reserved for issuance under various option plans of First Bank Holding
Company, the obligations under which will be assumed by the registrant upon
consummation of the merger, but which may be issued prior to consummation of
the merger to the extent such options are currently exercisable.
(2) Represents one right issued in respect of each share of common stock of the
registrant to be issued.
(3) Estimated solely for purposes of determining the amount of the registration
fee, in accordance with Rule 457(f)(2) under the Securities Act of 1933.
----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
FIRST BANK HOLDING COMPANY
[Letterhead]
A MERGER PROPOSAL - YOUR VOTE IS VERY IMPORTANT
To the Shareholders of First Bank Holding Company:
The board of directors of First Bank Holding Company has approved a
merger of First Bank Holding into SouthTrust of Alabama, Inc., a subsidiary of
SouthTrust Corporation. We have scheduled a special meeting of the shareholders
of First Bank Holding to vote on the merger. The special meeting will be held on
December {__}, 2000, at 5:30p.m. at 1997 Capital Circle, N.E., Tallahassee,
Florida, and you are cordially invited to attend.
Enclosed are the (1) notice of special meeting, (2) proxy statement/prospectus,
and (3) proxy for the special meeting. The proxy statement/prospectus describes
the merger agreement and the merger in more detail including a description of
the conditions to the merger and the effect of the merger on you, the
shareholders of First Bank Holding. Please read these materials carefully.
The board of directors has unanimously approved the merger agreement and the
merger, and unanimously recommends that you vote "FOR" the approval of the
merger agreement.
- If the merger is completed you will receive 1.7456 shares of common
stock of SouthTrust for each share of common stock of First Bank
Holding that you hold.
- After the merger is completed you will no longer own shares of First
Bank Holding common stock. You will own shares of SouthTrust common
stock.
- Shares of SouthTrust common stock are quoted on The Nasdaq Stock Market
under the symbol "SOTR".
- The merger cannot be completed unless the holders of at least
two-thirds of the shares of First Bank Holding common stock entitled to
vote at the special meeting approve it.
On behalf of the board of directors of First Bank Holding, we urge you
to complete, sign and return promptly the enclosed proxy card whether or not you
plan to attend the Special Meeting. If you attend the Special Meeting, you may
vote in person if you wish, even if you have previously returned your proxy
card.
/s/ Elaine N. Duggar /s/ F. C. Nixon
----------------------------------- -----------------------------------
Elaine N. Duggar F. C. Nixon
Chairman President
<PAGE> 3
FIRST BANK HOLDING COMPANY
1997 Capital Circle, N.E.
Tallahassee, Florida 32308
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER {__}, 2000
Notice is hereby given that a special meeting of shareholders of First
Bank Holding Company ("First Bank Holding"), a Florida corporation, will be held
on December {__}, 2000 at 5:30p.m. at 1997 Capital Circle, N.E., Tallahassee,
Florida for the following purposes:
1. to consider and vote upon a proposal to adopt an
Agreement and Plan of Merger, dated as of September 28, 2000 which
provides for the merger of First Bank Holding with and into SouthTrust
of Alabama, Inc., a subsidiary of SouthTrust Corporation. In the
merger, each share of First Bank Holding common stock outstanding on
the effective date of the merger will be converted into 1.7456 shares
of SouthTrust common stock. You can find a copy of the merger agreement
and related plan of merger in Exhibit A to the accompanying proxy
statement/prospectus; and
2. to transact other business, if any, that may properly
come before the special meeting or any adjournments or postponements of
the special meeting.
Only those persons who hold shares of First Bank Holding common stock
at the close of business on November 8, 2000 are entitled to notice of and to
vote at the special meeting or at any adjournment or postponement of the special
meeting. The special meeting may be adjourned or postponed more than once
without further notice being given to shareholders of First Bank Holding other
than an announcement being made at the special meeting or at any adjournment or
postponement of the special meeting. Any business referred to in this notice may
be transacted at any adjournment or postponement of the special meeting.
Appraisal rights are available under Florida law to First Bank Holding
shareholders with respect to the merger. Please see the section entitled "Your
Right to Dissent from the Merger" beginning on page {____} of the accompanying
proxy statement/prospectus for a discussion of the availability of appraisal
rights and the procedures required to be followed to assert dissenters' rights
in connection with the merger.
We look forward to seeing you at the special meeting. Your vote is
important. Please mark, sign and return your proxy card, whether or not you plan
to attend the special meeting.
By Order of the Board of Directors
/s/ Susie B. Andrews
------------------------------------
Susie B. Andrews, Secretary
Tallahassee, Florida
November {__}, 2000
WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING OR NOT, PLEASE SIGN AND RETURN
THE ENCLOSED PROXY SO THAT FIRST BANK HOLDING MAY BE ASSURED OF THE PRESENCE OF
A QUORUM AT THE SPECIAL MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE> 4
Proxy Statement of
FIRST BANK HOLDING COMPANY
For a Special Meeting of its Shareholders
to be held December {_____}, 2000
This Proxy Statement includes the Prospectus of
SOUTHTRUST CORPORATION
Relating to up to 736,644 shares of common stock
(Par Value $2.50 Per Share)
TO BE ISSUED IN CONNECTION WITH A PROPOSED MERGER OF
FIRST BANK HOLDING COMPANY INTO
SOUTHTRUST OF ALABAMA, INC.
A SUBSIDIARY OF SOUTHTRUST CORPORATION
In the merger, each of your shares of First Bank Holding common stock will be
converted into 1.7456 shares of SouthTrust common stock. This represents a value
of ${__________} based on the {____________}, 2000 closing price of SouthTrust
common stock.
Your board of directors has unanimously approved this strategic merger
which provides First Bank Holding with growth and opportunities that would not
have been available to us on a stand-alone basis. In addition, it provides you
with the opportunity to participate as a stockholder in one of the nation's
twenty-six largest bank holding companies. In order to complete this merger, we
need your approval. This document is being furnished to you in connection with
the solicitation of proxies by our board of directors for our use at the special
meeting of shareholders. This proxy statement/prospectus only offers the shares
of SouthTrust referred to in this document and does not offer them where it is
illegal to do so.
SPECIAL MEETING
WHERE: 1997 Capital Circle, N.E.
Tallahassee, Florida
WHEN: December {_____}, 2000
TIME: 5:30 p.m. local time
Your board of directors believes that the merger is in the best interest of
First Bank Holding and its shareholders and strongly encourages you to vote
"FOR" approval of the merger agreement. Our financial advisor, Allen C. Ewing &
Co., has issued its opinion to the First Bank Holding board of directors that
the exchange ratio is fair from a financial point of view to First Bank Holding
shareholders.
SouthTrust common stock is traded and quoted on The Nasdaq Stock Market
under the symbol "SOTR."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS
PROXY STATEMENT/PROSPECTUS OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES THAT SOUTHTRUST IS OFFERING THROUGH THIS DOCUMENT ARE NOT SAVINGS
OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK SUBSIDIARY OF
SOUTHTRUST, AND THEY ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
The date of this proxy statement/prospectus is November {__}, 2000, and
it is being mailed or otherwise delivered to First Bank Holding shareholders on
or about that date.
<PAGE> 5
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about SouthTrust from documents that are not included in
or delivered with this document. This information is available to you without
charge upon your written or oral request. You can obtain documents incorporated
by reference in this proxy statement/prospectus, other than certain exhibits to
those documents, by requesting them in writing or by telephone from SouthTrust
at the following address:
SouthTrust Corporation
420 North 20th Street
Birmingham, Alabama 35203
Attention: Alton E. Yother
(205) 254-0000
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY {__________},
{__________}, 2000 IN ORDER TO RECEIVE THEM BEFORE THE SPECIAL MEETING.
See "Where You Can Find More Information" on page {____} for further
information.
ii
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
REFERENCES TO ADDITIONAL INFORMATION.............................................................................ii
TABLE OF CONTENTS...............................................................................................iii
COMMON QUESTIONS AND ANSWERS ABOUT THE MERGER.....................................................................1
SUMMARY .........................................................................................................2
A WARNING ABOUT FORWARD-LOOKING INFORMATION.......................................................................5
SELECTED FINANCIAL INFORMATION....................................................................................7
Selected financial information about SouthTrust..........................................................7
Selected financial information about First Bank Holding..................................................8
Selected pro forma information...........................................................................9
Unaudited Comparative per Share Data....................................................................10
THE SPECIAL MEETING..............................................................................................11
The Record Date; Quorum Requirement.....................................................................11
Voting Rights and Votes Required........................................................................11
Voting at the Special Meeting; Proxies..................................................................11
Solicitation of Proxies.................................................................................12
Effect of "Abstentions" and "Broker Non-Votes"..........................................................12
THE MERGER.......................................................................................................13
General ...............................................................................................13
Effective Time of the Merger............................................................................13
Background of and Reasons of First Bank Holding for the Merger..........................................14
Reasons of SouthTrust for the Merger....................................................................15
Opinion of Financial Advisor to First Bank Holding......................................................15
Interests of Certain Persons in the Merger..............................................................21
Effect of the Merger on First Bank Holding Common Stock.................................................23
Effect of the Merger on First Bank Holding Stock Options................................................23
Distribution of SouthTrust Stock Certificates...........................................................24
Your Right to Dissent from the Merger...................................................................24
Timing of Completion of the Merger......................................................................28
Regulatory Approvals....................................................................................28
Conditions to be Satisfied or Waived before the Merger Can be Completed.................................29
Conduct of Business by First Bank Holding Pending the Merger............................................30
Other Covenants and Agreements..........................................................................31
Waiver and Amendment....................................................................................32
Termination of the Merger Agreement.....................................................................32
Break-Up and Termination Fees...........................................................................33
Resales of Shares of SouthTrust Common Stock............................................................34
Anticipated Accounting Treatment........................................................................34
Expenses ...............................................................................................35
FEDERAL INCOME TAX CONSEQUENCES..................................................................................35
DESCRIPTION OF SOUTHTRUST CAPITAL STOCK..........................................................................37
General ...............................................................................................37
SouthTrust Common Stock.................................................................................37
SouthTrust Preferred Stock..............................................................................40
</TABLE>
iii
<PAGE> 7
<TABLE>
<S> <C>
MARKET PRICE AND DIVIDEND INFORMATION WITH RESPECT TO
SOUTHTRUST COMMON STOCK AND FIRST BANK HOLDING COMMON STOCK.............................................41
Market Price............................................................................................41
Dividends...............................................................................................42
COMPARISON OF RIGHTS OF
STOCKHOLDERS OF SOUTHTRUST AND
SHAREHOLDERS OF FIRST BANK HOLDING......................................................................43
Voting Rights...........................................................................................43
Rights on Liquidation...................................................................................43
Rights of Pre-emption...................................................................................44
Rights to Call a Special Meeting of the Stockholders....................................................44
Right to Amend Corporate Governing Documents............................................................44
Right of Dissent and Appraisal..........................................................................44
Election and Classification of the Board of Directors...................................................44
Nomination of Directors by Stockholders.................................................................45
Rights to Remove a Director.............................................................................45
Rights to Reports to Stockholders.......................................................................45
Effect of the Issuance of Preferred Stock...............................................................45
Rights Attached to Capital Stock........................................................................46
SUPERVISION AND REGULATION.......................................................................................46
SouthTrust..............................................................................................46
First Bank Holding......................................................................................49
INFORMATION CONCERNING THE BUSINESS OF FIRST BANK HOLDING........................................................49
FIRST BANK HOLDING MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................................................52
WHERE YOU CAN FIND MORE INFORMATION..............................................................................63
EXPERTS AND COUNSEL..............................................................................................65
SUBMISSION OF SHAREHOLDER PROPOSALS AND OTHER MATTERS............................................................65
FIRST BANK HOLDING COMPANY AUDITED FINANCIAL STATEMENTS.........................................................F-1
EXHIBIT A - AGREEMENT AND PLAN OF MERGER........................................................................A-1
EXHIBIT B - OPINION OF ALLEN C. EWING & CO. ....................................................................B-1
EXHIBIT C
FLORIDA BUSINESS CORPORATION ACT DISSENT PROVISIONS....................................................C-1
</TABLE>
iv
<PAGE> 8
COMMON QUESTIONS AND ANSWERS ABOUT THE MERGER
Q. WHAT DO I NEED TO DO NOW?
A. Just indicate on your proxy card how you want to vote with respect to
the merger agreement. Sign and return the proxy card in the enclosed
prepaid return envelope marked "Proxy" as soon as possible, so that
your shares may be represented and voted at the special meeting to be
held on December {____}, 2000.
Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A. No. Your broker will not be able to vote your shares without
instructions from you. You should instruct your broker to vote your
shares, following the directions provided by your broker. Your failure
to instruct your broker to vote your shares will be the equivalent of
voting against the approval of the merger agreement.
Q. CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A. Yes. There are three ways in which you may revoke your proxy and
change your vote. First, you may send a written notice to the
Secretary of First Bank Holding stating that you would like to revoke
your proxy. Second, you may complete and submit a new proxy card.
Third, you may attend the special meeting and vote in person. Simply
attending the special meeting, however, will not revoke your proxy.
Q. SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A. No. After the merger is completed, SouthTrust will send you written
instructions explaining how you should exchange your stock
certificates.
Q. WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A. We expect the merger to be completed during the fourth quarter of 2000.
We are working towards completing the merger as quickly as possible.
To do so, the shareholders of First Bank Holding must approve the
merger agreement and the merger and we must obtain the banking and
other regulatory approvals that are necessary to complete the merger.
Q. WHOM SHOULD I CALL WITH QUESTIONS OR TO OBTAIN COPIES OF THIS PROXY
STATEMENT/PROSPECTUS?
A. You should contact Alton E. Yother of SouthTrust, telephone (205)
254-5000.
1
<PAGE> 9
SUMMARY
This brief summary highlights selected information from this proxy
statement/prospectus. It does not contain all of the information that is
important to you. Each item in this summary refers to the page where that
subject is discussed in more detail. You should carefully read the entire proxy
statement/prospectus and other documents to which we refer to fully understand
the merger. See "Where You Can Find More Information" on page {____} on how to
obtain copies of those documents. In addition, the merger agreement is attached
as Exhibit A to this proxy statement/prospectus. We encourage you to read the
merger agreement because it is the legal document that governs the merger.
INFORMATION REGARDING SOUTHTRUST AND FIRST BANK HOLDING
SOUTHTRUST CORPORATION
420 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 254-5000
SouthTrust is a Delaware corporation and a registered financial holding company,
and one of its wholly owned subsidiaries is SouthTrust of Alabama, Inc., an
Alabama corporation. SouthTrust of Alabama owns SouthTrust Bank, an Alabama
banking corporation. SouthTrust, through its subsidiaries, engages in a full
range of banking services from 640 banking locations in Alabama, Florida,
Georgia, Mississippi, North Carolina, South Carolina, Tennessee and Texas. As of
June 30, 2000, SouthTrust had consolidated total assets of approximately $44.3
billion, which ranked it as the twenty-sixth largest bank holding company in the
United States.
SouthTrust has pursued a strategy of acquiring banks and financial institutions
in or near major metropolitan or growth markets in Alabama, Florida, Georgia,
Mississippi, North Carolina, South Carolina, Tennessee and Texas. The purpose of
this strategy is to give SouthTrust business development opportunities in
metropolitan markets with favorable prospects for population and per capita
income growth.
SouthTrust routinely evaluates opportunities to acquire bank holding companies,
banks and other financial institutions. Thus, at any particular point in time,
including the date of this proxy statement/prospectus, discussions, and in some
cases, negotiations and due diligence activities leading to the execution of
preliminary or definitive acquisition agreements may occur or be in progress.
These transactions may involve SouthTrust acquiring such financial institutions
in exchange for cash or capital stock, and, depending on the terms of these
transactions, may dilute the SouthTrust common stock to be issued to you in the
merger.
FIRST BANK HOLDING COMPANY
1997 CAPITAL CIRCLE, N.E.
TALLAHASSEE, FLORIDA 32308
(850) 668-4034
First Bank Holding is a Florida corporation and a registered bank holding
company, whose subsidiary is First Bank, a Florida banking corporation. As of
the date of this proxy statement/prospectus, the bank has 3 branches in addition
to its main office and 4 ATMs located in Florida. At June 30, 2000, First Bank
Holding had consolidated assets of $99,806,000, deposits of $89,522,000 and
shareholders' equity of $8,556,000.
RECOMMENDATIONS OF FIRST BANK HOLDING'S BOARD AND OPINION OF FINANCIAL ADVISOR.
(SEE PAGE {____})
The First Bank Holding board believes that the merger is in your best interests
and has unanimously approved the merger agreement. The First Bank Holding board
of directors recommends that you vote "FOR" approval of the merger agreement.
In deciding to approve the merger, First Bank Holding's board considered the
opinion of its financial advisor, Allen C. Ewing & Co., that as of the date of
its opinion, and subject to and based on the considerations referred to in its
opinion, the exchange ratio is fair, from a financial point of view, to the
shareholders of First Bank Holding. The full text of this opinion is attached as
Exhibit B to this proxy statement/prospectus, and you are urged to read this
opinion in its entirety.
2
<PAGE> 10
SPECIAL MEETING TO BE HELD ON DECEMBER { }, 2000 (SEE PAGE {____})
The special meeting of First Bank Holding shareholders will be held at 5:30 p.m.
on {________}, December {__}, 2000, at 1997 Capital Circle, N.E., Tallahassee,
Florida. At the special meeting, you will be asked to consider and vote to
approve the merger agreement (which provides for the merger of First Bank
Holding into SouthTrust of Alabama).
RECORD DATE SET AT NOVEMBER 8, 2000, TWO-THIRDS VOTE OF OUTSTANDING SHARES IS
REQUIRED TO APPROVE MERGER (SEE PAGE {____})
You can vote at the special meeting if you owned First Bank Holding common stock
at the close of business on November 8, 2000. As of that date, there were
401,000 shares of First Bank Holding common stock issued and outstanding and
entitled to be voted at the special meeting. The affirmative vote of the holders
of at least two-thirds of the shares of First Bank Holding common stock entitled
to be cast on the merger agreement is required. Our directors and executive
officers beneficially owned, as of the record date, and are entitled to vote
153,423.5 shares of First Bank Holding common stock, which represents
approximately 38% of the outstanding shares of First Bank Holding common stock.
If you do not vote your shares of common stock, it will have the effect of a
vote against the merger.
The merger does not have to be approved by SouthTrust's stockholders.
DISSENTERS' APPRAISAL RIGHTS (SEE PAGE {____})
Under Florida law, you have the right to dissent from the merger and obtain an
amount in cash equivalent to the appraised value of your shares of First Bank
Holding common stock when the merger is completed. However, you may only receive
this cash payment if you correctly dissent from the merger by following
specified procedures. The relevant sections of Florida law are attached to this
proxy statement/prospectus as Exhibit C.
SOUTHTRUST BANK WILL BE THE SURVIVING BANK (SEE PAGE {_____})
First Bank Holding will be merged with and into SouthTrust of Alabama, and
SouthTrust of Alabama will be the surviving corporation after the merger. The
directors and officers of SouthTrust of Alabama before the merger will continue
to serve as the directors and officers of SouthTrust of Alabama after the
merger. In a related transaction, First Bank will be merged with and into
SouthTrust Bank. Some of the officers of First Bank will become officers of
SouthTrust Bank.
MERGER CONSIDERATION WILL BE 1.7456 SOUTHTRUST SHARES FOR EACH SHARE OF FIRST
BANK HOLDING. (SEE PAGE {___})
When the merger is complete, each of your shares of First Bank Holding common
stock will be converted into 1.7456 shares of SouthTrust common stock. This
exchange ratio is fixed. However, the market price of SouthTrust common stock
may change at any time. Consequently, the value of the SouthTrust common stock
you will be entitled to receive as a result of the merger may be significantly
higher or lower than its current value or its value at the date of the special
meeting. However, your board of directors may terminate the merger with
SouthTrust in the event that the market price of SouthTrust common stock drops
below $22.00 per share during a defined trading period.
In the case of fractional shares, you will receive cash instead of a fractional
share. For example, if you hold 100 shares of First Bank Holding common stock,
you will receive 174 shares of SouthTrust common stock, plus a cash payment
equal to the value of 0.56 of a share of SouthTrust common stock.
With respect to options to acquire First Bank Holding common stock, SouthTrust
will assume such options in accordance with the terms of the existing option
plans. The options will become options to acquire SouthTrust common stock in an
amount and for an exercise price adjusted pursuant to the exchange ratio, as
described on page {___}.
GENERALLY, THE MERGER WILL BE A TAX-FREE TRANSACTION FOR FIRST BANK HOLDING
SHAREHOLDERS (SEE PAGE {______})
We expect that for United States federal income tax purposes, you will not
recognize any gain or loss in the merger, except in connection with any cash
that you may receive instead of a fractional share of SouthTrust common stock or
your exercise of dissenters' appraisal rights. Your holding period for the
SouthTrust common stock received in the merger, which determines how any gain or
loss should be treated for federal income tax purposes upon future sales of
SouthTrust common stock, generally will include your holding period for the
shares of First Bank Holding common stock you exchange in the merger.
3
<PAGE> 11
This tax treatment may not apply to all First Bank Holding shareholders,
including shareholders who are non-U.S. persons or dealers in securities. You
should consult your own tax advisor for a full understanding of the merger's tax
consequences for you.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (SEE PAGE {____})
Some of the directors and executive officers of First Bank Holding have
interests in the merger that are different from, or in addition to, your
interests. Among those are certain employment and change in control agreements
that provide for payments upon the occurrence of the merger, as well as certain
rights to indemnification and the rights to participate in the employee benefit
plans of SouthTrust.
CONDITIONS THAT MUST BE SATISFIED FOR THE MERGER TO OCCUR (SEE PAGE {____})
Completion of the merger is subject to various conditions which include:
- approval of the merger agreement by First Bank Holding shareholders;
- receipt of all banking and other regulatory consents and approvals
necessary to permit completion of the merger; and
- receipt of the legal opinion concerning the tax implications of the
merger.
REGULATORY APPROVALS WE MUST OBTAIN FOR THE MERGER (SEE PAGE {____})
We cannot complete the merger unless it is approved by the Board of Governors of
the Federal Reserve System and the Alabama State Banking Department. SouthTrust
has filed applications with the Federal Reserve Board and Alabama State Banking
Department for approval of the merger and has given notice to the Florida
Department of Banking and Finance. In addition, the merger is subject to the
approval of or notice to other regulatory authorities. We cannot be certain when
or if we will obtain the regulatory approvals.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE {_____})
First Bank Holding and SouthTrust can mutually agree at any time to abandon the
merger and terminate the merger agreement, even if our shareholders have
approved it. Your board may also abandon the merger in the event that the market
price of SouthTrust common stock drops below $22.00 per share during a defined
trading period. Additionally, either the SouthTrust board or the First Bank
Holding board may decide, without the consent of the other, to abandon the
merger if:
- the other party breaches the merger agreement in a material way and
does not, or cannot, correct the breach in 30 days;
- the merger has not been completed by March 31, 2001;
- a governmental authority denies an approval necessary to complete the
merger, in a final and nonappealable way;
- our shareholders fail to approve the merger agreement; or
- certain conditions to the obligations of First Bank Holding and
SouthTrust to complete the merger cannot be satisfied.
Under certain circumstances, in the event of termination of the merger
agreement by either First Bank Holding or SouthTrust, the terminating party may
be required to pay the other party a termination fee of $150,000.00.
Furthermore, First Bank Holding may be required to pay SouthTrust a break- up
fee of $1,000,000 in the event the merger agreement is terminated and certain
circumstances accompany such termination, all as described on pages {___} to
{___}.
NO SOLICITATION (SEE PAGE {___})
First Bank Holding has agreed that we will not, directly or indirectly, solicit
or encourage an acquisition proposal by any other person.
SHAREHOLDER RIGHTS (SEE PAGE {___})
Currently, your rights as a First Bank Holding shareholder are governed by
Florida law, and our articles of incorporation and by-laws. After the merger,
you will become a SouthTrust stockholder and your rights as a stockholder will
be governed by Delaware law and SouthTrust's restated certificate of
incorporation and restated by-laws.
MARKET PRICE INFORMATION
SouthTrust common stock is traded on Nasdaq under the symbol "SOTR." First Bank
Holding common stock is not traded on any exchange, and there is no
4
<PAGE> 12
established public trading market for such stock. We are aware of certain
transactions in our common stock that have occurred since January 1, 2000, and
believe the prices of such transactions ranged from $22.00 to $25.00 per share
(although the prices of all transactions are not known). The following table
sets forth the historical price of SouthTrust common stock and the pro forma
equivalent of our common stock as of the date preceding the public announcement
of the merger and as of the most recent date practicable preceding this proxy
statement/prospectus. The pro forma equivalent of our common stock was
calculated using the last sales price of the SouthTrust common stock multiplied
by the exchange ratio of 1.7456.
<TABLE>
<CAPTION>
SouthTrust First Bank
Common Stock Holding
Last Sales Price Equivalent
---------------- ----------
<S> <C> <C>
September 27, 2000 $ 30.563 $ 53.35
November {__}, 2000 $ {____} $ {____}
</TABLE>
A WARNING ABOUT FORWARD-LOOKING INFORMATION
This proxy statement/prospectus contains information about possible or
assumed future results of operation or the performance of SouthTrust after the
merger is completed. These forward-looking statements may be made directly in
this document or may be contained in documents which are incorporated by
reference from other documents into this document. You can identify many of
these forward-looking statements by looking for statements that are preceded by,
followed by or include the words "believes", "expects", "anticipates",
"estimates" or similar expressions.
These forward-looking statements are not guarantees of future
performance and involve risks and uncertainties. In addition, many of these
forward-looking statements are based on assumptions about the future that may
prove to be inaccurate. Many possible events and factors could affect the future
financial results and performance of SouthTrust. This could cause actual results
and performance to differ materially from those expressed in the forward-looking
statements. You should not place undue reliance on any forward-looking
statement, which speaks only as of the date it is made, and you should consider
the risks of inaccuracies when you consider and decide on the merger.
Listed below are events and factors which may cause the forward-looking
statements to be inaccurate:
- we may have more trouble or be delayed in obtaining regulatory
approvals for the merger;
- SouthTrust may experience lower than expected revenues after
the merger, higher than expected operating costs after the
merger or higher than expected losses of deposits, customers
and business after the merger;
- after the merger, SouthTrust may experience lower than
expected cost savings from the merger, or delays in obtaining,
or an inability to obtain, cost savings from the merger;
- we may have more trouble integrating our businesses or
retaining key personnel;
- competition among depository and other financial institutions
may increase significantly;
- adverse changes in the securities markets may occur;
- changes in inflation and in the interest rate environment may
reduce our margins or reduce the fair value of our
investments;
- adverse changes in general economic conditions, either
nationally or in the combined company's market areas may
occur;
- adverse legislative or regulatory changes that adversely
affect our business may occur;
5
<PAGE> 13
- after the merger, SouthTrust may experience difficulties in
entering new markets successfully and capitalizing on growth
opportunities; or
- technological changes and systems integration may be more
difficult or expensive than we expect.
6
<PAGE> 14
SELECTED FINANCIAL INFORMATION
SELECTED FINANCIAL INFORMATION ABOUT SOUTHTRUST
The table below presents selected historical consolidated financial
information about SouthTrust. The historical income statement data for the five
fiscal years ended December 31, 1995 to 1999 is derived from audited
consolidated financial statements of SouthTrust. The financial data for the
interim periods ended June 30, 1999 and 2000 is derived from the unaudited
historical consolidated financial statements of SouthTrust and reflect in the
opinion of management of SouthTrust all adjustments of a normal recurring nature
necessary for a fair presentation of the unaudited interim period data. Results
for the interim periods do not necessarily indicate results which may be
expected for any other interim or annual period. You should read the following
table in conjunction with the consolidated financial statements of SouthTrust,
and the notes relating to the consolidated financial statements, contained in
documents included elsewhere in this proxy statement/prospectus or incorporated
into this document by reference. See "Where You Can Find More Information" on
page {___}.
SOUTHTRUST AND ITS SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months
Years Ended December 31, Ended June 30,
----------------------------------------------------------- ------------------------
1999 1998 1997 1996 1995 2000 1999
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(in thousands, except per share data):
Interest income.................... $ 2,906,447 $ 2,557,462 $ 2,232,252 $ 1,804,220 $ 1,484,623 $ 1,657,151 $ 1,366,055
Interest expense................... 1,539,538 1,386,256 1,186,079 938,194 791,423 950,188 712,756
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income.............. 1,366,909 1,171,206 1,046,173 866,026 693,200 706,963 653,299
Provision for loan losses.......... 141,249 94,796 90,613 90,027 61,286 54,844 62,138
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income after
provision for loan losses........ 1,225,660 1,076,410 955,560 775,999 631,914 652,119 591,161
Non-interest income................ 443,557 385,842 270,507 254,809 208,664 232,542 218,054
Non-interest expense............... 1,010,501 914,443 748,216 643,298 536,534 532,428 491,529
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income taxes......... 658,716 547,809 477,851 387,510 304,044 352,233 317,686
Income taxes....................... 215,543 179,199 171,143 132,807 105,039 114,273 103,476
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income....................... $ 443,173 $ 368,610 $ 306,708 $ 254,703 $ 199,005 $ 237,960 $ 214,210
=========== =========== =========== =========== =========== =========== ===========
Net income per diluted
common share..................... $ 2.63 $ 2.25 $ 2.03 $ 1.79 $ 1.57 $ 1.41 $ 1.27
Cash dividends declared
per common share................ 0.88 0.76 0.67 0.59 0.53 0.50 0.44
Average diluted common
shares outstanding
(in thousands)................... 168,778 164,148 151,008 142,154 126,687 168,740 168,667
BALANCE SHEET DATA (at period end)
(in thousands):
Total assets....................... $43,262,512 $38,133,774 $30,906,445 $26,223,193 $20,787,024 $44,344,503 $40,066,506
Total loans, net................... 31,697,841 27,317,506 22,474,785 19,331,132 14,655,162 32,043,373 29,178,407
Total deposits..................... 27,739,345 24,839,892 19,586,584 17,305,493 14,575,077 28,627,591 26,296,668
Total stockholders' equity......... 2,927,429 2,738,266 2,194,641 1,734,892 1,430,870 3,064,848 2,829,531
</TABLE>
7
<PAGE> 15
SELECTED FINANCIAL INFORMATION ABOUT FIRST BANK HOLDING
The following table presents selected historical consolidated financial
information for First Bank Holding. Our historical income statement data for the
five fiscal years ended December 31, 1995 to 1999 is derived from our audited
consolidated financial statements. The financial data for the interim periods
ended June 30, 2000 and June 30, 1999, are derived from the unaudited historical
consolidated financial statements of First Bank Holding and reflect in the
opinion of our management all adjustments of a normal recurring nature necessary
for a fair presentation of unaudited interim period data. Results for the
interim periods do not necessarily indicate results which may be expected for
any other interim or annual period. You should read the following table in
conjunction with our financial statements, and the notes relating to our
financial statements, contained in this document. See "Financial Statements of
First Bank Holding" at pp. F-1 to F-26.
FIRST BANK HOLDING AND ITS SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months
Years Ended December 31, Ended June 30,
---------------------------------------------------------- -----------------------
1999 1998 1997 1996 1995 2000 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(in thousands, except per share data):
Interest income......................... $ 7,026 $ 6,637 $ 5,810 $ 4,867 $ 4,055 $ 3,953 $ 3,328
Interest expense........................ 2,910 2,845 2,343 2,001 1,507 1,814 1,283
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income................... 4,116 3,792 3,467 2,866 2,548 2,139 2,045
Provision for loan losses............... 250 198 248 119 136 47 125
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after
provision for loan losses............. 3,866 3,594 3,219 2,747 2,412 2,092 1,920
Non-interest income..................... 1,440 1,252 1,133 762 482 512 669
Non-interest expense.................... 3,928 3,620 3,258 2,708 2,110 1,770 1,886
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes.............. 1,378 1,226 1,094 801 784 834 703
Income taxes............................ 418 373 351 254 264 284 218
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income ............................. $ 960 $ 853 $ 743 $ 547 $ 520 $ 550 $ 485
========== ========== ========== ========== ========== ========== ==========
Net income per diluted
common share.......................... $ 2.33 $ 2.08 $ 1.82 $ 1.34 $ 1.29 $ 1.34 $ 1.18
Cash dividends declared
per common share...................... 0.20 0.12 0.12 0.12 0.10 -- --
Average diluted common shares
outstanding (in thousands)............ 411 410 408 407 405 411 411
BALANCE SHEET DATA (at period end)
(in thousands):
Total assets............................ $ 101,242 $ 90,108 $ 81,793 $ 72,683 $ 58,629 $ 99,806 $ 92,300
Total loans, net of
unearned income....................... 73,142 59,969 54,364 44,973 34,549 74,267 65,843
Total deposits.......................... 92,088 81,884 74,404 66,257 52,931 89,522 77,965
Total stockholders' equity.............. 8,020 7,606 6,738 5,967 5,500 8,556 7,795
</TABLE>
8
<PAGE> 16
SELECTED PRO FORMA INFORMATION
The following table presents unaudited pro-forma combined financial
information for SouthTrust and First Bank Holding which has been prepared to
give you a better picture of the possible financial position of the combined
company had the merger already taken place at the beginning of each fiscal
period described below. This information is known as "pro forma" information and
has been prepared by combining certain selected historical information about us
and SouthTrust together. This pro forma information has been prepared for
illustrative purposes only. You should not rely on this information as being
indicative of the financial results the combined company would have had if the
merger had already been completed or will have in the future if the merger is
completed. This information should be read in conjunction with our financial
statements and the consolidated financial statements of SouthTrust and the
respective related notes included elsewhere in this proxy statement/prospectus
or incorporated in this proxy statement/prospectus by reference. See "Financial
Statements of First Bank Holding" at pp. F-1 through F-26 and "Where You Can
Find More Information" on page {___}.
PRO FORMA COMBINED INFORMATION
SOUTHTRUST AND FIRST BANK HOLDING
<TABLE>
<CAPTION>
Six Months Ended
Years Ended December 31, June 30,
----------------------------------- -----------------------
1999 1998 1997 2000 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
(in thousands, except per share data):
Interest income............................. $2,913,473 $2,564,099 $2,238,062 $1,661,104 $1,369,383
Interest expense............................ 1,542,448 1,389,101 1,188,422 952,002 714,039
---------- ---------- ---------- ---------- ----------
Net interest income....................... 1,371,025 1,174,998 1,049,640 709,102 655,344
Provision for loan losses................... 141,499 94,994 90,861 54,891 62,263
---------- ---------- ---------- ---------- ----------
Net interest income after provision
for loan losses........................... 1,229,526 1,080,004 958,779 654,211 593,081
Non-interest income......................... 444,997 387,094 271,640 233,054 218,723
Non-interest expense........................ 1,014,429 918,063 751,474 534,198 493,415
---------- ---------- ---------- ---------- ----------
Income before income taxes.................. 660,094 549,035 478,945 353,067 318,389
Income taxes................................ 215,961 179,572 171,494 114,557 103,694
---------- ---------- ---------- ---------- ----------
Net income................................ $ 444,133 $ 369,463 $ 307,451 $ 238,510 $ 214,695
========== ========== ========== ========== ==========
Net income per diluted common share......... $ 2.64 $ 2.24 $ 2.03 $ 1.41 $ 1.28
Average diluted common shares outstanding
(in thousands)............................ 168,277 164,864 151,720 168,828 168,072
BALANCE SHEET DATA
(in millions)
Total assets................................ $ 43,364 $ 38,224 $ 30,988 $ 44,445 $ 40,158
Total loans, net of unearned income......... 31,773 27,378 22,529 32,117 29,243
Total deposits.............................. 27,832 24,922 19,661 28,718 26,375
Total stockholders' equity.................. 2,935 2,746 2,202 3,074 2,838
</TABLE>
9
<PAGE> 17
UNAUDITED COMPARATIVE PER SHARE DATA
The following table shows information about the net income per share,
cash dividends per share and book value per share of SouthTrust and of First
Bank Holding on an historical basis, and similar information after giving effect
to the merger (which is called "pro forma" information). In presenting the pro
forma information, we assumed that we had been merged as of the beginning of the
earliest period presented. SouthTrust's pro forma amounts represent the pro
forma amounts of the two companies combined. We used the exchange ratio of
1.7456 in computing the First Bank Holding pro forma equivalent amounts. The pro
forma information gives effect to the merger under the pooling-of-interests
method of accounting in accordance with generally accepted accounting
principles, or GAAP.
We expect that we will incur merger and integration charges as a result
of combining our companies. The pro forma information is helpful in illustrating
the financial characteristics of the combined company under one set of
assumptions. However, it does not reflect these expenses and, accordingly, does
not attempt to predict or suggest future results. Also, it does not necessarily
reflect what the historical results of the combined company would have been had
our companies been combined for the periods presented. The information for
interim periods does not necessarily reflect results that would be expected for
the entire year or any other interim period. You should read the information in
the following table in conjunction with our financial statements and the
financial statements of SouthTrust, and the respective related notes, included
elsewhere in this proxy statement/prospectus or incorporated in this proxy
statement/prospectus by reference, and with the unaudited pro forma combined
information contained on the preceding page. See "Financial Statements of First
Bank Holding" at pp. F-1 through F-26 and "Where You Can Find More Information"
on page {_____}.
<TABLE>
<CAPTION>
Years Ended Six Months Ended
December 31, June 30,
-------------------------------- ---------------------
1999 1998 1997 2000 1999
-------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net income per diluted common share:
SouthTrust...................................... $ 2.63 $ 2.25 $ 2.03 $ 1.41 $ 1.27
First Bank Holding.............................. 2.33 2.08 1.82 1.34 1.18
SouthTrust pro forma combined................... 2.64 2.24 2.03 1.41 1.28
First Bank Holding pro forma equivalent......... 4.61 3.91 3.54 2.47 2.23
Cash dividends per common share:
SouthTrust...................................... $ 0.88 $ 0.76 $ 0.67 $ 0.50 $ 0.44
First Bank Holding.............................. 0.20 0.12 0.12 -0- -0-
SouthTrust pro forma combined................... 0.88 0.76 0.67 0.50 0.44
First Bank Holding pro forma equivalent......... 1.53 1.32 1.16 0.87 0.76
Book value per common share (period end):
SouthTrust...................................... $ 17.44 $ 16.38 $ 14.28 $ 18.22 $ 16.90
First Bank Holding.............................. 20.00 18.97 16.80 21.34 19.44
SouthTrust pro forma combined................... 17.41 16.35 14.26 18.19 16.87
SouthTrust pro forma equivalent................. 30.39 28.55 24.89 31.76 29.45
</TABLE>
10
<PAGE> 18
THE SPECIAL MEETING
SouthTrust and First Bank Holding have agreed that First Bank Holding
will be merged into SouthTrust of Alabama. The merger can not be completed
unless our shareholders approve it. Your board is providing this proxy
statement/prospectus to you in connection with our solicitation of proxies for
use at the special meeting of our shareholders and at any adjournments or
postponements thereof. The special meeting of our shareholders will take place
on December {__}, 2000, at 5:30 p.m., local time, at 1997 Capital Circle, N.E.,
Tallahassee, Florida, unless it is postponed or adjourned to a later date. At
the special meeting, you will be asked to vote on a proposal to approve the
merger. We encourage all of our shareholders to vote on the proposal to approve
the merger and we hope that the information contained in this document will help
you decide how you wish to vote at the special meeting. SouthTrust is also
providing this proxy statement/prospectus to you as a prospectus in connection
with the offer and sale by SouthTrust of its shares of common stock as a result
of First Bank Holding's merger into SouthTrust of Alabama.
THE RECORD DATE; QUORUM REQUIREMENT
Your board of directors has determined that only those persons or
entities who are recorded in our records as holding shares of First Bank Holding
common stock as of the close of business on November 8, 2000, are entitled to
notice of and to vote at the special meeting. This notice of special meeting
accompanies this proxy statement/prospectus.
Before any business may be transacted at the special meeting, a
sufficient number of our shareholders who between them hold at least a majority
of the issued and outstanding shares of First Bank Holding common stock entitled
to vote at the special meeting must be present, either in person or by proxy, at
the special meeting. As of the record date, there were 401,000 shares of First
Bank Holding common stock issued and outstanding. Accordingly, at least 200,501
shares of First Bank Holding common stock must be present at the special
meeting.
VOTING RIGHTS AND VOTES REQUIRED
Each share of First Bank Holding common stock held by you is entitled
to one vote on every matter to be considered at the special meeting. Approval of
the merger requires the affirmative vote of our shareholders who hold at least
two-thirds of the issued and outstanding shares of First Bank Holding common
stock (i.e. 267,334 shares of First Bank Holding common stock).
As of the close of business on the record date our directors and
executive officers and their affiliates beneficially owned and were entitled to
vote approximately 153,423.5 shares of First Bank Holding common stock, which
represents approximately 38% of the shares of First Bank Holding common stock
issued and outstanding on that date. Each of our directors and executive
officers has indicated his or her present intention to vote, or cause to be
voted, the shares of First Bank Holding common stock owned by him or her FOR the
proposal to approve the merger at the special meeting. IF YOU DO NOT VOTE YOUR
SHARES, IT WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT.
VOTING AT THE SPECIAL MEETING; PROXIES
If you wish to vote on the proposal you may either attend the special
meeting and vote your shares of First Bank Holding common stock in person, or
you may appoint a person to act as your proxy who will vote your shares at the
special meeting in accordance with your instructions. Every shareholder is
welcome and encouraged to attend the special meeting. If you wish to vote your
shares by way of a proxy, please complete, sign and date the proxy card enclosed
with this proxy statement/prospectus and mail it to us in the enclosed envelope.
If you properly complete a proxy and we receive the proxy before or at the
special meeting, your shares of First Bank Holding common stock will be voted in
accordance with the voting instructions you completed on the proxy. If you grant
a proxy by signing and returning to us the enclosed proxy card without
completing the voting instructions, your shares of First Bank Holding common
stock will be voted "FOR" the proposal to approve the merger. Our board of
directors is not aware of any other matter to be presented for action by our
shareholders at the special meeting. If, however, other matters do properly come
before the special meeting, your shares will be voted or not voted on such other
matters by the persons named in your proxy in their discretion and best
judgment.
11
<PAGE> 19
In the event a quorum is not present at the time the special meeting is
convened, or if for any other reason we believe that additional time should be
allowed for the solicitation of proxies, we may postpone the special meeting or
may adjourn the special meeting with or without a vote of our shareholders. If
we propose to adjourn the special meeting by a vote of our shareholders, the
persons named in the enclosed form of proxy will vote all First Bank Holding
common stock for which they have voting authority in favor of an adjournment.
You may revoke your proxy at any time prior to its exercise at the
special meeting by:
- writing to us and notifying us that you wish to revoke your
written proxy
- by properly completing, signing and returning to us another
proxy which is dated after any proxy or proxies previously
granted by you or
- by attending the special meeting and voting in person.
All written notices of revocation and other communications about your
proxy should be addressed to us as follows:
First Bank Holding
1997 Capital Circle, N.E.
Tallahassee, Florida 32308
Attention: Susie B. Andrews
All notices of revocation of proxies must be received by us as
originals sent by U.S. mail or overnight courier. You may not revoke your proxy
by sending us your written notice by any other means, including facsimile, telex
or any form of electronic communication.
If you grant a proxy by completing, signing and returning to us the
enclosed proxy card, you are not prevented from attending the special meeting
and voting in person. However, your attendance at the special meeting will not
by itself revoke a proxy that you have previously granted; you must also vote in
person at the special meeting. If you instructed your broker to vote your shares
of First Bank Holding common stock, you must contact your broker and follow your
broker's directions in order to change your vote.
Please do not send your stock certificates representing the shares of
First Bank Holding common stock held by you to us at this time. If the merger is
approved at the special meeting, SouthTrust's exchange agent, American Stock
Transfer & Trust Company, will send you a letter of transmittal with
instructions which will describe how you can surrender your stock certificates
and exchange your shares of First Bank Holding common stock for shares of
SouthTrust common stock after the merger is completed.
SOLICITATION OF PROXIES
This proxy solicitation is being made by our board of directors. In
addition to the use of the mail, we may solicit proxies by telephone, telegraph
or personally by our directors, officers and employees, who will receive no
extra compensation for their services. We will reimburse banks, brokerage firms
and other custodians, nominees and fiduciaries for reasonable expenses incurred
by them in sending proxy soliciting materials to the beneficial owners of shares
of First Bank Holding common stock.
EFFECT OF "ABSTENTIONS" AND "BROKER NON-VOTES"
We intend to count "abstentions" and "broker non-votes" only for the
purpose of determining if a quorum is present at the special meeting; they will
not be counted as votes cast on the proposal to approve the merger. An
"abstention" will occur if your shares are deemed to be present at the special
meeting, either because you attend the special meeting or because you have
properly completed and returned a proxy, but you do not vote on any matter at
the special meeting. A "broker non-vote" will occur if your shares are held by a
broker or nominee and the shares are deemed to be present at the special meeting
but you have not instructed your broker or nominee how to vote. Brokerage firms
which hold shares in street name for a client may not vote the client's shares
with respect to any "non-discretionary" item if the client has not furnished
voting instructions to the brokerage firm. Accordingly, abstentions and broker
non-votes will have the same effect as a vote against a proposal.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND RECOMMENDS THAT
OUR SHAREHOLDERS DO THE SAME. WE ENCOURAGE ALL OF OUR SHAREHOLDERS TO VOTE ON
THE PROPOSAL TO APPROVE THE MERGER.
12
<PAGE> 20
THE MERGER
The following discussion describes the material aspects of the merger.
Since this discussion is a summary, it may not contain all of the
information that is important to you to make your decision about the
merger. To understand the merger fully, and for a more complete
description of the legal terms of the merger, we encourage you to read
this entire proxy statement/prospectus and the merger agreement
completely and carefully. A copy of the merger agreement without any
exhibits or schedules is attached as Exhibit A to this proxy
statement/prospectus.
If you do not wish to receive shares of SouthTrust common stock in
exchange for your shares of First Bank Holding common stock, there is a
procedure under Florida law by which you can obtain the appraised value
of your shares of First Bank Holding common stock, provided you follow
the procedure exactly. We encourage you to read the section entitled
"Your Right to Dissent from the Merger" on page {_____}, carefully
review the attached Exhibit C which contains the procedure under
Florida law and to consult your legal counsel.
GENERAL
Our board of directors has unanimously adopted the merger agreement and
approved the merger. If the merger is completed:
- First Bank Holding will be merged into SouthTrust of Alabama
and will cease to exist as a separate corporate entity;
- SouthTrust of Alabama, as the surviving entity, will succeed
to all of our assets and liabilities;
- the merged entity will be an Alabama corporation and will
operate under the name "SouthTrust of Alabama, Inc.";
- the current officers and directors of SouthTrust of Alabama
will be the officers and directors of the merged entity;
- your shares of First Bank Holding common stock will be
exchanged for shares of SouthTrust common stock;
- our shareholders will become stockholders of SouthTrust; and
- the operations of First Bank Holding and First Bank will be
merged into the operations of SouthTrust and its subsidiaries.
At the time of the merger, each share of First Bank Holding common stock which
you currently hold will be converted into the right to receive 1.7456 shares of
SouthTrust common stock. No fractional shares of SouthTrust common stock will be
issued in the merger. If you are entitled to receive a fractional share of
SouthTrust common stock, then, in lieu thereof, you will receive a cash payment.
The cash payment will equal the product of (1) the fractional interest which you
would otherwise be entitled to receive, and (2) the last sale price of
SouthTrust common stock as reported by Nasdaq on the last trading day preceding
completion of the merger. All rights with respect to shares of First Bank
Holding common stock issuable upon the exercise of stock options will be
converted into the right to receive shares of SouthTrust common stock.
EFFECTIVE TIME OF THE MERGER
We will consummate the merger if it is approved by our shareholders,
all required regulatory approvals and actions are obtained and taken and all
other conditions to the merger have been met. See "Regulatory Approvals" on
page {__} for a description of the nature of the approvals to be obtained and
how the timing of the merger may be affected by the approval process. The merger
will become effective on the date and at the time when articles of merger are
filed with the Secretaries of State of Alabama and Florida, unless a later date
is specified in the articles
13
<PAGE> 21
of merger. SouthTrust intends to file the articles of merger on the first
business day following the later to occur of (1) the effective date (including
expiration of any applicable waiting period) of the last required consent of any
regulatory authority having authority over and approving or exempting the
merger, and (2) the date on which the shareholders of First Bank Holding approve
the merger agreement, although SouthTrust and First Bank Holding may agree to
another date.
If the merger is not completed by March 31, 2001, or any other date as
agreed to by the parties, either party may terminate the merger agreement,
provided the terminating party has not breached any provision of the merger
agreement. See "Termination of the Merger Agreement" on page {__} for more
details of how the merger agreement may be terminated.
BACKGROUND OF AND REASONS OF FIRST BANK HOLDING FOR THE MERGER
From time to time over the past several years, the directors of First
Bank Holding during regularly scheduled board of directors meetings have
discussed the business and prospects of First Bank Holding, conditions in the
business and community banking market in Florida, and the merger activity among
financial institutions in the state. Among other things, the board considered
whether or not to expand the franchise by seeking acquisitions of other
financial institutions, as well as the possibility of merging with another
financial institution. In addition, during this time period, First Bank Holding
was approached on an unsolicited basis by several companies who expressed
moderate to serious interest in acquiring First Bank Holding.
In November of 1999, the board of directors and senior management of
First Bank Holding held a two day facilitated planning retreat to consider the
direction of the company over the ensuing five year period. As a result of this
planning retreat, the board determined to engage a financial consultant to
develop plans and solicit possible interest from third parties for the board to
consider in regard to the sale of First Bank Holding. If, however, no acceptable
companies or offers were approved by August 2000, management of First Bank
Holding would embark on the implementation of a plan, which called for the
independent operation of First Bank Holding for the next 5 years.
The primary reasons for the board's decision to pursue this direction
were to better offer our customers a wider range of financial products and to
enhance shareholder value.
In January 2000, First Bank Holding contracted with Allen C. Ewing &
Company to fulfill the direction contemplated by the board of directors. In June
2000, Allen C. Ewing & Company presented to the Board of directors of First Bank
Holding a proposal from SouthTrust which ultimately called for issuing 700,000
shares of SouthTrust stock for the outstanding 401,000 shares of First Bank
Holding stock. The exchange rate of the transaction would be 1.7456 shares of
SouthTrust stock for every one share of First Bank Holding stock presently
outstanding. It was only contemplated that the exchange would be a tax-free
reorganization.
The board of directors approved the proposal subject to approval of the
stockholders at a special stockholders meeting. Several factors were considered
by First Bank Holding's board in arriving at this decision and include the
following.
- terms of the proposed transaction;
- the current financial condition and results of operation of
First Bank Holding;
- the value of the consideration to be received by the
shareholders of First Bank Holding relative to the current
book value of First Bank Holding;
- the current competitive and regulatory environment for
financial institutions in general;
- the exchange of First Bank Holding common stock for SouthTrust
common stock in this transaction will provide First Bank
Holding's shareholders with a more widely held and actively
traded investment;
14
<PAGE> 22
- First Bank Holding's shareholders would receive stock in a
company that has historically paid cash dividends to its
stockholders;
- the likelihood of receiving regulatory approval of the
proposed transaction; and
- that the merger is expected to be a tax-free transaction for
federal income tax purposes (except with regard to cash
received instead of fractional shares).
The board, further, took into account the "fairness opinion" as
prepared by Allen C. Ewing & Company and described within this proxy
statement/prospectus. The board, in its deliberations, did not assign any
relative or specific weight to any of the factors that are discussed above, and
individual directors may have given different weights to different factors as
they were discussed. In addition, the above discussion of the information and
factors considered by the board of directors is not intended to be exhaustive of
the factors considered.
THE BOARD OF DIRECTORS OF FIRST BANK HOLDING HAVE UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND DETERMINED THAT THE MERGER IS FAIR, FROM A FINANCIAL POINT
OF VIEW, AND IS IN THE BEST INTEREST OF FIRST BANK SHAREHOLDERS. ACCORDINGLY,
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF FIRST BANK VOTE IN
FAVOR OF THE MERGER AND THE MERGER AGREEMENT.
REASONS OF SOUTHTRUST FOR THE MERGER
SouthTrust is engaging in the merger because the merger is consistent
with SouthTrust's expansion strategy within the Southern United States. The
acquisition of First Bank Holding and First Bank will augment SouthTrust's
existing market share in Florida and will enhance its competitive position in
such market.
OPINION OF FINANCIAL ADVISOR TO FIRST BANK HOLDING
The board of directors of First Bank Holding, of Tallahassee, Florida,
retained Allen C. Ewing & Co. in the spring of 2000 to assist the board of
directors of First Bank Holding in developing and implementing a strategy for
marketing First Bank Holding and for the purpose of rendering its opinion to the
shareholders of First Bank Holding as to the fairness, from a financial point of
view, of the terms of any transaction resulting from the negotiations. The board
of directors selected a proposal by SouthTrust as offering the greatest value
and the most attractive terms to First Bank Holding's shareholders.
Allen C. Ewing issued its written opinion dated October 26, 2000, and
no limitations were imposed by the board of directors of First Bank Holding on
the scope of Allen C. Ewing's analysis or the procedures followed by Allen C.
Ewing in rendering its opinion. Allen C. Ewing's opinion is directed to First
Bank Holding's board of directors and does not constitute a recommendation to
any First Bank Holding shareholder as to how such shareholder should vote on the
merger. Allen C. Ewing has not been requested to opine as to, and the opinion
does not address, the underlying business decision by First Bank Holding's board
to enter into the merger.
In issuing its opinion, Allen C. Ewing assumed and relied upon the
accuracy and completeness of the financial and other information used by it in
arriving at its opinion as provided by First Bank Holding. Allen C. Ewing made
no independent verification of the assets and liabilities of First Bank Holding.
The opinion is based upon market and economic conditions as they existed on the
date of the merger agreement. Events occurring after the date of issuance of the
opinion including, but not limited to, changes in the market price of
securities, the results of operations, or material changes in the value of the
assets or liabilities of First Bank Holding could affect the assumptions used
and the conclusions of the opinion.
The full text of Allen C. Ewing's opinion is attached as Appendix B to
this Proxy Statement/Prospectus and is incorporated herein by reference. The
description of the opinion set forth herein is qualified in its entirety by
reference to Appendix B. First Bank Holding's shareholders are urged to read the
opinion in its entirety.
In arriving at its opinion, Allen C. Ewing:
15
<PAGE> 23
- reviewed the audited statements prepared by James D.A. Holley
& Co., PA, Tallahassee, Florida, for the fiscal years ended
December 31, 1995 through December 31, 1999;
- reviewed the call reports of First Bank filed with the
regulators reflecting the operations of First Bank for the
periods ended December 31, 1998, December 31, 1999, March 31,
2000, June 30, 2000, and September 30, 2000;
- reviewed the merger agreement dated September 28, 2000;
- reviewed the budget for First Bank for the year 2000;
- reviewed other financial information concerning First Bank and
First Bank Holding;
- compared the values and terms of the merger agreement with
SouthTrust with the values and terms of transactions in
Florida and the Southeast involving comparable institutions;
- examined First Bank's market share in the Leon County market;
- compared First Bank's financial performance with other
comparable banking institutions operating in Florida;
- reviewed the financial condition of SouthTrust and the impact
of the proposed transaction on the earnings per share of
SouthTrust; and
- reviewed the recent price performance and trading activity in
the shares of SouthTrust.
Allen C. Ewing held discussions with the management of First Bank
concerning its historical operations, its future prospects, and the decision of
its board of directors to negotiate a transaction with SouthTrust.
The following paragraphs summarize the most pertinent portions of the
financial and comparative analysis prepared by Allen C. Ewing in arriving at its
opinion. They do not purport to be a complete description of the analysis
performed or the matters considered by Allen C. Ewing in arriving at its
opinion.
The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances and is not readily
susceptible to summary description. In arriving at its opinion, Allen C. Ewing
did not attribute any particular weight to any one factor considered by it, but
rather made qualitative judgments as to the significance and relevance of each
analysis and factor. Allen C. Ewing believes that its analysis must be
considered as a whole and that considering any portions of such analysis and of
the factors considered, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying its opinion. In
its analysis, Allen C. Ewing made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond First Bank Holding's control. Any estimates contained in these
analyses are not necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less favorable than as set
forth therein. As described above, Allen C. Ewing's opinion, along with its
presentations to First Bank Holding's board, was just one of many factors taken
into consideration by First Bank Holding's board in entering in to the merger
agreement.
Trading History of First Bank Holding's Shares
In view of the fact that the shares of First Bank Holding are closely
held, Allen C. Ewing determined that there was no meaningful trading market in
the shares of First Bank Holding that would affect the values discussed in this
opinion.
Analysis of SouthTrust Shares
Allen C. Ewing examined the profitability, quality, and liquidity of
the shares of SouthTrust including a comparison of SouthTrust's operating
performance with the average of six other regional bank holding companies
16
<PAGE> 24
including AmSouth Bancorporation, The Colonial BancGroup, Inc., Compass
Bancshares, Inc., Regions Financial Corporation, Union Planters Corporation, and
Huntington Bancshares Incorporated. Allen C. Ewing compared the following 1999
performance indicators of SouthTrust with the average performance of the six
bank holding companies.
<TABLE>
<CAPTION>
PERFORMANCE INDICATOR SOUTHTRUST BANK HOLDING COMPANIES
--------------------- -------------- ----------------------
<S> <C> <C>
Return on Average Assets 1.09% 1.21%
Return on Average Equity 16.05% 16.19%
Ratio of Non-performing Assets/Assets 0.40% 0.42%
Ratio of Equity/Assets 6.79% 7.14%
</TABLE>
Allen C. Ewing reviewed market prices and volumes for SouthTrust and
compared the performance of SouthTrust shares to the other regional banks. Allen
C. Ewing found the recent market performance of SouthTrust to be superior to the
other bank holding companies and that SouthTrust shares offer excellent
liquidity to its shareholders.
Selection of Valuation Method
In valuing financial institutions, there are several methods available
to determine if a prospective transaction is fair, from a financial point of
view, to the shareholders of the institution to be acquired. These methods
include:
(1) Market Comparison Method: A comparison of the purchase price
of the transaction with prices paid for similar banks during
periods of similar economic activity and bank valuations based
on ratios commonly used in the industry including price/book
and price/earnings
(2) Control Premium Method: This method only applies to selling
companies where there is a public market for their shares,
and, as there is not an active market for the shares of First
Bank Holding, this method is not applicable;
(3) Net Asset or Liquidating Value Method: This method does not
apply to profitable banks and is only used in periods of
severely depressed markets;
(4) Discounted Cash Flow Method: This method is often used in
valuing community banks for the primary purpose of confirming
valuations determined by the Market Comparison or other
methods.
The Discounted Cash Flow Method is based on a forecast of earnings and
dividends for a period of years based on the historical performance of First
Bank Holding with an estimate of the proceeds of a projected sale at the end of
the period. The present value of these projected cash flows is determined using
an array of discount rates reflecting the risks and accuracy of the projections.
Earnings for small banks can be volatile, which can have an adverse affect on
any one year's earnings, and earnings projections for smaller banks tend to have
less reliability than projections for larger banks. This tends to reduce the
accuracy of the Discounted Cash Flow method in determining the market value of
an institution. Allen C. Ewing believes that the Market Comparison Method
provides the soundest choice for determining the fairness of this transaction,
and that the Discounted Cash Flow Method is useful in confirming the valuation
determined by the Market Comparison Method.
Analysis of Comparable Companies
Using industry information including information prepared by SNL
Securities, Allen C. Ewing compared the financial performance of First Bank
Holding with two comparable groups of banks. In the first group, Allen C. Ewing
compared performance indicators of First Bank with the average performance of
220 independent Florida community banks.
17
<PAGE> 25
<TABLE>
<CAPTION>
PERFORMANCE INDICATOR FIRST BANK FLORIDA BANKS
--------------------- ---------- -------------
<S> <C> <C>
Return on Average Assets 1.09% 0.87%
Return on Average Equity 13.18% 10.00%
Ratio of Non-performing Assets/Assets 0.24% 0.15%
Ratio of Equity/Assets 7.90% 9.15%
Net Interest Margin 4.82% 4.55%
</TABLE>
In the second group, Allen C. Ewing compared performance indicators of
First Bank with the average performance indicators of 4 selected comparable
banks in Florida, which were merged or agreed to merge with larger companies
during the first nine months of 2000.
<TABLE>
<CAPTION>
PERFORMANCE INDICATOR FIRST BANK COMPARABLE BANKS
--------------------- ---------- ----------------
<S> <C> <C>
Return on Average Assets 1.09% 0.49%
Return on Average Equity 13.18% 6.23%
Ratio of Non-performing Assets/Assets 0.24% 0.52%
Ratio of Equity/Assets 7.90% 6.85%
Net Interest Margin 4.82% 4.35%
</TABLE>
Allen C. Ewing determined that the performance ratios of First Bank in
1999 were superior to the averages of the 220 Florida banks and the four
comparable Florida banks that agreed to merge in 2000.
Analysis of Comparable Transactions
Allen C. Ewing reviewed the terms and financial characteristics of
selected transactions involving the acquisition of banks by commercial bank
holding companies in the first nine months of 2000. Allen C. Ewing selected
transactions for comparison involving banks in Florida and the Southeastern
United States of similar size and profitability. Allen C. Ewing selected
transactions that occurred in a period of similar economic activity and similar
market valuations involving banks of similar asset size. Allen C. Ewing selected
4 transactions in Florida involving banks with assets ranging from $70.0 million
to $178.0 million, and 5 transactions in Georgia, South Carolina, and Virginia
involving banks with assets ranging from $64.0 million to $146.0 million. These
banks were community banks serving smaller communities, and were profitable and
adequately capitalized. None of the banks had a problem with excessive
non-performing assets. The 9 transactions that met the above criteria included
the following transactions:
<TABLE>
<CAPTION>
Acquiree Acquiror
-------- --------
<S> <C>
Village Banc Harris Bankcorp, Inc.
(Naples, Florida) (Illinois)
Commerce National Corp. Wachovia Corporation
(Winter Park, Florida) (North Carolina)
East Coast Bank Corp. Regions Financial Corporation
(Ormond Beach, Florida) (Alabama)
</TABLE>
18
<PAGE> 26
<TABLE>
<S> <C>
Peoples State Bank Alabama National BanCorp
(Groveland, Florida) (Alabama)
Independent Bancshares United Community Banks, Inc.
(Georgia) (Georgia)
North Point Bancshares United Community Banks, Inc.
(Georgia) (Georgia)
Rockingham Heritage Bank Marathon Financial Corporation
(Virginia) (Virginia)
Ridgeway Bancshares RHBT Financial Corp.
(South Carolina) (South Carolina)
First Bankshares Capital City Bank Group, Inc.
(Georgia) (Florida)
</TABLE>
Allen C. Ewing utilized the two primary ratios that are generally
utilized in the banking industry for comparing the relative prices paid in
transactions involving banks.
<TABLE>
<CAPTION>
First Bank Holding/ Florida Southeastern
Ratio SouthTrust Transactions Transactions
----- ------------------- ------------ ------------
<S> <C> <C> <C>
Price/Book 2.70 2.37 2.16
Price/Earnings 22.61 22.29 20.56
</TABLE>
Allen C. Ewing observed that the price/book of First Bank Holding/SouthTrust
transaction was significantly higher than the nine comparable transactions and
that the price/earnings ratio was higher.
Because the reasons for and circumstances surrounding each of the
transactions were diverse and because of the differences between the operations
of First Bank and the nine banks in the selected transactions, Allen C. Ewing
believes that a strict reliance on the quantitative comparable transaction
analysis is, by itself, not conclusive. Notwithstanding these differences, Allen
C. Ewing believes that the averages of the valuation ratios, i.e., price/book
and price/earnings for these nine transactions are relevant in determining
fairness of the valuation ratios of First Bank Holding/SouthTrust transaction.
Discounted Cash Flow Analysis
Allen C. Ewing projected the cash flows of First Bank Holding based on
First Bank Holding's historical performance for a five-year period ended
December 31, 2004, which assumes that First Bank Holding would continue to
operate as an independent institution. For purposes of this Discounted Cash Flow
analysis, Allen C. Ewing assumed that the projected dividends would be paid by
First Bank Holding at a similar payout ratio that it has utilized in the past,
and that First Bank Holding would enter into a merger contract as of December
31, 2004. The projected earnings for the year 2004 were multiplied by the
average price/book and price/earnings ratio of all Florida bank transactions for
the past ten years, which were, respectively, 2.35 times and 21.38 times. These
two values were given equal weight in determining the projected proceeds from a
sale of First Bank Holding at December 31, 2004. The projected dividends and
sales proceeds were discounted to present value utilizing a discount rate, which
was determined based on Allen C. Ewing's estimate of the rate that investors
would require in making an investment in First Bank Holding based on the above
projections and assumptions. Allen C. Ewing calculated the discount rate by
layering appropriate risk rates, which took into consideration the riskless rate
of Treasury Notes for the period of the projections (five years), the general
risks of equity investment, and an additional risk rate reflecting the
volatility of earnings of small banks. Allen C. Ewing used a range of 14% to 16%
in its calculations of present value.
19
<PAGE> 27
Based on the Discounted Cash Flow Analysis, Allen C. Ewing determined
that the present value of the projected cash flows was less than the values
represented by First Bank Holding/SouthTrust Merger Agreement and that the
Discounted Cash Flow analysis supported the fairness of the transaction to First
Bank Holding's shareholders.
Company's Right to Terminate and Price Volatility
Prior to the closing of the transaction, the board of directors of
First Bank Holding may elect to terminate the transaction if the Average Price
of SouthTrust shares during the Determination Period is below $22.00 per share.
Because the number of SouthTrust shares to be issued is fixed, representing a
fixed exchange ratio of 1.7456 SouthTrust shares for each First Bank Holding
share, the market value of the transaction will vary prior to closing
proportionate to the market price of SouthTrust shares. The transaction will be
consummated at an average price of $22.00 or higher, and SouthTrust does not
have the right to terminate the transaction or to reduce the number of shares to
be issued regardless of the price of SouthTrust shares. While the possibility
exists of the transaction taking place at an average price of SouthTrust shares
as low as $22.00 exists, it is Ewing's opinion that the earnings potential and
the current low market valuation of SouthTrust shares and the unrestricted
upside value provided by the terms of the merger agreement offer significantly
higher price potential for the First Bank Holding shareholders, and offset the
possibility of a lower transaction price as of the closing date.
Marketing of First Bank Holding
The board of directors of First Bank Holding developed a marketing
program to solicit interest in First Bank Holding from approximately eight
qualified bank holding companies whose shares were acceptable to the Board of
Directors in terms of investment value and quality. Allen C. Ewing assisted the
board of directors in this process, which resulted in specific interest being
expressed by several bank holding companies, including SouthTrust. Several
offers were made by SouthTrust during the negotiating period leading to the
acceptance of the merger agreement by the board of directors of First Bank
Holding. The proposal from SouthTrust was selected by the board because of the
higher market value and advantageous terms that it represented.
Compensation of Allen C. Ewing & Co.
Allen C. Ewing served as financial advisor to First Bank Holding in
addition to rendering its opinion, and First Bank Holding has agreed to pay
Allen C. Ewing at closing a transaction fee of one percent (1.0%) of the value
of the consideration paid by SouthTrust for the shares of First Bank Holding,
including $15,000 paid to Allen C. Ewing for its issuance of its opinion. First
Bank Holding has agreed to indemnify Allen C. Ewing against certain liabilities
as delineated in Allen C. Ewing's agreement with First Bank Holding.
Experience of Allen C. Ewing & Co.
As a part of its investment banking business, Allen C. Ewing is
regularly engaged in the valuation of securities in connection with mergers and
acquisitions, underwritings, private placements, trading and market making
activities, and valuations for various other purposes. First Bank Holding's
board of directors engaged Allen C. Ewing based on its experience as a financial
advisor in mergers and acquisitions of financial institutions, particularly
transactions in Florida, and its general investment banking experience in the
financial services industry.
In the ordinary course of its business as a broker/dealer, Allen C.
Ewing may, from time to time, purchase securities from, and sell securities to,
banking and thrift companies and as a market maker in securities may from time
to time have a long or short position in, and buy or sell, debt or equity
securities of banking and thrift companies for its own account and for the
account of its customers. As of the date of this proxy statement/prospectus,
Ewing had no such position in the securities of First Bank Holding or
SouthTrust.
20
<PAGE> 28
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General
Certain members of the management and the boards of directors of First
Bank Holding and First Bank have interests in the merger that are in addition to
any interests they may have as shareholders of First Bank Holding generally.
These interests include, among others, provisions in the merger agreement
relating to indemnification of First Bank Holding's and First Bank's directors
and officers and certain employee benefits, as described below.
SouthTrust has agreed in the merger agreement that after the merger is
completed, it will indemnify, defend and hold harmless each person entitled to
indemnification from First Bank Holding and First Bank against all liabilities
arising out of actions or omissions occurring after completion of the merger to
the same extent and subject to the same conditions as officers, directors and
employees of SouthTrust as set forth in the restated certificate of
incorporation and by-laws of SouthTrust, under such directors' and officers'
liability insurance policies as SouthTrust may then make available and by
applicable law.
Following completion of the merger and subject to certain conditions
described below, SouthTrust has agreed that the officers and employees of First
Bank Holding or First Bank who SouthTrust or any of its affiliates employ will
be eligible to participate in the employee benefit plans of SouthTrust,
including welfare and fringe benefit plans, on the same basis and subject to the
same conditions as are applicable to any newly-hired employee of SouthTrust,
except that (1) with respect to SouthTrust's group health plan, SouthTrust will
credit each such employee for eligible expenses incurred by such employee and
his or her dependents (if applicable) under the group medical insurance plan of
First Bank Holding or First Bank during the current calendar year for purposes
of satisfying the deductible provisions under SouthTrust's group medical
benefits plan for such current year, and SouthTrust will waive all waiting
periods under said plans for pre-existing conditions; and (2) credit for each
such employee's past service with First Bank Holding or First Bank prior to the
completion of the merger will be given by SouthTrust to employees for purposes
of: (1) determining vacation and sick leave benefits and accruals in accordance
with the established policies of SouthTrust; and (2) establishing eligibility
for participation in, and vesting under SouthTrust's welfare and fringe benefit
plans and for purposes of determining the scheduling of vacations and other
determinations which are made based on length of service.
Employment Agreements for Certain Executive Officers
First Bank previously entered into an employment and change of control
agreement with Frederick C. Nixon, the President of First Bank Holding and the
President and Chief Executive Officer of First Bank. First Bank also previously
entered into change of control agreements with each of Susie B. Andrews, Senior
Vice President and Chief Operating Officer of First Bank, and Tami H. Chandler,
Vice President of First Bank. As a condition to the merger, Mr. Nixon, Ms.
Andrews and Ms. Chandler entered into employment agreements with SouthTrust's
banking subsidiary, SouthTrust Bank. Each of the new employment agreements is
dated September 27, 2000 and will become effective upon completion of the
merger. The new employment agreements will supersede and replace any and all
other employment agreements or arrangements between each of Mr. Nixon, Ms.
Andrews and Ms. Chandler and First Bank.
Frederick C. Nixon
Mr. Nixon's employment agreement provides that upon completion of the
merger, SouthTrust Bank will pay Mr. Nixon a lump sum payment, subject to
certain limitations, in an amount equal to 2.99 multiplied by the five-year
average of taxable income paid by First Bank Holding or First Bank to Mr. Nixon.
The employment agreement further provides that SouthTrust Bank will employ Mr.
Nixon for a period commencing on the closing date of the merger and ending upon
the earlier of (1) 30 days after the date on which all of First Bank's
operational systems are converted to SouthTrust Bank's operational systems, or
(2) the date that is six months after the closing date of the merger. Under the
terms of the employment agreement, SouthTrust Bank will pay Mr. Nixon a base
salary at a rate of $150,000 per annum. Mr. Nixon is entitled to participate on
the same basis as other similarly situated executive personnel of SouthTrust and
its affiliates in all incentive and benefit programs or arrangements made
available by SouthTrust and its affiliates to such employees. The employment
agreement also provides Mr. Nixon with particular benefits, including vacation,
reimbursement for business expenses and personal use of an automobile furnished
by SouthTrust Bank. In the event Mr. Nixon's employment is terminated by
SouthTrust Bank for any reason, SouthTrust Bank will be under no further
obligation to make payments or provide benefits to Mr. Nixon, except for base
salary earned but unpaid at the time of his termination, payment for accrued
vacation, reimbursable expenses incurred but not yet reimbursed, any earned but
unpaid incentive awards due to Mr. Nixon and group health coverage that is
required to be continued by applicable law. Mr. Nixon's employment agreement
21
<PAGE> 29
provides that for a period of one year after Mr. Nixon's employment is
terminated by SouthTrust Bank or after expiration of his employment period, Mr.
Nixon will not (1) compete with SouthTrust Bank or its affiliates in a defined
territory, or (2) solicit employees of SouthTrust Bank and its affiliates to
terminate their employment. In consideration for Mr. Nixon's agreement to
refrain from competing with SouthTrust and soliciting its employees to terminate
their employment, SouthTrust Bank will pay Mr. Nixon an amount equal to his base
salary at the time his employment is terminated.
Susie B. Andrews
Ms. Andrews' employment agreement provides that upon the completion of
the merger, SouthTrust Bank will pay Ms. Andrews, subject to certain
limitations, a lump sum payment of $160,000. Ms. Andrews' employment agreement
further provides that SouthTrust Bank will employ Ms. Andrews for a period
commencing on the closing date of the merger and ending 30 days after the date
on which all of First Bank's operational systems are converted to SouthTrust
Bank's operational systems. SouthTrust Bank will pay Ms. Andrews a base salary
at a rate of $85,000 per annum. Under the employment agreement, Ms. Andrews will
be entitled to participate on the same basis as other similarly situated
employees of SouthTrust and its affiliates in all incentive and benefit programs
or arrangements made available by SouthTrust and its affiliates to such
employees. The employment agreement provides for particular benefits including
vacation and reimbursement of business expenses. In the event that Ms. Andrews'
employment is terminated by SouthTrust Bank for any reason, SouthTrust Bank will
not be obligated to make payments or provide benefits to Ms. Andrews except for
earned but unpaid or unreimbursed amounts and group health coverage required to
be continued by applicable law. Ms. Andrews' employment agreement provides that
for a period of six months following the termination of her employment or upon
expiration of her employment period, Ms. Andrews will not (1) compete with
SouthTrust Bank or its affiliates in a defined territory, or (2) solicit any
employees of SouthTrust Bank and its affiliates to terminate their employment.
In consideration for her agreement not to compete with SouthTrust Bank and its
affiliates, SouthTrust Bank will pay Ms. Andrews, on a semi-monthly basis, an
amount equal to the semi-monthly payments of her base salary at the time of her
termination of employment. At the end of Ms. Andrews' noncompetition period,
subject to certain conditions, Ms. Andrews will be entitled to receive severance
payments from SouthTrust Bank calculated in accordance with a formula set forth
in her employment agreement.
Tami H. Chandler
Ms. Chandler's employment agreement provides that upon the completion
of the merger, SouthTrust Bank will pay Ms. Chandler, subject to certain
limitations, a lump sum payment of $144,000. Ms. Chandler's employment agreement
further provides that SouthTrust Bank will employ Ms. Chandler for a period
commencing on the closing date of the merger and ending on the first anniversary
thereof and will pay her a base salary at a rate of $80,000 per annum. Under the
employment agreement, Ms. Chandler will be entitled to participate on the same
basis as other similarly situated employees of SouthTrust and its affiliates in
all incentive and benefit programs or arrangements made available by SouthTrust
and its affiliates to such employees. The employment agreement also provides for
particular benefits including vacation and reimbursement of business expenses.
If Ms. Chandler remains employed by SouthTrust Bank for one year, then, upon
expiration of her employment agreement, she will not be subject to any
obligations to refrain from competing with SouthTrust Bank or its affiliates.
However, in the event that Ms. Chandler's employment is terminated for cause or
upon notice by Ms. Chandler prior to the end of her one-year employment period,
then SouthTrust Bank will not be further obligated to make payments or provide
benefits to Ms. Chandler except for earned but unpaid or unreimbursed amounts
and group health coverage required to be continued by applicable law.
Furthermore, for a period of one year following Ms. Chandler's termination, she
will be prohibited from (1) competing with SouthTrust or its affiliates within a
defined territory, and (2) soliciting employees of SouthTrust or its affiliates
to terminate their employment. In the event the employment agreement is
terminated by SouthTrust Bank other than for cause or upon notice by Ms.
Chandler, then SouthTrust Bank will be obligated to pay Ms. Chandler the
remainder of her base salary that would have been due to be paid had the
employment agreement not been terminated early. Moreover, Ms. Chandler will be
prohibited from competing with SouthTrust Bank or its affiliates and from
soliciting employees of SouthTrust Bank or its affiliates from terminating their
employment for a period the length of which is dependent upon the number of days
Ms. Chandler was employed by SouthTrust Bank and calculated in accordance with
the terms of her employment agreement. During the non-competition period, Ms.
Chandler would be entitled to receive payments calculated in accordance with a
formula set forth in her employment agreement.
22
<PAGE> 30
EFFECT OF THE MERGER ON FIRST BANK HOLDING COMMON STOCK
Subject to approval of the merger agreement by our shareholders, the
receipt of required regulatory approvals, and satisfaction of other conditions,
First Bank Holding will be merged with and into SouthTrust of Alabama. Upon
completion of the merger, each share (excluding (1) shares held by any of First
Bank Holding's subsidiaries or by SouthTrust or any of its subsidiaries, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, and (2) shares dissenting from approval of the merger agreement) of
First Bank Holding common stock will be converted into the right to receive
1.7456 shares of SouthTrust common stock.
The conversion ratio, including the number of shares of SouthTrust
common stock issuable in the merger, is subject to appropriate adjustment in the
event of certain stock splits, stock dividends, reclassifications or similar
distributions effected by SouthTrust. No fractional shares of SouthTrust common
stock will be issued in the merger, and in lieu thereof, each First Bank Holding
shareholder that otherwise would have been entitled to receive a fractional
share of SouthTrust common stock will be entitled to receive a cash payment in
an amount equal to the product of (1) the fractional interest of a share of
SouthTrust common stock to which such holder otherwise would have been entitled,
and (2) the last sale price of SouthTrust common stock as reported by Nasdaq on
the last trading day preceding the completion of the merger.
Because the conversion ratio of shares of SouthTrust common shares for
First Bank Holding common shares is fixed, our shareholders will not be
compensated for decreases in the market price of SouthTrust common stock which
may occur before completion of the merger. However, in the event that the
average market price of SouthTrust common stock falls below $22.00 during a 10
consecutive day trading period beginning 45 days prior to completion of the
merger, your board of directors may terminate the merger agreement by a majority
vote. In the event the market price of SouthTrust common stock increases prior
to completion of the merger, the value of the SouthTrust common stock to be
received by our shareholders would increase.
OUR SHAREHOLDERS ARE ADVISED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
SOUTHTRUST COMMON STOCK. NO ASSURANCE CAN BE GIVEN AS TO THE MARKET PRICE OF
SOUTHTRUST COMMON STOCK ON THE DATE THE MERGER BECOMES EFFECTIVE OR AS TO THE
MARKET PRICE OF SOUTHTRUST COMMON STOCK THEREAFTER.
EFFECT OF THE MERGER ON FIRST BANK HOLDING STOCK OPTIONS
Upon completion of the merger, all rights with respect to options to
acquire shares of First Bank Holding common stock granted under our stock option
plans will be assumed by SouthTrust. SouthTrust will assume such rights in
accordance with the terms of our stock option plans regardless of whether the
options are exercisable at the time the merger is completed. Rights to acquire
shares of First Bank Holding common stock will become rights to acquire shares
of SouthTrust common stock on an adjusted basis. Upon completion of the merger:
- each First Bank Holding stock option assumed by SouthTrust may
be exercised solely for shares of SouthTrust common stock;
- the number of shares of SouthTrust common stock issuable upon
the exercise of each option will be equal to product of (1)
the number of shares of First Bank Holding common stock
issuable upon exercise of the option immediately prior to
completion of the merger, and (2) 1.7456; and
- the per share exercise price of each First Bank Holding stock
option will be adjusted by dividing the per share exercise
price in effect immediately prior to completion of the merger
by 1.7456 and rounding up to the nearest cent.
For example, if you held an option to acquire 100 shares of First Bank
Holding common stock at a per share exercise price of $20 per share immediately
prior to completion of the merger, then your option would be converted into an
option to acquire 174 shares of SouthTrust common stock (100 x 1.7456) at a per
share exercise price of $11.45 per share (20 / 1.7456).
As soon as practicable after completion of the merger, SouthTrust will
file a registration statement on Form S-3 or Form S-8, as the case may be, with
respect to the shares of SouthTrust common stock subject to First Bank
23
<PAGE> 31
Holding stock options. SouthTrust will use its reasonable efforts to maintain
the effectiveness of such registration statement (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as any
of First Bank Holding stock options remain outstanding.
It is intended that SouthTrust's assumption of First Bank Holding stock
options shall be undertaken in a manner that will not constitute a
"modification" as defined in Section 424 of the Internal Revenue Code of 1986,
as amended, as to any stock option which is an incentive stock option as defined
in Section 422 of the Code. All restrictions or limitations on transfer with
respect to shares of our common stock awarded under First Bank Holding stock
option plans, to the extent such restrictions or limitations shall not have
already lapsed, shall remain in full force and effect with respect to the shares
of SouthTrust common stock into which First Bank Holding options are converted,
unless such restrictions arise under the Securities Act of 1933 and are
eliminated by virtue of the registration statement filed by SouthTrust on Form
S-3 or S-8, as the case may be.
DISTRIBUTION OF SOUTHTRUST STOCK CERTIFICATES
After the effective date of the merger, SouthTrust will insure that its
exchange agent, American Stock Transfer & Trust Company, will send transmittal
materials to you for use in exchanging certificates representing shares of First
Bank Holding common stock for shares of SouthTrust common stock. Each stock
certificate representing shares of First Bank Holding common stock will be
canceled when they are surrendered to American Stock Transfer & Trust Company.
YOU SHOULD NOT SURRENDER YOUR CERTIFICATES REPRESENTING SHARES OF FIRST BANK
HOLDING COMMON STOCK UNLESS AND UNTIL YOU RECEIVE THE TRANSMITTAL FORM AND
ACCOMPANYING INSTRUCTIONS. You should carefully read and follow the instructions
in the transmittal form to ensure proper delivery of your stock certificates
representing shares of First Bank Holding common stock to the exchange agent and
to ensure the proper issuance of your shares of SouthTrust common stock. You
will not receive any new certificates representing shares of SouthTrust common
stock or any payments in cash for fractional shares unless and until you
surrender all of your certificates representing all of your shares of First Bank
Holding common stock to the exchange agent for exchange. SouthTrust is not
required to pay any dividends or other distributions on SouthTrust common stock
with a record date occurring after the effective time of the merger to any
former First Bank Holding shareholder who has not delivered his or her First
Bank Holding stock certificate for exchange. All paid dividends and other
distributions and a check for any amount representing a fractional share
interest will be delivered to each shareholder who has exchanged his or her
certificates, in each case without interest.
After the effective time of the merger, we will not record any
transfers of shares of First Bank Holding common stock in our corporate records.
Certificates representing shares of First Bank Holding common stock presented to
us for transfer after the effective time will be canceled and exchanged for
certificates representing shares of SouthTrust common stock and a check for the
amount due in lieu of fractional shares, if any.
Neither SouthTrust, its exchange agent, nor any other person shall be
liable to any of our former shareholders for any amount or property delivered in
good faith to a public official pursuant to any applicable abandoned property or
similar law.
YOUR RIGHT TO DISSENT FROM THE MERGER
The following discussion is not a complete statement of the
law pertaining to dissenters' rights under Florida law. If you
wish to dissent from the merger and receive the fair value in
cash of your shares of First Bank Holding common stock instead
of receiving shares of SouthTrust common stock, you should
carefully read the following discussion, review the full text
of the applicable law relating to dissenter's rights which is
attached to this proxy statement/prospectus as Exhibit C and
consult with your legal counsel before electing or attempting
to exercise these rights.
If you hold one or more shares of First Bank Holding common stock you
are entitled to dissenter's rights under Florida law. This means you may dissent
from the merger and receive an amount in cash representing the fair value of the
shares of First Bank Holding common stock held by you. This value may differ
from the value of the
24
<PAGE> 32
consideration that you would otherwise receive in the merger. The availability
of your right to dissent from the merger and obtain the fair value of your
shares of First Bank Holding common stock is conditioned upon compliance with a
complicated procedure which is set forth in Sections 607.1301, 607.1302 and
607.1320 of the Florida Business Corporation Act, which is referred to in the
following discussion as the dissent provisions. A copy of the full text of the
dissent provisions is attached as Exhibit C.
If you have a beneficial interest in one or more shares of First Bank Holding
common stock that are held of record in the name of another person or entity,
such as a broker or nominee, and you want to dissent from the merger, you must
act promptly to cause the record holder to follow the steps summarized below and
in a timely manner to perfect your right to dissent from the merger.
25
<PAGE> 33
Failure to timely and properly comply with the procedure specified below will
result in the complete loss of your dissenters' rights in the merger.
How to exercise and perfect your right to dissent
In order to be eligible to exercise your right to dissent from the merger:
1. you must deliver to First Bank Holding prior to the vote on the merger
written notice that you intend to demand payment for your shares of
First Bank Holding common stock if the merger is approved and
completed; and
2. you must not vote your shares of First Bank Holding common stock in
favor of the merger.
If you wish to exercise your right to dissent, you should send this notice, and
all communications to
First Bank Holding, to:
First Bank Holding Company
1997 Capital Circle, N.E.
Tallahassee, Florida 32308
Attention: Susie B. Andrews, Corporate Secretary
You should sign every communication.
If you do not fully satisfy both of the above requirements you will
not be entitled to receive payment for your shares of First Bank Holding common
stock under the dissent provisions. Instead, you will receive shares of
SouthTrust common stock and cash in lieu of fractional shares, as described in
the merger agreement. A PROXY OR VOTE AGAINST THE PROPOSED ACTION DOES NOT
CONSTITUTE A DEMAND FOR PAYMENT. However, provided that you fully satisfy both
of the requirements listed above, a failure to vote against the proposal will
not constitute a waiver of your appraisal rights.
If the merger is approved at the special meeting and if you satisfied
both of the requirements referred to in (1) and (2) above, First Bank Holding
will deliver to you written notice that the merger was approved within ten (10)
days after the date of the special meeting. Within twenty (20) days after you
receive written notice from First Bank Holding, you must file with First Bank
Holding a written notice of your election to dissent. This notice must:
- state that you are electing to dissent from the merger;
- state your name and address;
- state the number of your shares of First Bank Holding common
stock as to which you dissent;
- state that you are demanding payment of the fair value of
your shares of First Bank Holding common stock; and
- be accompanied by certificates representing your shares of
First Bank Holding common stock.
If you file an election to dissent and submit the stock certificates
representing your shares of First Bank Holding common stock, you will not be
entitled to vote or to exercise any other rights as a shareholder of First Bank
Holding. You may withdraw your election to dissent from the merger at any time
before First Bank Holding makes an offer to purchase your shares, as described
below, by filing written notice of withdrawal with First Bank Holding. After
First Bank Holding offers to buy your shares, you may not withdraw your
election to dissent unless First Bank Holding consents thereto. If you do not
demand payment and submit the certificates representing your shares of First
Bank Holding common stock according to the instructions and by the date
discussed above, you will not be entitled to receive payment for your shares of
First Bank Holding common stock. Instead you will receive shares of SouthTrust
common stock and cash in lieu of fractional shares, as described in the merger
agreement.
26
<PAGE> 34
First Bank Holding must make an offer
Within ten (10) days after the time in which you were entitled to file
notice of election to dissent, or within ten (10) days after the merger is
completed, whichever is later (but in no event later than ninety (90) days
after the special meeting), we must make a written offer to pay you, provided
you have complied with your obligations under the dissent provisions, the
amount we estimate to be the fair value of your shares of First Bank Holding
common stock. If the merger is not completed within ninety (90) days after the
special meeting, then our offer to purchase your shares may be made conditional
upon completion of the merger. This offer of payment must be accompanied by the
following:
- our balance sheet as of the latest available date but no more
than twelve (12) months prior to our offer; and
- our profit and loss statement for the twelve (12) month
period ended on the date of our balance sheet.
If you accept First Bank Holding's offer
If within thirty (30) days after we make our offer you agree to accept
our offer of payment in full satisfaction of your demand, then we will pay you
the appropriate amount within ninety (90) days after the date of our offer or
the completion of the merger, whichever is later. When we pay you, you will
cease to have any interest in your shares of First Bank Holding common stock.
Commencement of Legal Proceedings
If we fail to make an offer to purchase your shares within the
specified time, or if you fail to accept our offer within thirty (30) days
after we make our offer, then we may file an action in any court of competent
jurisdiction in Leon County, Florida and request that the fair value of your
shares be determined. We must file this action within thirty (30) days after we
receive a written demand from any dissenting shareholder to pay the fair value
of his or her shares, provided such written demand is made within sixty (60)
days after the merger is completed. If we do not receive such a written demand,
then we may, at our election, file this action at any time during the sixty
(60) day period after the merger is completed.
If we do not institute legal proceedings, then you or any dissenting
shareholder may do so in the name of First Bank Holding. All dissenting
shareholders will be made party to this proceeding, and we must properly serve
all dissenting shareholders with a summons and complaint.
The court may appoint one or more persons as appraisers to recommend a
fair value for your shares. The appraiser or appraisers shall have the powers
specified in the order appointing them or any amendment to it. Every
shareholder who is made a party to this proceeding is entitled to judgment for
the amount the court finds as the fair value of their shares of First Bank
Holding common stock. We must pay each dissenting shareholder the amount due
him or her within ten (10) days after final determination of the proceedings.
The judgment may include a fair rate of interest to be determined by the court.
The costs and expenses of an appraisal proceeding must be determined
by the court and will be assessed against us, but the court may assess costs
against any or all of the dissenting shareholders as the court deems equitable
and to the extent the court finds that any shareholder has acted arbitrarily,
vexatiously or not in good faith.
Expenses determined by the court will include reasonable compensation
and expenses for the appraisers. However, expenses determined by the court will
not include fees and expenses of counsel and experts employed by us or by any
dissenting shareholder. If the fair value of the shares, as determined by the
court, materially exceeds the amount which we offered to pay for the shares of
any dissenting shareholder, then the court may award reasonable compensation to
any attorney or expert employed by such dissenting shareholder.
See "Federal Income Tax Consequences" on page {__} for a discussion on
how the federal income tax consequences of your action will change if you elect
to dissent from the merger.
27
<PAGE> 35
TIMING OF COMPLETION OF THE MERGER
We are working towards completing the merger as soon as possible.
Assuming that the merger is approved by our shareholders and by all applicable
regulatory authorities, we anticipate that completion of the merger will occur
in the fourth quarter of 2000. However, the merger cannot be completed unless
and until:
- our shareholders approve the merger agreement;
- all conditions to the merger have been waived or satisfied;
and
- the merger has been approved by the Board of Governors of the
Federal Reserve System and the Alabama State Banking
Department.
The merger timing may be affected by the timing of the regulatory
review of any application for approval of the merger. For a more detailed
discussion of the regulatory procedures and any potential effects on the timing
of the completion, see "Regulatory Approvals" immediately following.
REGULATORY APPROVALS
In addition to obtaining your approval, the merger cannot be completed
unless and until we obtain all requisite regulatory approvals. The merger must
be approved by the Federal Reserve Board pursuant to the Bank Holding Company
Act and the Federal Reserve Act and by the Alabama State Banking Department. On
October 11, 2000, we, together with SouthTrust, submitted an application
seeking approval of the merger to the Federal Reserve Board and to the Alabama
State Banking Department. In reviewing the application, the Federal Reserve
Board is required to consider, among other factors, SouthTrust's and our
financial and managerial resources and future prospects and the convenience and
needs of the communities to be served after the merger is completed. In
addition, the Federal Reserve Board must also take into account the record of
performance in meeting the credit needs of the entire community, including low
to moderate income neighborhoods, served by us and SouthTrust. The Federal
Reserve Board has the authority to deny the merger application if it concludes
that the combined entity would have an inadequate capital position. In
addition, the Federal Reserve Board may not approve the merger if it:
- would result in a monopoly;
- would be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of
banking in any part of the United States;
- may have the effect in any section of the United States of
substantially lessening competition;
- may have the effect of tending to create a monopoly; or
- would result in a restraint of trade;
unless the Federal Reserve Board finds that the anti-competitive effects of the
merger are outweighed clearly by public interest and by the probable effect of
the merger in meeting the convenience and needs of the communities served. For
example, the Federal Reserve Board may consider if the merger can reasonably be
expected to produce benefits to the public, such as greater convenience,
continued local banking services or gains in efficiency, that outweigh possible
adverse effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interests, or unsound banking practices.
The Alabama State Banking Department must also approve the merger. In
its review, the state regulatory authority will consider substantially similar
considerations as those considered by the Federal Reserve Board. We are also
required to give notice of the proposed transaction to the Florida Department of
Banking and Finance.
The Federal Reserve Board is required to furnish notice of and a copy
of our application requesting approval of the merger to the other federal
supervisory and regulatory banking agencies and to the appropriate state
regulatory authorities, which will have thirty (30) days to submit their views
and recommendations on the merger to
28
<PAGE> 36
the Federal Reserve Board. Furthermore, we are required to publish notice of
the fact that the application has been filed with the Federal Reserve Board
and, if there is sufficient public comment about the merger, the Federal
Reserve Board may hold a public hearing about the merger if it determines that
such a hearing would be appropriate. If any comments are made or a hearing is
called, the period during which the application is subject to review by the
Federal Reserve Board may be prolonged and the determination of the Federal
Reserve Board on the application for approval may be delayed. In addition, the
merger may be challenged on antitrust grounds by a private person, a state
attorney general or by the United States Department of Justice. If the
Department of Justice commences an antitrust action, it will suspend the
effectiveness of the Federal Reserve Board's approval of the merger unless and
until a court specifically orders otherwise. The Department of Justice may
analyze and conclude differently from the Federal Reserve Board about the
competitive effects of the merger and may impose conditions before it will
approve of the merger, including requiring the divestiture of assets and
branches of any of the parties.
Assuming Federal Reserve Board approval is granted, the merger may not
be consummated until 30 days after such approval, during which time the
Department of Justice may challenge the merger on antitrust grounds. With the
approval of the Federal Reserve Board and the Department of Justice, the
waiting period may be reduced by no less than 15 days. The commencement of any
antitrust action, however, would postpone the effectiveness of the Federal
Reserve Board approval until a court specifically orders otherwise.
Neither we nor SouthTrust are aware of any other material governmental
or regulatory approvals or actions that are required to complete the merger,
other than those described above. Should any other approval or action be
required, it is the current intention of both parties to obtain those approvals
or actions. Any approval received from the Federal Reserve Board or any other
governmental agency reflects only that agency's view that the merger does not
contravene the competitive standards imposed by applicable law and regulation,
and that the merger is consistent with applicable regulatory policies relating
to the safety and soundness of the banking industry. The approval of the merger
by the Federal Reserve Board and state regulatory authorities is not an
endorsement or recommendation of the merger.
WE CANNOT ASSURE YOU THAT ALL REQUISITE REGULATORY APPROVALS WILL BE
OBTAINED AND, IF OBTAINED, WHEN THEY WILL BE OBTAINED. WE ALSO CANNOT ASSURE
YOU THAT ANY APPROVAL WILL NOT BE CONDITIONED UPON MATTERS WHICH WILL CAUSE
SOUTHTRUST OR US TO RECONSIDER AND PERHAPS ABANDON THE MERGER; NOR CAN WE
ASSURE YOU THAT THERE WILL BE NO CHALLENGE TO THE MERGER OR, IF SUCH A
CHALLENGE IS MADE, THE RESULT OF SUCH CHALLENGE.
CONDITIONS TO BE SATISFIED OR WAIVED BEFORE THE MERGER CAN BE COMPLETED
Neither we nor SouthTrust is required to complete the merger unless
various conditions have either been satisfied or, where appropriate, waived by
the party in whose favor the condition is granted. These conditions include,
among others, the following:
- our shareholders and all applicable regulatory agencies have
approved the merger;
- there is no temporary, preliminary or permanent order, law or
other action which prohibits the merger from being completed
or makes the merger illegal;
- the shares of SouthTrust common stock to be issued in the
merger are validly registered (or a valid exemption from such
registration requirements has been obtained) under all
applicable state and federal laws and no stop orders
suspending the effectiveness of such registration shall have
been issued;
- there is no fact or event which would have a material adverse
impact on a party nor is there a moratorium on banking, state
of war, national emergency or suspension of trading which
would render the merger impractical;
- the representations and warranties of all parties are
accurate in all material respects and the obligations and
agreements made by all parties have been fully performed;
- there is no fact or event which would significantly affect
the financial benefit to SouthTrust in completing the merger;
29
<PAGE> 37
- holders of no more than 5% of our outstanding shares shall
have elected to exercise their right to dissent;
- SouthTrust may account for the merger as a
pooling-of-interests;
- there shall not be any material increase in our loan
agreements, notes or borrowing arrangements, except those
arising in the ordinary course of business;
- receipt by each party of an opinion on various legal aspects
of the merger from legal counsel representing the other
party;
- we shall have received an opinion from legal counsel
representing SouthTrust opining that the merger shall qualify
as a tax-free reorganization within the meaning of section
368 of the Internal Revenue Code and Allen C. Ewing & Co.
shall not have withdrawn its fairness opinion, set forth as
Exhibit B to this proxy statement/prospectus; and
- the directors, officers and non-executive employees of First
Bank Holding and First Bank identified in the merger
agreement have offered to rescind certain purchases of First
Bank Holding common stock as specified in the merger
agreement.
CONDUCT OF BUSINESS BY FIRST BANK HOLDING PENDING THE MERGER
We have agreed that until the merger is completed we will take no
action which will materially and adversely affect SouthTrust's or our ability
to obtain any consents required to complete the merger, to perform any of
either of our obligations under the merger agreement or to complete the merger.
In addition, we have also agreed that until the merger is completed we will
operate our business only in the usual, regular and ordinary course in
substantially the same manner as we currently do and that we will preserve our
current assets and business relationships and retain the services of our key
employees and officers. We have agreed that we will not, without first
obtaining SouthTrust's consent:
- amend our organizational documents or our authorized capital
stock;
- issue more shares of First Bank Holding common stock;
- issue or grant any options, warrants or other rights to
purchase shares of First Bank Holding common stock;
- declare dividends or other distributions on shares of First
Bank Holding common stock (except for our normal and
recurring annual dividend which we may declare if the merger
has not become effective by the record date of SouthTrust's
fourth quarter dividend);
- except in the ordinary course of business consistent with
past practice, incur any material liability or indebtedness,
directly or as guarantor;
- make any capital expenditures individually in excess of
$25,000, or in the aggregate in excess of $50,000, except as
otherwise provided in the merger agreement;
- sell or otherwise dispose of any of our property or our
interest in property which has a book value in excess of or
in exchange for consideration in excess of $25,000;
- except as may be provided in the merger agreement, pay any
bonuses to our officers and directors or generally increase
the compensation of our officers, directors and employees;
- except as otherwise provided in the merger agreement, enter
into any new or amend any existing employment, consulting,
non-competition or independent contractor agreement or enter
into or
30
<PAGE> 38
amend any incentive, profit sharing, retirement or other
employee benefit plan, except as may be required by law;
- enter into or extend any agreement, lease or license relating
to property or services where our liability is more than
$25,000;
- change the rate of interest paid on our time deposits or on
our certificates of deposit, except in accordance with our
past banking practices;
- with respect to our investment portfolio, purchase or acquire
any investment securities having an average remaining life to
maturity greater than five years, or except as provided in
the merger agreement, any asset-backed security;
- except as otherwise contemplated by the merger agreement,
acquire twenty percent (20%) or more of the assets or equity
securities of any person or acquire direct or indirect
control of any person;
- commence or settle any action or proceeding, legal,
governmental or otherwise, against us which involves material
money damages or a restriction upon any of our operations; or
- agree or commit to do any of the foregoing.
OTHER COVENANTS AND AGREEMENTS
Mutual Agreements
Both we and SouthTrust have agreed that each of us will:
- use our best efforts to take all action required under the
merger agreement to permit the merger to be completed at the
earliest possible date;
- cooperate in furnishing information for the preparation and
filing of this proxy statement/prospectus;
- cooperate in the preparation and filing of any regulatory
application required to be filed with respect to the merger;
- not publish any news release or other public announcement or
disclosure about the merger without the consent of the other;
- advise the other as to our general status and ongoing
operations and of any material inaccuracies in data provided
to the other; and we, in addition, have agreed to advise
SouthTrust of any materially adverse change in our financial
condition, assets, business or operations; and
- if the merger is not completed, for a period of five years
after the merger agreement is terminated keep as confidential
all information relating to, and provided by the other,
except as may be required by law and with respect to
information which is already in the public domain.
Agreements of SouthTrust
SouthTrust has agreed to take all actions necessary to validly
register, or obtain valid exemptions from registration, pursuant to applicable
federal and state securities laws the shares of SouthTrust common stock it will
issue in the merger. In addition, SouthTrust has agreed to reserve enough
shares of SouthTrust common stock to fulfill the share exchange requirements of
the merger after it is completed and to cause these additional shares of
SouthTrust common stock to be listed on Nasdaq.
31
<PAGE> 39
SouthTrust has also agreed that all of our employees and officers who
are employed by SouthTrust after the merger is completed will be eligible to
participate in SouthTrust's employee benefit plans on the same basis and
subject to the same conditions as are applicable to any newly-hired employee of
SouthTrust, subject to various waiting periods and deductions, and such
employees and officers will receive credit, for vesting purposes, for all
periods of time served as our employees.
SouthTrust has agreed in the merger agreement that after the effective
time of the merger, it will indemnify, defend and hold harmless each person
entitled to indemnification from First Bank Holding and First Bank against all
liabilities arising out of actions omissions occurring at or after the
effective time of the merger to the same extent and subject to the same
conditions as officers, directors and employees of SouthTrust as set forth in
SouthTrust's restated certificate of incorporation and by-laws, under such
directors' and officers' liability insurance policy as SouthTrust may then make
available, and by applicable law.
Agreements of First Bank Holding; No Solicitation
We have agreed that we will not directly, nor ask anyone to, solicit
or encourage, including by way of furnishing information, any inquiries or the
making of any proposal which may reasonably be expected to lead to any proposal
for a merger or other business combination involving First Bank Holding or for
the acquisition of a significant equity interest in First Bank Holding or for
the acquisition of a significant portion of our assets or liabilities. We have
agreed to promptly advise SouthTrust orally and in writing of any inquiries or
proposals we receive. We have also agreed to use our best efforts to obtain the
consent of any third party which is necessary to transfer and assign all of our
right, interest and title in any property or contract to SouthTrust Bank.
WAIVER AND AMENDMENT
Prior to or at the effective time, either party may: (1) waive any
default in the performance of any term of the merger agreement by the other;
and (2) waive or extend the time for compliance or fulfillment by the other of
any and all of the other's obligations, except with respect to any condition
which, if not satisfied, would result in the violation of any law or any
applicable governmental regulation. Furthermore, our obligations may change if
the merger agreement is amended. The merger agreement may be amended if both
parties execute a written document which amends the existing terms of the
merger agreement.
TERMINATION OF THE MERGER AGREEMENT
We may terminate the merger agreement and abandon the merger any time
prior to the effective time if both parties mutually consent to the
termination. The merger agreement may also be terminated and the merger
abandoned at any time before the merger is completed by either SouthTrust or
First Bank Holding if:
- the merger has not been completed by March 31, 2001; provided
the party wishing to terminate is not then in breach of its
representations, warranties, covenants or agreements under
the merger agreement, which breach is the cause of or has
resulted in the failure of the merger to be completed before
March 31, 2001;
- any of the representations and warranties of the other party
are inaccurate and the inaccuracy cannot be, or has not been,
cured within thirty (30) days after notice to cure has been
given; provided the party wishing to terminate is not also in
breach of its representations and warranties under the merger
agreement;
- the other party materially breaches any of its covenants or
agreements and the breach cannot be, or has not been, cured
within thirty (30) days after notice to cure has been given;
provided the party wishing to terminate is not also in breach
of its representations and warranties under the merger
agreement;
- any of the conditions required to be completed before the
merger can be completed cannot be satisfied by March 31, 2000
and have not been waived; provided the party wishing to
terminate is not also in breach of its representations and
warranties under the merger agreement;
32
<PAGE> 40
- a regulatory authority denies approval of the merger by final
nonappealable action or if any action taken by a regulatory
authority is not appealed within the time limit for appeal;
- our shareholders fail to approve the merger agreement; or
- your board of directors decides by majority vote to abandon
the merger in the event that the market price of SouthTrust
common stock drops below $22.00 per share during a certain
trading period defined in the merger agreement.
If the merger agreement is terminated, it will become void and have no
effect, except that some of the provisions of the merger agreement may continue
after the termination, in particular, the provisions requiring First Bank
Holding to pay SouthTrust a break-up fee under certain circumstances and each
party's obligation to pay the other a termination fee under certain
circumstances. See "Break-Up and Termination Fees" immediately following this
section. Provisions requiring the parties to keep confidential any information
they have obtained, other than through publicly available sources, about the
other party will also continue after termination of the merger agreement. In
the event the merger agreement is terminated, each party will still remain
liable for any uncured willful breach of any of its representations,
warranties, covenants or other agreements which gave rise to the termination.
BREAK-UP AND TERMINATION FEES
Under certain circumstances, First Bank Holding may be obligated to pay
SouthTrust a $1,000,000 break-up fee if the merger is not completed. If (1) a
third party offers or proposes to enter into one of the "acquisition
transactions" specified in the merger agreement and described below with First
Bank Holding or First Bank, (2) the proposed merger of SouthTrust of Alabama and
First Bank Holding is subsequently disapproved by your board of directors or by
our shareholders resulting in termination of the merger agreement, and, (3)
within one year after termination of the merger agreement, First Bank Holding or
First Bank enters into an "acquisition transaction" with the third party, then
First Bank Holding will be required to pay SouthTrust $1,000,000. The
"acquisition transactions" which could trigger First Bank Holding's obligation
to pay a $1,000,000 break-up fee to SouthTrust are defined in the merger
agreement and generally include:
- a merger or consolidation of any company (other than
SouthTrust) with First Bank Holding or First Bank;
- a purchase, lease or other acquisition of all or
substantially all of the assets of First Bank Holding or
First Bank;
- the acquisition of beneficial ownership of 35% or more of the
voting power of First Bank Holding or First Bank; or
- a bona fide tender or exchange offer to acquire 35% or more
of the voting power of First Bank Holding.
Each party may also have an obligation to pay the other a termination
fee of $150,000 if the merger agreement is terminated. If SouthTrust terminates
the merger agreement for any reason other than as provided below and, at the
time of SouthTrust's termination, First Bank Holding has not breached its
obligations under the merger agreement, then SouthTrust will be obligated to pay
First Bank Holding a $150,000 termination fee. If First Bank Holding terminates
the merger agreement for any reason other than as provided below and SouthTrust
has not breached any of its obligations under the merger agreement, then First
Bank Holding is required to pay SouthTrust a termination fee of $150,000.
However, in the event that either SouthTrust or First Bank Holding terminates
the merger agreement because the merger has not occurred by March 31, 2001
through no fault of the terminating party, then neither party will not be
obligated to pay the other a termination fee. Furthermore, if First Bank Holding
elects to terminate the merger agreement because the market price of SouthTrust
common stock falls below $22 during a defined trading period, then First Bank
Holding will not be obligated to pay SouthTrust a termination fee.
33
<PAGE> 41
RESALES OF SHARES OF SOUTHTRUST COMMON STOCK
If the merger is approved and completed, generally, the shares of
SouthTrust common stock issued to you will be freely transferable and not
subject to any restrictions.
However, if you are an "affiliate" of First Bank Holding when the
merger is completed or you become an "affiliate" of SouthTrust as a result of or
after the merger is completed, you will be subject to restrictions which will
limit how you may sell your shares of SouthTrust common stock and in some cases
may limit the number of shares of SouthTrust common stock that you may sell at
any one time.
WHAT IS AN "AFFILIATE"?
An "affiliate" of an entity is generally deemed to include individuals
or entities that, directly or indirectly through one or more intermediaries,
control, are controlled by or are under common control with the entity.
Affiliates may include various executive officers and directors as well
as various principal shareholders: for example, shareholders who hold 10% or
more of the issued and outstanding capital stock of the entity.
If you are deemed to be an affiliate of First Bank Holding, you may not
resell the shares of SouthTrust common stock issued to you in the merger until
financial results covering at least thirty (30) days of combined operations of
SouthTrust and First Bank Holding have been published within the meaning of
Section 201.01 of the Securities and Exchange Commission's Codification of
Financial Reporting Policies. Following such date, you may resell the shares of
SouthTrust common stock issued to you in the merger only:
- in transactions permitted by Rule 145 under the Securities
Act; or
- otherwise as permitted by the Securities Act, such as
pursuant to an effective registration statement or in
transactions which are otherwise exempt from registration
under the Securities Act.
Rule 145 imposes restrictions on the manner in which an affiliate may
resell and the quantity of any such resale of any of the shares of SouthTrust
common stock received by the affiliate in the merger. This proxy
statement/prospectus does not cover resales of SouthTrust's common stock
received by any person who may be deemed to be an affiliate of First Bank
Holding, and SouthTrust does not intend to register such shares for resale. We
have agreed in the merger agreement to cause each person who may be deemed to be
an "affiliate" of ours to execute and deliver to SouthTrust an affiliate letter
in which the affiliate agrees not to offer, sell or otherwise transfer any of
the shares of SouthTrust common stock distributed to them in connection with the
merger except in compliance with Rule 145 or in a transaction otherwise exempt
from the Securities Act.
If you are deemed to be an affiliate of First Bank Holding before the
merger, you should insure that any subsequent sale or transfer of your shares of
SouthTrust common stock is made in compliance with one of the above listed
exceptions.
ANTICIPATED ACCOUNTING TREATMENT
We expect the merger to qualify as a pooling of interests. This means
that after the merger is complete, SouthTrust may reflect the merger for
accounting and financial reporting purposes as if First Bank Holding and
SouthTrust had always been combined. Under this method of accounting, the book
value of our assets, liabilities and shareholders' equity, as reported on our
financial statements prior to completion of the merger, will be carried forward
to the consolidated financial statements of SouthTrust and no goodwill will be
created that would otherwise be required to be expensed against the future
earnings of the merged entity. It is a condition to the merger that SouthTrust
will not have determined that the merger will fail to qualify for
pooling-of-interests accounting treatment. To insure that pooling-of-interests
accounting treatment may be used in connection with the merger, persons who were
identified as affiliates of First Bank Holding will be subject to certain
restrictions on transfers of
34
<PAGE> 42
the SouthTrust common stock they receive. For more information on these
restrictions, see "Resales of Shares of SouthTrust Common Stock" immediately
prior to this section.
EXPENSES
SouthTrust will be responsible and pay for all of the expenses incurred
by it in connection with completing the merger, and we will be responsible and
pay for our expenses incurred in connection with the completion of the merger.
FEDERAL INCOME TAX CONSEQUENCES
The following section describes the material federal
income tax consequences of the merger to First Bank Holding
shareholders who hold their shares of common stock as capital
assets. This section does not address state, local or foreign
tax consequences of the merger.
This section is based on the federal tax laws that are currently in
effect. These laws are subject to change at any time, possibly with retroactive
effect. This is not a complete description of all of the consequences of the
merger in your particular circumstances. We do not address the U.S. federal
income tax considerations applicable to certain classes of stockholders,
including:
- financial institutions;
- insurance companies;
- tax-exempt organizations;
- dealers in securities or currencies;
- traders in securities that elect to mark to market;
- persons who are not for United States federal income
tax purposes:
- a citizen or resident of the United States;
- a domestic corporation;
- an estate whose income is subject to United
States federal income tax regardless of its
source; or
- a trust if a United States court can
exercise primary supervision over the
trust's administration and one or more
United States persons are authorized to
control all substantial decisions of the
trust;
- persons who acquired or acquire shares of First Bank
Holding common stock pursuant to the exercise of
employee stock options or otherwise as compensation;
and
- persons who do not hold their shares of First Bank
Holding common stock as a capital asset.
YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR ABOUT THE FEDERAL INCOME TAX
CONSEQUENCES UNDER YOUR OWN PARTICULAR FACTS AND CIRCUMSTANCES, AND ALSO AS TO
ANY STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES ARISING OUT OF THE MERGER.
Neither we, SouthTrust nor any of SouthTrust's subsidiaries have
requested or will receive an advance ruling from the Internal Revenue Service as
to any of the federal income tax consequences of the merger to holders of First
Bank Holding common stock or to SouthTrust or First Bank Holding. The
consummation of the merger is conditioned upon our receipt of an opinion of
Bradley Arant Rose & White LLP as to certain of the federal income tax
consequences of the merger to our shareholders. The opinion of Bradley Arant
Rose & White LLP is based entirely upon the Internal Revenue Code of 1986, as
amended, current regulations under the Internal Revenue Code, current
administrative rulings and practice, and judicial authority, all of which are
subject to change, possibly with retroactive effect. Management of SouthTrust
has represented to Bradley Arant Rose & White LLP that it has no plan or
intention to cause SouthTrust to redeem or otherwise reacquire the shares of
SouthTrust common stock issued in the merger.
35
<PAGE> 43
Unlike a ruling from the IRS, an opinion is not binding on the IRS and
neither we nor SouthTrust can assure you that the IRS will not take a position
contrary to one or more positions reflected in this proxy statement/prospectus
or that the positions stated in the opinion will be upheld by the courts if
challenged by the IRS.
In the opinion of Bradley Arant Rose & White LLP, First Bank Holding
shareholders who exchange all of their shares of First Bank Holding common
stock for shares of SouthTrust common stock pursuant to the merger will be
subject to the following material U.S. federal income tax consequences:
(1) The merger will qualify as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code. First Bank
Holding, SouthTrust and SouthTrust of Alabama each will be a party to
the reorganization within the meaning of Section 368(b) of the
Internal Revenue Code.
(2) You will recognize no gain or loss upon your exchange
of First Bank Holding common stock solely for SouthTrust common stock.
(3) The basis of the shares of SouthTrust common stock
received by you (including any fractional share interests to which you
may be entitled) will be the same as the basis of the shares of First
Bank Holding common stock surrendered in exchange therefor.
(4) The holding period of the shares of SouthTrust common
stock received by you (including any fractional share interest to
which you may be entitled) will include the period during which you
held such shares provided that such shares surrendered were held by
you as a capital asset within the meaning of Section 1221 of the
Internal Revenue Code by the First Bank Holding shareholders as of the
Effective Time of the Merger.
(5) The receipt by you of cash instead of a fractional
share of SouthTrust common stock will be treated as though such
fractional share actually was issued in the merger and thereafter
redeemed by SouthTrust for cash. The receipt of such cash instead of a
fractional share by a holder of First Bank Holding common stock will
be treated as a distribution by SouthTrust in full payment in exchange
for the fractional share as provided in Section 302(a) of the Internal
Revenue Code.
(6) Our shareholders who exercise dissenters' rights, and
as a result receive only cash, will be treated as having received such
cash as a distribution in redemption of their shares of First Bank
Holding common stock, subject to the provisions and limitations of
Section 302 of the Internal Revenue Code. Our shareholders who receive
only cash, and who hold no SouthTrust common stock, directly or
indirectly through the application of Section 318(a) of the Internal
Revenue Code, following the merger will be treated as having a
complete termination of interest within the meaning of Section
302(b)(3) of the Internal Revenue Code, and the cash received will be
treated as a distribution in full payment in exchange for such
holder's First Bank Holding common stock as provided in Section 302(a)
of the Internal Revenue Code. As provided in Section 1001 of the
Internal Revenue Code, gain will be realized and recognized by such
First Bank Holding shareholders measured by the difference between the
redemption price and the adjusted tax basis of the shares of First
Bank Holding common stock that are surrendered. Provided that Section
341 of the Internal Revenue Code (relating to collapsible
corporations) is inapplicable and the First Bank Holding common stock
is a capital asset in the hands of such holders, the gain, if any,
will constitute capital gain. Such gain will constitute long-term
capital gain if the surrendered shares of First Bank Holding common
stock were held by the shareholder for a period greater than one year
prior to the merger; if the surrendered shares of First Bank Holding
common stock were held by such shareholder for a period of one year or
less, the gain will constitute short-term capital gain.
The opinion of Bradley Arant Rose & White LLP is rendered solely with
respect to certain federal income tax consequences of the merger under the
Internal Revenue Code, and does not extend to the income or other tax
consequences of the merger under the laws of any State or any political
subdivision of any State. The opinion also does not extend to any tax effects
or consequences of the merger to SouthTrust, SouthTrust of Alabama or
36
<PAGE> 44
SouthTrust Bank, other than those expressly stated in the opinion. No opinion
is expressed as to the federal tax treatment of the transaction under any other
provisions of the Internal Revenue Code and regulations, or about the tax
treatment of any conditions existing at the time of, or effects resulting from,
the transaction that are not specifically covered by the opinion.
DESCRIPTION OF SOUTHTRUST CAPITAL STOCK
The descriptive information below outlines certain
provisions of SouthTrust's restated certificate of
incorporation, restated by-laws, certificate of designations
and the general corporation law of Delaware. The information
is not complete and is qualified by the more detailed
provisions of SouthTrust's certificate of incorporation,
by-laws and certificate of designations, which are
incorporated by reference as exhibits to this document, and
the general corporation law of Delaware. See "Where You Can
Find More Information" on page {____________} for information
on how to obtain copies of these incorporated documents.
GENERAL
The authorized capital stock of SouthTrust consists of 500,000,000
shares of common stock, par value $2.50 per share, and 5,000,000 shares of
preferred stock, par value $1.00 per share. As of June 30, 2000, there were
168,233,823 shares of SouthTrust common stock issued and outstanding, exclusive
of shares held as treasury stock, and no shares of SouthTrust preferred stock
were outstanding. As of June 30, 2000, 2,000,000 shares of SouthTrust preferred
stock designated as Series 1999 Junior Participating Preferred Stock were
reserved for issuance upon the exercise of certain rights described below under
"Stockholder Rights Plan" on page {__}.
Since SouthTrust is a holding company, the right of SouthTrust, and
hence the right of creditors and stockholders of SouthTrust, to participate in
any distribution of assets of any subsidiary, including SouthTrust Bank, upon
its liquidation or reorganization or otherwise is necessarily subject to the
prior claims of creditors of the subsidiary, except to the extent that the
claims of SouthTrust itself as a creditor of the subsidiary may be recognized.
SOUTHTRUST COMMON STOCK
Dividend Rights
Holders of SouthTrust common stock are entitled to their proportionate
share of dividends declared by SouthTrust's board of directors out of funds
legally available for payment of dividends, subject to any prior rights of any
SouthTrust preferred stock outstanding. Under Delaware law, SouthTrust may pay
dividends out of surplus or net profits for the fiscal year in which declared
or for the preceding fiscal year, even if its surplus accounts are in a deficit
position. The sources of funds for payment of dividends by SouthTrust are its
subsidiaries. Because its primary subsidiary is a bank, payments made by
SouthTrust are limited by law and regulations of the bank regulatory
authorities.
Voting Rights and Other Matters
SouthTrust stockholders have one vote for each share of common stock
held on all matters brought before the stockholders. The holders of SouthTrust
common stock do not have the right to cumulate their shares of SouthTrust
common stock in the election of directors. SouthTrust's restated certificate of
incorporation requires the vote of the holders of 70% of the voting power of
the outstanding voting securities of SouthTrust to approve a transaction or a
series of transactions with an "Interested Stockholder" which would result in
SouthTrust being merged into or with another corporation or securities of
SouthTrust being issued in a transaction which would permit control of
SouthTrust to pass to another entity, or similar transactions having the same
effect. An "Interested Stockholder" is generally defined as a holder of more
than 10% of the voting stock of SouthTrust or an affiliate of such a holder. An
exception exists in cases in which either certain price criteria and procedural
requirements are satisfied or the transaction is recommended to the
stockholders by a majority of the members of SouthTrust's board
37
<PAGE> 45
of directors who are unaffiliated with the Interested Stockholder and who were
directors before the Interested Stockholder became an Interested Stockholder.
SouthTrust common stock does not have any conversion rights, and there
are no redemption or sinking fund provisions applicable to SouthTrust common
stock. Holders of SouthTrust common stock are not entitled to any preemptive
rights to subscribe for any additional securities which may be issued.
Liquidation Rights
In the event of liquidation, holders of SouthTrust common stock will
be entitled to receive pro rata any assets distributable to stockholders with
respect to the shares held by them, after payment of indebtedness and such
preferential amounts required to be paid to the holders of any SouthTrust
preferred stock issued by SouthTrust.
Provisions with Respect to Board of Directors
SouthTrust's restated certificate of incorporation provides that the
members of SouthTrust's board of directors are divided into three classes as
nearly equal in number as possible. Stockholders elect each class for a
three-year term. At each annual meeting of stockholders of SouthTrust, the
stockholders elect roughly one-third of the members of SouthTrust's board of
directors for a three-year term, and the other directors remain in office until
their three-year terms expire. Therefore, control of SouthTrust's board of
directors cannot be changed in one year, and at least two annual meetings must
be held before stockholders can change a majority of the members of
SouthTrust's board of directors.
Special Vote Requirements for Certain Amendments to Restated Certificate of
Incorporation
The general corporation law of the State of Delaware and the restated
certificate of incorporation and by-laws of SouthTrust provide that
stockholders may remove a director, or SouthTrust's entire board of directors,
only for cause. The restated certificate of incorporation and by-laws of
SouthTrust also provide that the affirmative vote of the holders of at least
70% of the voting power of the outstanding capital stock entitled to vote for
the election of directors is required to remove a director or the entire board
of directors from office. Stockholders may amend certain portions of the
restated certificate of incorporation of SouthTrust described in certain of the
preceding paragraphs, including those related to business combinations and the
classified board of directors, only by the affirmative vote of the holders of
70% of the voting power of the outstanding voting stock of SouthTrust.
Anti-Takeover Effects of Special Provisions
Some of the provisions contained in the restated certificate of
incorporation and by-laws of SouthTrust described above have the effect of
making it more difficult to change SouthTrust's board of directors, and may
make SouthTrust's board of directors less responsive to stockholder control.
These provisions also may tend to discourage attempts by third parties to
acquire SouthTrust because of the additional time and expense involved and a
greater possibility of failure. As a result, these provisions may adversely
affect the price that a potential purchaser would be willing to pay for the
capital stock of SouthTrust, thereby reducing the amount a stockholder might
realize in, for example, a tender offer for the capital stock of SouthTrust.
Stockholder Rights Plan
Each share of SouthTrust common stock outstanding as of February 22,
1999, including those that may be issued under this proxy statement/
prospectus, carries with it one preferred share purchase right, referred to in
this proxy statement/prospectus as a "right." If the rights become exercisable,
each right entitles the registered holder of a right to purchase one
one-hundredth of a share of the series 1999 junior participating preferred
stock at a purchase price of $150.00. Until a right is exercised, the holder of
the right has no right to vote or receive dividends or any other rights as a
stockholder as a result of holding the right.
The rights trade automatically with shares of SouthTrust common stock.
A holder of SouthTrust common stock may exercise the rights only under the
circumstances described below. The rights will generally cause substantial
dilution to a person or group that attempts to acquire SouthTrust common stock
on terms not approved by SouthTrust's board of directors. The rights should not
interfere with any merger or other business combination
38
<PAGE> 46
that SouthTrust's board of directors approves since they may redeem the rights
before a person or group acquires 15% or more of the outstanding shares of
SouthTrust's common stock. The rights may, but are not intended to, deter
takeover proposals that may be in the interests of SouthTrust's stockholders.
Holders may exercise their rights only following a distribution date.
A distribution date will occur on the earlier of:
- 10 days after a public announcement that a person or group
has acquired or obtained the right to acquire 15% or more of
the outstanding shares of SouthTrust's common stock; or
- 10 days after a person or group makes or announces an offer
to purchase SouthTrust's common stock, which, if successful,
would result in the acquisition of 15% or more of the
outstanding shares of common stock; or
- 10 days after the SouthTrust's board of directors declares
that a person or group has become the beneficial owner of at
least 10% of the outstanding shares of SouthTrust's common
stock, and that this ownership might cause SouthTrust's board
of directors to take action which is not in SouthTrust's
long-term interests or which will impact SouthTrust to the
detriment of its stockholders.
The rights have additional features that will be triggered upon the
occurrence of specified events, including:
- if a person or group acquires 15% or more of the outstanding
shares of SouthTrust common stock, holders of the rights,
other than such person or group whose rights will have become
void, may purchase common stock, instead of SouthTrust's
series 1999 junior participating preferred stock, having a
value of twice the right's then current purchase price;
- if SouthTrust is involved in certain business combinations or
the sale of 50% or more of its assets or earning power after
a person or group acquires 15% or more of its outstanding
common stock, the holders of the rights, other than such
person or group whose rights will have become void, may
purchase common stock of the acquirer or an affiliated
company having a value of twice the right's then current
purchase price; or
- if a person or group acquires 15% or more of the outstanding
shares of SouthTrust common stock, SouthTrust's board of
directors may, at any time before the person or group
acquires 50% or more of the outstanding shares of common
stock, exchange all or part of the rights, other than rights
held or previously held by the 15% or greater stockholder,
for common stock at an exchange ratio of one share of
SouthTrust common stock per right, subject to adjustment for
any stock split, stock dividend or similar transaction.
At any time prior to the earlier of (1) 10 days after a person or
group acquires 15% or more of the outstanding shares of SouthTrust common
stock, or (2) February 22, 2009, SouthTrust's board of directors may redeem all
of the rights at a price of $.01 per right, subject to adjustment for stock
dividends, stock splits and similar transactions. SouthTrust's board of
directors in its sole discretion may establish the effective time, basis and
conditions of the redemption. However, the board may not redeem any of the
rights after it determines that a person or group owning at least 10% of
SouthTrust common stock poses a threat to SouthTrust. Immediately after the
redemption of the rights, the holder can no longer exercise the rights and can
only receive the redemption price described above.
The rights will expire on February 22, 2009, unless SouthTrust redeems
or exchanges them before then or extends the expiration date. SouthTrust's
board of directors may amend the terms of the rights, other than the redemption
price, without the consent of the holders of the rights at any time prior to a
distribution date in any manner the board deems desirable. SouthTrust's board
of directors may amend the terms of the rights without the consent of the
holders of the rights after the distribution date only if the amendment does
not adversely affect the interests of the holders of the rights.
39
<PAGE> 47
This description of the rights and the series 1999 participating
preferred stock is not complete and is qualified in its entirety by reference
to SouthTrust's Amended and Restated Stockholder's Rights Agreement with
American Stock Transfer & Trust Company dated as of August 1, 2000 and the
certificate of designation for the series 1999 junior participating preferred
stock.
Transfer Agent
The transfer agent for SouthTrust common stock is American Stock
Transfer & Trust Company.
SOUTHTRUST PREFERRED STOCK
General
Under SouthTrust's restated certificate of incorporation, SouthTrust's
board of directors is authorized without further stockholder action to provide
for the issuance of up to 5,000,000 shares of SouthTrust preferred stock in one
or more series. SouthTrust's board must adopt a resolution or resolutions
providing for the issuance of such series and determining the relative rights
and preferences of the shares of any such series with respect to the rate of
dividend, call provisions, payments on liquidation, sinking fund provisions,
conversion privileges and voting rights and whether the shares shall be
cumulative, non-cumulative or partially cumulative. The holders of SouthTrust
preferred stock would not have any preemptive right to subscribe for any shares
issued by SouthTrust. It is not possible to state the actual effect of the
authorization and issuance of SouthTrust preferred stock upon the rights of
holders of SouthTrust common stock unless and until SouthTrust's board of
directors determines the price and specific rights of the holders of a series
of SouthTrust preferred stock. Such effects might include, however,
- restrictions on dividends on SouthTrust common stock if
dividends on SouthTrust preferred stock have not been paid;
- dilution of the voting power of SouthTrust common stock to
the extent that SouthTrust preferred stock has voting rights,
or that any SouthTrust preferred stock series is convertible
into SouthTrust common stock;
- dilution of the equity interest of SouthTrust common stock
unless the SouthTrust preferred stock is redeemed by
SouthTrust; and
- SouthTrust common stock not being entitled to share in
SouthTrust's assets upon liquidation until satisfaction of
any liquidation preference granted SouthTrust preferred
stock.
While the ability of SouthTrust to issue SouthTrust preferred stock
is, in the judgment of SouthTrust's board of directors, desirable in order to
provide flexibility in connection with possible acquisitions and other
corporate purposes, its issuance could impede an attempt by a third party to
acquire a majority of the outstanding voting stock of SouthTrust.
Series 1999 Junior Participating Preferred Stock
In connection with the adoption of the Stockholder Rights Plan
described above, SouthTrust's board of directors designated 2,000,000 shares of
SouthTrust's authorized but unissued SouthTrust preferred stock as series 1999
junior participating preferred stock. One share of series 1999 preferred stock
will be approximately equivalent in terms of dividend and voting rights to 100
shares of SouthTrust common stock. No shares of series 1999 preferred stock
have been issued as of the date of this proxy statement/prospectus.
40
<PAGE> 48
MARKET PRICE AND DIVIDEND INFORMATION WITH RESPECT TO
SOUTHTRUST COMMON STOCK AND FIRST BANK HOLDING COMMON STOCK
MARKET PRICE
SouthTrust common stock is quoted on Nasdaq under the symbol SOTR. The
following table sets forth, for the periods indicated, the high and low sales
prices per share of SouthTrust common stock as reported by Nasdaq. On
{_______________}, 2000, the most recent date practicable preceding the date of
this proxy statement/prospectus, the last reported sale price of the SouthTrust
common stock as reported by Nasdaq was ${___________}. All prices are adjusted
to reflect a three-for-two stock split effected on February 26, 1998.
<TABLE>
<CAPTION>
Price*
----------------------------
High Low
--------- ---------
<S> <C> <C>
1998:
First Quarter.............................. $ 45.1250 $ 35.7500
Second Quarter............................. 45.0000 39.2500
Third Quarter.............................. 45.3750 30.6875
Fourth Quarter............................. 39.0000 24.8750
1999:
First Quarter.............................. 42.3750 35.3750
Second Quarter............................. 42.8750 36.0000
Third Quarter.............................. 38.9380 32.7500
Fourth Quarter............................. 41.8125 32.7500
2000:
First Quarter.............................. 37.0630 20.8750
Second Quarter ............................ 30.3750 22.5000
Third Quarter.............................. 32.1250 22.6250
</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.
First Bank Holding common stock is not traded on any exchange, and
there is no established public trading market for our stock. There are no bid
or asked prices available for First Bank Holding common stock. We are aware of
certain transactions in our common stock that have occurred since January 1,
2000. Although the prices of all transactions are not known, we believe that
such prices ranged from $22.00 to $25.00 per share of First Bank Holding common
stock. We cannot give you any assurance that these trades were effected on an
arm's-length basis. Transactions in our common stock are infrequent and are
negotiated privately between persons involved in those transactions.
On {____________}, the last sale price of SouthTrust common stock as
obtained from Nasdaq was ${______}. On September 27, 2000 and September 29,
2000 (the trading days immediately before and after the public announcement of
the merger), the last sale prices of SouthTrust common stock, as obtained from
Nasdaq, were $30.563 and $31.438, respectively.
41
<PAGE> 49
DIVIDENDS
The following table sets forth, for the periods indicated, the
dividends declared by SouthTrust per share of SouthTrust common stock, as well
as the pro-forma dividend per share of First Bank Holding common stock after
the merger based on the number of shares of SouthTrust common stock to be
issued pursuant to the merger. The dividends have been adjusted to reflect a
three-for-two stock split of SouthTrust common stock effected on February 26,
1998.
<TABLE>
<CAPTION>
Pro-Forma
SouthTrust First Bank Holding Dividend Per
Common Stock Common Stock Share of
Dividend Per Dividend Per First Bank Holding
Share Share Stock(1)
------------ ------------------ ------------------
<S> <C> <C> <C>
1998:
First Quarter $ 0.1900 $ -0- $ 0.3316
Second Quarter 0.1900 -0- 0.3316
Third Quarter 0.1900 -0- 0.3316
Fourth Quarter 0.1900 0.1200 0.3316
1999:
First Quarter 0.2200 -0- 0.3840
Second Quarter 0.2200 -0- 0.3840
Third Quarter 0.2200 -0- 0.3840
Fourth Quarter 0.2200 0.2000 0.3840
2000:
First Quarter 0.2500 -0- 0.4364
Second Quarter 0.2500 -0- 0.4364
Third Quarter 0.2500 -0- 0.4364
Fourth Quarter 0.2500(2) 0.2200(3) 0.4364
</TABLE>
---------------
(1) The pro-forma dividend per share of First Bank Holding common stock is
equal to the SouthTrust common stock dividend per share multiplied by
the conversion ratio and represents the dividend that would have been
distributed on the number of shares of SouthTrust common stock you
will receive for each share of First Bank Holding common stock.
(2) On October 18, 2000, SouthTrust declared a quarterly cash dividend of
$0.2500 per share of SouthTrust common stock. The dividend is payable
on January 2, 2001 to stockholders of record at the close of business
on November 24, 2000.
(3) In the merger agreement, SouthTrust agreed that we may declare our
normal and recurring annual dividend if the merger is not effective by
the record date of SouthTrust's fourth quarter dividend. It is not
expected that the merger will be effective by November 24, 2000, the
record date of SouthTrust's fourth quarter dividend. Therefore, your
board of directors anticipates that it will declare a fourth quarter
cash dividend of $0.2200 per share of First Bank Holding common stock.
Dividends paid by SouthTrust on SouthTrust common stock are at the
discretion of SouthTrust's board of directors and are affected by certain legal
restrictions on the payment of dividends as described below, SouthTrust's
earnings and financial condition and other relevant factors. SouthTrust has
increased the dividend paid on SouthTrust common stock for 29 consecutive
years. The current policy of SouthTrust is to pay dividends on a quarterly
basis. Subject to an evaluation of its earnings and financial condition and
other factors, including the legal
42
<PAGE> 50
restrictions on the payment of dividends as described below, SouthTrust
anticipates that it will continue to pay regular quarterly dividends with
respect to SouthTrust common stock.
There are certain limitations on the payment of dividends to
SouthTrust by its bank subsidiary. As an Alabama banking corporation, the
amount of dividends that SouthTrust's subsidiary bank may declare in one year,
is subject to certain limitations imposed by both the Federal Reserve Board and
the Alabama Department of Banking. These limitations are described in greater
detail under "Supervision and Regulation - - SouthTrust - - Dividend
Restrictions" on page { }. Under the described laws and regulations, at June
30, 2000, approximately $490 million was available for payment of dividends
to SouthTrust by its bank subsidiary.
COMPARISON OF RIGHTS OF
STOCKHOLDERS OF SOUTHTRUST AND
SHAREHOLDERS OF FIRST BANK HOLDING
The rights of SouthTrust stockholders are governed by Delaware law and
SouthTrust's restated certificate of incorporation and by-laws. The rights of
our shareholders are currently governed by Florida law and our articles of
incorporation and by-laws. There are differences between Delaware law and
Florida law and between the respective chartering documents of SouthTrust and
First Bank Holding that will affect the relative rights of SouthTrust
stockholders and our shareholders.
The following discussion describes and summarizes the material
differences between the rights of SouthTrust stockholders and First Bank
Holding shareholders. With respect to each issue described below, the
information set forth in the left column describes the rights our shareholders
currently enjoy, while the information set forth in the right column describes
the rights enjoyed by SouthTrust's stockholders. If the merger is completed,
any First Bank Holding shareholder who becomes a stockholder of SouthTrust will
be entitled and become subject to all of the rights described in the right
column. The following discussion is not a complete discussion of all of the
differences. For a complete understanding of all of the differences, you will
need to review the restated certificate and by-laws of SouthTrust, the articles
of incorporation and by-laws of First Bank Holding, Delaware General
Corporation Law and the Florida Business Corporation Act. Copies of the
respective chartering documents of both SouthTrust and First Bank Holding may
be obtained from the corporate secretary of each company. See page {____} for
details of who to contact to obtain copies of these documents.
<TABLE>
<CAPTION>
FIRST BANK HOLDING SOUTHTRUST
VOTING RIGHTS
<S> <C>
Holders of shares of First Bank Holding common Holders of shares of SouthTrust common stock are
stock are entitled to one vote for each share of entitled to one vote for each share of common stock
common stock held. Holders of fractional shares of held.
First Bank Holding common stock are entitled to a
corresponding fractional vote for each fractional
share held.
<CAPTION>
RIGHTS ON LIQUIDATION
<S> <C>
In the event of liquidation, First Bank Holding In the event of liquidation, SouthTrust stockholders
shareholders are entitled to receive pro-rata any are entitled to receive pro-rata any assets
assets distributable to First Bank Holding distributable to SouthTrust stockholders with respect
shareholders with respect to the shares of First Bank to the shares of SouthTrust common stock held by
Holding common stock held by them, after payment them, after payment of
of indebtedness. indebtedness.
</TABLE>
43
<PAGE> 51
<TABLE>
<CAPTION>
RIGHTS OF PRE-EMPTION
<S> <C>
Holders of shares of First Bank Holding common Holders of shares of SouthTrust common stock do
stock do not have any pre-emptive rights to subscribe not have any pre-emptive rights to subscribe to or
to or acquire additional shares of First Bank Holding acquire additional shares of SouthTrust common
common stock which may be issued. stock which may be issued.
<CAPTION>
RIGHTS TO CALL A SPECIAL MEETING OF THE STOCKHOLDERS
<S> <C>
Special meetings of shareholders may be called by Holders of shares of capital stock of any class do not
the holders of not less than fifty percent (50%) of all have any rights to call a special meeting of
the shares of First Bank Holding common stock SouthTrust's stockholders or to require that
entitled to vote at the meeting. SouthTrust's board of directors call a special
meeting.
<CAPTION>
RIGHT TO AMEND CORPORATE GOVERNING DOCUMENTS
<S> <C>
A majority of the holders of First Bank Holding's A majority of the holders of SouthTrust's capital
common stock who are entitled to vote may by stock who are entitled to vote may by affirmative
affirmative vote amend First Bank Holding's articles vote amend SouthTrust's certificate of incorporation.
of incorporation. Holders of a majority of the First However, one of the provisions of SouthTrust's
Bank Holding common stock may by affirmative certificate of incorporation may only be amended by
vote amend the by-laws of First Bank Holding. the affirmative vote of holders of at least 70% of the
issued and outstanding shares of SouthTrust capital
stock.
Holders of a majority of SouthTrust capital stock
who are entitled to vote may by affirmative vote
amend the bylaws of SouthTrust.
<CAPTION>
RIGHT OF DISSENT AND APPRAISAL
<S> <C>
Our shareholders have dissent and appraisal rights Holders of shares of SouthTrust common stock have
under Sections 607.1301, 607.1302 and 607.1320 of no rights to dissent from certain corporate actions
the Florida Business Corporation Act. Under these proposed to be taken by SouthTrust.
provisions, shareholders of First Bank Holding may
dissent from certain corporate actions proposed by
our management and receive the fair value of their
shares of First Bank Holding common stock as of or
immediately prior to the effective time of the
proposed corporate action.
<CAPTION>
ELECTION AND CLASSIFICATION OF THE BOARD OF DIRECTORS
<S> <C>
Each member of our board of directors is elected The board of directors of SouthTrust is classified into
annually at the annual meeting of shareholders. Each three (3) classes of directors. Each director serves for
director is elected to serve for a term of one year. a three (3) year term. At each annual stockholder
meeting, one-third (1/3) of the board of directors is
elected. Accordingly, control of the board of
directors of SouthTrust cannot be changed in one
year; at least two annual meetings must be held
before a majority of the board of directors may be
changed. Holders of shares of SouthTrust common
stock do not have the right to cumulate their votes in
the election of directors.
</TABLE>
44
<PAGE> 52
<TABLE>
<CAPTION>
NOMINATION OF DIRECTORS BY STOCKHOLDERS
<S> <C>
Any shareholder may nominate a person to stand for In addition to the right of the board of directors to
election at an annual meeting of the shareholders of make nominations for the election of directors, any
First Bank Holding without complying with any stockholder may nominate a person to stand for
special notice requirements. election at an annual meeting of the stockholders of
SouthTrust, provided the stockholder complies with
special advance notice requirements.
<CAPTION>
RIGHTS TO REMOVE A DIRECTOR
<S> <C>
A director may be removed with or without cause by A director may be removed "for cause" by the
the affirmative vote of the First Bank common affirmative vote of SouthTrust stockholders who hold
shareholders who hold a majority of the shares at least 70% of the voting power of SouthTrust's
entitled to vote. Any vacancy on First Bank issued and outstanding capital stock which is entitled
Holding's board of directors, including a vacancy to vote for the election of directors. The vacancy
created by a removal of a director with or without created by this type of removal may be filled by a
cause, may be filled by a person who is voted on by a person who is voted on by a majority of the directors
majority of the directors then in office, though less then in office. The newly elected director will serve
than a quorum of the board of directors, or by the for the remainder of the unexpired term of the
shareholders. The new director will serve for the director removed from office.
remainder of the unexpired term of the new director's
predecessor in office.
Any vacancies on SouthTrust's board of directors
created by the death, resignation, retirement,
disqualification or removal from office other than for
cause of a director or the creation of a new
directorship, may be elected only by action of a
majority of the directors then in office. The new
director will serve for the remainder of the unexpired
term of the class of director to which the director has
been appointed.
<CAPTION>
RIGHTS TO REPORTS TO STOCKHOLDERS
<S> <C>
Our shares of common stock are not registered under Shares of SouthTrust common stock are registered
the Securities Exchange Act of 1934. Accordingly, under the Securities Exchange Act of 1934.
we are not subject to the reporting requirements of Accordingly, SouthTrust is required to provide
the Exchange Act. We provide annual reports containing annual reports containing audited financial
audited financial statements to our shareholders. statements to stockholders. SouthTrust also provides
reports to its stockholders on an interim basis which
We regularly file reports with the Federal Reserve contain unaudited financial information.
Board and the Florida Department of Banking and Finance,
some of which may be inspected by the public. SouthTrust and its banking subsidiary SouthTrust
Bank regularly file reports with the Federal Reserve
Board and the Alabama State Banking Department,
some of which may be inspected by the public.
<CAPTION>
EFFECT OF THE ISSUANCE OF PREFERRED STOCK
<S> <C>
First Bank Holding's board of directors is authorized SouthTrust's board of directors is authorized to issue
to issue 500,000 shares of preferred stock and can up to 5,000,000 shares of preferred stock and can
determine the class and rights attached to any share determine the class and rights to be attached to any
of preferred stock. The board of directors has not share of preferred stock.
created any series of preferred stock.
</TABLE>
45
<PAGE> 53
<TABLE>
<S> <C>
In 1998 the board of directors adopted resolutions
which created 2,000,000 shares of series 1999 junior
participating preferred stock. No shares of this class
of preferred stock have been issued yet. However, if
and when they are, the voting, liquidation, dividend
and other rights of holders of shares of SouthTrust
common stock will be affected. The voting power of
each share of SouthTrust common stock will be
diluted as each share of this class of preferred stock
will be entitled to 100 votes on each proposal
submitted to a vote of SouthTrust's stockholders.
Shares of preferred stock will have preferential rights
with respect to the payment of dividends and the
distribution of SouthTrust's assets in the event of a
liquidation of SouthTrust.
<CAPTION>
RIGHTS ATTACHED TO CAPITAL STOCK
<S> <C>
Shares of First Bank Holding common stock have no Each share of SouthTrust common stock which is
rights attached to them. currently or will be issued has or will have one right
attached to it.
Under specified conditions, each right entitles the
stockholder to purchase one-one hundredth of a share
of series 1999 junior participating preferred stock at a
purchase price of $150.00
</TABLE>
SUPERVISION AND REGULATION
SOUTHTRUST
General
SouthTrust is a bank holding company that is qualified as a financial
holding company within the meaning of the Bank Holding Company Act and is
registered with the Board of Governors of the Federal Reserve System. The Bank
Holding Company Act permits a financial holding company to engage in a variety
of financial activities, some of which are not permitted for other bank holding
companies that are not financial holding companies. As a financial holding
company, SouthTrust is required to file with the Federal Reserve Board
semi-annual reports and such additional information as the Federal Reserve
Board may require. The Federal Reserve Board may also make examinations of
SouthTrust and each of its subsidiaries.
SouthTrust Bank, SouthTrust's Alabama state chartered banking
subsidiary that is a member of the Federal Reserve System, is subject to
primary federal regulation by the Federal Reserve Board and is also subject to
the regulation of the Federal Deposit Insurance Corporation and the Alabama
State Banking Department.
Dividend Restrictions
Various federal and state statutory provisions limit the amount of
dividends SouthTrust Bank can pay to SouthTrust without regulatory approval.
Approval of the Federal Reserve Board is required for payment of any dividend
by a state chartered bank like SouthTrust Bank that is a member of the Federal
Reserve System, sometimes referred to as a state member bank, if the total of
all dividends declared by the bank in any calendar year would exceed the total
of its net profits (as defined by regulatory agencies) for that year combined
with its retained net profits for the proceeding two years. In addition, a
state member bank may not pay a dividend in an amount greater than its net
profits then on hand. State member banks may also be subject to similar
restrictions imposed by the laws of the states in which they are chartered.
46
<PAGE> 54
Under Alabama law, a bank may not pay a dividend in excess of 90% of
its net earnings until the bank's surplus is equal to at least 20% of its
capital. SouthTrust Bank is also required by Alabama law to obtain the prior
approval of the Superintendent of the State Banking Department of Alabama for
its payment of dividends if the total of all dividends declared by SouthTrust
Bank is any calendar year will exceed the total of (1) SouthTrust Bank's net
earnings (as defined by statute) for that year, plus (2) its retained net
earnings for the preceding two years, less any required transfers to surplus.
In addition, no dividends may be paid from SouthTrust Bank's surplus without
the prior written approval of the Superintendent.
In addition, federal bank regulatory authorities have authority to
prohibit SouthTrust Bank from engaging in unsafe or unsound practices in
conducting its business. The payment of dividends, depending upon the financial
condition of the bank in question, could be deemed an unsafe or unsound
practice. The ability of SouthTrust Bank to pay dividends in the future is
currently, and could be further, influenced by bank regulatory policies and
capital guidelines.
Capital Requirements
SouthTrust and SouthTrust Bank are subject to the risk-based capital
requirements and guidelines imposed by the Federal Reserve Board. For the
purposes of the Federal Reserve Board's risk-based capital requirements,
SouthTrust's and SouthTrust Bank's assets and certain specified off-balance
sheet commitments and obligations are assigned to various risk categories. The
capital of SouthTrust and SouthTrust Bank, in turn, is classified in one of
three tiers: core ("Tier 1") capital, which includes common and qualifying
preferred stockholder's equity, less certain intangibles and other adjustments;
supplementary ("Tier 2") capital, which includes, among other items, preferred
stockholder's equity not meeting the Tier 1 definition, mandatory convertible
securities, subordinated debt and allowances for loan and lease losses, subject
to certain limitations; and market risk ("Tier 3") capital, which includes
qualifying unsecured subordinated debt.
SouthTrust, like other bank holding companies, is required to maintain
Tier 1 capital and "total capital" (the sum of Tier 1, Tier 2 and Tier 3
capital) equal, respectively, to at least 4% and 8% of its total risk-weighted
assets (including certain off-balance sheet items, such as standby letters of
credit). In addition, in order for a holding company or bank to be considered
"well capitalized" for regulatory purposes, its Tier 1 and total capital ratios
must be 6% and 10% on a risk-adjusted basis, respectively. As of June 30, 2000,
SouthTrust met both requirements, with Tier 1 and total capital equal to
6.99% and 10.61% of its respective total risk-weighted assets. As of June
30, 2000, SouthTrust Bank was also in compliance with applicable capital
requirements.
The Federal Reserve Board has adopted rules to incorporate market and
interest rate risk components into its risk-based capital standards. Amendments
to the risk-based capital requirements, incorporating market risk, became
effective January 1, 1998. Under these market risk requirements, capital will
be allocated to support the amount of market risk related to a financial
institution's ongoing trading activities.
The Federal Reserve Board also requires bank holding companies to
maintain a minimum "leverage ratio" (Tier 1 capital divided by adjusted
quarterly average assets) of 3% if the holding company has the highest
regulatory rating and meets certain other requirements, or of 3% plus an
additional "cushion" of at least 100 to 200 basis points if the holding company
does not meet those requirements. As of June 30, 2000, SouthTrust's average
leverage ratio was 6.91%.
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, or
FDICIA, among other things, identifies five capital categories for insured
depository institutions: "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
47
<PAGE> 55
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 be
undercapitalized after making the payment. 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. Similarly, the cross-guaranty provisions of the Federal Deposit
Insurance Act provide that if the FDIC suffers or anticipates a loss as a
result of a default by a banking subsidiary or by providing assistance to a
subsidiary in danger of default, then any other bank subsidiaries may be
assessed for the FDIC's loss.
The Riegle-Neal Interstate Banking and Branching Efficiency Act
The Interstate Banking Act provides that adequately capitalized and
managed bank holding companies are permitted to acquire banks in any state.
State laws prohibiting interstate banking or discriminating against out-of-
state banks were preempted as of the effective date, although states were
permitted to require that target banks located within the state be in existence
for a period of up to five years before such bank may be subject to the
Interstate Banking Act. The Interstate Banking Act establishes deposit caps
which prohibit acquisitions that would result in the acquiror controlling 30%
or more of the deposits of insured banks and thrifts held in the state in which
the acquisition or merger is occurring or in any state in which the target
maintains a branch or 10% or more of the deposits nationwide. State-level
deposit caps are not preempted as long as they do not discriminate against
out-of-state acquirors, and the federal deposit caps apply only to initial
entry acquisitions.
Recent Legislation
On November 12, 1999, President Clinton signed into law legislation
that allows bank holding companies to engage in a wider range of nonbanking
activities, including greater authority to engage in securities and insurance
activities. Under the Gramm-Leach-Bliley Act, a bank holding company that
elects to become a financial holding company may engage in any activity that
the Federal Reserve Board, in consultation with the Secretary of the Treasury,
determines by regulation or order is (1) financial in nature, (2) incidental to
any such financial activity, or (3) complementary to any such financial
activity and does not pose a substantial risk to the safety or soundness of
depository institutions or the financial system generally. This legislation
makes significant changes in U.S. banking law, principally by repealing certain
restrictive provisions of the 1933 Glass-Steagall Act. The new law specifies
activities that are deemed to be financial in nature, including lending,
exchanging, transferring, investing for others, or safeguarding money or
securities; underwriting and selling insurance; providing financial,
investment, or economic advisory services; underwriting, dealing in or making a
market in, securities; and any activity currently permitted for bank holding
companies by the Federal Reserve Board under Section 4(c)(8) of the Bank
Holding Company Act. The legislation does not authorize banks or their
affiliates to engage in commercial activities that are
48
<PAGE> 56
not financial in nature. A bank holding company may elect to be treated as a
financial holding company only if all depository institution subsidiaries of
the holding company are well-capitalized, well-managed and have at least a
satisfactory rating under the Community Reinvestment Act. Effective March 13,
2000, SouthTrust elected financial holding company status.
The legislation also contains a number of other provisions which will
affect SouthTrust's operations and the operations of all financial
institutions. One of the new provisions relates to the financial privacy of
consumers, authorizing federal banking regulators to adopt rules that will
limit the ability of banks and other financial entities to disclose non-public
information about consumers to non-affiliated entities. These limitations
likely will require more disclosure to SouthTrust's customers, and in some
circumstances, will require consent by the customer before information is
allowed to be provided to a third party.
At this time, SouthTrust is unable to predict the impact this
legislation may have upon it or SouthTrust Bank, including its impact on its
financial condition and results of operations.
Changes in Regulations
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. SouthTrust cannot determine the
likelihood and timing of any such proposals or legislation and the impact they
might have on it and its subsidiaries.
FIRST BANK HOLDING
First Bank Holding is a bank holding company within the meaning of the
Bank Holding Company Act, and is registered with the Federal Reserve Board, and
is therefore subject to regulations that are substantially the same as those to
which SouthTrust is subject. First Bank is chartered by the State of Florida,
and is subject to comprehensive regulation, examination and supervision by the
State of Florida Department of Banking and Finance as well as by the Federal
Deposit Insurance Corporation.
INFORMATION CONCERNING THE BUSINESS OF FIRST BANK HOLDING
GENERAL
First Bank was organized in 1990 and opened for business on October
15,1990 in Tallahassee, Leon County, Florida. First Bank was chartered as a
state bank by the State of Florida and has been principally regulated by the
Federal Deposit Insurance Corporation, or the FDIC, and the State of Florida
Department of Banking. In 1997, First Bank Holding was organized as a one-bank
holding company under the laws of the State of Florida for the purpose of
acquiring and holding all of the outstanding common stock of First Bank. As of
close of business on June 30, 2000 First Bank Holding had assets of
approximately $99,806,000 and deposits of approximately $89,522,000.
When First Bank opened, the operation consisted of one facility
located in northeast Leon County. In 1992, the first branch facility was opened
on Thomasville Road in Tallahassee approximately 5 miles south of the original
location.
During 1995, the board of directors of First Bank Holding made a
conscious effort to expand banking offices and product delivery venues. In May
1995, a branch office was opened in the Wal-Mart SuperCenter in Panama City
Beach, Florida, approximately 130 miles west of Tallahassee. In August of that
year a new facility was opened on Capital Circle Northeast, which would
thereafter be utilized as the main banking office. The original location was
converted to a branch site.
In 1997, a second Wal-Mart SuperCenter Branch was opened at the
Wal-Mart Store in Tallahassee. In 1998 the board took actions to close the
Panama City Beach office. Presently, First Bank Holding operates 4 offices in
the Tallahassee, Leon County market area.
49
<PAGE> 57
Since its origination in 1990, First Bank has provided traditional
commercial banking services, including interest and non-interest bearing
checking accounts, savings accounts, money market accounts, certificates of
deposit, individual retirement accounts and a wide variety of commercial, real
estate and consumer loans.
First Bank Holding's primary business is attracting deposits from the
general public within the primary market area and utilizing those funds to make
secured and unsecured loans within the categories of commercial, real estate,
and consumer loan products.
The principal sources of funds for First Bank Holding which are
utilized in the funding of lending and investment activities are deposits, loan
repayments, and proceeds from the sale of securities. First Bank Holding's
principal expenses are interest paid on deposits, and general operating
expenses such as salaries, employee benefits, and occupancy expenses.
First Bank Holding offers a wide range of short to medium term
commercial and consumer loans. Commercial loans include, but are not limited
to, both secured and unsecured financing for working capital, business
expansion loans, purchase of equipment, inventory, and real property and also
construction. Consumer loans include both secured and unsecured loans for
financing automobiles, home improvements and other personal expenditures.
First Bank Holding provides a variety of banking services to
individuals, businesses, and other institutions, including governmental,
located within the delineated primary market area. These services would include
both business and personal checking accounts, savings accounts, individual
retirement accounts, and time deposits. The FDIC insures all deposit accounts
to the maximum extent as provided by law.
First Bank Holding offers ATM service at three of its four branches as
well as at the Governor's Square Cine-Plex. Full teller service is provided at
all locations. Drive-in tellers are provided at three of the four offices and
safe deposit boxes are provided at two of the four offices.
First Bank Holding operates in an extremely competitive environment
throughout its primary market area. It has never been the goal of First Bank
Holding to attempt to be "all things to all people". Rather, First Bank Holding
has sought to satisfy a specific niche, primarily small business and young
professionals. To that end, efforts have proven to be successful and First Bank
Holding has enjoyed comfortable growth and profitability in an otherwise
"over-banked" community. The key to this growth and profitability has been the
delivery of quality customer service.
As is often the case with financial institutions, operations and
profitability are significantly influenced by general economic conditions and
by the related monetary and fiscal policies of the Federal Reserve System.
Deposit flows and interest rates on competing investments and general market
rates of interest influence, to a degree, First Bank Holding's cost of funds.
Lending activities are affected by the demand for financing of real estate and
other types of loans, which in turn are affected by competitive influences such
as competition and interest rates.
EMPLOYEES
As of June 30, 2000, First Bank Holding employed 39 full-time
equivalent employees at the four banking locations. Management believes the
relationship with the staff is excellent.
DESCRIPTION OF PROPERTIES
The main office of First Bank Holding is located at 1997 Capital
Circle Northeast, Tallahassee, Florida. This location is subject to two leases,
each with an original term of 25 years, expiring in 2020, and with 3 renewal
periods of five years each. Of the remaining three locations, all are leased
and have terms ranging from three years with automatic renewal periods of three
years each (Timberlane Road office), to 15 years with two five-year renewals
(Thomasville Road), to 5 years with one five-year renewal period (Wal-Mart
SuperCenter).
50
<PAGE> 58
LEGAL PROCEEDINGS
There are presently no legal actions pending that has First Bank
Holding named as either a plaintiff or defendant outside of the normal
activities resulting from loan collection efforts.
REGULATION AND LEGISLATION
First Bank Holding is regulated by and periodically examined by both
the State of Florida Banking Department as well the Federal Deposit Insurance
Company. Routinely, reports are filed with both of these entities detailing
First Bank Holding's financial condition, and these regulators must give
approval before certain transactions are entered into. Each of these regulators
monitors First Bank Holding's compliance with all applicable regulations and
laws on an ongoing basis.
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The officers and directors of First Bank Holding and the businesses
and organizations related to them have been customers of First Bank and it is
believed that those relationships will continue following the merger.
Extensions of credit made to officers and directors of First Bank Holding were
made in the ordinary course of business, were made on substantially the same
terms, including interest rates and collateral requirements, as those
prevailing at the time for comparable transactions with other persons, and do
not involve more than a normal risk of collectability or present other
unfavorable circumstances.
BENEFICIAL OWNERSHIP OF FIRST HOLDING COMPANY COMMON STOCK
The following table sets forth, as of November 1, 2000, (1) the names
and addresses of the persons known by First Bank Holding to be beneficial
owners of five percent (5%) or more of the issued and outstanding shares of
First Bank Holding common stock and the names of each director and executive
officer; (2) the number and percent of shares of First Bank Holding common
stock owned by each such person and by all of the directors and executive
officers of First Bank Holding; and (3) the estimated number of shares of
SouthTrust common stock each such person or group is expected to receive as a
result of the merger, assuming that such persons do not exercise their
dissenters' rights, calculated by multiplying the number of shares of First
Bank Holding common stock beneficially owned by such person or group by the
exchange ratio.
According to the rules and regulations of the SEC, shares are
considered to be beneficially owned by a person if the person (1) has any power
to vote or dispose of the shares, either directly or indirectly, or (2) has the
right to acquire shares within 60 days of the date of this proxy
statement/prospectus. For purposes of computing the percentage of shares owned,
we have included the number of shares that a person has the right to acquire
within 60 days in the number of outstanding shares, but only for that
individual. Unless indicated otherwise, you may assume that the named
beneficial owner has sole voting and investment power with respect to the
shares reported.
<TABLE>
<CAPTION>
Number of Shares of Percentage of Total
First Bank Holding Shares of Estimated Number of
Common Stock First Bank Holding Shares to be Owned
Beneficial Owner Beneficially Owned Common Stock Following the Merger
---------------- ------------------- ------------------- --------------------
<S> <C> <C> <C>
5% OR MORE
SHAREHOLDERS:
William E. Childers (1) 46,875 (2) 11.66% 81,825
2241 Armistead Road
Tallahassee, FL 32312
Luther E. Council, Sr. 26,826 (2) 6.67% 46,827
and Nancy T. Council,
JTWROS(1)
P O Box 2025
Quincy, FL 32353
</TABLE>
51
<PAGE> 59
DIRECTORS AND EXECUTIVE OFFICERS:
<TABLE>
<S> <C> <C> <C>
Kathleen B. Atkins 8,385.5(2) 2.09% 14,637
Michael Blankenship 14,576(2) 3.63% 25,443
Nancy T. Council 26,826(2) 6.67% 46,827
William E. Childers 46,875(2) 11.66% 81,825
William G. Donnellan, Jr. 7,442(2) 1.85% 12,990
Thomas E. Duggar 6,576(2) 1.64% 11,479
Elaine N. Duggar 9,007(2) 2.24% 15,722
William D. Gunter, Jr. 6,825(2) 1.70% 11,913
F. C. Nixon 18,277(3) 4.45% 31,904
J. Lee Vause 13,826(2) 3.45% 24,134
Stephen R. Winn 9,945(2) 2.47% 17,359
Susie B. Andrews 4,619(2) 1.15% 8,062
Tami H. Chandler 1,294(2) 0.32% 2,258
All Directors and
Executive Officers
as a Group
(a total of 13 people) 174,473.5 41.34% 304,560
</TABLE>
(1) Mr. Childers and Mrs. Council are also directors of First Bank Holding.
(2) Includes 1,000 shares held as options which are exercisable within 60
days of the date of this proxy statement/prospectus.
(3) Includes 9,000 shares held as options which are exercisable within 60
days of the date of this proxy statement/prospectus.
FIRST BANK HOLDING MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
This analysis has been prepared to provide insight into the
consolidated financial condition of First Bank Holding and addresses the factors
which have affected First Bank Holding's results of operations for the six
months ended June 30, 2000 and 1999, and for the fiscal years ended December 31,
1999, 1998 and 1997. Unless otherwise noted, the financial and other information
presented with respect to First Bank Holding in the discussion includes the
accounts of First Bank. First Bank Holding's financial statements and
accompanying notes which follow are an integral part of this review and should
be read in conjunction with it.
First Bank Holding conducts general commercial banking business in Leon
County, Florida. The business consists primarily of attracting deposits from the
general public within the trade area and utilizing those funds in the
origination of loans for commercial, consumer, and residential purposes. First
Bank Holding's profitability depends, to a large extent, on net interest income,
which is the difference between interest income generated from interest-earning
assets (i.e., loans and investments) less interest expense incurred on
interest-bearing liabilities (i.e., customer deposits and borrowed funds). Net
interest income is affected by the relative amounts of interest-earning assets
and interest bearing liabilities and the interest rates paid or charged on these
balances.
Net interest income is dependent upon First Bank Holding's interest
rate spread, which is the difference between the average yield earned on
interest earning assets and the average rate paid on interest bearing
liabilities. When the interest that is generated on interest earning assets
exceeds the interest that is paid on interest bearing liabilities, First Bank
Holding generates a positive interest rate spread (net rate of yield). During
2000, First Bank Holding's yield on net average earning assets was 4.73% and for
the six-month period ending June 30, 1999 First Bank Holding yielded 5.12% on
net average earning assets. For the full years of 1999, 1998 and 1997 First Bank
Holding's yield on net average earning assets was 4.65%, 4.66% and 5.17%
respectively. The net yield is impacted by external factors such as interest
rates on loans and deposits as well as deposit flows and loan demand.
52
<PAGE> 60
Additionally, First Bank Holding's profitability is affected by such
factors as the level of non-interest Additionally, First Bank Holding's
profitability is affected by such factors as the level of non-interest income
and expenses, the provisions for loan losses, and the effective tax rate.
Non-interest income typically consists of service charges and other deposit
fees, and also ATM fees, credit card merchant services fees, and mortgage loan
origination activities. Non-interest expenses consist primarily of compensation
and benefits, occupancy related expenses and other operating expenses.
RESULTS OF OPERATIONS
Comparison of Six Months Ended June 30, 2000 and 1999
For the six month period ended June 30, 2000, First Bank Holding
reported net income of approximately $550,000, or $1.37 per outstanding share of
stock, as compared to net income of $485,000 or $1.21 per outstanding share of
stock for the six month period ended June 30, 1999, which represents an increase
of $65,000 (rounded). Total assets as of June 30,2000 were approximately
$99,806,000 which is an increase of $7,506,000 or 8.13% over June 30, 1999. Net
interest earnings increased by approximately $94,000 or 4.6% from the first six
months of 1999.
Total net non-interest expenses (non-interest expenses minus
non-interest income) increased by $41,000, or 3.37%, to $1,258,000 from June 30,
1999.
First Bank Holding's loans totaled approximately $73,515,000 at June
30,2000 an increase of $8,357,000, or 12.83% over June 30, 1999. The allowance
for loan losses was $752,000, or 1.01% of total outstanding loans on June
30,2000, which is up from $684,708, or 1.04% of total loans at June 30, 1999.
First Bank Holding's yield on net average earning assets as of June 30,
2000 (as previously stated) was 4.73% as compared to 5.12% for the period ending
June 30, 1999.
Comparison of the Fiscal Years Ended December 31, 1999 and 1998
For the year ended December 31, 1999, First Bank Holding reported net
income of $959,590 or $2.33 per share of outstanding stock, as compared to net
income of $852,799 or $2.08 per outstanding share of stock for the year ended
December 31, 1998.
Net interest income before provision for loan losses for the year ended
December 31, 1999 was $4,116,376 or 4.65% of average net earning assets, as
compared to $3,792,251 or 4.68% of average earning assets for the year ended
December 31, 1998. The increase in net income from 1998 to 1999 was largely due
to an increase in net earning assets.
First Bank Holding's total assets were $101,242,276 and $90,107,959 at
December 31, 1999 and 1998 respectively. Total assets increased $11,134,317 or
12.36% from the previous year-end. First Bank Holding's earning assets were
approximately $92,581,764 on December 31, 1999, representing an increase of
$12,978,744 or 16.3% from December 31, 1998.
Loans totaled $72,423,552 at year-end 1999, an increase of $13,064,708
or 21.94% from December 31, 1998. The allowance for loan losses was $718,440 or
0.99% of total outstanding loans as of December 31, 1999. This compares to loss
allowance of $609,720 or 1.03% of total outstanding loans on December 31, 1998.
Comparison of the Fiscal Years Ended December 31, 1998 and 1997
For the year ended December 31, 1998 First Bank Holding reported net
income of $852,799 or $2.08 per outstanding share of stock as compared to net
income of $742,524 or $1.82 per share of outstanding stock for the year ended
December 31, 1997.
Net interest income before provision for loan losses for the year ended
December 31, 1998 was $3,792,251 or 4.66% of average net earning assets, as
compared to $3,467,435 or 5.17% of average net earning assets for the year ended
December 31, 1997. The increase was due to an increase in earning assets. First
Bank Holding's total assets were $90,107,959 and $81,793,475 at December 31,
1998 and December 31, 1997, respectively. Total assets increased $8,314,484 or
10.17% between years ended 1997 and 1998. First Bank Holding's earning assets
were
53
<PAGE> 61
79,603,020 at December 31, 1998, which represents an increase of $7,480,666 or
10.37% from December 31, 1997.
First Bank Holding's loans totaled $59,358,844 on December 31, 1998,
which is an increase of $5,544,935 or 10.3% from December 31, 1997. Allowance
for loan losses were $609,720 or 1.03% of total outstanding loans on December
31, 1998. This compares to an allowance for loan losses of $550,000 or 1.02% of
total outstanding at December 31, 1997.
NET INTEREST INCOME
Net interest income, which constitutes the major source of income for
First Bank Holding, represents the difference between interest income on
interest earning assets and interest expense on interest bearing liabilities.
The primary interest earning assets of First Bank Holding are loans made to
businesses and individuals. Interest bearing liabilities consist mostly of time
deposits, interest bearing checking accounts ("NOW" accounts), savings accounts,
money market deposits, and individual retirement accounts. Funds generated by
these sources are invested in interest bearing assets accordingly. Net interest
income depends on the volume of average interest earning assets and average
interest bearing liabilities and the interest earned and paid on interest
earning assets and interest bearing liabilities.
Net interest income for the six months ended June 30, 2000 and 1999 was
$2,139,000 and $2,045,000, respectively, and the yield on net average earning
assets was 4.73% and 5.12% respectively.
Net interest income for the years ended December 31, 1999, 1998, and
1997 was $4,116,376, $3,792,251, and $3,467,435 respectively. The yield on net
average earning assets was 4.65%, 4.66%, and 5.17% respectively. Total interest
expense for the years end December 31, 1999, 1998, and 1997 was approximately
$2,909,523, $2,845,069, and $2,342,799 respectively. The average cost of
interest bearing liabilities for each period was approximately 4.42%, 4.69%, and
4.70%, respectively.
54
<PAGE> 62
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY, INTEREST RATES,
AND INTEREST DIFFERENTIALS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
----------------------------- --------------------------- -----------------------------
Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
-------- -------- ------- -------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Loans, net of unearned interest $ 64,746 $5,714 8.83% $ 56,151 $5,263 9.37% $ 50,112 $ 4,788 9.55%
Taxable investment securities 12,635 783 6.20% 8,408 533 6.34% 9,542 639 6.70%
Tax-exempt investment securities 4,042 194 4.80% 3,815 176 4.61% 1,866 94 5.04%
Funds sold 2,628 129 4.91% 8,946 478 5.34% 1,678 87 5.18%
-------- ------ ------- -------- ------ ------- -------- ------- -------
Total earning assets 84,051 6,820 8.11% 77,320 6,450 8.34% 63,198 5,608 8.87%
Cash and due from banks 4,624 4,158 3,394
Allowance for loan losses (697) (595) (553)
Other assets 5,012 3,972 4,075
-------- -------- --------
TOTAL ASSETS $ 92,990 $ 84,855 $ 70,114
======== ======== ========
Liabilities:
NOW accounts $ 6,075 $ 97 1.60% $ 5,792 $ 109 1.88% $ 4,879 $ 94 1.93%
Money market accounts 19,543 647 3.31% 20,104 775 3.85% 16,697 686 4.11%
Savings accounts 5,435 136 2.50% 4,910 130 2.65% 4,963 133 2.68%
Other time deposits 33,920 1,988 5.86% 29,655 1,820 6.14% 22,339 1,371 6.14%
-------- ------ ------- -------- ------ ------- -------- ------- -------
Total interest bearing deposits 64,973 2,868 4.41% 60,461 2,834 4.69% 48,878 2,284 4.67%
Funds purchased 528 21 3.98% 4 0 0.00% 251 10 3.98%
Other short-term borrowings 373 20 5.36% 177 12 6.78% 755 49 6.49%
Long-term debt 0 0 0.00% 0 0 0.00% 0 0 0.00%
-------- ------ ------- -------- ------ ------- -------- ------- -------
Total interest bearing
liabilities 65,874 2,909 4.42% 60,642 2,846 4.69% 49,884 2,343 4.70%
Noninterest bearing deposits 18,497 16,417 13,325
Other liabilities 678 580 502
-------- -------- --------
TOTAL LIABILITIES 85,049 77,639 63,711
-------- -------- --------
Shareholders' Equity:
Common stock 2,000 2,000 2,000
Additional paid-in capital 2,000 2,000 2,000
Retained earnings 3,941 3,216 2,403
-------- -------- --------
TOTAL SHAREOWNERS' EQUITY 7,941 7,216 6,403
-------- -------- --------
TOTAL LIABILITIES AND
SHAREOWNERS' EQUITY $ 92,990 $ 84,855 $ 70,114
======== ======== ========
Interest rate spread 3.69% 3.65% 4.17%
======= ======= ======
Net interest income $3,911 $3,604 $3,265
====== ====== =======
Net interest margin 4.65% 4.66% 5.17%
======= ======= ======
</TABLE>
55
<PAGE> 63
ASSET/LIABILITY MANAGEMENT
First Bank Holding seeks to maximize net interest income through growth
in net earning assets and by protecting First Bank Holding's net interest margin
and ensuring adequate liquidity and/or growth in deposit flows. This is
accomplished by structuring the balance sheet so that repricing opportunities
exist for both assets and liabilities during approximately the same time
intervals in the future. Management of First Bank Holding and the Board
recognize that a perfectly matched interest rate sensitive balance sheet is not
possible and that imbalances in repricing opportunities at any point in time
constitutes an interest rate sensitivity position.
Management attempts to control these imbalances to provide for a
consistently growing positive net interest rate margin under all interest rate
environments. To this end, First Bank Holding through the Asset and Liability
Management Committee monitors the structure of our rate-sensitive assets and
liabilities.
A traditional indicator of the interest rate sensitivity position of a
financial institution's balance sheet is the difference between rate sensitive
assets and rate sensitive liabilities at given forward-looking time horizons,
which is referred to as First Bank Holding's "GAP" measurement. GAP analysis is
a traditional indicator used for monitoring interest rate risk and First Bank
Holding employs GAP analysis as one of the means of monitoring exposure to the
risk of interest rate sensitivity. First Bank Holding management believes that
First Bank Holding was not subject to any excessive interest rate risk at June
30, 2000.
RATE AND VOLUME ANALYSIS
<TABLE>
<CAPTION>
1999 Changes from 1998 1998 Changes from 1997
------------------------------- -------------------------------
Due to Average Due to Average
------------------------------- -------------------------------
Total Volume Rate Total Volume Rate
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Loans, net of unearned interest $ 451 $ 805 $ (354) $ 475 $ 576 $ (101)
Investment securities
Taxable 250 267 (17) (106) (75) (31)
Tax-exempt 18 10 8 82 98 (16)
Funds sold and interest
bearing deposits (349) (337) (12) 391 376 15
------- ------- ------- ------- ------- -------
TOTAL 370 745 (375) 842 975 (133)
------- ------- ------- ------- ------- -------
Interest bearing liabilities:
NOW accounts (12) 5 (17) 15 17 (2)
Money market accounts (128) (21) (107) 89 140 (51)
Savings accounts 6 13 (7) (3) (1) (2)
Other time deposits 168 261 (93) 449 449 0
Short-term borrowings 29 48 (19) (47) (53) 6
Long-term debt 0 0 0 0 0 0
------- ------- ------- ------- ------- -------
TOTAL 63 306 (243) 503 552 (49)
------- ------- ------- ------- ------- -------
Changes in net interest income $ 307 $ 439 $ (132) $ 339 $ 423 $ (84)
======= ======= ======= ======= ======= =======
</TABLE>
PROVISION FOR LOAN LOSSES
First Bank Holding recorded a provision for loan losses of
approximately $47,000 during the six-month period ending June 30, 2000 as
compared to approximately $125,000 for the six-month period ended June 30, 1999.
For the year ended December 31, 1999, First Bank Holding recorded a provision
for loan losses of $250,232 as compared to $198,260 for the year ended December
31, 1998 and $248,335 for the year ended December 31, 1997.
The total allowance for loan losses was $718,440 or 0.99% of total
outstanding loans on December 31, 1999 as compared to $609,720 or 1.03% on
December 31, 1998.
56
<PAGE> 64
First Bank Holding's policy is to record a provision for loan losses
consistent with current levels of net charge-offs with special emphasis placed
on credit quality trends (inclusive of assessments of criticized and classified
assets as set-forth in First Bank's Accrual for Loan and Leases Losses Policy)
and current economic trends.
First Bank Holding's allowance for loan losses represents an amount
which, in the judgement of management and the board of directors, will be
adequate to absorb losses on existing loans that may become uncollectable. The
adequacy of these allowances is evaluated monthly based on regular review of the
First Bank Holding loan portfolio, non-accruing loans, past due loans and other
loans management and the board believes require special attention.
NON-INTEREST INCOME
First Bank Holding's non-interest income includes service charges and
other fees on deposit accounts, and other miscellaneous fee income such as
merchant credit card fees. For the six months ended June 30, 2000 and 1999,
non-interest income was approximately $512,000 and $669,000 respectively. Note
that the accounting method for recording income on credit card merchant's fees
was changed in 2000 from a gross income figure to a net figure, which accounts
for the decline in these numbers.
Non-interest income totaled $1,440,102, $1,252,210, and $1,133,302
respectively for the years ended 1999, 1998, and 1997.
NON-INTEREST EXPENSE
Non-interest expense for the six-month period ended June 30, 2000 and
1999 totaled approximately $1,770,000 and $1,886,000, respectively.
Non-interest expense for the years-ended December 31, 1999, 1998, and
1997 totaled approximately $3,927,857, $3,619,870, and $3,258,082 respectively.
The percentage increases range from 8.51% between 1998 and 1999 to 11.10%
between 1997 and 1998. These trends are believed to be nominal in nature and
within acceptable limits based on normal growth trends.
INCOME TAXES
For the six-month periods ended June 30, 2000 and 1999, First Bank
Holding's provision for income taxes was approximately $284,000 and $218,000
respectively. For the years ended December 31, 1999, 1998, and 1997, provision
for income taxes was $418,799, $373,532, and $351,796, respectively. All
increases were due to increased earnings before tax.
LENDING ACTIVITIES
The primary source of income for First Bank Holding is the interest
earned on loans. Loans are the single largest component of First Bank Holding's
earning assets, as well as the highest yielding asset. Due to the importance of
loans to profitability, most other assets and liabilities are managed to
accommodate the funding of loans.
As of June 30, 2000, First Bank Holding's total assets were
approximately $99,806,000 as compared to $92,300,000 on June 30, 1999. On the
years ended December 31, 1999, 1998, and 1997 total assets were $101,242,276,
$90,107,959, and $81,793,475 respectively. On June 30, 2000, total loans, net
were approximately $73,515,000 or 73.66% of total assets as compared with
$65,158,000 or 70.59% on June 30, 1999.
Comparisons for years ended December 31, 1999, 1998, and 1997 show
total loans of $73,141,992 or 72.24% of assets, $59,968,564 or 66.55%, and
$54,363,909 or 66.46%, respectively. Management believes the loan increases from
year to year are the result of a consistent local economy and a reasonable
interest rate environment as well as the positive reputation enjoyed by First
Bank Holding among small businesses in the primary market area.
57
<PAGE> 65
The amount of loans outstanding at the dates indicated is shown in the
following table according to loan category.
LOANS BY CATEGORY
<TABLE>
<CAPTION>
December 31,
(Dollars in thousands) 1999 1998 1997 1996 1995
--------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Commercial, financial,
and agricultural $ 24,663 $ 21,865 $ 18,245 $ 15,159 $ 11,994
Real estate - construction 3,440 3,119 3,435 2,703 2,005
Real estate - mortgage 33,455 23,735 21,745 17,006 13,016
Consumer 11,584 11,250 10,939 10,105 7,534
--------- --------- --------- --------- ---------
$ 73,142 $ 59,969 $ 54,364 $ 44,973 $ 34,549
========= ========= ========= ========= =========
</TABLE>
Total loans as of December 31, 1999, are shown in the following table
according to maturity classifications.
LOAN MATURITIES
<TABLE>
<CAPTION>
Maturity Periods
Over One
One Year Through Over
Or Less Five Years Five Years Total
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Commercial, financial,
and agricultural $ 14,874 $ 7,878 $ 1,911 $ 24,663
Real estate 4,941 14,616 17,338 36,895
Consumer 5,831 5,453 300 11,584
--------- --------- --------- ---------
$ 25,646 $ 27,947 $ 19,549 $ 73,142
========= ========= ========= =========
</TABLE>
RISK ELEMENT ASSETS
<TABLE>
<CAPTION>
December 31,
----------------------
(Dollars in thousands) 1999 1998
------- -------
<S> <C> <C>
Nonaccruing loans(1) $ 55 $ 119
Restructured
------- -------
Total nonperforming loans $ 55 $ 119
======= =======
Past due 90 days or more $ 42 $ 29
======= =======
</TABLE>
(1) Interest income recognized and not recognized not significant.
ASSET QUALITY
Management of First Bank Holding has sought to maintain a high quality
of assets and adhere to a sound underwriting practice. An analysis of the loan
portfolio reveals a reasonable concentration of real estate related credits. On
June 30, 2000, approximately 43.2% of total loans were secured by real estate.
At year end 1999, that percentage was 41.8%. At year end 1998 and 1997,
respectively, 36.6% and 42.1% of total loans were secured by real estate.
As a by-product of the First Bank Holding loan policy and on-going
review of the loan portfolio, loans are classified as non-accrual when it is
anticipated that the collection of interest under the original loan terms is
doubtful due to deterioration in the financial condition of the borrower. On
June 30, 2000 total non-accrual loans were $52,765.
58
<PAGE> 66
Loan concentrations are defined as amounts of monies loaned to a number
of borrowers engaged in similar activities, which could cause them to be
impacted by economic and other conditions. First Bank Holding regularly
evaluates these concentrations vis-a-vis the established parameters for lending
levels in each type of loan. As needed, adjustments are made to properly shape
lending activities. Events that may trigger such adjustments would include
economic changes, loan to deposit ratios, and industry trends. First Bank
Holding has established a target mix of 45% commercial loans, 42% real estate
loans, and 13% consumer loans for the purposes of closely monitoring loan
concentration trends.
First Bank Holding, through its management and board of directors,
places great emphasis on strong underwriting procedures. An established loan
review policy has the defined purpose of quickly identifying possible areas that
may be problematic and the application of corrective action that is needed for
marginal or troubled loans. Additionally, all due and past due loans are
reviewed weekly by the board of directors' loan committee and monthly by the
full board.
CLASSIFICATION OF ASSETS
Interest on loans is accrued and credited to income based on the
principal balance outstanding. Unless mitigating circumstances exist or waiver
of policy by the loan committee is given, it is the policy of First Bank Holding
to discontinue the accrual of interest income and classify the loan for
non-accrual or instigate charge-off proceedings when principal and/or interest
is 90 days past due or the financial condition of the borrower has deteriorated.
Loans are not returned to accrual status until principal and interest are
brought current. Interest that is accrued and unpaid at the time the loan is
placed on non-accrual or charged-off is charged against income.
Any real estate that may be acquired by First Bank Holding as a result
of foreclosure action is classified as "other real estate owned". The properties
are recorded on the date acquired at the lower of fair market value less
estimated selling costs, or First Bank Holding's recorded investment in the
related loan. If under the fair market calculation the property is less than the
recorded investment in the related loan, the estimated loss is charged to the
allowance for loan losses at that time. The resulting carrying value established
at the date of the foreclosure becomes the new cost basis for subsequent
accounting. After the foreclosure, if the fair market value less estimated
selling costs, becomes less than its cost; the difference is charged to loan
loss provision. Any costs related to the developmental improvement of the
property are capitalized, whereas those cost relating to holding the property
for sale are charged as expense.
First Bank Holding had no other real estate owned for the reporting
periods ending December 31, 1999, 1998, and 1997 as well as June 30, 2000.
ALLOWANCE FOR LOAN LOSSES
In the origination of loans First Bank Holding recognizes that credit
losses will be experienced and the risk of loss will depend largely on the type
of loan made, the credit worthiness of the borrower over the term of the loan,
and, in case of a collateralized loan, the quality of the collateral as well as
changes in the economic environment. It is the policy of First Bank Holding to
maintain adequate allowances for loan losses based on our historical loss
experience, economic condition evaluation, and regular reviews of delinquencies
and of the quality of the loan portfolio.
The allowance for loan losses is established through charges to
earnings in the form of provision for loan losses, increases and decreases in
the allowance due to changes in the measurement of impaired loans are included
in the provision for loan losses. Loans are classified as incurred and reviewed
and re-classified (as necessary) on a regular on-going basis. When a loan or a
portion thereof is deemed to be uncollectable, it is charged (as appropriate)
against the allowance.
First Bank Holding's management continues to actively monitor asset
quality and to charge-off loans against the allowance for loan losses when
appropriate, or to provide specific loan losses when necessary. Although
management believes it utilizes the best information available to make
determinations with respect to the allowance for loan losses, future adjustments
may be necessary if the economic conditions differ from those in effect when and
used as assumptions when the loan was made.
59
<PAGE> 67
First Bank Holding's allowance for loan losses was $752,000 as of June
30, 2000 (1.01% of total loans) and $718,440 on December 31, 1999 (0.99% of
total loans). First Bank Holding experienced gross charge-offs of $47,168 during
the six months ended June 30, 2000. Recoveries of previously charged-off loans
during that period were $14,043. First Bank Holding had gross charge-offs
totaling $250,232, $198,260, and $248,335 for fiscal years 1999, 1998, and 1997.
Recoveries for each of those years respectively were $26,803, $48,996, and
$16,781.
As of June 30, 2000 the Board of Directors of First Bank Holding
determined that the loan loss reserve position was adequate to cover anticipated
losses.
SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Balance at beginning of year $ 610 $ 550
------ ------
Charge-offs:
Commercial, financial, and agricultural 90 39
Real estate - construction 0 0
Real estate - mortgage 0 8
Consumer 78 140
------ ------
168 187
------ ------
Recoveries:
Commercial, financial, and agricultural 1 0
Real estate - construction 0 0
Real estate - mortgage 0 42
Consumer 25 7
------ ------
26 49
------ ------
Net charge-offs 142 138
Additions charged to operations 250 198
------ ------
$ 718 $ 610
====== ======
</TABLE>
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1999 1998
----------------------------------- ----------------------------------
Percent of Loans Percent of Loans
In Each Category in Each Category
Amount to Total Loans Amount to Total Loans
-------- ----------------- -------- ----------------
<S> <C> <C> <C> <C>
Commercial, financial, and agricultural $ 525 0.64% $ 466 0.68%
Real estate - construction 0 0.00 0 0.00
Real estate - mortgage 31 0.16 17 0.11
Consumer 160 0.20 122 0.21
Unallocated 2 0.00 5 0.00
-------- -------- -------- ---------
$ 718 100.00% $ 610 100.00%
======== ======== ======== =========
</TABLE>
INVESTMENT ACTIVITIES
Management and the Board of Directors of First Bank Holding have made
it a policy to classify virtually all investment securities as "available for
sale". Securities in this category are recorded at amortized cost. The cost of
investment securities sold is determined by the specific identification method.
If a security has a decline in fair market value that is other than temporary
then the security will be written down to its fair market value by recording a
loss in the statement of operations (while also recognizing the significance of
the income tax position). As of June
60
<PAGE> 68
30, 2000, First Bank Holding had approximately $15,637,00 of securities held as
"available for sale" and no "trading" securities.
As of June 30, 2000, First Bank Holding had unrealized losses on
securities available for sale (net of taxes) of approximately $348,000. As of
June 30, 2000 the investment portfolio totaled approximately $15,637,000
compared to $15,828,212 as of December 31, 1999. As of June 30, 2000, 51.8%
($8,077,697) of the investment portfolio consisted of U.S. Government Agency
securities.
MATURITY DISTRIBUTION OF INVESTMENT SECURITIES
<TABLE>
<CAPTION>
Amortized Weighted
Cost Average Yield
--------- -------------
<S> <C> <C>
U. S. Governments:
Due over 1 year through 5 years $ 8,500 6.05%
Total 8,500
-------
State & Political Subdivisions:
Due over 1 year through 5 years 339 4.70%
Due over 10 years 3,616 4.94%
-------
Total 3,955
-------
Mortgage-Backed Securities:
Due in 1 year or less 9 7.15%
Due over 1 year through 5 years 680 6.33%
Due over 5 years through 10 years 673 7.27%
Due over 10 years 2,271 5.90%
-------
Total 3,633
-------
Other Securities:
Due over 10 years 270
-------
Total 270
-------
Total Investment Securities $16,358
=======
</TABLE>
DEPOSIT ACTIVITIES
Deposits are the primary source of funds for First Bank Holding's
lending and other investment activities. In addition to deposits, First Bank
Holding derives funds from interest payments, loan principal payments, funds
provided from operations sources and prudent borrowing strategies when
circumstances warrant and are deemed beneficial. First Bank Holding will
occasionally utilize federal funds borrowing lines established through three
upstream correspondents for short-term borrowing needs.
Generally speaking, First Bank Holding attracts deposits from within
its principal market area through the offering of a full line of deposit
products. Deposit products include checking accounts, money market accounts,
savings accounts, time deposits, and individual retirement accounts.
On certain situations First Bank Holding will accept deposits from
areas outside of its local geographic market area. First Bank Holding has never,
however, accepted brokered deposits and has not aggressively pursued high
interest bearing certificates of deposits unless such efforts were part of a
concerted asset liability management plan. As of June 30, 2000, First Bank
Holding had $13,992,980 in time deposits with balances of $100,000 or more. As
of December 31, 1999, 1998, and 1997 First Bank Holding had time deposits in
excess of $100,000 totaling $16,000,107, $12,840,550, and $8,265,305
respectively.
61
<PAGE> 69
First Bank Holding establishes maturity terms, service fees, and
withdrawal penalties on a periodic basis. The determination of interest rates
and terms is dependent upon funds acquisition and liquidity needs, interest
rates paid by competitors, growth goals, loan demand and federal regulations.
Average amounts of deposits, determined using daily average balances,
and average rates paid thereon are presented below.
DEPOSITS
<TABLE>
<CAPTION>
1999 1998
---------------------------- --------------------------
Average Average
Amount Rate Amount Rate
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Noninterest bearing deposits $ 19,188 $ 16,825
Interest bearing demand deposits 25,618 3.0% 25,896 3.5%
Savings deposits 4,121 2.6% 3,979 2.8%
Time deposits 33,332 6.0% 29,655 6.1%
--------- ---------
$ 82,259 $ 76,355
========= =========
</TABLE>
The amounts of time deposits issued in amounts of $100,000 or more as of
December 31, 1999, are shown below by category, which is based on time remaining
until maturity of three months or less, over three through six months, over six
months through twelve months, over twelve months.
<TABLE>
<S> <C>
Three months or less $ 3,786
Over three through six months 2,091
Over six through twelve months 3,470
Over twelve months 6,653
-------
$16,000
=======
</TABLE>
RETURN ON EQUITY AND ASSETS
The return on average assets for the years-ended December 31, 1999,
1998, and 1997 respectively, approximated 1.03%, 1.01%, and 1.06%.
The return on equity for the years-ended December 31, 1999, 1998, and
1997 respectively, approximated 12.08%, 11.82%, and 11.60%.
The following rate of return information for the years indicated is
presented below:
RETURN ON EQUITY AND ASSETS
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Return on assets 1.03% 1.01%
Return on equity 12.08% 11.82%
Dividend payout ratio 8.58% 5.71%
Equity to assets ratio 8.54% 8.50%
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
First Bank Holding's principal sources of funds are deposits, principal
and interest payments on loans, interest on investments, and sales of investment
securities. During 1999, First Bank Holding experienced deposit growth of
$10,203,656 or 12.46%. First Bank Holding management is unaware of any trends in
the sources or uses of funds that are expected to have a material impact on
liquidity position. First Bank Holding believes it maintains significant sources
of secondary liquidity in case events occur that would cause a material change
in the liquidity
62
<PAGE> 70
position of First Bank Holding. First Bank Holding also meets the definition of
a "well capitalized" financial institution.
At June 30, 2000, shareholder equity was approximately $8,556,000 or
8.6% of total assets compared to $8,020,092 or 7.9% of total assets as of
December 31, 1999. All of First Bank Holding's capital ratios exceed the minimum
regulatory guidelines for a "well capitalized" bank.
IMPACT OF INFLATION AND CHANGING PRICES
First Bank Holding's financial statements have been prepared in
accordance with generally accepted accounting principles which require the
measurement of financial position and operating results in terms of historical
dollars without considering changes in the relative purchasing power of money
over time due to inflation. The primary impact of inflation on the operations of
First Bank Holding is reflected in increased operating costs. Unlike most
industrial companies, virtually all of the assets and liabilities of a financial
institution are monetary in nature. Consequently, changes in interest rates have
a more significant impact on the performance of a financial institution than do
the effect of changes in the general rate of inflation and changes in prices.
Interest rates do not necessarily move in the same direction or in the same
magnitude as the prices of goods and services in general.
FEDERAL AND STATE TAXATION
Although a bank's income tax liability is determined under the
provision of the Internal Revenue Code, which is applicable to taxpayers or
corporations, sections 581 and 597 of the Internal Revenue Code apply
specifically to financial institutions.
The two primary areas in which the treatment of financial institutions
differs from the treatment of other corporations under the Internal Revenue Code
are bond gains and losses, and bad debt deductions. Bond gains and losses
generated from the sale or exchange of portfolio securities are generally
treated for financial institutions as ordinary gains and losses as opposed to
capital gains and losses for other corporations. The Internal Revenue Code
considers bond portfolios held by First Bank Holding to be inventory in a trade
or business rather than to be capital assets. Banks are allowed a statutory
method for calculating a tax-deductible reserve for bad debt deductions.
First Bank Holding is also subject to various taxes imposed by the
State of Florida.
WHERE YOU CAN FIND MORE INFORMATION
You may obtain more information about SouthTrust from its web site at
http://www.southtrust.com. In addition, you can also obtain more information
about SouthTrust by reviewing the information which SouthTrust is required by
the Securities Exchange Act of 1934 to file with the Securities and Exchange
Commission. The information which SouthTrust is required to file includes, among
other things, information about its business, operations and financial
condition, executive compensation and other information about its management.
You may read and copy this information at the following locations of the SEC:
Public Reference Section
Room 1024
450 Fifth Street, N. W.
Washington D.C. 20549
Seven World Trade Center
Suite 1300
New York, New York 10048
Citicorp Center
Suite 1400
500 West Madison Street
Chicago, Illinois 60601-2511
You may also obtain by mail copies of any document filed with the SEC by
SouthTrust from the Public Reference Section of the SEC at prescribed rates. You
may call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.
63
<PAGE> 71
The SEC also maintains an Internet world wide web site that contains reports,
proxy statements and other information about issuers, including SouthTrust, who
file information electronically with the SEC. The web site address is
http://www.sec.gov.
You may also inspect reports, proxy statements and other information
which SouthTrust has filed with the SEC from the National Association of
Securities Dealers, Inc., 1735 K Street, Washington D.C. 20096.
SouthTrust "incorporates by reference" into this proxy
statement/prospectus the information it files with the SEC, which means that
SouthTrust can disclose important information to you by referring you to those
documents. The information incorporated by reference is an important part of
this proxy statement/prospectus. Some information contained in this proxy
statement/prospectus updates the information incorporated by reference, and
information that SouthTrust files subsequently with the SEC will automatically
update this proxy statement/prospectus. In other words, in the case of a
conflict or inconsistency between information set forth in this proxy
statement/prospectus and information incorporated by reference into this proxy
statement/prospectus, you should rely on the information contained in the
document that was filed later. SouthTrust incorporates by reference the
documents listed below and any filings it makes with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after the
initial filing of the registration statement that contains this proxy
statement/prospectus and up to and including the final adjournment of the
special meeting at which First Bank Holding shareholders consider and vote on
the merger:
- Annual Report on Form 10-K for the year ended December 31,
1999;
- Quarterly Reports on Form 10-Q for the quarters ended March
31, 2000 and June 30, 2000;
- Proxy Statement on Schedule 14A, filed on March 6, 2000;
- The description of SouthTrust common stock set forth in the
Amendment No. 1 to the Registration Statement on Form S-3,
Registration Number 333-32922, filed on August 1, 2000; and
- The description of the SouthTrust Rights Agreement set forth
in the Registration Statement on Form 8-A/A, as amended, filed
on September 29, 2000.
You can request copies of the documents incorporated by reference in this
proxy statement/prospectus by requesting them in writing or by
telephone from:
Mr. Alton E. Yother
Secretary, Treasurer and Controller
SouthTrust Corporation
420 North 20th Street, 34th Floor
Birmingham, Alabama 35203
Telephone Number: (205) 254-5000.
Copies of exhibits to the documents incorporated by reference will not
be provided to you unless the exhibits themselves are specifically incorporated
into the documents incorporated by reference.
You should rely only on the information contained in this proxy
statement/prospectus or contained in the documents which are incorporated by
reference into this document. Neither we nor SouthTrust have authorized anyone
to provide you with any information that differs from, or adds to, the
information in this document.
64
<PAGE> 72
Therefore, if anyone does give you different or additional information, you
should not rely on it. The information contained in this document is correct as
of the date of this document. It may not continue to be correct after this date.
We have supplied all of the information about First Bank Holding contained in
this proxy statement/prospectus and SouthTrust supplied all of the information
contained in this proxy statement/prospectus about SouthTrust and its
subsidiaries. Each of us is relying on the correctness of the information
supplied by the other.
EXPERTS AND COUNSEL
The financial statements and schedules incorporated by reference in
this prospectus and elsewhere in this registration statement 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.
James D.A. Holley & Co., P.A., independent public accountants, has
audited our consolidated financial statements set out in this proxy
statement/prospectus, to the extent and for the periods indicated in its
reports. We have included these financial statements in reliance upon the
authority of James D.A. Holley & Co., P.A. as experts in accounting and auditing
and giving reports such as the reports given.
Bradley Arant Rose & White LLP, a law firm located in Birmingham,
Alabama and counsel for SouthTrust, will give an opinion as to the legality of
the shares of SouthTrust common stock to be issued in connection with the merger
and will give an opinion on the federal income tax consequences involved in the
merger. As of October 31, 2000, the partners and associates of Bradley Arant
Rose & White LLP beneficially owned approximately 1,900,000 shares of
SouthTrust common stock.
SUBMISSION OF SHAREHOLDER PROPOSALS AND OTHER MATTERS
Our board of directors does not know of any matters to be presented for
consideration at the special meeting other than those matters which are
described in this proxy statement and in the Notice of Special Meeting
accompanying this proxy statement/prospectus. If any other matters properly come
before the special meeting for consideration, it is the intention of the persons
named in the accompanying proxy to vote the shares of First Bank Holding common
stock in accordance with their best judgment with respect to such other matters.
65
<PAGE> 73
FIRST BANK HOLDING COMPANY
AUDITED FINANCIAL STATEMENTS
For the years ended December 31, 1999 and 1998
F-1
<PAGE> 74
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report ................................................... F-4
Audited Financial Statements:
Consolidated Balance Sheets as of December 31, 1999 and 1998 ............... F-4
Consolidated Statements of Income for the Years Ended December 31,
1999, 1998 and 1997 ..................................................... F-5
Consolidated Statements of Changes in Stockholders' Equity for the Years
Ended December 31, 1999, 1998 and 1997 .................................. F-6
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997 ..................................................... F-7
Notes to Financial Statements .............................................. F-8 thru F-21
Interim Unaudited Financial Statements:
Consolidated Balance Sheets as of June 30, 2000 and 1999 ................... F-22
Consolidated Statements of Income for the Six Months Ended
June 30, 2000 and 1999 .................................................. F-23
Consolidated Statements of Changes in Stockholders' Equity
for the Six Months Ended June 30, 1999 and 1998 ......................... F-24
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2000 and 1999 ............................................ F-25
Notes to Financial Statements .............................................. F-26
</TABLE>
F-2
<PAGE> 75
INDEPENDENT AUDITORS' REPORT
The Board of Directors
First Bank Holding Company
Tallahassee, Florida
We have audited the accompanying consolidated balance sheets of First Bank
Holding Company and subsidiary as of December 31, 1999 and 1998, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1999.
These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Bank Holding Company and
subsidiary as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for each of the years in the three-year period ended December
31, 1999, in conformity with generally accepted accounting principles.
/s/ James D. A. Holley & Co., P.A.
Tallahassee, Florida
January 25, 2000
F-3
<PAGE> 76
FIRST BANK HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS
1999 1998
------------- -------------
<S> <C> <C>
Cash and due from banks $ 3,963,310 $ 6,047,581
Interest-bearing time deposits in banks 6,000 6,000
Federal funds sold 4,324,000 1,511,000
Investment securities (Note 2) 15,828,212 18,727,176
Loans, net of allowance for loan losses
of $718,440 in 1999 and $609,720
in 1998 (Notes 3 and 4) 72,423,552 59,358,844
Properties and equipment (Note 5) 2,622,003 2,766,589
Accrued interest receivable 642,805 625,800
Other assets 1,432,394 1,064,969
------------- -------------
$ 101,242,276 $ 90,107,959
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Interest-bearing $ 67,847,090 $ 58,913,557
Noninterest-bearing 24,240,584 22,970,461
------------- -------------
92,087,674 81,884,018
Federal Home Loan Bank advances (Note 12) 571,250 162,000
Other payables and accrued liabilities 563,260 455,677
------------- -------------
93,222,184 82,501,695
------------- -------------
Stockholders' equity:
Preferred stock; $.01 par value:
Authorized: 500,000 shares; none issued
Common stock; $.01 par value:
Authorized: 1,000,000 shares
Issued and outstanding: 401,000 shares 4,010 4,010
Additional paid-in capital 4,413,990 4,413,990
Retained earnings 3,936,362 3,056,972
Accumulated other comprehensive income (334,270) 131,292
------------- -------------
8,020,092 7,606,264
------------- -------------
$ 101,242,276 $ 90,107,959
============= =============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-4
<PAGE> 77
FIRST BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Interest income:
Loans $5,919,209 $5,450,713 $5,007,493
Securities 976,401 708,576 693,636
Federal funds sold 129,088 477,816 87,305
Deposits in banks 1,201 215 21,800
---------- ---------- ----------
Total interest income 7,025,899 6,637,320 5,810,234
---------- ---------- ----------
Interest expense:
Interest on deposits 2,867,862 2,833,267 2,283,863
Federal funds purchased and securities sold
under repurchase agreements 21,383
Other interest 20,278 11,802 58,936
---------- ---------- ----------
Total interest expense 2,909,523 2,845,069 2,342,799
---------- ---------- ----------
Net interest income 4,116,376 3,792,251 3,467,435
Provision for loan losses (Note 4) 250,232 198,260 248,335
---------- ---------- ----------
Net interest income after
provision for loan losses 3,866,144 3,593,991 3,219,100
---------- ---------- ----------
Other income:
Service charges on deposit accounts 581,678 556,766 523,823
Merchant charge card fees 541,960 442,241 381,794
Securities transactions 2,219
Other (Note 8) 316,464 253,203 225,466
---------- ---------- ----------
Total other income 1,440,102 1,252,210 1,133,302
---------- ---------- ----------
Other expenses:
Salaries and employee benefits 1,446,438 1,442,800 1,376,814
Occupancy expense 659,988 472,097 498,590
Other (Note 8) 1,821,431 1,704,973 1,382,678
---------- ---------- ----------
Total other expenses 3,927,857 3,619,870 3,258,082
---------- ---------- ----------
Income before income taxes 1,378,389 1,226,331 1,094,320
Income taxes (Note 9) 418,799 373,532 351,796
---------- ---------- ----------
Net income $ 959,590 $ 852,799 $ 742,524
========== ========== ==========
Basic net income per share $ 2.39 $ 2.13 $ 1.86
Diluted net income per share $ 2.33 $ 2.08 $ 1.82
Basic average common shares outstanding 401,000 401,216 400,012
Diluted average common shares outstanding 410,930 410,140 407,728
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-5
<PAGE> 78
FIRST BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common Paid-in Retained Comprehensive Stockholders'
Stock Capital Earnings Income Equity
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 4,000 $ 4,396,000 $ 1,561,774 $ 5,604 $ 5,967,378
Net income 742,524
Net change in unrealized
gain on available-for-sale
securities, net of taxes
of $44,515 75,796
Comprehensive income 818,320
Capital stock issued 10 17,990 18,000
Cash dividends (Note 13) (50,000) (50,000)
Treasury stock transactions (15,210)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 4,010 4,413,990 2,254,298 81,400 6,738,488
Net income 852,799
Net change in unrealized
gain on available-for-sale
securities, net of taxes
of $29,302 49,892
Comprehensive income 902,691
Cash dividends (Note 13) (50,125) (50,125)
Treasury stock transactions 15,210
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 4,010 4,413,990 3,056,972 131,292 7,606,264
Net income 959,590
Net change in unrealized
gain on available-for-sale
securities, net of taxes
of $273,425 (465,562)
Comprehensive income 494,028
Cash dividends (Note 13) (80,200) (80,200)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 $ 4,010 $ 4,413,990 $ 3,936,362 $ (334,270) $ 8,020,092
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-6
<PAGE> 79
FIRST BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 959,590 $ 852,799 $ 742,524
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 250,232 198,260 248,335
Depreciation and amortization 239,012 219,119 223,210
Other changes:
Deferred income taxes (50,155) (19,550) 27,414
Accrued interest receivable (17,005) (84,376) (90,689)
Other assets (317,270) (646,002) (122,271)
Other payables and accrued liabilities 107,583 3,962 229,517
------------ ------------ ------------
Net cash provided by operating activities 1,171,987 524,212 1,258,040
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from payments/maturities of securities
available for sale 3,249,620 4,614,402 5,464,445
Proceeds from payments/maturities of securities
held to maturity 348,736 1,000,000 1,000,000
Purchase of securities available for sale (1,164,954) (15,066,241) (2,009,755)
Purchase of securities held to maturity (1,000,000)
Loans made to customers net of principal collections (13,314,940) (5,743,195) (9,599,524)
Purchase of equipment and leasehold improvements (94,426) (14,019) (334,607)
------------ ------------ ------------
Net cash used in investing activities (10,975,964) (15,209,053) (6,479,441)
------------ ------------ ------------
Cash flows from financing activities:
Net proceeds from deposits 10,203,656 7,479,746 8,147,148
Federal Home Loan Bank advances 2,321,250
Repayments of Federal Home Loan Bank advances (1,912,000) (37,000) (37,000)
Cash dividends (80,200) (50,125) (50,000)
Capital stock issued 18,000
Treasury stock transactions 15,210 (15,210)
------------ ------------ ------------
Net cash provided by financing activities 10,532,706 7,407,831 8,062,938
------------ ------------ ------------
Net change in cash and cash equivalents 728,729 (7,277,010) 2,841,537
Cash and cash equivalents at beginning of year 7,564,581 14,841,591 12,000,054
------------ ------------ ------------
Cash and cash equivalents at end of year $ 8,293,310 $ 7,564,581 $ 14,841,591
============ ============ ============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 2,855,733 $ 2,842,499 $ 2,248,860
Income taxes 429,620 412,918 209,059
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-7
<PAGE> 80
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting principles followed by the Company and its subsidiary
and the method of applying those principles conform with generally accepted
accounting principles and with general practice within the banking industry. The
significant policies are summarized below.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of First
Bank Holding Company and its subsidiary First Bank. All material intercompany
transactions and accounts have been eliminated. The following notes to financial
statements relate primarily to First Bank (Bank).
NATURE OF OPERATIONS
The Bank provides a variety of financial services to individuals and
corporate customers through its main bank and three branches in Tallahassee,
Florida. The Bank's primary deposit products are noninterest-bearing checking
accounts, interest-bearing demand accounts, and certificates of deposit. Its
primary lending products are commercial and real estate loans.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash and due from banks,
interest-bearing deposits in other banks, and federal funds sold.
INVESTMENT SECURITIES
Investment securities classified as held to maturity are stated at
cost, adjusted for amortization of premiums and accretion of discounts.
Held-to-maturity securities are carried at amortized cost as the Bank has the
ability and positive intent to hold these securities to maturity. Investment
securities in the available for sale portfolio are carried at fair value and
represent securities that are available to meet liquidity and/or other needs of
the Bank.
Gains and losses are recognized and shown separately in the statements
of income upon realization or when impairment of values is deemed to be other
than temporary. These gains or losses are recognized using the specific
identification method. Unrealized holding gains and losses for securities in the
available for sale portfolio are excluded from the statements of income and
reported net of taxes as a net amount in other comprehensive income.
LOANS
Loans are stated at the principal amount outstanding. Interest income
on loans, except for those designated as non-accrual loans, is accrued based on
the outstanding daily balances.
F-8
<PAGE> 81
NOTES TO FINANCIAL STATEMENTS
ALLOWANCE FOR LOAN LOSSES
Provisions for loan losses are charged to operating expenses and added
to the allowance to maintain it at a level deemed appropriate by management to
absorb known and inherent risks in the loan portfolio. When establishing a
provision, management makes various estimates regarding the value of collateral
and future economic events. Actual future experience may differ from these
estimates. Recognized loan losses are charged to the allowance when loans are
deemed to be uncollectible due to such factors as the borrower's failure to pay
principal and interest or when loans are classified as losses under internal or
external review criteria. Recoveries of principal on loans previously
charged-off are added to the allowance.
Loans are placed on nonaccrual status when management believes the
borrower's financial condition, after giving consideration to economic
conditions and collection efforts, is such that collection of interest is
doubtful. Generally, loans are placed on nonaccrual status when interest becomes
past due 90 days or more, or management deems the ultimate collection of
principal and interest, in full, is in doubt.
The Bank defines impaired loans as all nonperforming loans except
residential mortgages and consumer loans. The allowance for loan losses related
to impaired loans is determined by measuring the amount of impairment for these
loans. Impairment is measured by comparing the recorded investment in the loan
to the present value of expected future cash flows from the loan or to the fair
value of the underlying collateral.
PROPERTIES AND EQUIPMENT
Properties and equipment are stated at cost less accumulated
depreciation, computed on the straight-line method over estimated useful lives
of 35 years for buildings and 5 to 20 years for fixtures and equipment.
Additions and major facilities are capitalized and depreciated in the same
manner. Repairs and maintenance are charged to operating expense as incurred.
INCOME TAXES
The Company and its affiliate file consolidated federal and state
income tax returns. Under a tax-sharing arrangement, income tax charges or
benefits are generally allocated to the Company and its affiliate on the basis
of their respective taxable income or loss included in the consolidated income
tax returns.
Deferred tax assets and liabilities are reflected at currently enacted
income tax rates applicable to the period in which the deferred tax assets or
liabilities are expected to be realized or settled. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.
BENEFIT PLANS
The Bank has a 401(k) benefit plan which covers substantially all
officers and employees. The plan provides for employee contributions with
limited matching contributions. The expense for 1999, 1998, and 1997 was
$29,024, $24,895, and $14,000, respectively.
The Company has a stock option plan that provides for the granting of
stock options to officers and directors.
ADVERTISING
Advertising costs are expensed in the year incurred.
F-9
<PAGE> 82
NOTES TO FINANCIAL STATEMENTS
2. INVESTMENT SECURITIES
Debt and equity securities have been classified in the balance sheets
according to management's intent. Equity securities consist of Federal Home Loan
Bank stock. The carrying amount of securities and their approximate fair value
at December 31, are as follows:
<TABLE>
<CAPTION>
1999
-----------------------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Available for sale:
U.S. government agencies
and corporations $ 8,500,000 $ $ 391,433 $ 8,108,567
State and municipal securities 3,616,314 21,898 110,135 3,528,077
Mortgage backed securities 3,043,957 10,731 61,649 2,993,039
Equity securities 270,400 270,400
----------- -------- ----------- -----------
15,430,671 32,629 563,217 14,900,083
----------- -------- ----------- -----------
Held to maturity:
State and municipal securities 338,658 441 339,099
Mortgage backed securities 589,471 7,846 4,332 592,985
----------- -------- ----------- -----------
928,129 8,287 4,332 932,084
----------- -------- ----------- -----------
$16,358,800 $ 40,916 $ 567,549 $15,832,167
=========== ======== =========== ===========
<CAPTION>
1998
-----------------------------------------------------------
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Available for sale:
U.S. government agencies
and corporations $ 9,696,362 $ 11,924 $ 5,071 $ 9,703,215
State and municipal securities 3,623,200 208,712 5,019 3,826,893
Mortgage backed securities 3,604,622 12,820 14,965 3,602,477
Equity securities 333,100 333,100
----------- -------- ----------- -----------
17,257,284 233,456 25,055 17,465,685
----------- -------- ----------- -----------
Held to maturity:
State and municipal securities 323,284 15,120 338,404
Mortgage backed securities 938,207 20,610 15 958,802
----------- -------- ----------- -----------
1,261,491 35,730 15 1,297,206
----------- -------- ----------- -----------
$18,518,775 $269,186 $ 25,070 $18,762,891
=========== ======== =========== ===========
</TABLE>
F-10
<PAGE> 83
NOTES TO FINANCIAL STATEMENTS
The amortized cost and estimated market value of debt securities at
December 31, 1999, by contractual maturity, are shown below:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
------------- -------------
<S> <C> <C>
Available for sale:
Due after one year through five years $ 3,750,000 $ 3,596,515
Due after five years through ten years 4,750,000 4,512,052
Due after ten years 3,616,314 3,528,077
Mortgage backed securities 3,043,957 2,993,039
------------- -------------
15,160,271 14,629,683
------------- -------------
Held to maturity:
Due after one year through five years 338,658 339,099
Mortgage backed securities 589,471 592,985
------------- -------------
928,129 932,084
------------- -------------
$ 16,088,400 $ 15,561,767
============= =============
</TABLE>
Investment securities with a carrying value of $709,795 and $792,879 at
December 31, 1999 and 1998, respectively, were pledged to secure public deposits
and for other purposes.
3. LOANS
Major classifications of loans as of December 31, 1999 and 1998, are
summarized as follows:
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Commercial, financial, and agricultural $ 24,663,438 $ 21,864,651
Real estate - construction 3,440,294 3,118,628
Real estate - mortgage 33,454,706 23,734,529
Consumer 11,583,554 11,250,756
------------- -------------
73,141,992 59,968,564
Allowance for loan losses (718,440) (609,720)
------------- -------------
$ 72,423,552 $ 59,358,844
============= =============
</TABLE>
F-11
<PAGE> 84
NOTES TO FINANCIAL STATEMENTS
4. ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Balance, beginning of year $ 609,720 $ 550,000 $ 510,079
Provision charged to operations 250,232 198,260 248,335
Loans charged off (168,315) (187,536) (225,195)
Recoveries 26,803 48,996 16,781
---------- ---------- ----------
Balance, end of year $ 718,440 $ 609,720 $ 550,000
========== ========== ==========
</TABLE>
Impaired loans totaled $97,000, $261,000, and $256,000, with a related
reserves of $21,000, $75,000, and $57,000, at December 31, 1999, 1998, and 1997,
respectively. The allowance for loan losses is established to cover potential
losses inherent in the portfolio as a whole.
The Bank recognizes income on impaired loans primarily on the cash
basis. Any change in the present value of expected cash flows is recognized
through the allowance for loan losses. Interest recognized in income on impaired
loans during 1999, 1998, and 1997 was not significant.
5. PROPERTIES AND EQUIPMENT
Major classifications of depreciable assets are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Land $ 163,561 $ 163,561
Buildings 2,211,456 2,463,528
Equipment under capital lease 260,665 260,665
Furniture and equipment 1,256,648 981,543
------------- -------------
3,892,330 3,869,297
Less accumulated depreciation 1,270,327 1,102,708
------------- -------------
$ 2,622,003 $ 2,766,589
============= =============
</TABLE>
Depreciation and amortization of $239,012, $219,119, and $223,210 was
charged to operating expense for 1999, 1998, and 1997, respectively.
6. DEPOSITS
Time deposits in denominations of $100,000 or more totaled $16,000,107
and $12,840,550 for 1999 and 1998, respectively. Interest expense for time
deposits of $100,000 or more amounted to $1,045,523, $654,693, and $410,554, for
1999, 1998, and 1997, respectively.
7. COMMITMENTS
The Bank leases certain property and facilities from which the main
bank and its branches operate. The leases generally provide for the lessee to
pay taxes, maintenance, and insurance on the leased property. The leases on most
of the properties contain renewal options and terms currently run from 3 to 20
years.
The Bank's lease on its main office property is its most significant
lease. This lease provides for monthly lease payments of $5,090 in the current
year with annual increases in subsequent years based on the increase in the
consumer price index. The lease runs through the year 2019 and can be renewed
for three additional five year terms.
F-12
<PAGE> 85
NOTES TO FINANCIAL STATEMENTS
Lease expense for operating leases amounted to $166,154, $154,674, and
$147,948 for 1999, 1998, and 1997, respectively. Future minimum lease
commitments under noncancellable leases for 2000 through 2004 are $149,968,
$125,936, $73,304, $56,975, and $56,975, respectively, and $911,798 for years
subsequent to the year 2004.
8. OTHER INCOME AND EXPENSE
Other operating income and expenses that exceed 1% of the total income
include the following:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Income:
Other fees $ 178,725 $ 180,289 $ 173,035
Expense:
Data processing 191,105 179,066 45,600
Advertising 72,713 103,351 114,110
Printing and supplies 76,012 84,768 111,343
Directors' fees 111,625 109,928 90,722
Charge card processing 385,499 323,197 273,889
Bookkeeping services 92,190 86,791
</TABLE>
9. INCOME TAXES
Income taxes from continuing operations are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Currently payable:
Federal $ 437,495 $ 353,766 $ 305,144
State 29,103 23,913 19,238
Deferred:
Federal (40,330) (4,024) 23,407
State (7,469) (123) 4,007
---------- ---------- ----------
$ 418,799 $ 373,532 $ 351,796
========== ========== ==========
</TABLE>
The difference between federal income tax computed at the statutory
rate and the actual tax provision is shown below:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Computed tax expense $ 468,652 $ 416,953 $ 372,069
Increase (decrease) resulting from:
Tax exempt interest income (68,393) (61,310) (39,272)
State income taxes net of
federal income tax benefits 14,131 15,702 15,061
Other 4,409 2,187 3,938
---------- ---------- ----------
Actual tax expense $ 418,799 $ 373,532 $ 351,796
========== ========== ==========
</TABLE>
F-13
<PAGE> 86
NOTES TO FINANCIAL STATEMENTS
The deferred tax asset and liability and the temporary differences
comprising those balances at December 31, 1999 and 1998, are detailed below:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 213,964 $ 193,401
Unrealized loss on investment securities 196,317
Other 639
---------- ----------
Total deferred tax asset 410,281 194,040
---------- ----------
Deferred tax liabilities:
Depreciation 92,210 118,730
Unrealized gain on investment securities 77,108
Other 616 1,972
---------- ----------
Total deferred tax liability 92,826 197,810
---------- ----------
Net deferred tax asset (liability) $ 317,455 $ (3,770)
========== ==========
</TABLE>
10. RELATED PARTY TRANSACTIONS
Certain officers and directors were indebted to the Bank in the
aggregate amounts of $1,643,670 and $1,892,666 at December 31, 1999 and 1998,
respectively. These loans were made on the same terms as loans to other
individuals of comparable creditworthiness. During 1999, new loans to related
parties amounted to $762,186 and repayments amounted to $1,011,182. The Bank
paid approximately $37,000, $40,000, and $57,134 in 1999, 1998, and 1997,
respectively, to directors for legal fees and insurance.
11. FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISKS
The Bank is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit and
standby letters of credit.
The Bank's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amounts of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments. As of
December 31, 1999, the Bank's off-balance-sheet obligations were as follows:
<TABLE>
<S> <C>
Commitments to extend credit $15,521,600
Standby letters of credit $ 183,885
</TABLE>
For both on and off-balance-sheet financial instruments, the Bank
requires collateral to support such instruments when it is deemed necessary. The
Bank evaluates each customer's creditworthiness on a case by case basis.
Collateral may include deposits held in financial institutions; U.S. Treasury
securities; other marketable securities; real estate; accounts receivable;
property, plant and equipment; and inventory. The Bank's geographic
concentration of credit risk is generally limited to the counties in which the
Bank operates. At December 31, 1999, approximately 50% of the Bank's loan
portfolio consisted of real estate loans.
F-14
<PAGE> 87
NOTES TO FINANCIAL STATEMENTS
12. FEDERAL HOME LOAN BANK ADVANCES
Federal Home Loan Bank advances are as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Advance at 6.7% interest, maturing in 2001 $ 50,000 $ 75,000
Advance at 6.2% interest, maturing in 2006 75,000 87,000
Advance at 7.1% interest, maturing in 2009 446,250
-------- --------
$571,250 $162,000
======== ========
</TABLE>
The agreement with Federal Home Loan Bank provides for a blanket
floating lien collateral arrangement on one to four unit residential loans.
13. DIVIDEND RESTRICTIONS
The payment of dividends is subject to certain regulatory restrictions.
The most common restriction requires regulatory approval of any dividends paid
that would cause total dividends for the most recent three fiscal years to
exceed net income for the same period. Under this restriction, $2,347,330 was
available for payment of dividends on December 31, 1999, without prior
regulatory approval.
14. STOCK OPTION PLAN
The Company has a stock option plan under which options for 21,000
shares of common stock have been granted as of December 31, 1999. The Company
accounts for the fair value of its grants under this plan in accordance with
SFAS No. 123. Since compensation cost as computed under SFAS No. 123 was
immaterial, no expense was recorded.
The fair value of each option grant is estimated on the date of grant
using the Black-Sholes option-pricing model with the following weighted-average
assumptions used: dividend yield of 1 percent, expected volatility of 1.5
percent, risk-free interest rate of 6 percent, and expected life of 6 years.
A summary of the status of the fixed stock option plan as of December
31, 1999, and changes during the year then ended is presented below:
<TABLE>
<CAPTION>
1999 1998
--------------------------------- -------------------------------
Weighted-Average Weighted-Average
Shares Exercise Price Shares Exercise Price
------- ---------------- ------- ----------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year 21,000 $ 11.07 21,000 $ 11.07
Granted (modified) 8,000 11.00 -- --
Exercise -- -- -- --
Forfeited (8,000) 11.00 -- --
------- -------
Outstanding at end of year 21,000 $ 11.07 21,000 $ 11.07
======= =======
</TABLE>
As of December 31, 1999, options for 21,000 shares were outstanding and
were exercisable at $11.07 per share. Options for 8,000 shares expire in three
years, nine months, and options for 13,000 shares expire in three years, six
months. All positions are exercisable at the greater of book value per share of
stock at the grant date or $11.00 per share.
F-15
<PAGE> 88
NOTES TO FINANCIAL STATEMENTS
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair values are based upon quoted market prices, when available. In
cases where quoted market prices are not available, fair values are based on
estimates using present value or other techniques, all of which may be
significantly affected by the assumptions used, including the discount rates and
estimates of future cash flows. Therefore, these values may not be substantiated
by comparison to independent markets and are not intended to reflect the
proceeds that may be realizable from offering for sale at one time the Company's
entire holdings of a particular financial instrument. Furthermore, the Company
does not intend to dispose of a significant portion of its financial
instruments. Therefore, any aggregate unrealized gains or losses should not be
interpreted as a forecast of future earnings and cash flows.
The following methods and assumptions were used to estimate the fair
value of each material financial instrument.
INVESTMENT SECURITIES - Fair values are based on quoted market prices.
LOANS - Fair values are based on carrying values for variable-rate loans that
reprice frequently and have no significant change in credit risk. The fair
values of other loans are estimated by discounting expected future cash flows
using current rates at which similar loans would be made to borrowers with
similar credit ratings and remaining maturities. Fair values for impaired loans
are estimated using discounted future cash flows or underlying collateral
values.
DEPOSIT LIABILITIES - The fair value of demand deposits, savings accounts, and
certain money market deposits is the amount payable on demand at the reporting
date. The fair value of fixed maturity certificates of deposit is estimated
using the rates currently offered for deposits of similar remaining maturities.
COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT - The fair value of
commitments to extend credit is estimated using fees currently charged to enter
into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counterparties. Fair value of
these fees is not material.
The estimated fair values of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>
1999
--------------------------------
Carrying Fair
Amount Value
------------ ------------
<S> <C> <C>
Financial assets:
Cash and cash equivalents $ 8,293,310 $ 8,293,310
Investment securities 15,828,212 15,832,167
Loans, net of allowance for loan losses 72,423,552 82,441,552
Financial liabilities:
Deposits 92,087,674 92,099,674
Federal Home Loan Bank advances 571,250 571,250
</TABLE>
F-16
<PAGE> 89
NOTES TO FINANCIAL STATEMENTS
16. REGULATORY CAPITAL MATTERS
First Bank Holding Company is subject to various regulatory
capital requirements administered by its primary federal regulators the
Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve
Bank. Failure to meet the minimum regulatory capital requirements can
initiate certain mandatory, and possible additional discretionary
actions by regulators, that if undertaken, could have a direct material
affect on the Company's financial statements. Under the regulatory
capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Company must meet specific capital guidelines
involving quantitative measures of the Company's assets, liabilities,
and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Company's capital amounts and classification
under the prompt corrective actions guidelines are also subject to
qualitative judgements by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure
capital adequacy require the Company to maintain minimum amounts and
ratios of total risk-based capital and Tier 1 capital to risk-weighted
assets (defined in the regulations), and Tier 1 capital to adjusted
total assets (as defined). Management believes, as of December 31,
1999, that the Company meets all the capital adequacy requirements to
which it is subject.
As of December 31, 1999, the most recent notification from the
FDIC and the Federal Reserve Bank, the Company was categorized as well
capitalized under the regulatory framework for prompt corrective
action. To remain categorized as well capitalized, the Company will
have to maintain minimum total risk-based, Tier 1 risk-based, and Tier
1 leverage ratios as disclosed in the table below. There are no
conditions or events since the most recent notification that management
believes have changed the Company's category.
The Company's actual capital amounts and ratios are also
presented in the following table.
<TABLE>
<CAPTION>
To be Well Capitalized
Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
----------------- ------------------- ----------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1999:
Total Risk-Based Capital
(to Risk-Weighted Assets) $9,073,000 10.9% $6,657,000 8.0% $8,322,000 10.0%
Tier 1 Capital
(to Risk-Weighted Assets) $8,354,000 10.0% $3,329,000 4.0% $4,993,000 6.0%
Tier 1 Capital
(to Adjusted Total Assets) $8,354,000 8.6% $3,904,000 4.0% $4,880,000 5.0%
As of December 31, 1998:
Total Risk-Based Capital
(to Risk-Weighted Assets) $8,031,000 11.5% $5,587,000 8.0% $6,984,000 10.0%
Tier 1 Capital
(to Risk-Weighted Assets) $7,421,000 10.6% $2,793,000 4.0% $4,190,000 6.0%
Tier 1 Capital
(to Adjusted Total Assets) $7,421,000 8.5% $3,501,000 4.0% $4,376,000 5.0%
</TABLE>
F-17
<PAGE> 90
NOTES TO FINANCIAL STATEMENTS
17. EARNINGS PER SHARE
Basic and diluted earnings per share calculations are as
follows:
<TABLE>
<CAPTION>
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
1999:
Basic earnings per share $ 959,590 401,000 $ 2.39
======
Stock options 9,930
----------- ----------
Diluted earnings per share $ 959,590 410,930 $ 2.33
=========== ========== ======
1998:
Basic earnings per share $ 852,799 401,216 $ 2.13
======
Stock options 8,924
----------- ----------
Diluted earnings per share $ 852,799 410,140 $ 2.08
=========== ========== ======
1997:
Basic earnings per share $ 742,524 400,012 $ 1.86
======
Stock options 7,716
----------- ----------
Diluted earnings per share $ 742,524 407,728 $ 1.82
=========== ========== ======
</TABLE>
F-18
<PAGE> 91
NOTES TO FINANCIAL STATEMENTS
18. PARENT COMPANY FINANCIAL INFORMATION
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Assets:
Cash $ 11,625 $ 14,125
Investments in and amounts due from affiliates
Bank 7,974,834 7,552,107
Amounts due from Bank 89,600 55,153
Other assets 24,233 35,004
----------- -----------
$ 8,100,292 $ 7,656,389
=========== ===========
Liabilities:
Other liabilities 80,200 50,125
----------- -----------
Stockholders Equity:
Common stock 4,010 4,010
Additional paid-in capital 4,413,990 4,413,990
Retained earnings 3,936,362 3,056,972
Accumulated other comprehensive income (334,270) 131,292
----------- -----------
8,020,092 7,606,264
----------- -----------
$ 8,100,292 $ 7,656,389
=========== ===========
</TABLE>
F-19
<PAGE> 92
NOTES TO FINANCIAL STATEMENTS
Statements of Income
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Income:
Income from affiliates:
Dividends $ 80,200 $ 50,125 $ 50,000
--------- --------- ---------
Expenses:
Salaries and employee benefits 6,930
Legal and accounting 2,500 2,500
Other expense 11,248 10,862 8,077
--------- --------- ---------
13,748 13,362 15,007
--------- --------- ---------
Income before income taxes and equity
in undistributed income of affiliate 66,452 36,763 34,993
Reduction of consolidated income taxes from
parent company loss 4,849 5,028 5,647
--------- --------- ---------
Income before equity in undistributed
income of affiliates 71,301 41,791 40,640
Equity in undistributed income of affiliates 888,289 811,008 701,884
--------- --------- ---------
Net income $ 959,590 $ 852,799 $ 742,524
========= ========= =========
</TABLE>
F-20
<PAGE> 93
NOTES TO FINANCIAL STATEMENTS
Statements of Cash Flows
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Net income $ 959,590 $ 852,799 $ 742,524
Adjustments to reconcile net income
to net cash provided by operating activities:
Equity in undistributed earnings of affiliates (888,289) (811,008) (701,884)
Amortization 10,771 10,770 8,077
Other liabilities 30,075 (15,085) 50,000
--------- --------- ---------
Net cash provided by operating activities 112,147 37,476 98,717
--------- --------- ---------
Cash flows from investing activities:
Change in amounts due from affiliates (34,447) 494 (37,657)
--------- --------- ---------
Net cash provided by (used in) investing
activities (34,447) 494 (37,657)
--------- --------- ---------
Cash flows from financing activities:
Capital stock issued 10
Treasury stock transactions 15,210
Cash dividends (80,200) (50,125) (50,000)
--------- --------- ---------
Net cash used in financing activities (80,200) (34,915) (49,990)
--------- --------- ---------
Net change in cash and cash equivalents (2,500) 3,055 11,070
Cash and cash equivalents at beginning of year 14,125 11,070
--------- --------- ---------
Cash and cash equivalents at end of year $ 11,625 $ 14,125 $ 11,070
========= ========= =========
</TABLE>
F-21
<PAGE> 94
FIRST BANK HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
ASSETS (Unaudited) (Unaudited)
------------- -------------
<S> <C> <C>
Cash and due from banks $ 6,018 $ 5,979
Investment securities 15,637 16,465
Loans, net 73,515 65,158
Properties and equipment 2,539 2,809
Accrued interest receivable 679 640
Other assets 1,418 1,249
-------- --------
$ 99,806 $ 92,300
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Interest-bearing $ 67,208 $ 57,740
Noninterest-bearing 22,314 20,225
-------- --------
89,522 77,965
Federal funds purchased and repurchase agreements 791 3,934
Federal Home Loan Bank advances 530 2,018
Other payables and accrued liabilities 407 588
-------- --------
91,250 84,505
-------- --------
Stockholders' equity:
Common stock 4,010 4,010
Additional paid-in capital 4,414 4,414
Retained earnings 4,486 3,542
Accumulated other comprehensive income (348) (165)
-------- --------
8,556 7,795
-------- --------
$ 99,806 $ 92,300
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-22
<PAGE> 95
FIRST BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Six Months
Ended June 30
(Unaudited)
2000 1999
-------- --------
<S> <C> <C>
Interest income:
Loans $ 3,389 $ 2,752
Securities 477 497
Federal funds sold 87 79
-------- --------
Total interest income 3,953 3,328
-------- --------
Interest expense:
Interest on deposits 1,794 1,272
Federal funds purchased and repurchase agreements 1 6
Other interest 19 5
-------- --------
Total interest expense 1,814 1,283
-------- --------
Net interest income 2,139 2,045
Provision for loan losses 47 125
-------- --------
Net interest income after provision for loan losses 2,092 1,920
-------- --------
Other income:
Service charges on deposit accounts 290 281
Merchant charge card fees 72 241
Other 150 147
-------- --------
Total other income 512 669
-------- --------
Other expenses:
Salaries and employee benefits 768 706
Occupancy 285 267
Other 717 913
-------- --------
Total other expense 1,770 1,886
-------- --------
Income before income taxes 834 703
Income taxes 284 218
-------- --------
Net income $ 550 $ 485
======== ========
Basic net income per share $ 1.37 $ 1.21
Diluted net income per share $ 1.34 $ 1.18
Basic average common shares outstanding 401,000 401,000
Diluted average common shares outstanding 410,930 410,930
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE> 96
FIRST BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common Paid-in Retained Comprehensive Stockholder's
Stock Capital Earnings Income Equity
-------- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 $ 4,010 $ 4,414 $ 3,057 $ 131 $ 7,606
Net income 485
Net change in unrealized
gain on available-for-sale
securities (296)
Comprehensive income 189
-------- -------- -------- -------- --------
Balance, June 30, 1999 $ 4,010 $ 4,414 $ 3,542 $ (165) $ 7,795
======== ======== ======== ======== ========
Balance, December 31, 1999 $ 4,010 $ 4,414 $ 3,936 $ (334) $ 8,020
Net income 550
Net change in unrealized
gain on available-for-sale
securities (14)
Comprehensive income 536
-------- -------- -------- -------- --------
Balance, June 30, 2000 $ 4 $ 4,414 $ 4,486 $ (348) $ 8,556
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-24
<PAGE> 97
FIRST BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
(Unaudited)
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities $ 501 $ 711
-------- --------
Cash flows from investing activities:
Proceeds from payments/maturities of securities available for sale 52 3,235
Proceeds from payments/maturities of securities held to maturity 116
Purchase of securities available for sale (1,443)
Loans made to customers net of principal collections (1,091) (5,799)
Purchase of equipment (37) (161)
-------- --------
Net cash used in investing activities (960) (4,168)
-------- --------
Cash flows from financing activities:
Net decrease in deposits (2,566) (3,919)
Federal Home Loan Bank advances 3,750
Repayments of Federal Home Loan Bank advances (41) (1,894)
Federal funds purchased and repurchase agreements 791 3,934
-------- --------
Net cash provided by (used in) financing activities (1,816) 1,871
-------- --------
Net change in cash and cash equivalents (2,275) (1,586)
Cash and cash equivalents at beginning of period 8,293 7,565
-------- --------
Cash and cash equivalents at end of period $ 6,018 $ 5,979
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-25
<PAGE> 98
FIRST BANK HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
Financial information as of June 30, 2000 and 1999, and for
the six month periods ended June 30, 2000 and 1999, included
herein, is unaudited. Such information includes all
adjustments (consisting only of normal recurring adjustments),
which are, in the opinion of management, necessary for a fair
statement of the financial information in the interim periods.
The results of operations for the six months ended June 30,
2000 and 1999, are not necessarily indicative of the results
for the full year.
F-26
<PAGE> 99
EXHIBIT A - AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
OF
SOUTHTRUST OF ALABAMA, INC.
AND
FIRST BANK HOLDING COMPANY
JOINED IN BY
SOUTHTRUST CORPORATION
AND
THE DIRECTORS OF FIRST BANK HOLDING COMPANY
A-1
<PAGE> 100
TABLE OF CONTENTS
ARTICLE I
<TABLE>
<S> <C>
THE MERGER
Section 1.1 Constituent Corporations; Consummation of Merger; Closing Date...... A-8
Section 1.2 Effect of Merger.................................................... A-9
Section 1.3 Further Assurances.................................................. A-9
Section 1.4 Directors and Officers.............................................. A-9
ARTICLE II
CONVERSION OF CONSTITUENTS' CAPITAL SHARES
Section 2.1 Manner of Conversion of Company Shares.............................. A-10
Section 2.2 Company Stock Options and Related Matters........................... A-11
Section 2.3 Fractional Shares................................................... A-12
Section 2.4 Effectuating Conversion ........................................... A-12
Section 2.5 Laws of Escheat..................................................... A-13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Corporate Organization.............................................. A-13
Section 3.2 Capitalization...................................................... A-14
Section 3.3 Financial Statements; Filings....................................... A-15
Section 3.4 Loan Portfolio; Reserves............................................ A-16
Section 3.5 Certain Loans and Related Matters................................... A-16
Section 3.6 Authority; No Violation............................................. A-17
Section 3.7 Consents and Approvals.............................................. A-17
Section 3.8 Broker's Fees....................................................... A-17
Section 3.9 Absence of Certain Changes or Events................................ A-17
Section 3.10 Legal Proceedings; Etc.............................................. A-18
Section 3.11 Taxes and Tax Returns............................................... A-18
Section 3.12 Employee Benefit Plans.............................................. A-19
Section 3.13 Title and Related Matters........................................... A-21
Section 3.14 Real Estate......................................................... A-21
Section 3.15 Environmental Matters............................................... A-22
Section 3.16 Commitments and Contracts........................................... A-22
Section 3.17 Regulatory, Accounting and Tax Matters.............................. A-23
Section 3.18 Registration Obligations............................................ A-23
Section 3.19 [Intentionally Omitted]............................................. A-23
Section 3.20 Insurance........................................................... A-23
Section 3.21 Labor............................................................... A-22
Section 3.22 Compliance with Laws................................................ A-24
Section 3.23 Transactions with Management........................................ A-25
</TABLE>
A-2
<PAGE> 101
<TABLE>
<S> <C>
Section 3.24 Derivative Contracts................................................ A-25
Section 3.25 Deposits............................................................ A-25
Section 3.26 Accounting Controls................................................. A-25
Section 3.27 Proxy Materials..................................................... A-25
Section 3.28 Deposit Insurance................................................... A-25
Section 3.29 Untrue Statements and Omissions..................................... A-25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SOUTHTRUST AND ST-SUB
Section 4.1 Organization and Related Matters of SouthTrust...................... A-26
Section 4.2 Organization and Related Matters of ST-Sub.......................... A-26
Section 4.3 Capitalization...................................................... A-26
Section 4.4 Authorization....................................................... A-26
Section 4.5 Financial Statements................................................ A-27
Section 4.6 Absence of Certain Changes or Events................................ A-27
Section 4.7 Legal Proceedings, Etc.............................................. A-27
Section 4.8 Insurance........................................................... A-28
Section 4.9 Consents and Approvals.............................................. A-28
Section 4.10 Accounting, Tax, Regulatory Matters................................. A-28
Section 4.11 Proxy Materials..................................................... A-28
Section 4.12 No Broker's or Finder's Fees........................................ A-28
Section 4.13 Untrue Statements and Omissions..................................... A-28
Section 4.14 SEC Filings......................................................... A-28
Section 4.15 Compliance with Laws................................................ A-28
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of the Business of Company.................................. A-29
Section 5.2 Current Information................................................. A-31
Section 5.3 Access to Properties; Personnel and Records......................... A-31
Section 5.4 Approval of Shareholders............................................ A-32
Section 5.5 No Other Bids....................................................... A-32
Section 5.6 Notice of Deadlines................................................. A-32
Section 5.7 Affiliates.......................................................... A-32
Section 5.8 Maintenance of Properties........................................... A-33
Section 5.9 Environmental Audits................................................ A-33
Section 5.10 Title Insurance..................................................... A-33
Section 5.11 Surveys............................................................. A-33
Section 5.12 Consents to Assign and Use Leased Premises.......................... A-33
Section 5.13 Exemption Under Anti-Takeover Statutes.............................. A-34
Section 5.14 Conforming Accounting and Reserve Policies.......................... A-34
Section 5.15 Publicity........................................................... A-34
Section 5.16 Compliance Matters.................................................. A-34
</TABLE>
A-3
<PAGE> 102
<TABLE>
<S> <C>
Section 5.17 Subsidiary Merger Agreement......................................... A-34
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
Section 6.1 Best Efforts; Cooperation........................................... A-34
Section 6.2 Regulatory Matters.................................................. A-34
Section 6.3 Other Matters....................................................... A-35
Section 6.4 Indemnification..................................................... A-36
Section 6.5 Current Information................................................. A-37
Section 6.6 Registration Statement.............................................. A-37
Section 6.7 Reservation of Shares............................................... A-37
Section 6.8 Consideration....................................................... A-37
ARTICLE VII
MUTUAL CONDITIONS TO CLOSING
Section 7.1 Shareholder Approval................................................ A-37
Section 7.2 Regulatory Approvals................................................ A-37
Section 7.3 Legal Proceedings................................................... A-38
Section 7.4 Registration Statement and Listing.................................. A-38
Section 7.5 Matters Relating to Employment Agreements........................... A-38
Section 7.6 Certain Stock Purchases............................................. A-38
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF SOUTHTRUST AND ST-SUB
Section 8.1 Representations and Warranties...................................... A-38
Section 8.2 Performance of Obligations.......................................... A-38
Section 8.3 Certificate Representing Satisfaction of Conditions................. A-39
Section 8.4 Absence of Adverse Facts............................................ A-39
Section 8.5 Opinion of Counsel.................................................. A-39
Section 8.6 Consents Under Agreements........................................... A-39
Section 8.7 Consents Relating to Leased Real Property........................... A-39
Section 8.8 Material Condition.................................................. A-39
Section 8.9 Acknowledgment of Option Conversion................................. A-39
Section 8.10 Outstanding Shares of the Company................................... A-42
Section 8.11 Dissenters.......................................................... A-40
Section 8.12 Pooling............................................................. A-40
Section 8.13 Certification of Claims............................................. A-40
Section 8.14 Litigation.......................................................... A-40
Section 8.15 Increase in Borrowing............................................... A-40
</TABLE>
A-4
<PAGE> 103
<TABLE>
<S> <C>
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE COMPANY
Section 9.1 Representations and Warranties...................................... A-40
Section 9.2 Performance of Obligations.......................................... A-40
Section 9.3 Certificate Representing Satisfaction of Conditions................. A-40
Section 9.4 Absence of Adverse Facts............................................ A-43
Section 9.5 Consents Under Agreements........................................... A-41
Section 9.6 Opinion of Counsel.................................................. A-41
Section 9.7 SouthTrust Shares................................................... A-41
Section 9.8 Tax Opinion......................................................... A-41
Section 9.9 Fairness Opinion.................................................... A-41
ARTICLE X
TERMINATION, WAIVER AND AMENDMENT
Section 10.1 Termination......................................................... A-41
Section 10.2 Effect of Termination; Break-Up and Termination Fees................ A-42
Section 10.3 Effect of Wrongful Termination...................................... A-43
Section 10.4 Amendments.......................................................... A-43
Section 10.5 Waivers............................................................. A-43
Section 10.6 Non-Survival of Representations and Warranties...................... A-44
ARTICLE XI
MISCELLANEOUS
Section 11.1 Entire Agreement.................................................... A-44
Section 11.2 Definitions......................................................... A-44
Section 11.3 Notices............................................................. A-45
Section 11.4 Severability........................................................ A-46
Section 11.5 Costs and Expenses.................................................. A-46
Section 11.6 Captions............................................................ A-46
Section 11.7 Counterparts........................................................ A-46
Section 11.8 Governing Law....................................................... A-46
Section 11.9 Persons Bound; No Assignment........................................ A-46
Section 11.10 Exhibits and Schedules.............................................. A-46
Section 11.11 Waiver.............................................................. A-46
Section 11.12 Construction of Terms............................................... A-46
</TABLE>
A-5
<PAGE> 104
AGREEMENT AND PLAN OF MERGER OF
SOUTHTRUST OF ALABAMA, INC.
WITH
FIRST BANK HOLDING COMPANY
LIST OF SCHEDULES
Disclosure Schedule 3.1(d)
Disclosure Schedule 3.2(a)
Disclosure Schedule 3.3(f)
Disclosure Schedule 3.4
Disclosure Schedule 3.5
Disclosure Schedule 3.7
Disclosure Schedule 3.8
Disclosure Schedule 3.9
Disclosure Schedule 3.10
Disclosure Schedule 3.11
Disclosure Schedule 3.12(a)
Disclosure Schedule 3.12(g)
Disclosure Schedule 3.12(m)
Disclosure Schedule 3.13(a)
Disclosure Schedule 3.13(b)
Disclosure Schedule 3.14(a)
Disclosure Schedule 3.14(b)
Disclosure Schedule 3.16(a)
Disclosure Schedule 3.16(b)
Disclosure Schedule 3.20
Disclosure Schedule 3.22
Disclosure Schedule 3.23
Disclosure Schedule 3.24
Disclosure Schedule 3.25
Disclosure Schedule 4.4
Disclosure Schedule 4.7
Disclosure Schedule 4.9
Disclosure Schedule 4.15
Disclosure Schedule 5.1(b)(iv)
Disclosure Schedule 5.1(b)(vi)
Disclosure Schedule 5.6
Disclosure Schedule 7.6
A-6
<PAGE> 105
AGREEMENT AND PLAN OF MERGER OF
SOUTHTRUST OF ALABAMA, INC.
WITH
FIRST BANK HOLDING COMPANY
LIST OF EXHIBITS
<TABLE>
<S> <C>
Exhibit 5.7: Form of Affiliate Letter
Exhibit 5.17: Subsidiary Merger Agreement
Exhibit 7.5(a): Employment Agreement with Frederic C. Nixon
Exhibit 7.5(b): Employment Agreement with Susie Andrews
Exhibit 7.5(c): Employment Agreement with Tami Chandler
Exhibit 8.5: Matters as to which Pennington, Moore, Wilkinson, Bell & Dunbar, P.A.,
Counsel to the Company, will opine
Exhibit 9.6: Matters as to which Bradley Arant Rose & White LLP, Counsel to
SouthTrust and ST-Sub, will opine
</TABLE>
A-7
<PAGE> 106
AGREEMENT AND PLAN OF MERGER
OF
SOUTHTRUST OF ALABAMA, INC.
AND
FIRST BANK HOLDING COMPANY
JOINED IN BY
SOUTHTRUST CORPORATION
This AGREEMENT AND PLAN OF MERGER, dated as of the 28th day of
September, 2000 (this "Agreement"), by and between SouthTrust of Alabama, Inc.,
an Alabama corporation ("ST-Sub") and First Bank Holding Company, a Florida
corporation (the "Company"), and joined in by SouthTrust Corporation, a Delaware
corporation ("SouthTrust") and the Board of Directors of the Company (the
"Directors").
WITNESSETH THAT:
WHEREAS, the respective Boards of Directors of ST-Sub and the Company
deem it in the best interests of ST-Sub and of the Company, respectively, and of
their respective shareholders, that ST-Sub and the Company merge pursuant to
this Agreement in a transaction that qualifies as a reorganization pursuant to
Section 368(a)(1) of the Internal Revenue Code of 1986 (the "Code") (the
"Merger");
WHEREAS, the Boards of Directors of ST-Sub and the Company have
approved this Agreement and have directed that this Agreement be submitted to
their respective shareholders for approval and adoption in accordance with
applicable law;
WHEREAS, SouthTrust, the sole shareholder of ST-Sub, will deliver, or
cause to be delivered, to the shareholders of the Company the consideration to
be paid pursuant to the Merger in accordance with the terms of this Agreement;
and
WHEREAS, the Company owns all of the issued and outstanding capital
stock of the First Bank, a Florida banking corporation (the "Bank"), and ST-Sub
owns all of the issued and outstanding capital stock of SouthTrust Bank, an
Alabama banking corporation ("ST-Bank"), and it is contemplated that, in
connection with the consummation of this Agreement and pursuant to the terms of
that certain Subsidiary Merger Agreement (the "Subsidiary Merger Agreement"),
the Bank will be merged with and into ST-Bank;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements herein contained, the
parties agree that the Company will be merged with and into ST-Sub and that the
terms and conditions of the Merger, the mode of carrying the Merger into effect,
including the manner of converting the shares of common stock of the Company,
par value $.01 per share, into shares of common stock of SouthTrust, par value
of $2.50 per share, shall be as hereinafter set forth.
ARTICLE I
THE MERGER
Section 1.1 Constituent Corporations; Consummation of Merger;
Closing Date.
(a) Subject to the provisions hereof, the Company shall be merged
with and into ST-Sub (which has heretofore and shall hereinafter be referred to
as the "Merger") pursuant to the laws of the States of Alabama and Florida and
ST-Sub shall be the surviving corporation (sometimes hereinafter referred to
as "Surviving Corporation"
A-8
<PAGE> 107
when reference is made to it after the Effective Time of the Merger (as defined
below)). The Merger shall become effective on the date and at the time on which
a Certificate or Articles of Merger have been duly filed with the Secretaries of
State of Alabama and Florida, unless a later date is specified in such
Certificate or Articles of Merger (such time is hereinafter referred to as the
"Effective Time of the Merger"). Subject to the terms and conditions hereof,
unless otherwise agreed upon by SouthTrust and the Company, the Effective Time
of the Merger shall occur on the first business day following the later to occur
of (i) the effective date (including expiration of any applicable waiting
period) of the last required Consent (as defined below) of any Regulatory
Authority (as defined below) having authority over the transactions contemplated
under this Agreement and (ii) the date on which the shareholders of the Company,
to the extent that their approval is required by applicable law, approve the
transactions contemplated by this Agreement, or such other time as the parties
may agree.
(b) The closing of the Merger (the "Closing") shall take
place at the principal offices of the Company at 10:00 a.m. local time on the
day that the Effective Time of the Merger occurs, or such other date and time
and place as the parties hereto may agree (the "Closing Date"). Subject to the
provisions of this Agreement, at the Closing there shall be delivered to each of
the parties hereto the opinions, certificates and other documents and
instruments required to be so delivered pursuant to this Agreement.
Section 1.2 Effect of Merger. (a) At the Effective Time of the
Merger, the Company shall be merged with and into ST-Sub and the separate
existence of the Company shall cease. The Articles of Incorporation and Bylaws
of ST-Sub, as in effect on the date hereof and as otherwise amended prior to the
Effective Time of the Merger, shall be the Articles of Incorporation and the
Bylaws of the Surviving Corporation until further amended as provided therein
and in accordance with applicable law. The Surviving Corporation shall have all
the rights, privileges, immunities and powers and shall be subject to all of the
duties and liabilities of a corporation organized under the laws of the State of
Alabama and shall thereupon and thereafter possess all other privileges,
immunities and franchises of a private, as well as of a public nature, of each
of the constituent corporations. All property (real, personal and mixed) and all
debts on whatever account, including subscriptions to shares, and all choses in
action, all and every other interest, of or belonging to or due to each of the
constituent corporations so merged shall be taken and deemed to be transferred
to and vested in the Surviving Corporation without further act or deed. The
title to any real estate, or any interest therein, vested in any of the
constituent corporations shall not revert or be in any way impaired by reason of
the Merger. The Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of each of the constituent
corporations so merged and any claim existing or action or proceeding pending by
or against either of the constituent corporations may be prosecuted as if the
Merger had not taken place or the Surviving Corporation may be substituted in
its place. Neither the rights of creditors nor any liens upon the property of
any constituent corporation shall be impaired by the Merger.
Section 1.3 Further Assurances. From and after the Effective Time
of the Merger, as and when requested by the Surviving Corporation, the officers
and directors of the Company last in office shall execute and deliver or cause
to be executed and delivered in the name of the Company such deeds and other
instruments and take or cause to be taken such further or other actions as shall
be necessary in order to vest or perfect in or confirm of record or otherwise to
the Surviving Corporation title to and possession of all of the property,
interests, assets, rights, privileges, immunities, powers, franchises and
authority of the Company.
Section 1.4 Directors and Officers. From and after the Effective
Time of the Merger, the directors of the Surviving Corporation and the officers
of the Surviving Corporation shall be those persons serving as directors and
officers of ST-Sub immediately prior to the Effective Time of the Merger, and
such additional persons, in each case, as SouthTrust, at or prior to the
Effective Time of the Merger, shall designate in writing.
A-9
<PAGE> 108
ARTICLE II
CONVERSION OF CONSTITUENTS' CAPITAL SHARES
Section 2.1 Manner of Conversion of Company Shares. Subject to
the provisions hereof, as of the Effective Time of the Merger and by virtue of
the Merger and without any further action on the part of SouthTrust, ST-Sub, the
Company or the holder of any shares thereof, the shares of the constituent
corporations shall be converted as follows:
(a) Each share of capital stock of ST-Sub outstanding
immediately prior to the Effective Time of the Merger shall, after the Effective
Time of the Merger, remain outstanding and unchanged and thereafter shall
constitute all of the issued and outstanding shares of capital stock of the
Surviving Corporation.
(b) Each share of common stock of the Company (the
"Company Shares") held by the Company or by SouthTrust (or any of their
subsidiaries), other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired and no consideration shall
be paid or delivered in exchange therefor.
(c) Except with regard to Dissenting Company Shares (as
hereinafter defined) and the Company Shares excluded in (b) above, each Company
Share outstanding immediately prior to the Effective Time of the Merger shall be
converted into the right to receive 1.7456 shares (such number being hereinafter
referred to as the "Conversion Ratio") of common stock of SouthTrust (and the
rights associated therewith pursuant to that certain Amended and Restated Rights
Agreement dated as of August 1, 2000 between SouthTrust and American Stock
Transfer & Trust Company (together, the "SouthTrust Shares"), The Conversion
Ratio, including the aggregate number of SouthTrust Shares issuable in the
Merger, shall be subject to an appropriate adjustment in the event of any stock
split, reverse stock split, dividend payable in SouthTrust Shares,
reclassification or similar distribution whereby SouthTrust issues SouthTrust
Shares or any securities convertible into or exchangeable for SouthTrust Shares
without receiving any consideration in exchange therefor, provided that the
record date of such transaction is a date after the date of the Agreement and
prior to the Effective Time of the Merger, such that the aggregate value of the
consideration to be delivered by SouthTrust pursuant to this Agreement remains
unchanged. There has been no stock split, reverse stock split, dividend payable
in SouthTrust Shares, reclassification or similar distribution whereby
SouthTrust issues SouthTrust Shares or any securities convertible into or
exchangeable for SouthTrust Shares without receiving any consideration in
exchange therefor, since June 30, 2000.
(d) Each outstanding Company Share, the holder of which
has demanded and perfected such holder's demand for payment of the fair value of
such share in accordance with Sections 607.1301 and 607.1302 of the Florida
Business Corporation Act and Section 658.44 of the Florida Code, to the extent
applicable (the "Dissent Provisions"), and has not effectively withdrawn or lost
the right to such appraisal (the "Dissenting Company Shares"), shall not be
converted into or represent a right to receive the SouthTrust Shares issuable in
the Merger but the holder thereof shall be entitled only to such rights as are
granted by the Dissent Provisions. The Company shall give SouthTrust prompt
notice upon receipt by the Company of any written objection to the Merger and
any written demand for payment of the fair or appraised value of the Company
Shares, and of withdrawals of such demands, and any other instruments provided
to the Company pursuant to the Dissent Provisions (any shareholder duly making
such demand being hereinafter called a "Dissenting Shareholder"). Each
Dissenting Shareholder who becomes entitled, pursuant to the Dissent Provisions,
to payment of fair value for any Company Shares held by such Dissenting
Shareholder shall receive payment therefor from the Surviving Corporation in
accordance with the Dissent Provisions and all of such Dissenting Shareholder's
Company Shares shall be canceled. Neither the Company nor the Surviving
Corporation shall, except with the prior written consent of SouthTrust,
voluntarily make any payment with respect to, or settle or offer to settle, any
demand for payment by any Dissenting Shareholder. If any Dissenting Shareholder
shall have failed to perfect or shall have effectively withdrawn or lost such
right to demand payment of fair or appraised value, the Company Shares held by
such Dissenting Shareholder shall thereupon be deemed to have been converted
into the right to receive the consideration to be issued in the Merger as
provided by this Agreement.
A-10
<PAGE> 109
Section 2.2 Company Stock Options and Related Matters. (a) As of
the Effective Time of the Merger, all rights with respect to Company Shares
issuable pursuant to the exercise of stock options (the "Company Options")
granted by the Company under stock option plans of the Company (the "Company
Stock Option Plans"), which are outstanding at the Effective Time of the Merger,
whether or not such Company Options are then exercisable, shall, subject to this
section, be assumed by SouthTrust in accordance with the terms of the particular
Company Stock Option Plan under which such Company Options were issued and the
stock option agreement by which such Company Options are evidenced. From and
after the Effective Time of the Merger, (i) each Company Option assumed by
SouthTrust hereunder may be exercised solely for SouthTrust Shares, (ii) the
number of SouthTrust Shares subject to such Company Option shall be equal to the
number of Company Shares subject to such Company Option immediately prior to the
Effective Time of the Merger multiplied by the Conversion Ratio and (iii) the
per share exercise price under each such Company Option shall be adjusted by
dividing the per share exercise price under each such Company Option by the
Conversion Ratio and rounding down to the nearest cent. By way of example, a
Company Option to acquire 100 Company Shares at a per share exercise price of
$20 would be converted into an option to acquire 174 SouthTrust Shares (100 x
1.7456) at a per share exercise price of $11.45 per share (20 / 1.7456).
(b) At all times after the Effective Time of the Merger,
SouthTrust shall reserve for issuance such number of SouthTrust Shares as shall
be necessary to permit the exercise of the Company Options assumed by SouthTrust
in the manner contemplated by this Agreement. Within a reasonable time after the
Effective Time of the Merger, SouthTrust shall file a Registration Statement on
Form S-3 or Form S-8, as the case may be (or any successor or other appropriate
form), with respect to the SouthTrust Shares subject to the Company Options
assumed by SouthTrust and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as any such Company Options assumed by SouthTrust remain
outstanding. SouthTrust shall make any filings required under any applicable
state securities laws to qualify the SouthTrust Shares subject to such Company
Options assumed by SouthTrust for resale thereunder.
(c) The number of SouthTrust Shares subject to Company
Options to be assumed by SouthTrust hereunder and the exercise price thereof
shall, from and after the Effective Time of the Merger, be subject to
appropriate adjustment in the event of the occurrence of any transaction
described in Section 2.1(c) hereof if the record date with respect to such
transaction is on or after the Effective Time of the Merger.
(d) It is intended that the foregoing assumption of
Company Options shall be undertaken in a manner that will not constitute a
"modification" as defined in Section 424 of the Code as to any Company Option
which is an incentive stock option as defined in Section 422 of the Code. All
restrictions or limitations on transfer with respect to Company Shares awarded
under a Company Stock Option Plan ("Restricted Stock"), to the extent that such
restrictions or limitations shall not have already lapsed, and except as
otherwise provided by such Company Stock Option Plan, shall remain in full force
and effect with respect to the SouthTrust Shares into which such Restricted
Stock is converted pursuant to this Agreement, unless such restrictions arise
under the Securities Act of 1933 and are eliminated by virtue of the
Registration Statements described in this Agreement. Except as otherwise
provided herein, (i) no additional options to purchase shares of capital stock
of the Company will be granted pursuant to Company Stock Option Plans following
the Effective Time of the Merger and (ii) the Company shall take all reasonable
steps to ensure that following the Effective Time of the Merger no holder of
Company Options shall have any right thereunder to acquire any equity securities
of the Company.
(e) The Company acknowledges that the holders of Company
Options who may become or be deemed to be executive officers or directors of
SouthTrust after the Effective Time of the Merger may be subject to the
short-swing sale restrictions of the Securities Exchange Act of 1934 and
regulations promulgated thereunder.
(f) At the election of SouthTrust, the Company shall
procure from each holder of Company Options, and shall deliver to SouthTrust at
the Closing, an executed acknowledgment of the treatment and disposition of such
holder's Company Options, as provided for under this Section 2.2 of this
Agreement.
A-11
<PAGE> 110
Section 2.3 Fractional Shares. Notwithstanding any other
provision of this Agreement, each holder of Company Shares converted pursuant to
the Merger, and each holder of Company Options assumed by SouthTrust pursuant to
this Agreement, who would otherwise have been entitled to receive a fraction of
a SouthTrust Share (after taking into account all certificates delivered by such
holder), shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of such SouthTrust Share, multiplied by the market
value of one SouthTrust Share at the Effective Time of the Merger in the case of
shares exchanged pursuant to the Merger or at the date of exercise in the case
of the Company Options to be exercised for SouthTrust Shares. The market value
of one SouthTrust Share at the Effective Time of the Merger or the date of
exercise of Company Options, as the case may be, shall be the last sales price
of such SouthTrust Shares, as reported by The Nasdaq Stock Market ("NASDAQ") on
the last trading day preceding the Effective Time of the Merger or the date of
exercise, as the case may be, or, if the SouthTrust Shares hereafter become
listed for trading on any national securities exchange registered under the
Securities Exchange Act of 1934, the last sales price of such SouthTrust Shares
on the applicable date as reported on the principal securities exchange on which
the SouthTrust Shares are then listed for trading. No such holder will be
entitled to dividends, voting rights or any other rights as a shareholder in
respect of any fractional share.
Section 2.4 Effectuating Conversion (a) SouthTrust shall
designate such institution as it may select, including SouthTrust or one of its
affiliates, to serve as the exchange agent (the "Exchange Agent") pursuant to
this Agreement. The Exchange Agent may employ sub-agents in connection with
performing its duties. As of the Effective Time of the Merger, SouthTrust will
deliver or cause to be delivered to the Exchange Agent the consideration to be
paid by SouthTrust for the Company Shares, along with an appropriate cash
payment in lieu of fractional interests in SouthTrust Shares. As promptly as
practicable after the Effective Time of the Merger, the Exchange Agent shall
send or cause to be sent to each former holder of record of Company Shares
transmittal materials (the "Letter of Transmittal") for use in exchanging their
certificates formerly representing Company Shares for the consideration provided
for in this Agreement. The Letter of Transmittal will contain instructions with
respect to the surrender of certificates representing the Company Shares and the
receipt of the consideration contemplated by this Agreement and will require
each holder of the Company Shares to transfer good and marketable title to such
Company Shares to SouthTrust, free and clear of all liens, claims and
encumbrances. Amounts that would have been payable to Dissenting Shareholders
for Company Shares but for the fact of their dissent in accordance with the
provisions of Section 2.1(d) hereof shall be returned by the Exchange Agent to
SouthTrust as promptly as practicable.
(b) At the Effective Time of the Merger, the stock
transfer books of the Company shall be closed as to holders of Company Shares
immediately prior to the Effective Time of the Merger and no transfer of Company
Shares by any such holder shall thereafter be made or recognized and each
outstanding certificate formerly representing Company Shares shall, without any
action on the part of any holder thereof, no longer represent Company Shares.
If, after the Effective Time of the Merger, certificates are properly presented
to the Exchange Agent, such certificates shall be promptly exchanged for the
consideration contemplated by this Agreement into which the Company Shares
represented thereby were converted in the Merger.
(c) In the event that any holder of record as of the
Effective Time of the Merger of Company Shares is unable to deliver the
certificate which represents such holder's Company Shares, ST-Sub, in the
absence of actual notice that any Company Shares theretofore represented by any
such certificate have been acquired by a bona fide purchaser, may, in its
discretion, deliver to such holder the consideration contemplated by this
Agreement and the amount of cash representing fractional SouthTrust Shares to
which such holder is entitled in accordance with the provisions of this
Agreement upon the presentation of all of the following:
(i) An affidavit or other evidence to the reasonable
satisfaction of SouthTrust that any such certificate
has been lost, wrongfully taken or destroyed;
(ii) Such security and indemnity as may be reasonably
requested by SouthTrust to indemnify and hold
SouthTrust harmless in respect of such stock
certificate(s); and
A-12
<PAGE> 111
(iii) Evidence to the satisfaction of SouthTrust that such
holder is the owner of the Company Shares theretofore
represented by each certificate claimed by such
holder to be lost, wrongfully taken or destroyed and
that such holder is the person who would be entitled
to present each such certificate for exchange
pursuant to this Agreement.
(d) In the event that the delivery of the consideration
contemplated by this Agreement and the amount of cash representing fractional
SouthTrust Shares are to be made to a person other than the person in whose name
any certificate representing Company Shares surrendered is registered, such
certificate so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer), with the signature(s) appropriately
guaranteed, and otherwise in proper form for transfer, and the person requesting
such delivery shall pay any transfer or other taxes required by reason of the
delivery to a person other than the registered holder of such certificate
surrendered or establish to the satisfaction of SouthTrust that such tax has
been paid or is not applicable.
(e) No holder of Company Shares shall be entitled to
receive any dividends or distributions declared or made with respect to the
SouthTrust Shares with a record date before the Effective Time of the Merger.
After the Effective Time of the Merger, and until properly surrendered and
exchanged pursuant to this Agreement, each outstanding certificate representing
Company Shares, subject to this Section 2.4(e), shall be deemed to represent and
evidence for all corporate purposes only the right to receive the consideration
into which such Company Shares were converted as of the Effective Time of the
Merger. Accordingly, among other matters, neither the consideration contemplated
by this Agreement, any amount of cash representing fractional SouthTrust Shares
nor any dividend or other distribution with respect to SouthTrust Shares where
the record date thereof is on or after the Effective Time of the Merger shall be
paid, and SouthTrust shall not be obligated to pay, to the holder of any
unsurrendered certificate or certificates representing Company Shares until such
holder shall surrender the certificate or certificates representing the Company
Shares as provided for by this Agreement, and until such holder becomes the
record holder of the SouthTrust Shares issuable in the Merger, such holder shall
not be entitled to vote such SouthTrust Shares in respect of any matter coming
before the stockholders of SouthTrust. Subject to applicable laws, following
surrender of any such certificate or certificates, there shall be paid to the
holder of the certificate or certificates then representing SouthTrust Shares
issued in the Merger, without interest at the time of such surrender, the
consideration contemplated by this Agreement, the amount of any cash
representing fractional SouthTrust Shares and the amount of any accrued
dividends or other distributions with respect to SouthTrust Shares to which such
holder is entitled as a holder of SouthTrust Shares in accordance with the
foregoing.
Section 2.5 Laws of Escheat. If any of the consideration due or
other payments to be paid or delivered to the holders of Company Shares is not
paid or delivered within the time period specified by any applicable laws
concerning abandoned property, escheat or similar laws, and if such failure to
pay or deliver such consideration occurs or arises out of the fact that such
property is not claimed by the proper owner thereof, SouthTrust or the Exchange
Agent shall be entitled to dispose of any such consideration or other payments
in accordance with applicable laws concerning abandoned property, escheat or
similar laws. Any other provision of this Agreement notwithstanding, none of the
Company, SouthTrust, ST-Sub, the Exchange Agent nor any other person acting on
their behalf shall be liable to a holder of Company Shares for any amount paid
or property delivered in good faith to a public official pursuant to and in
accordance with any applicable abandoned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to ST-Sub and SouthTrust as
follows as of the date hereof and as of all times up to and including the
Effective Time of the Merger (except as otherwise provided):
Section 3.1 Corporate Organization. (a) The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. The Company has the corporate power and authority to
own
A-13
<PAGE> 112
or lease all of its properties and assets and to carry on its business as such
business is now being conducted, and the Company is duly licensed or qualified
to do business in each state or other jurisdiction where the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it make such qualification necessary, except where the
failure to be so licensed or qualified would not have a Material Adverse Effect
(as defined in Section 11.2 of this Agreement) on the Company. The Company is
duly registered as a bank holding company under the Bank Holding Company Act of
1956, as amended. True and correct copies of the Articles of Incorporation of
the Company and the Bylaws of the Company, each as amended to the date hereof,
have been delivered to SouthTrust.
(b) The Bank is a state banking corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, the Bank has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as such business is now
being conducted, and the Bank is duly licensed or qualified to do business in
Florida and in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed or qualified would not have a Material Adverse Effect on the
Bank. True and correct copies of the Articles of Incorporation of the Bank and
the Bylaws of the Bank, each as amended to the date hereof, have been delivered
to SouthTrust.
(c) Each of the Company, the Bank, and their respective
subsidiaries has in effect all federal, state, local and foreign governmental,
regulatory and other authorizations, permits and licenses necessary to own or
lease its properties and assets and to carry on its business as now conducted,
except for authorizations, permits and licenses, the absence of which, either
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
(d) Neither the Company nor the Bank owns any capital
stock of any subsidiary, or has any interest in any partnership or joint
venture, except that the Bank is a subsidiary of the Company and except as set
forth in Disclosure Schedule 3.1(d); for purposes of this Agreement, a
"subsidiary" means any corporation or other entity of which the party referred
to beneficially owns, controls, or has the power to vote, directly or
indirectly, more than 5% of the outstanding equity securities.
(e) The minute books of the Company, the Bank and their
respective subsidiaries contain complete and accurate records in all material
respects of all meetings and other corporate actions held or taken by their
shareholders and Boards of Directors (including all committees thereof).
Section 3.2 Capitalization. (a) The authorized capital stock of
the Company consists of 1,000,000 shares of common stock, par value $.01
(hereinbefore and hereinafter referred to as "Company Shares"), 401,000 shares
of which as of the date hereof are issued and outstanding. All of the issued and
outstanding Company Shares have been duly authorized and validly issued and all
such shares are fully paid and nonassessable. Except as set forth on Disclosure
Schedule 3.2(a), as of the date hereof, there are no outstanding options,
warrants, commitments or other rights or instruments to purchase or acquire any
shares of the capital stock of the Company, or any securities or rights
convertible into or exchangeable for shares of capital stock of the Company.
(b) The authorized capital stock of the Bank consists of
500,000 shares of common stock, par value of $5.00, 400,000 shares of which as
of the date hereof are issued and outstanding (the "Bank Shares"). All of the
issued and outstanding Bank Shares have been duly authorized and validly issued
and all such shares are fully paid and nonassessable. As of the date hereof,
there are no outstanding options, warrants, commitments or other rights or
instruments to purchase or acquire any shares of capital stock of the Bank, or
any securities or rights convertible into or exchangeable for shares of capital
stock of the Bank.
(c) All of the issued and outstanding shares of capital
stock of the Bank:
(i) are owned by the Company, except as may be
limited or required by laws of general application relating to
the Bank; and
A-14
<PAGE> 113
(ii) are so owned free and clear of all liens and
encumbrances and adverse claims thereto.
Section 3.3 Financial Statements; Filings. (a) The Company has
previously delivered to SouthTrust copies of the consolidated financial
statements of the Company as of and for each of the three (3) fiscal years ended
immediately prior to this Agreement and the interim unaudited consolidated
financial statements of the Company as of and for each of the fiscal periods of
the Company ended after the close of the most recently completed fiscal year of
the Company and prior to the date of this Agreement, and the Company shall
deliver to SouthTrust, as soon as practicable following the preparation of
additional consolidated financial statements for each subsequent fiscal quarter
(or other reporting period) or year of the Company, the consolidated financial
statements of the Company as of and for such subsequent fiscal quarter (or other
reporting period) or year (such financial statements, unless otherwise
indicated, being hereinafter referred to collectively as the "Financial
Statements of the Company").
(b) The Bank has previously delivered to SouthTrust
copies of the financial statements of the Bank as of and for each of the three
(3) fiscal years of the Bank ended immediately prior to the date of this
Agreement and the interim financial statements of the Bank as of and for each of
the fiscal periods of the Bank ended after the close of the most recently
completed fiscal year of the Bank and prior to the date of this Agreement, and
the Bank shall deliver to SouthTrust, as soon as practicable following the
preparation of additional financial statements for each subsequent fiscal
quarter (or other reporting period) or year of the Bank, the financial
statements of the Bank as of and for such subsequent fiscal quarter (or other
reporting period) or year (such financial statements, unless otherwise
indicated, being hereinafter referred to collectively as the "Financial
Statements of the Bank").
(c) The Bank have previously delivered to SouthTrust
copies of the Call Reports of the Bank as of and for each of the three (3)
fiscal years ended immediately prior to this Agreement and the Call Reports of
the Bank as of and for the periods after the end of the most recent fiscal year
and prior to the date of this Agreement, and the Bank shall deliver to
SouthTrust, as soon as practicable following the preparation of additional Call
Reports for each subsequent fiscal quarter (or other reporting period) or year
of the Bank, the Call Reports of the Bank as of and for each such subsequent
fiscal quarter (or other reporting period) or year (such Call Reports, unless
otherwise indicated, being hereinafter referred to collectively as the "Call
Reports of the Bank").
(d) Each of the Financial Statements of the Company, the
Financial Statements of the Bank and each of the Call Reports of the Bank
(including the related notes, where applicable) have been or will be prepared in
all material respects in accordance with generally accepted accounting
principles or regulatory accounting principles, whichever is applicable, which
principles have been or will be consistently applied during the periods
involved, except as otherwise noted therein, and the books and records of the
Company and the Bank, and their subsidiaries have been, are being, and will be
maintained in all material respects in accordance with applicable legal and
accounting requirements and reflect only actual transactions. Each of the
Financial Statements of the Company, the Financial Statements of the Bank and
each of the Call Reports of the Bank (including the related notes, where
applicable) fairly present or will fairly present the financial position of the
Company and the financial condition of the Bank on a consolidated basis as of
the respective dates thereof and fairly present or will fairly present the
results of operation of the Company and the results of operation of the Bank on
a consolidated basis for the respective periods therein set forth.
(e) To the extent not prohibited by law, the Company has
heretofore delivered or made available, or caused to be delivered or made
available, to SouthTrust all reports and filings made or required to be made by
the Company, the Bank or any of their subsidiaries, with the Regulatory
Authorities, and will from time to time hereafter furnish to SouthTrust, upon
filing or furnishing the same to the Regulatory Authorities, all such reports
and filings made after the date hereof with the Regulatory Authorities. Such
reports and filings did not and shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
A-15
<PAGE> 114
(f) Except as reflected on Disclosure Schedule 3.3(f) hereto, since
December 31, 1999, none of the Company, the Bank, nor any of their subsidiaries
has incurred any obligation or liability (contingent or otherwise) that has or
might reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company except obligations and liabilities (i)
which are accrued or reserved against in the Financial Statements of the
Company, the Financial Statements of the Bank or the Call Reports of the Bank,
or reflected in the notes thereto, and (ii) which were incurred after December
31, 1999, in the ordinary course of business consistent with past practices.
Since December 31, 1999, none of the Company, the Bank, nor any of their
subsidiaries have incurred or paid any obligations or liability which would have
a Material Adverse Effect on the Company, except as may have been incurred or
paid in the ordinary course of business, consistent with past practices.
Section 3.4 Loan Portfolio; Reserves. Except as set forth in Disclosure
Schedule 3.4, (i) all evidences of indebtedness in original principal amount in
excess of $10,000 reflected as assets in the Financial Statements of the
Company, the Financial Statements of the Bank and the Call Reports of the Bank
as of and for the year ended December 31, 1999 were as of such dates in all
respects the binding obligations of the respective obligors named therein in
accordance with their respective terms, and, to the knowledge of the Company,
the Bank or any of their respective subsidiaries, were not subject to any
defenses, setoffs, or counterclaims, except as may be provided by bankruptcy,
insolvency or similar laws or by general principles of equity; (ii) the
allowances for possible loan losses shown on the Financial Statements of the
Company, the Financial Statements of the Bank and the Call Reports of the Bank
as of and for the year ended December 31, 1999 were, and the allowance for
possible loan losses to be shown on the Financial Statements of the Company, the
Financial Statements of the Bank and the Call Reports of the Bank as of any date
subsequent to the execution of this Agreement will be, as of such dates,
adequate to provide for possible losses, net of recoveries relating to loans
previously charged off, in respect of loans outstanding (including accrued
interest receivable) of the Company and the Bank and other extensions of credit
(including letters of credit or commitments to make loans or extend credit);
(iii) the reserve for losses with respect to other real estate owned ("OREO
Reserve") shown on the Financial Statements of the Company, the Financial
Statements of the Bank and the Call Reports of the Bank as of and for the year
ended December 31, 1999 were, and the OREO Reserve to be shown on the Financial
Statements of the Company, the Financial Statements of the Bank and the Call
Reports of the Bank as of any date subsequent to the execution of this Agreement
will be, as of such dates, adequate to provide for losses relating to the other
real estate owned portfolio of the Company and the Bank as of the dates thereof;
(iv) the Company has reserved on the Financial Statements of the Company, the
Financial Statements of the Bank and the Call Reports of the Bank as of and for
the year ended December 31, 1999, and on the Financial Statements of the
Company, the Financial Statements of the Bank, and the Call Reports of the Bank
as of any date subsequent to the execution of this Agreement, an amount adequate
to provide for losses relating to or arising out of all pending or threatened
litigation applicable to the Company, the Bank and their subsidiaries as of the
dates thereof, and (v) each such allowance or reserve described above has been
established in accordance with the accounting principles described in Section
3.3(d) and applicable regulatory requirements and guidelines.
Section 3.5 Certain Loans and Related Matters. Except as set forth in
Disclosure Schedule 3.5, none of the Company, the Bank nor any of their
subsidiaries is a party as of the date of this Agreement to any written or oral:
(i) loan agreement, note or borrowing arrangement, other than credit card loans
and other loans the unpaid balance of which does not exceed $10,000 per loan,
under the terms of which the obligor is sixty (60) days delinquent in payment of
principal or interest or is in default of any other provision as of the date
hereof; (ii) loan agreement, note or borrowing arrangement which has been
classified or, in the exercise of reasonable diligence by the Company, the Bank
or any Regulatory Authority, should have been classified as "substandard",
"doubtful", "loss," "other loans especially mentioned," "other assets especially
mentioned" or any other comparable classification; or (iii) loan agreement, note
or borrowing arrangement, including any loan guaranty, with any director or
executive officer of the Company, the Bank or any of their subsidiaries or any
ten percent (10%) shareholder of the Company, the Bank or any of their
subsidiaries, or any person, corporation or enterprise controlling, controlled
by or under common control with any of the foregoing; or (iv) loan agreement,
note or borrowing arrangement in violation of any law, regulation or rule
applicable to the Company, the Bank or any of their respective subsidiaries
including, but not limited to, those promulgated, interpreted or enforced by any
of the Regulatory Authorities and which violation could have a Material
A-16
<PAGE> 115
Adverse Effect on the Company. As of the date of any Financial Statement of the
Company, any Financial Statement of the Bank and any Call Reports of the Bank
subsequent to the execution of this Agreement, including the date of the
Financial Statements of the Company, the Financial Statements of the Bank and
the Call Reports of the Bank that immediately preceded the Effective Time of the
Merger, there shall not have been any material increase in the loan agreements,
notes or borrowing arrangements described in (i) through (iv) above and
Disclosure Schedule 3.5.
Section 3.6 Authority; No Violation. (a) The Company has full corporate
power and authority to execute and deliver this Agreement and, subject to the
approval of the shareholders of the Company and to the receipt of the Consents
of the Regulatory Authorities and the other Consents referred to in Section 3.7
hereof, to consummate the transactions contemplated hereby. The Board of
Directors of the Company has duly and validly approved this Agreement and the
transactions contemplated hereby, has authorized the execution and delivery of
this Agreement, has directed that this Agreement and the transactions
contemplated hereby be submitted and recommended to the Company's shareholders
for approval at a meeting of such shareholders and, except for the adoption of
such Agreement by its shareholders, no other corporate proceedings on the part
of the Company are necessary to consummate the Merger and the other transactions
contemplated hereby. This Agreement, when duly and validly executed by the
Company and delivered by the Company, will constitute a valid and binding
obligation of the Company, and will be enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
(b) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the terms or provisions
hereof, will (i) violate any provision of the Articles of Incorporation or
Bylaws of the Company, the Articles of Incorporation of the Bank or Bylaws of
the Bank, (ii) to the knowledge of the Company, the Bank or any of their
respective subsidiaries, assuming that any necessary Consents, including, but
not limited to, those of the Regulatory Authorities, referred to herein are duly
obtained, (A) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to the Company, the Bank or any of
their subsidiaries or any of their respective properties or assets, or (B)
violate, conflict with, result in a breach of any provisions of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of the Company, the Bank or any of their subsidiaries under, any of the
terms, conditions or provisions of any material note, bond, mortgage, indenture,
deed of trust, license, permit, lease, agreement or other instrument or
obligation to which the Company, the Bank or any of their subsidiaries is a
party, or by which the Company, the Bank or any of their subsidiaries or any of
its properties or assets may be bound or affected.
Section 3.7 Consents and Approvals. Except for (i) the approval of the
shareholders of the Company pursuant to the proxy statement of the Company
relating to the meeting of the shareholders of the Company at which the Merger
is to be considered (the "Proxy Statement"); (ii) the Consents of the Regulatory
Authorities; (iii) the approval of this Agreement by the shareholders of ST-Sub
and the Company; (iv) the filing of a Certificate or Articles of Merger with the
States of Alabama and Florida; and (v) as set forth in Disclosure Schedule 3.7,
no Consents of any person are necessary in connection with the execution and
delivery by the Company of this Agreement, and the consummation by the Company
of the Merger and the other transactions contemplated hereby.
Section 3.8 Broker's Fees. Except for Allen C. Ewing & Co., a copy of whose
engagement letter with the Company is attached as Disclosure Schedule 3.8, none
of the Company, the Bank or any of their subsidiaries nor any of their
respective officers or directors, has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement.
Section 3.9 Absence of Certain Changes or Events. Except as disclosed on
Disclosure Schedule 3.9 and as otherwise provided in Section 5.1(b) of this
Agreement, since December 31, 1999, there has not been (i) any
A-17
<PAGE> 116
declaration, payment or setting aside of any dividend or distribution (whether
in cash, stock or property) in respect of the Company Shares or (ii) any
Material Adverse Effect on the Company, the Bank or any of their respective
subsidiaries including, without limitation, any change in the administration or
supervisory standing or rating of the Company, the Bank or any of their
respective subsidiaries with any Regulatory Authority, and no fact or condition
exists as of the date hereof which might reasonably be expected to cause any
such event or change in the future.
Section 3.10 Legal Proceedings; Etc. Except as set forth in Disclosure
Schedule 3.10, none of the Company, the Bank nor any of their respective
subsidiaries is a party to any, and there are no pending or, to the knowledge of
the Company, the Bank or any of their respective subsidiaries, threatened,
judicial, administrative, arbitral or other proceedings, claims, actions, causes
of action or governmental investigations against the Company, the Bank or any of
their respective subsidiaries challenging the validity of the transactions
contemplated by this Agreement and, to the knowledge of the Company, the Bank
and their respective subsidiaries as of the date hereof, there is no proceeding,
claim, action or governmental investigation against the Company, the Bank or any
of their respective subsidiaries, and no judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator is outstanding against the Company, the Bank or any of their
respective subsidiaries which has or might reasonably be expected to have a
Material Adverse Effect on the Company; there is no default by the Company, the
Bank or any their respective subsidiaries under any material contract agreement
to which the Company, the Bank or any of their respective subsidiaries is a
party to any agreement, order or memorandum in writing by or with any Regulatory
Authority restricting the operations of the Company, the Bank or any of their
respective subsidiaries and none of the Company, the Bank or any of their
respective subsidiaries has been advised by any Regulatory Authority that any
such Regulatory Authority is contemplating issuing or requesting the issuance of
any such order or memorandum in the future.
Section 3.11 Taxes and Tax Returns. (a) The Company has previously delivered
or made available to SouthTrust copies of the federal, state and local income
tax returns of the Company and, if consolidated returns do not exist for all
periods, of the Bank and each of its respective subsidiaries, for the years
1996, 1997, and 1998 and all schedules and exhibits thereto, and, will provide
SouthTrust with a copy of all federal, state and local income tax returns for
the year 1999, with all schedules and exhibits thereto, when such returns are
filed, and, to the knowledge of the Company, the Bank and their respective
subsidiaries such returns have not been examined by the Internal Revenue Service
or any other taxing authority. Except as reflected in Disclosure Schedule 3.11,
the Company, the Bank and their respective subsidiaries have duly filed in
correct form all federal, state and local information returns and tax returns
required to be filed on or prior to the date hereof, and the Company, the Bank
and any of their respective subsidiaries have duly paid or made adequate
provisions for the payment of all taxes and other governmental charges which are
owed by the Company, the Bank or any of their respective subsidiaries to any
federal, state or local taxing authorities, whether or not reflected in such
returns (including, without limitation, those owed in respect of the properties,
income, business, capital stock, deposits, franchises, licenses, sales and
payrolls of the Company, the Bank and any of their respective subsidiaries),
other than taxes and other charges which (i) are not yet delinquent or are being
contested in good faith or (ii) have not been finally determined. The amounts
set forth as liabilities for taxes on the Financial Statements of the Company,
the Financial Statements of the Bank and the Call Reports of the Bank are
sufficient, in the aggregate, for the payment of all unpaid federal, state and
local taxes (including any interest or penalties thereon), whether or not
disputed, accrued or applicable, for the periods then ended, and have been
computed in accordance with generally accepted accounting principles. None of
the Company, the Bank nor any of their respective subsidiaries is responsible
for the taxes of any other person other than the Company, the Bank and any of
their respective subsidiaries, under Treasury Regulation 1.1502-6 or any similar
provision of federal, state or foreign law.
(b) Except as disclosed in Disclosure Schedule 3.11, neither the
Company, the Bank nor any of their respective subsidiaries has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any federal, state or local taxes due that is currently in effect,
and deferred taxes of the Company, the Bank or any of their respective
subsidiaries, have been adequately provided for in the Financial Statements of
the Company, or the Financial Statements of the Bank, as the case may be.
A-18
<PAGE> 117
(c) Except as disclosed in Disclosure Schedule 3.11, neither the
Company, the Bank nor any of their respective subsidiaries has made any payment,
is obligated to make any payment or is a party to any contract, agreement or
other arrangement that could obligate it to make any payment that would be
disallowed as a deduction under Section 280 G or 162(m) of the Code.
(d) There has not been an ownership change, as defined in Section
382(g) or the Code, of the Company, the Bank or any of their respective
subsidiaries that occurred during or after any taxable period in which the
Company, the Bank or any of their respective subsidiaries incurred an operating
loss that carries over to any taxable period ending after the fiscal year of the
Company immediately preceding the date of this Agreement.
(e) (i) Proper and accurate amounts have been withheld by the
Company, the Bank and their respective subsidiaries from their employees and
others for all prior periods in compliance in all material respects with the tax
withholding provisions of all applicable federal, state and local laws and
regulations, and proper due diligence steps have been taken in connection with
back-up withholding, (ii) federal, state and local returns have been filed by
the Company, the Bank and their respective subsidiaries for all periods for
which returns were due with respect to withholding, Social Security and
unemployment taxes or charges due to any federal, state or local taxing
authority and (iii) the amounts shown on such returns to be due and payable have
been paid in full or adequate provision therefor have been included by either
the Company, the Bank in the Financial Statements of the Company or the
Financial Statements of the Bank.
Section 3.12 Employee Benefit Plans. (a) None of the Company, the Bank or
any of their respective subsidiaries has or maintains any "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), except as described in Disclosure Schedule
3.12(a). The Company, the Bank or their respective subsidiaries have, with
respect to each such plan, delivered to SouthTrust true and complete copies of:
(a) all plan texts and agreements and related trust agreements or annuity
contracts and any amendments thereto; (b) all summary plan descriptions and
material employee communications; (c) the Form 5500 filed in each of the most
recent three plan years (including all schedules thereto and the opinions of
independent accountants); (iv) the most recent actuarial valuation (if any); (d)
the most recent annual and periodic accounting of plan assets; (vii) if the plan
is intended to qualify under Section 401(a) or 403)a) of the Code, the most
recent determination letter received from the Internal Revenue Service; and (e)
all material communications with any governmental entity or agency (including,
without limitation, the Department of Labor, Internal Revenue Service and the
Pension Benefit Guaranty Corporation ("PBGC")).
(b) None of the Company, the Bank or any of their respective
subsidiaries (or any pension plan maintained by either of them) has incurred any
liability to the PBGC or the Internal Revenue Service with respect to any
pension plan qualified under Section 401 of the Code, except liabilities to the
PBGC pursuant to Section 4007 of ERISA, all which have been fully paid. No
reportable event under Section 4043(b) of ERISA (including events waived by PBGC
regulation) has occurred with respect to any such pension plan.
(c) None of the Company, the Bank or any of their subsidiaries has
incurred any material liability under Section 4201 of ERISA for a complete or
partial withdrawal from, or agreed to participate in, any multi-employer plan
as such term is defined in Section 3(37) of ERISA.
(d) All "employee benefit plans," as defined in Section 3(3) of
ERISA, that are maintained by the Company, the Bank and their respective
subsidiaries comply in all material respects, with ERISA and the Code that are
applicable, or intended to be applicable, including, but not limited to, COBRA,
HIPAA and any applicable, similar state law, to such "employee benefit plans."
None of the Company, the Bank or any of their respective subsidiaries have any
material liability under any such plan.
For purposes of this Agreement, "COBRA" means the provision of
Section 4980B of the Code and the regulations thereunder, and Part 6 of the
Subtitle B of Title I of ERISA and any regulations thereunder, and "HIPPA" means
the provisions of the Code and ERISA as enacted by the Health Insurance
Portability and Accountability Act of 1996.
A-19
<PAGE> 118
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)
has occurred with respect to any employee benefit plan maintained by the
Company, the Bank or any of their respective subsidiaries (i) which would result
in the imposition, directly or indirectly, of a material excise tax under
Section 4975 of the Code or a material civil penalty under Section 502(i) of
ERISA, or (ii) the correction of which would have a material adverse effect on
the Condition of the Company, the Bank or any of their respective subsidiaries;
and no actions have occurred which could result in the imposition of a penalty
under any section or provision of ERISA.
(f) No employee benefit plan which is a defined benefit pension plan
has any "unfunded current liability," as that term is defined in Section
302(d)(8)(A) of ERISA, and the present fair market value of the assets of any
such plan exceeds the plan's "benefit liabilities," as that term is defined in
Section 4001(a)(16) of ERISA, when determined under actuarial factors that would
apply if the plan terminated in accordance with all applicable legal
requirements.
(g) Except as set forth in Disclosure Schedule 3.12(g), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any material payment
(including, without limitation, severance, unemployment compensation, golden
parachute or otherwise) becoming due to any director or any officer or employee
of the Company, the Bank or any of their respective subsidiaries under any
benefit plan or otherwise, (ii) materially increase any benefits otherwise
payable under any benefit plan or (iii) result in any acceleration of the time
of payment or vesting of any such benefits to any material extent.
(h) No employee benefit plan is a multiemployer plan as defined in
Section 414(f) of the Code or Section 3(37) or 4001(a)(31) of ERISA. The
Company, the Bank and their respective subsidiaries have never been a party to
or participant in a multiemployer plan.
(i) There are no actions, liens, suits or claims pending or
threatened (other than routine claims for benefits) with respect to any employee
benefit plan or against the assets of any employee benefit plan. No assets of
the Company, the Bank or their respective subsidiaries are subject to any lien
under Section 302(f) of ERISA or Section 412(n) of the Code.
(j) Each employee benefit plan which is intended to qualify under
Section 401(a) or 403(a) of the Code so qualifies and its related trust is
exempt from taxation under Section 501(a) of the Code. No event has occurred or
circumstance exists that will or could give rise to a disqualification or loss
of tax-exempt status of any such plan or trust.
(k) No employee benefit plan is a multiple employer plan within the
meaning of Section 413(c) of the Code or Sections 4063, 4064 or 4066 of ERISA.
No employee benefit plan is a multiple employer welfare arrangement as defined
in Section 3(40) of ERISA.
(l) Each employee pension benefit plan, as defined in Section 3(2)
of ERISA, that is not qualified under Section 401(a) or 403(a) of the Code is
exempt from Part 2, 3 and 4 of Title I of ERISA as an unfunded plan that is
maintained primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees, pursuant to Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA. No assets of the Company, the Bank or
their respective subsidiaries are allocated to or held in a "rabbi trust" or
similar funding vehicle.
(m) Except as set forth on Disclosure Schedule 3.12(m), no employee
benefit plan provides benefits to any current or former employee of the Company,
the Bank of their respective subsidiaries beyond retirement or other termination
of service (other than coverage mandated by COBRA, the cost of which is fully
paid by the current or former employee or his or her dependents). Any such plan
may be amended or terminated at any time by unilateral action of the Company,
the Bank or their respective subsidiaries.
A-20
<PAGE> 119
Section 3.13 Title and Related Matters. (a) Except as set forth in
Disclosure Schedule 3.13(a), the Company, the Bank and their respective
subsidiaries have good title, and as to owned real property, have good and
marketable title in fee simple absolute, to all assets and properties, real or
personal, tangible or intangible, reflected as owned by any of them on the
Financial Statements of the Company, the Financial Statements of the Bank, or
the Call Reports of the Bank or acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of for fair value in
the ordinary course of business since December 31, 1999), free and clear of all
liens, encumbrances, mortgages, security interests, restrictions, pledges or
claims, except for (i) those liens, encumbrances, mortgages, security interests,
restrictions, pledges or claims reflected in the Financial Statements of the
Company, the Financial Statements of the Bank and the Call Reports of the Bank
or incurred in the ordinary course of business after December 31, 1999, (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith, and (iii) liens, encumbrances, mortgages, security interests,
pledges, claims and title imperfections that do not in the aggregate have a
Material Adverse Effect on the Company.
(b) All agreements pursuant to which the Company, the Bank or any of
their respective subsidiaries leases, subleases or licenses material real or
material personal properties from others are valid, binding and enforceable in
accordance with their respective terms, and there is not, under any of such
leases or licenses, any existing default or event of default, or any event which
with notice or lapse of time, or both, would constitute a default or force
majeure, or provide the basis for any other claim of excusable delay or
nonperformance, except for defaults which individually or in the aggregate would
not have a Material Adverse Effect on the Company. Except as set forth in
Disclosure Schedule 3.13(b), the Company, the Bank and their respective
subsidiaries have all right, title and interest as a lessee under the terms of
each lease or sublease, free and clear of all liens, claims or encumbrances
(other than the rights of the lessor), as of the Effective Time of the Merger,
and shall have the right to transfer each lease or sublease pursuant to this
Agreement.
(c) Other than real estate owned, acquired by foreclosure or
voluntary deed in lieu of foreclosure (i) all of the buildings, structures and
fixtures owned, leased or subleased by the Company, the Bank and any of their
respective subsidiaries, are in good operating condition and repair, subject
only to ordinary wear and tear and/or minor defects which do not interfere with
the continued use thereof in the conduct of normal operations, and (ii) all of
the material personal properties owned, leased or subleased by the Company, the
Bank and any of their respective subsidiaries, are in good operating condition
and repair, subject only to ordinary wear and tear and/or minor defects which do
not interfere with the continued use thereof in the conduct of normal
operations.
Section 3.14 Real Estate. (a) Disclosure Schedule 3.14(a) identifies and
sets forth a complete legal description for each parcel of real estate or
interest therein owned, and a description of each parcel of real estate leased
or subleased by the Company, the Bank or any of their respective subsidiaries or
in which the Company, the Bank or any of their respective subsidiaries have any
ownership or leasehold interest.
(b) Disclosure Schedule 3.14(b) lists or otherwise describes and
sets forth each and every written or oral lease or sublease, together with the
current name, address and telephone number of the landlord or sublandlord and
the landlord's property manager (if any), under which the Company, the Bank or
any of their respective subsidiaries is the lessee or sublessee of any real
property and which relates in any manner to the operation of the businesses of
the Company, the Bank or any of their respective subsidiaries.
(c) None of the Company, the Bank or any of their respective
subsidiaries have violated, or is currently in violation of, any law, regulation
or ordinance relating to the ownership or use of the real estate and real estate
interests described in Disclosure Schedules 3.14(a) and 3.14(b) including, but
not limited to, any law, regulation or ordinance relating to zoning, building,
occupancy, environmental or comparable matter which individually or in the
aggregate would have a Material Adverse Effect on the Company.
(d) As to each parcel of real property owned or used by the Company,
the Bank or any of their respective subsidiaries, none of the Company, the Bank
or any of their respective subsidiaries have received notice of any pending or,
to the knowledge of the Company, the Bank or any of their respective
subsidiaries, threatened condemnation proceedings, litigation proceedings or
mechanics or materialmen's liens.
A-21
<PAGE> 120
Section 3.15 Environmental Matters.
(a) Each of the Company, the Bank, their respective subsidiaries,
the Participation Facilities (as defined below), and the Loan Properties (as
defined below) are, and have been, in compliance with all applicable laws,
rules, regulations, standards and requirements of the United States
Environmental Protection Agency and all state and local agencies with
jurisdiction over pollution or protection of the environment, except for
violations which, individually or in the aggregate, will not have a Material
Adverse Effect on the Company.
(b) There is no litigation pending or, to the knowledge of the
Company, the Bank or any of their respective subsidiaries, threatened before any
court, governmental agency or board or other forum in which the Company, the
Bank, their respective subsidiaries, or any Participation Facility has been or,
with respect to threatened litigation may be, named as defendant (i) for alleged
noncompliance (including by any predecessor), with any Environmental Law (as
defined below) or (ii) relating to the release into the environment of any
Hazardous Material (as defined below) or oil, whether or not occurring at or on
a site owned or leased or operated by the Company, the Bank or any Participation
Facility, except for such litigation pending or threatened that will not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(c) There is no litigation pending or, to the knowledge of the
Company, the Bank and their respective subsidiaries, threatened before any
court, governmental agency or board or other forum in which any Loan Property
(or the Company, the Bank and their respective subsidiaries in respect of such
Loan Property) has been or, with respect to threatened litigation, may be, named
as a defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law (as defined below) or
(ii) relating to the release into the environment of any Hazardous Material (as
defined below) or oil, whether or not occurring at, on or involving a Loan
Property, except for such litigation pending or threatened that will not
individually or in the aggregate, have a Material Adverse Effect on the Company.
(d) To the knowledge of the Company, the Bank and any of their
respective subsidiaries, there is no reasonable basis for any litigation of a
type described in Sections 3.15(b) or 3.15(c) of this Agreement, except as will
not have, individually or in the aggregate, a Material Adverse Effect on the
Company.
(e) During the period of (i) ownership or operation by the Company,
the Bank or any of their respective subsidiaries of any of their respective
current properties, or (ii) participation by the Company, the Bank or any of
their respective subsidiaries in the management of any Participation Facility,
or (iii) holding by the Company, the Bank or any of their respective
subsidiaries of a security interest in a Loan Property, there have been no
releases of Hazardous Material or oil in, on, under or affecting such
properties, except where such releases have not and will not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
(f) Prior to the period of (i) ownership or operation by the
Company, the Bank or any of their respective subsidiaries of any of their
respective current properties, (ii) participation by the Company, the Bank or
any of their respective subsidiaries in the management of any Participation
Facility, or (iii) holding by the Company, the Bank or any of their respective
subsidiaries of a security interest in any Loan Property, to the knowledge of
the Company, the Bank and their respective subsidiaries, there were no releases
of Hazardous Material or oil in, on, under or affecting any such property,
Participation Facility or Loan Property, except where such releases have not and
will not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
Section 3.16 Commitments and Contracts. (a) Except as set forth in
Disclosure Schedule 3.16(a), none of the Company, the Bank or any of their
respective subsidiaries is a party or subject to any of the following (whether
written or oral, express or implied):
(i) Any employment contract or understanding (including any agreement or
plan with respect to severance or termination pay liabilities or
fringe benefits) with any present or former officer, director,
employee, including in any such person's capacity as a consultant
(other than those which either are terminable at will without any
further amount being payable
A-22
<PAGE> 121
thereunder or as a result of such termination by the Company, the
Bank or any of their respective subsidiaries);
(ii) Any labor contract or agreement with any labor union;
(iii) Any contract covenants which limit the ability of the Company, the
Bank or any of their respective subsidiaries to compete in any line
of business or which involve any restriction of the geographical
area in which the Company, the Bank or any of their respective
subsidiaries may carry on its business (other than as may be
required by law or applicable regulatory authorities);
(iv) Any lease (other than real estate leases described on Disclosure
Schedule 3.14(b)) or other agreements or contracts with annual
payments aggregating $10,000 or more; or
(v) Any other contract or agreement which would be required to be
disclosed in reports filed by the Company, the Bank or any of their
respective subsidiaries with the SEC, the FRB, or the FDIC and which
has not been so disclosed.
(b) To the knowledge of the Company, the Bank or any of their
respective subsidiaries, except as set forth in Disclosure Schedule 3.16(b),
there is not, under any agreement, lease or contract to which the Company, the
Bank or any of their respective subsidiaries is a party, any existing default or
event of default, or any event which with notice or lapse of time, or both,
would constitute a default or force majeure, or provide the basis for any other
claim of excusable delay or non-performance.
Section 3.17 Regulatory, Accounting and Tax Matters. None of the Company,
the Bank or any of their respective subsidiaries has taken or agreed to take any
action, has any knowledge of any fact nor has agreed to any circumstance that
would (i) materially impede or delay receipt of any Consents of any Regulatory
Authorities referred to in this Agreement, (ii) prevent the transactions
contemplated by this Agreement from qualifying as a reorganization within the
meaning of Section 368(a) of the Code, or (iii) materially impede the ability of
SouthTrust to account for the transactions contemplated by this Agreement as a
pooling of interests.
Section 3.18 Registration Obligations. None of the Company, the Bank or any
of their respective subsidiaries is under any obligation, contingent or
otherwise, which will survive the Merger, to register any of its securities
under the Securities Act of 1933 or any state securities laws.
Section 3.19 [Intentionally Omitted]
Section 3.20 Insurance. Each of the Company, the Bank and their respective
subsidiaries is presently insured, and during each of the past three (3)
calendar years has been insured, for reasonable amounts against such risks as
companies or institutions engaged in a similar business would, in accordance
with good business practice, customarily be insured. To the knowledge of the
Company, the Bank and their respective subsidiaries, the policies of fire,
theft, liability and other insurance maintained with respect to the assets or
businesses of the Company, the Bank and their respective subsidiaries provide
adequate coverage against loss, and the fidelity bonds in effect as to which the
Company, the Bank or any of their respective subsidiaries is named an insured
are sufficient for their purpose. Such policies of insurance are listed and
described in Disclosure Schedule 3.20.
Section 3.21 Labor. (a) No work stoppage involving the Company, the Bank or
any of their respective subsidiaries is pending as of the date hereof or, to the
knowledge of the Company, the Bank and their respective subsidiaries,
threatened. None of the Company, the Bank or any of their respective
subsidiaries is involved in, or, to the knowledge of the Company, the Bank and
their respective subsidiaries, threatened with or affected by, any proceeding
asserting that the Company, the Bank or any of their respective subsidiaries has
committed an unfair labor practice or any labor dispute, arbitration, lawsuit or
administrative proceeding which might reasonably be expected to have a Material
Adverse Effect on the Company. No union represents or claims to represent any
employees of the Company, the Bank or their respective subsidiaries, and, to the
knowledge of the Company, the Bank and their
A-23
<PAGE> 122
respective subsidiaries, no labor union is attempting to organize employees of
the Company, the Bank or their respective subsidiaries.
(b) The Company, the Bank or their respective subsidiaries has made
available to SouthTrust a true and complete list of all employees of the
Company, the Bank and their respective subsidiaries as of the date hereof,
together with the employee position, title, salary and date of hire, and all
information with respect to all benefit plans or policies, bonus arrangements,
commissions, severance plans or policies, compensation arrangements or other
benefits provided to such employees. Except as set forth on Schedule 3.21(b),
the consummation of the transactions contemplated hereby will not cause
SouthTrust or ST-Sub to incur or suffer any liability relating to, or obligation
to pay, severance, termination or other payments to any person or entity. Except
as set forth on Schedule 3.21(b) hereto, no employee of the Company, the Bank or
their respective subsidiaries has any contractual right to continued employment
by the Company. Except as set forth on Schedule 3.21(b) hereto, there are no
employment agreements, contracts, plans, arrangements, professional service
contracts, commitments or understandings between the Company, the Bank or their
respective subsidiaries and any employee not terminable at will.
(c) The Company, the Bank and their respective subsidiaries is in
compliance with all applicable laws and regulations relating to employment or
the workplace, including, without limitation, provisions relating to wages,
hours, collective bargaining, safety and health, work authorization, equal
employment opportunity, immigration and the withholding of income taxes,
unemployment compensation, workers compensation, employee privacy and right to
know and social security contributions.
(d) Except as set forth on Schedule 3.21(d) hereto, there has not
been, there is not presently pending or existing and, to the knowledge of the
Company, the Bank or any of their respective subsidiaries, there is not
threatened any proceeding against or affecting the Company, the Bank or their
respective subsidiaries relating to the alleged violation of any legal
requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission or any comparable
governmental body, organizational activity, or other labor or employment dispute
against or affecting the Company, the Bank or their respective subsidiaries.
Section 3.22 Compliance with Laws. Each of the Company, the Bank and their
respective subsidiaries has conducted its business and owned its assets in
accordance with all applicable federal, foreign, state and local laws,
regulations and orders, and is in compliance with such laws, regulations and
orders, except for such violations or non-compliance, which when taken together
as a whole, will not have a Material Adverse Effect on the Company. Except as
disclosed in Disclosure Schedule 3.22, none of the Company, the Bank or any of
their respective subsidiaries:
(a) is in violation of any laws, regulations, rules, orders or
permits applicable to its business or the employees or agents
or representatives conducting its business, except for
violations which individually or in the aggregate do not have
and will not have a Material Adverse Effect on the Company;
and
(b) has received a notification or communication from any agency
or department of federal, state or local government or the
Regulatory Authorities or the staff thereof (i) asserting
that the Company, the Bank or any of their respective
subsidiaries is not in compliance with any laws or orders
which such governmental authority or Regulatory Authority
enforces, where such noncompliance is reasonably likely to
have a Material Adverse Effect on the Company, (ii)
threatening to revoke any permit, the revocation of which is
reasonably likely to have a Material Adverse Effect on the
Company, (iii) requiring the Company, the Bank or any of
their respective subsidiaries to enter into any cease and
desist order, formal agreement, commitment or memorandum of
understanding, or to adopt any resolutions or similar
undertakings, or (iv) directing, restricting or limiting, or
purporting to direct, restrict or limit in any manner, the
operations of the Company, the Bank or any of their
respective subsidiaries, including, without limitation, any
restrictions on the payment of dividends.
A-24
<PAGE> 123
Section 3.23 Transactions with Management. Except for (a) deposits, all of
which are on terms and conditions comparable to those made available to other
customers of the Bank at the time such deposits were entered into, (b) the loans
listed on Disclosure Schedule 3.5, (c) the agreements listed on Disclosure
Schedule 3.16, (d) obligations under employee benefit plans of the Company, the
Bank and their respective subsidiaries as set forth on Disclosure Schedule 3.12,
and (e) the items described on Disclosure Schedule 3.23 and any loans or deposit
agreements entered into in the ordinary course with customers of the Bank, there
are no contracts with or commitments to present or former stockholders,
directors, officers or employees involving the expenditure of more than $1,000
as to any one individual, including, any business directly or indirectly
controlled by any such person, or $5,000 for all such contracts or commitments
in the aggregate for all such individuals.
Section 3.24 Derivative Contracts. Neither the Company nor the Bank is a
party to or has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial contract or
agreement, or any other contract or agreement not included in Financial
Statements of the Company and the Financial Statements of the Bank which is a
financial derivative contract (including various combinations thereof)
("Derivative Contracts"), except for those Derivative Contracts set forth in
Disclosure Schedule 3.24.
Section 3.25 Deposits. None of the deposits of the Bank are "brokered"
deposits or are subject to any encumbrance, legal restraint or other legal
process (other than garnishments, pledges, set off rights, escrow limitations
and similar actions taken in the ordinary course of business), and no portion of
such deposits represents a deposit of any affiliate of the Company's except as
set forth in Disclosure Schedule 3.25.
Section 3.26 Accounting Controls. Each of the Company, the Bank and their
respective subsidiaries have devised and maintained systems of internal
accounting control sufficient to provide reasonable assurances that: (i) all
material transactions are executed in accordance with general or specific
authorization of the Board of Directors and the duly authorized executive
officers of the Company, the Bank and their respective subsidiaries; (ii) all
material transactions are recorded as necessary to permit the preparation of
financial statements in conformity with generally accepted accounting principles
consistently applied with respect to institutions such as the Company, the Bank
and their respective subsidiaries or any other criteria applicable to such
financial statements, and to maintain proper accountability for items therein;
(iii) access to the material properties and assets of the Company, the Bank and
their respective subsidiaries is permitted only in accordance with general or
specific authorization of the Board of Directors and the duly authorized
executive officers of the Company, the Bank and their respective subsidiaries;
and (iv) the recorded accountability for items is compared with the actual
levels at reasonable intervals and appropriate actions taken with respect to any
differences.
Section 3.27 Proxy Materials. None of the information relating to the
Company, the Bank or any of their respective subsidiaries to be included in the
Proxy Statement which is to be mailed to the shareholders of the Company in
connection with the solicitation of their approval of this Agreement will, at
the time such Proxy Statement is mailed or at the time of the meeting of
shareholders to which such Proxy Statement relates, be false or misleading with
respect to any material fact, or omit to state any material fact, necessary in
order to make a statement therein not false or misleading. The legal
responsibility for the contents of such Proxy Statement relating to the Company,
the Bank or any of their respective subsidiaries shall be and remain with the
Company, the Bank and their respective subsidiaries.
Section 3.28 Deposit Insurance. The deposit accounts of the Bank are insured
by the Bank Insurance Fund ("BIF") in accordance with the provisions of the
Federal Deposit Insurance Act (the "Act"); the Bank has paid all regular
premiums and special assessments and filed all reports required under the Act.
Section 3.29 Untrue Statements and Omissions. No representation or warranty
contained in Article III of this Agreement or in the Disclosure Schedules of the
Company contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
A-25
<PAGE> 124
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
SOUTHTRUST AND ST-SUB
SouthTrust and ST-Sub hereby jointly and severally represent and warrant to
Company as follows as of the date hereof and as of all times up to and including
the Effective Time of the Merger (except as otherwise provided):
Section 4.1 Organization and Related Matters of SouthTrust. (a) SouthTrust
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. SouthTrust has the corporate power and authority
to own or lease all of its properties and assets and to carry on its business as
now conducted, or as proposed to be conducted pursuant to this Agreement, and
SouthTrust is licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by SouthTrust, or the character or location
of the properties and assets owned or leased by SouthTrust makes such licensing
or qualification necessary, except where the failure to be so licensed or
qualified (or steps necessary to cure such failure) would not have a Material
Adverse Effect on SouthTrust. SouthTrust is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended. True and correct
copies of the Restated Certificate of Incorporation of SouthTrust and the Bylaws
of SouthTrust, each as amended to the date hereof, have been made available to
the Company.
(b) SouthTrust has in effect all federal, state, local and foreign
governmental, regulatory and other authorizations, permits and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted, the absence of which, either individually or in the
aggregate, would have a Material Adverse Effect on SouthTrust.
Section 4.2 Organization and Related Matters of ST-Sub. (a) ST-Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Alabama. ST-Sub has, or as of the Effective Time of the Merger,
will have, the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as now conducted, or as
proposed to be conducted pursuant to this Agreement, and ST-Sub is licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by ST-Sub, or the character or location of the properties and
assets owned or leased by ST-Sub makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified (or steps
necessary to cure such failure) would not have a Material Adverse Effect on
SouthTrust. True and correct copies of the Articles of Incorporation of ST-Sub
and the Bylaws of ST-Sub, each as amended to the date hereof will be made
available to the Company.
(b) ST-Sub has in effect all federal, state, local and foreign
governmental, regulatory and other authorizations, permits and licenses
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted, the absence of which, either individually or in the
aggregate, would have a Material Adverse Effect on SouthTrust.
Section 4.3 Capitalization. As of June 30, 2000, the authorized capital
stock of SouthTrust consisted of 500,000,000 shares of common stock, par value
$2.50 per share, 168,233,823 shares (which includes the rights associated with
such shares pursuant to that certain Amended and Restated Rights Agreement dated
as of August 1, 2000 between SouthTrust and American Stock Transfer & Trust
Company) of which were issued and outstanding (exclusive of any such shares held
in the treasury of SouthTrust as of such date), and 5,000,000 shares of
preferred stock, par value $1.00 per share, none of which is issued and
outstanding as of the date hereof. All issued and outstanding SouthTrust Shares
have been duly authorized and validly issued, and all such shares are fully paid
and nonassessable.
Section 4.4 Authorization. The execution, delivery, and performance of this
Agreement, and the consummation of the transactions contemplated hereby and in
any related agreements, have been or, as of the Effective Time of the Merger,
will have been duly authorized by the Boards of Directors of SouthTrust and
ST-Sub, and no other corporate proceedings on the part of SouthTrust or ST-Sub
are or will be necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement, when duly authorized, will be the valid and
A-26
<PAGE> 125
binding obligation of SouthTrust and ST-Sub enforceable against each in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought. Neither the execution, delivery or performance of this Agreement nor
the consummation of the transactions contemplated hereby will (i) violate any
provision of the Restated Certificate of Incorporation or Bylaws of SouthTrust
or the Articles of Incorporation or Bylaws of ST-Sub or, (ii) to SouthTrust's
knowledge and assuming that any necessary Consents, including, but not limited
to those of the Regulatory Authorities, referred to herein are duly obtained,
(A) violate, conflict with, result in a breach of any provisions of, constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets of
SouthTrust or ST-Sub under any of the terms, conditions or provisions of any
material note, bond, mortgage, indenture, deed of trust, license, permit, lease,
agreement or other instrument or obligation to which SouthTrust or ST-Sub is a
party, or by which SouthTrust or ST-Sub or any of their respective properties or
assets may be bound or affected, (B) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to SouthTrust
or ST-Sub or any of their respective material properties or assets, except for
(X) such conflicts, breaches or defaults as are set forth in Disclosure Schedule
4.4; and (Y) with respect to (B) above, such as individually or in the aggregate
will not have a Material Adverse Effect on SouthTrust.
Section 4.5 Financial Statements. (a) SouthTrust has made available to the
Company copies of the consolidated financial statements of SouthTrust as of and
for the two (2) fiscal years ended immediately prior to the date of this
Agreement. SouthTrust will make available to the Company, as soon as practicable
following the preparation of additional consolidated financial statements for
each subsequent fiscal period or year of SouthTrust, the consolidated financial
statements of SouthTrust as of and for such subsequent fiscal period or year
(such consolidated financial statements, unless otherwise indicated, being
hereinafter referred to collectively as the "Financial Statements of
SouthTrust").
(b) Each of the Financial Statements of SouthTrust (including the
related notes) have been or will be prepared in all material respects in
accordance with generally accepted accounting principles, which principles have
been or will be consistently applied during the periods involved, except as
otherwise noted therein, and the books and records of SouthTrust have been, are
being, and will be maintained in all material respects in accordance with
applicable legal and accounting requirements and reflect only the actual
transactions. Each of the Financial Statements of SouthTrust (including the
related notes) fairly presents or will fairly present the consolidated financial
position of SouthTrust as of the respective dates thereof and fairly presents or
will fairly present the results of operations of SouthTrust for the respective
periods therein set forth.
(c) Since December 31, 1999, SouthTrust has not incurred any
obligation or liability (contingent or otherwise) that has or might reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on SouthTrust, except obligations and liabilities (i) which are accrued or
reserved against in the Financial Statements of SouthTrust or reflected in the
notes thereto, and (ii) which were incurred after December 31, 1999 in the
ordinary course of business consistent with past practices. Since December 31,
1999, and except for the matters described in (i) and (ii) above, SouthTrust has
not incurred or paid any obligation or liability which would have a Material
Adverse Effect on SouthTrust.
Section 4.6 Absence of Certain Changes or Events. Since December 31, 1999,
no fact or condition has occurred which would give rise to a Material Adverse
Effect on SouthTrust, and to the knowledge of SouthTrust, no fact or condition
exists which might reasonably be expected to cause such a Material Adverse
Effect on SouthTrust in the future.
Section 4.7 Legal Proceedings, Etc. Except as set forth on Disclosure
Schedule 4.7 hereto, or as disclosed in any registration statement filed by
SouthTrust with the SEC and made available to the Company hereunder, neither
SouthTrust nor any of its affiliates is a party to any, and there are no
pending, or, to the knowledge of SouthTrust,
A-27
<PAGE> 126
threatened, legal, administrative, arbitral or other proceedings, claims,
actions, causes of action or governmental investigations of any nature against
SouthTrust challenging the validity or propriety of the transactions
contemplated by this Agreement or which would be required to be reported by
SouthTrust pursuant to Item 103 of Regulation S-K promulgated by the SEC.
Section 4.8 Insurance. SouthTrust has in effect insurance coverage with
insurers which, in respect of amounts, premiums, types and risks insured,
constitutes reasonably adequate coverage against all risks customarily insured
against by institutions comparable in size and operation to SouthTrust.
Section 4.9 Consents and Approvals. Except for (i) the Consents of the
Regulatory Authorities; (ii) approval of this Agreement by the respective
shareholders of ST-Sub and the Company; (iii) the filing of a Certificate or
Articles of Merger with the States of Alabama and Florida; or (iv) as disclosed
in Disclosure Schedule 4.9, no Consents of any person are necessary in
connection with the execution and delivery by SouthTrust and ST-Bank or, to the
knowledge of SouthTrust, by the Company of this Agreement, and the consummation
of the Merger and the other transactions contemplated hereby.
Section 4.10 Accounting, Tax, Regulatory Matters. SouthTrust has not agreed
to take any action, has no knowledge of any fact and has not agreed to any
circumstance that would (i) prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368 of the Code, or (ii) materially impede or delay receipt of any
Consent from any Regulatory Authority referred to in this Agreement.
Section 4.11 Proxy Materials. None of the information relating solely to
SouthTrust or any of its subsidiaries to be included or incorporated by
reference in the Proxy Statement which is to be mailed to the shareholders of
the Company in connection with the solicitation of their approval of this
Agreement will, at the time such Proxy Statement is mailed or at the time of the
meeting of shareholders of the Company to which such Proxy Statement relates, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make a statement therein not false or
misleading. The legal responsibility for the contents of the information
supplied by SouthTrust and relating solely to SouthTrust which is either
included or incorporated by reference in the Proxy Statement shall be and remain
with SouthTrust.
Section 4.12 No Broker's or Finder's Fees. Neither SouthTrust nor ST-Sub or
any of their subsidiaries, affiliates or employers has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with this Agreement or the consummation of any of the
transactions contemplated herein.
Section 4.13 Untrue Statements and Omissions. No representation or warranty
contained in Article IV of this Agreement or in the Disclosure Schedules of
SouthTrust or ST-Sub contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 4.14 SEC Filings. SouthTrust has filed all forms, reports and
documents required to be filed by SouthTrust with the SEC since December 31,
1998, other than registration statements on Form S-4 and S-8 (collectively, the
"SouthTrust SEC Reports"). The SouthTrust SEC Reports (i) at the time they were
filed, complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended, as the case may be, (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such SouthTrust SEC Reports or
necessary in order to make the statements in such SouthTrust SEC Reports, in
light of the circumstances under which they were made, not misleading.
Section 4.15 Compliance with Laws. Each of SouthTrust or ST-Sub has
conducted its business and owned its assets in accordance with all applicable
federal, foreign, state and local laws, regulations and orders, and is in
compliance with such laws, regulations and orders, except for such violations or
non-compliance, which when taken
A-28
<PAGE> 127
together as a whole, will not have a Material Adverse Effect on SouthTrust.
Except as disclosed in Disclosure Schedule 4.15, none of SouthTrust or ST-Sub:
(a) is in violation of any laws, regulations, rules, orders or
permits applicable to its business or the employees or agents
or representatives conducting its business, except for
violations which individually or in the aggregate do not have
and will not have a Material Adverse Effect on SouthTrust;
and
(b) has received a notification or communication from any agency
or department of federal, state or local government or the
Regulatory Authorities or the staff thereof (i) asserting
that SouthTrust or ST-Sub is not in compliance with any laws
or orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably
likely to have a Material Adverse Effect on SouthTrust, (ii)
threatening to revoke any permit, the revocation of which is
reasonably likely to have a Material Adverse Effect on
SouthTrust, (iii) requiring SouthTrust or ST-Sub to enter
into any cease and desist order, formal agreement, commitment
or memorandum of understanding, or to adopt any resolutions
or similar undertakings, or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit in any
manner, the operations of SouthTrust or ST-Sub, including,
without limitation, any restrictions on the payment of
dividends.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Conduct of the Business of Company. (a) Except as provided in
this Agreement, during the period from the date of this Agreement to the
Effective Time of the Merger, the Company shall and shall cause the Bank and
each subsidiary of the Company and the Bank to, (i) conduct their business in
the usual, regular and ordinary course consistent with past practice and prudent
banking and business principles, (ii) use their best efforts to maintain and
preserve intact their business organization, employees, goodwill with customers
and advantageous business relationships and retain the services of their
officers and key employees, and (iii) except as required by law or regulation,
take no action which would adversely affect or delay the ability of the Company
or SouthTrust to obtain any Consent from any Regulatory Authorities or other
approvals required for the consummation of the transactions contemplated hereby
or to perform their covenants and agreements under this Agreement.
(b) During the period from the date of this Agreement to the
Effective Time of the Merger, except as required by law or regulation, the
Company shall not, and it shall not permit the Bank or any of their respective
subsidiaries, without the prior written consent of SouthTrust, to:
(i) change, delete or add any provision of or to the Articles of
Incorporation or Bylaws of the Company, the Articles of
Incorporation or Bylaws of the Bank or the Articles or Certificates
of Incorporation or Bylaws of any of their respective subsidiaries;
(ii) except for the issuance of the Company Shares pursuant to the terms
of the Company Options, change the number of shares of the
authorized, issued or outstanding capital stock of the Company,
including any issuance, purchase, redemption, split, combination or
reclassification thereof, or issue or grant any option, warrant,
call, commitment, subscription, right or agreement to purchase
relating to the authorized or issued capital stock of the Company,
or declare, set aside or pay any dividend or other distribution with
respect to the outstanding capital stock of the Company or the Bank
except for that certain dividend from the Bank to Company disclosed
on Schedule 3.9 (which consent, with respect to dividends paid by
the Bank, will not be unreasonably withheld); provided, however,
that in the event the Effective Time of the Merger has not occurred
by the record date for the payment of SouthTrust's fourth quarter
dividend, the Company shall be permitted to pay its
A-29
<PAGE> 128
normal and recurring dividend of $0.22 per share to its shareholders
prior to the Effective Time of the Merger;
(iii) incur any material liabilities or material obligations (other than
deposit liabilities and short-term borrowings in the ordinary
course of business), whether directly or by way of guaranty,
including any obligation for borrowed money, or whether evidenced by
any note, bond, debenture, or similar instrument, except in the
ordinary course of business consistent with past practice;
(iv) make any capital expenditures individually in excess of $25,000, or
in the aggregate in excess of $50,000 other than pursuant to binding
commitments existing on December 31, 1999 and disclosed in a
Disclosure Schedule delivered pursuant to Article III of this
Agreement or in the annexed Disclosure Schedule 5.1(b)(iv) and other
than expenditures necessary to maintain existing assets in good
repair;
(v) sell, transfer, convey or otherwise dispose of any real property
(including "other real estate owned") or interest therein or any
tangible or intangible personal property having a book value in
excess of or in exchange for consideration in excess of $25,000 for
each such parcel or interest, in which case consent will not be
unreasonably withheld;
(vi) except as reflected in annexed Disclosure Schedule 5.1(b)(vi): pay
any bonuses to any executive officer or director except pursuant to
the terms of an enforceable agreement; enter into any new, or amend
in any respect any existing employment, consulting, non-competition
or independent contractor agreement with any person; alter the terms
of any existing incentive bonus or commission plan; adopt any new or
amend in any material respect any existing employee benefit or bonus
plan, except as may be required by law; grant any general increase
in compensation to its employees as a class or to its officers
except for non-executive officers in the ordinary course of business
and consistent with past practices and policies or except in
accordance with the terms of an enforceable written agreement; grant
any material increases in fees or other increases in compensation or
in other benefits to any of its directors; or effect any change in
any material respect in retirement benefits to any class of
employees or officers, except as required by law;
(vii) enter into or extend any agreement, lease or license relating to
real property, tangible or intangible personal property or any
service or other function (including, without limitation), data
processing or bankcard functions relating to the Company, the Bank
or any of their respective subsidiaries that involves an aggregate
of $25,000;
(viii) increase or decrease the rate of interest paid on time deposits or
on certificates of deposit, except in a manner and pursuant to
policies consistent with the Company and the Bank' past practices;
(ix) purchase or otherwise acquire any investment securities for its own
account having an average remaining life to maturity greater than
five years, or any asset-backed security, other than those issued or
guaranteed by the Government National Mortgage Association, the
Federal National Mortgage Association or Home Loan Mortgage
Corporation, or any Derivative Contract;
(x) acquire twenty percent (20%) or more of the assets or equity
securities of any person or acquire direct or indirect control of
any person, other than in connection with (A) any internal
reorganization or consolidation involving existing subsidiaries of
the Company or the Bank which has been approved in advance in
writing by SouthTrust, (B) foreclosures in the ordinary course of
business, (C) acquisitions of control by a banking subsidiary in
A-30
<PAGE> 129
a fiduciary capacity or (D) the creation of new subsidiaries
organized to conduct and continue activities otherwise permitted by
this Agreement; or
(xi) commence any cause of action or proceeding other than in accordance
with past practice or settle any action, claim, arbitration,
complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry or other
proceeding against the Company, the Bank or any of their respective
subsidiaries for material money damages or restrictions upon any of
their operations.
Section 5.2 Current Information. During the period from the date of this
Agreement to the Effective Time of the Merger or the time of termination or
abandonment of this Agreement, the Company will cause one or more of its
designated representatives to confer on a regular and frequent basis with
representatives of SouthTrust and to report the general status of the ongoing
operations of the Company, the Bank and their respective subsidiaries. The
Company will promptly notify SouthTrust of any material change in the normal
course of business or the operations or the properties of the Company, the Bank
or any of their respective subsidiaries, any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) affecting the Company, the Bank or any of their respective
subsidiaries, the institution or the threat of material litigation, claims,
threats or causes of action involving the Company, the Bank or any of their
respective subsidiaries, and will keep SouthTrust fully informed of such events.
The Company will furnish to SouthTrust, promptly after the preparation and/or
receipt by the Company thereof, copies of its unaudited periodic financial
statements, and shall furnish or cause the Bank or such other applicable
subsidiary of the Company or the Bank to furnish to SouthTrust promptly after
the preparation and/or receipt by the Company, the Bank or such subsidiary,
copies of all periodic financial statements of the Bank and such subsidiaries,
if available, and all call reports with respect to the Bank for the applicable
periods then ended, and such financial statements and call reports shall, upon
delivery to SouthTrust, be treated, for purposes of Section 3.3 hereof, as among
the Financial Statements of the Company, the Financial Statements of the Bank
and the Call Reports of the Bank.
Section 5.3 Access to Properties; Personnel and Records. (a) So long as this
Agreement shall remain in effect, the Company, the Bank and their respective
subsidiaries shall permit SouthTrust or its agents reasonable access, to be
arranged with the officers of the Company in advance, during normal business
hours, to the properties of the Company, the Bank and their respective
subsidiaries, and shall disclose and make available (together with the right to
copy) to SouthTrust and to its internal auditors, loan review officers,
attorneys, accountants and other representatives, all books, papers and records
relating to the assets, stock, properties, operations, obligations and
liabilities of the Company, the Bank or any of their respective subsidiaries,
including all books of account (including the general ledger), tax records,
minute books of directors' and shareholders' meetings, organizational documents,
bylaws, contracts and agreements, filings with any regulatory agency,
examination reports, correspondence with regulatory or taxing authorities,
documents relating to assets, titles, abstracts, appraisals, consultant's
reports, plans affecting employees, securities transfer records and stockholder
lists, and any other assets, business activities or prospects in which
SouthTrust may have a reasonable interest, and the Company, the Bank and their
respective subsidiaries shall use their reasonable best efforts to provide
SouthTrust and its representatives access to the work papers of the Company's
accountants. The Company, the Bank and their respective subsidiaries shall not
be required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer, would
contravene any law, rule, regulation, order or judgment or would violate any
confidentiality agreement; provided that the Company, the Bank and their
respective subsidiaries shall cooperate with SouthTrust in seeking to obtain
Consents from appropriate parties under whose rights or authority access is
otherwise restricted. The foregoing rights granted to SouthTrust shall not,
whether or not and regardless of the extent to which the same are exercised,
affect the representations and warranties made in this Agreement by the Company
and its subsidiaries.
(b) All information furnished by the parties hereto pursuant to this
Agreement shall be treated as the sole property of the party providing such
information until the consummation of the Merger contemplated hereby and, if
such transaction shall not occur, the party receiving the information shall
return to the party which furnished such information, all documents or other
materials containing, reflecting or referring to such information, shall use
A-31
<PAGE> 130
its best efforts to keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purposes. The obligation to keep such information confidential shall
continue for five (5) years from the date the proposed transactions are
abandoned but shall not apply to (i) any information which (A) the party
receiving the information was already in possession of prior to disclosure
thereof by the party furnishing the information, (B) was then available to the
public, or (C) became available to the public through no fault of the party
receiving the information; or (ii) disclosures pursuant to a legal requirement
or in accordance with an order of a court of competent jurisdiction or
regulatory agency; provided that the party which is the subject of any such
legal requirement or order shall use its best efforts to give the other party at
least ten (10) business days prior notice of any such required disclosure. Each
party hereto acknowledges and agrees that a breach of any of their respective
obligations under this Section 5.3 would cause the other irreparable harm for
which there is no adequate remedy at law, and that, accordingly, each is
entitled to injunctive and other equitable relief for the enforcement thereof in
addition to damages or any other relief available at law.
Section 5.4 Approval of Shareholders. The Company will take all steps
necessary under applicable laws to call, give notice of, convene and hold a
meeting of its shareholders at such time as may be mutually agreed to by the
parties for the purpose of approving this Agreement and the transactions
contemplated hereby and for such other purposes consistent with the complete
performance of this Agreement as may be necessary or desirable. The Board of
Directors of the Company will recommend to its shareholders the approval of this
Agreement and the transactions contemplated hereby and the Company will use its
best efforts to obtain the necessary approvals by its shareholders of this
Agreement and the transactions contemplated hereby.
Section 5.5 No Other Bids. Except with respect to this Agreement and the
transactions contemplated hereby, neither the Company nor any "affiliate" (as
defined below) thereof, nor any investment banker, attorney, accountant or other
representative (collectively, "representative") retained by the Company, the
Bank or any of their respective subsidiaries shall directly or indirectly
initiate, solicit, encourage or otherwise facilitate any inquiries or the making
of any proposal or offer that constitutes, or may reasonably be expected to lead
to, any "takeover proposal" (as defined below) by any other party. Except to the
extent necessary to comply with the fiduciary duties of the Company's Board of
Directors as advised in writing by counsel to such Board of Directors, neither
the Company nor any affiliate or representative thereof shall furnish any
non-public information that it is not legally obligated to furnish or negotiate
or enter into any agreement or contract with respect to any takeover proposal,
and shall direct and use its reasonable efforts to cause its affiliates or
representatives not to engage in any of the foregoing, but the Company may
communicate information about such a takeover proposal to its shareholders if
and to the extent it is required to do so in order to comply with its legal
obligations as advised in writing by counsel. The Company shall promptly notify
SouthTrust orally and in writing in the event that it receives any inquiry or
proposal relating to any such transaction. The Company shall immediately cease
and cause to be terminated as of the date of this Agreement any existing
activities, discussions or negotiations with any other parties conducted
heretofore with respect to any of the foregoing. As used in this Section 5.5, an
"affiliate" of a party means (i) any other party directly or indirectly
controlling, controlled by or under common control with such party, (ii) any
executive officer, director, partner, employer or direct or indirect beneficial
owner of a 10% or greater equity or voting interest in such party, or (iii) any
other party for which a party described in clause (ii) acts in any such
capacity. As used in this Section 5.5, "takeover proposal" shall mean any
proposal for a merger or other business combination involving the Company, the
Bank or any of their respective subsidiaries or for the acquisition of a
significant equity interest in the Company, the Bank or any of their respective
subsidiaries or for the acquisition of a significant portion of the assets or
liabilities of the Company, the Bank or any of their respective subsidiaries.
Section 5.6 Notice of Deadlines. Disclosure Schedule 5.6 lists the deadlines
for extensions or terminations of any material leases, agreements or licenses
(including specifically real property leases and data processing agreements) to
which the Company, the Bank or any of their respective subsidiaries is a party.
Section 5.7 Affiliates. No later than thirty (30) days following the
execution of this Agreement, Company shall deliver to SouthTrust a letter
identifying all persons who are anticipated to be, at the time this Agreement is
submitted for approval to the shareholders of the Company, "affiliates" of the
Company for purposes of Rule 145
A-32
<PAGE> 131
under the Securities Act of 1933. In addition, the Company shall cause each
person named in the letter referred to above to deliver to SouthTrust not later
than thirty (30) days following the execution of this Agreement a written
agreement substantially in the form of EXHIBIT 5.7 providing that such person
will not sell, pledge, transfer, or otherwise dispose of the Company Shares held
by such person, except as contemplated by such agreement or by this Agreement,
and will not sell, pledge, transfer, or otherwise dispose of the SouthTrust
Shares to be received by such person upon consummation of the Merger except in
compliance with applicable provisions of the Securities Act of 1933, and the
rules and regulations promulgated thereunder and until such time as the
financial results covering at least thirty (30) days of combined operations of
SouthTrust and the Company and its subsidiaries have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies. To assure that the Merger will qualify for pooling-of-interests
accounting treatment, the SouthTrust Shares issued to such affiliates of the
Company in exchange for the Company Shares shall not be transferable until such
time as the financial results covering at least thirty (30) days of combined
operations of SouthTrust and the Company and its subsidiaries have been
published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies regardless of whether each such person has provided
the written agreement referred to in this Section 5.7.
Section 5.8 Maintenance of Properties. The Company, the Bank and their
respective subsidiaries will maintain their respective properties and assets in
satisfactory condition and repair for the purposes for which they are intended,
ordinary wear and tear excepted.
Section 5.9 Environmental Audits. At the election and expense of SouthTrust,
the Company will, with respect to each parcel of real property that the Company,
the Bank or any of their respective subsidiaries owns, leases or subleases,
procure and deliver to SouthTrust, at least thirty (30) days prior to the
Effective Time of the Merger, an environmental audit, which audit shall be
reasonably acceptable to and shall be conducted by a firm reasonably acceptable
to SouthTrust; provided, however, that in the event the Company, the Bank or any
of their respective subsidiaries acquires a parcel of real property after the
date of this Agreement, and owns, leases or subleases such parcel within
forty-five (45) days prior to the Effective Time of the Merger, SouthTrust may
elect to have an environmental audit conducted on the property at the expense of
the Company.
Section 5.10 Title Insurance. At the election of SouthTrust, the Company
will, at its own expense, with respect to each parcel of real property that the
Company, the Bank or any of their respective subsidiaries owns, leases or
subleases (with the exception of the branch located in the Wal-Mart store),
procure and deliver to SouthTrust, at least thirty (30) days prior to the
Effective Time of the Merger, a commitment to issue owner's title insurance in
such amounts and by such insurance company reasonably acceptable to SouthTrust,
which policy shall be free of all material exceptions to SouthTrust's reasonable
satisfaction.
Section 5.11 Surveys. At the election of SouthTrust, with respect to each
parcel of real property as to which a title insurance policy is to be procured
pursuant to Section 5.10, the Company, at its own expense, will procure and
deliver to SouthTrust at least thirty (30) days prior to the Effective Time of
the Merger, a survey of such real property, which survey shall be reasonably
acceptable to and shall be prepared by a licensed surveyor reasonably acceptable
to SouthTrust, disclosing the locations of all improvements, easements,
sidewalks, roadways, utility lines and other matters customarily shown on such
surveys and showing access affirmatively to public streets and roads and
providing the legal description of the property in a form suitable for recording
and insuring the title thereof (the "Survey"). The Survey shall not disclose any
survey defect or encroachment from or onto such real property that has not been
cured or insured over prior to the Effective Time of the Merger.
Section 5.12 Consents to Assign and Use Leased Premises. With respect to the
leases disclosed in Disclosure Schedule 3.14(b), the Company will, or shall
cause the Bank and each applicable subsidiary of the Company and the Bank to,
obtain all Consents necessary or appropriate to transfer and assign all right,
title and interest of the Company, the Bank and their respective subsidiaries to
ST-Bank and to permit the use and operation of the leased premises by ST-Bank.
A-33
<PAGE> 132
Section 5.13 Exemption Under Anti-Takeover Statutes. Prior to the Effective
Time of the Merger, the Company and SouthTrust will use its best efforts to take
all steps required to exempt the transactions contemplated by this Agreement
from any applicable state anti-takeover law.
Section 5.14 Conforming Accounting and Reserve Policies. At the request of
SouthTrust, the Company shall immediately prior to Closing establish and take
such reserves and accruals as SouthTrust reasonably shall request to conform the
Bank's loan, accrual, reserve and other accounting policies to the policies of
ST-Bank, provided however, such requested conforming adjustment shall not be
taken into account as having a Material Adverse Effect on the Company.
Section 5.15 Publicity. Except as otherwise required by law or the rules of
NASDAQ, so long as this Agreement is in effect, neither ST-Sub nor the Company
shall, or shall permit any of their respective subsidiaries or Affiliates to,
issue or cause the publication of any press release or other public announcement
with respect to, or otherwise make any public statement concerning, the
transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld. In the event such press
release, public statement or public announcement is required by law, the
announcing party will give the other party advance notice of such and provide a
copy of the proposed release, statement or announcement to the other party.
Section 5.16 Compliance Matters. Prior to the Effective Time of the Merger,
the Company shall take, or cause to be taken, all steps reasonably requested by
SouthTrust to cure any deficiencies in regulatory compliance by the Company, the
Bank or any of their respective subsidiaries, including compliance with
Regulations Z and CC of the FRB; provided that neither SouthTrust nor ST-Sub
shall be responsible for discovering or have any obligation to disclose the
existence of such defects to the Company nor shall SouthTrust or ST-Sub have any
liability resulting from such deficiencies or attempts to cure them.
Section 5.17 Subsidiary Merger Agreement. Prior to the effective time of the
Merger, ST-Bank, and the Bank shall have executed and delivered the Subsidiary
Merger Agreement substantially in the form annexed hereto as EXHIBIT 5.17 and
the Company shall have voted by action by written consent or as otherwise
required the shares of capital stock of the Bank held by the Company in favor of
such Subsidiary Merger Agreement and the transactions contemplated thereby.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
Section 6.1 Best Efforts; Cooperation. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts
promptly to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or otherwise, including attempting to obtain all necessary
Consents, to consummate and make effective, as soon as practicable, the
transactions contemplated by this Agreement.
Section 6.2 Regulatory Matters. (a) Within thirty (30) days following the
execution and delivery of this Agreement, SouthTrust and the Company shall cause
to be prepared and filed all required applications and filings with the
Regulatory Authorities which are necessary or contemplated for the obtaining of
the Consents of the Regulatory Authorities or consummation of the Merger. Such
applications and filings shall be in such form as may be prescribed by the
respective government agencies and shall contain such information as they may
require. The parties hereto will cooperate with each other and use their best
efforts to prepare and execute all necessary documentation, to effect all
necessary or contemplated filings and to obtain all necessary or contemplated
permits, consents, approvals, rulings and authorizations of government agencies
and third parties which are necessary or contemplated to consummate the
transactions contemplated by this Agreement, including, without limitation,
those required or contemplated from the Regulatory Authorities, and the
shareholders of the Company. Each of the parties
A-34
<PAGE> 133
shall have the right to review and approve in advance, which approval shall not
be unreasonably withheld, any filing made with, or written material submitted
to, any government agency in connection with the transactions contemplated by
this Agreement.
(b) Each party hereto will furnish the other party with all
information concerning itself, its subsidiaries, directors, trustees, officers,
shareholders and depositors, as applicable, and such other matters as may be
necessary or advisable in connection with any statement or application made by
or on behalf of any such party to any governmental body in connection with the
transactions, applications or filings contemplated by this Agreement. Upon
request, the parties hereto will promptly furnish each other with copies of
written communications received by them or their respective subsidiaries from,
or delivered by any of the foregoing to, any governmental body in respect of the
transactions contemplated hereby.
Section 6.3 Other Matters. (a) The parties acknowledge that nothing in this
Agreement shall be construed as constituting an employment agreement between
SouthTrust or any of its affiliates and any officer or employee of the Company,
the Bank or any of their respective subsidiaries or an obligation on the part of
SouthTrust or any of its affiliates to employ any such officers or employees.
(b) The parties agree that appropriate steps shall be taken to
terminate the First Bank 401(k) Profit Sharing Plan (the "Company Savings Plan")
as of a date prior to the Effective Time of the Merger or as promptly as
practicable thereafter. SouthTrust shall take appropriate steps to wind up the
Company Savings Plan and distribute the assets of its trust in accordance with
the terms of the Company Savings Plan and applicable law, following the
termination of the Company Savings Plan and receipt of a favorable determination
letter from the Internal Revenue Service relating to such termination. In
addition, the parties agree that appropriate steps shall be taken to terminate
all employee benefit plans of the Company, the Bank or any of their respective
subsidiaries other than the Company Savings Plan and that certain Split Dollar
Agreement between Frederick C. Nixon and the Bank, dated March 24, 1999,
immediately prior to, at or as soon as administratively feasible following the
Effective Time of the Merger provided that the conditions of this Subsection (b)
and of paragraphs (i)-(ii) below are then met and provided further that all
employees of the Company, the Bank or any of their respective subsidiaries who
were participating immediately prior to the Merger in employee benefit plans of
the Company, the Bank or any of their respective subsidiaries (other than the
Company Savings Plan) for which SouthTrust maintains a corresponding plan shall
commence participation in SouthTrust's corresponding plan upon the later of the
Effective Time of the Merger or the date of termination of coverage under the
Company's employee benefit plans of the Company, the Bank or any of their
respective subsidiaries without any gap or interruption in coverage (including
any gap affecting any Target employee's dependents), whether a gap in time of
coverage or in waiting or elimination periods. Subject to Section 6.4(c) hereof
and except as otherwise specifically provided below, SouthTrust agrees that the
officers and employees of the Company, the Bank or any of their respective
subsidiaries who SouthTrust or its subsidiaries employ shall be eligible to
participate in SouthTrust's employee benefit plans, including welfare and fringe
benefit plans, sick leave, vacation, holiday pay and similar payroll practices,
on the same basis as and subject to the same conditions as are applicable to any
newly-hired employee of SouthTrust; provided, however, that:
(i) with respect to each SouthTrust group health plan
(within the meaning of Section 5000(b)(1) of the Code), SouthTrust
shall credit each such employee for eligible expenses incurred by
such employee and his or her dependents (if applicable) under the
group medical insurance plan of the Company, the Bank or any of
their respective subsidiaries during the current calendar year for
purposes of satisfying the deductible provisions under SouthTrust's
plan for such current year, and SouthTrust shall waive all waiting
periods under said plans for pre-existing conditions; and
(ii) credit for each such employee's past service with the
Company, the Bank or any of their respective subsidiaries prior to
the Effective Time of the Merger ("Past Service Credit") shall be
given by SouthTrust to employees for purposes of:
(1) determining vacation, sick leave and other
leave benefits and accruals, in accordance with the
established policies of SouthTrust; and
A-35
<PAGE> 134
(2) establishing eligibility for participation in
and vesting under SouthTrust's welfare and fringe benefit
plans, and for purposes of determining the scheduling of
vacations and other determinations which are made based on
length of service.
(c) From and after the Applicable Date (as hereinafter defined) and
subject to applicable law, SouthTrust shall recognize the service of all Company
employees of the Company, the Bank or any of their respective subsidiaries for
purposes of determining eligibility to participate in, and vesting in accrued
benefits under the SouthTrust 401(k) Plan, the SouthTrust Employee Stock
Ownership Plan, the SouthTrust Corporation Employees' Cash Profit Sharing Plan
(the "ST Cash PS Plan"), and the SouthTrust Corporation Revised Retirement
Income Plan (the "ST Retirement Plan") as follows:
(i) for purposes of vesting and eligibility under the
SouthTrust 401(k) Plan, the SouthTrust Employee Stock Ownership
Plan, the ST Cash PS Plan and the ST Retirement Plan, all Past
Service Credit shall be credited as if such service had been
performed for SouthTrust and all service performed for SouthTrust
from and after the Effective Time of the Merger shall be credited;
and
(ii) for purposes of benefit accrual under the ST Retirement
Plan, all service performed for SouthTrust from and after the
Applicable Date shall be credited.
The "Applicable Date" with respect to a plan is as specified below:
<TABLE>
<CAPTION>
Plan Applicable Date
-------------------------- -------------------------------------------------------
<S> <C>
SouthTrust 401(k) Plan The Eligibility Plan Entry Date as defined in such plan
SouthTrust Employee Stock January 1
Ownership Plan
ST Cash PS Plan January 1
ST Retirement Plan January 1
SouthTrust Discount Stock January 1
Payroll Purchase Plan
</TABLE>
Section 6.4 Indemnification (a) The Company agrees to indemnify, defend
and hold harmless SouthTrust and its subsidiaries and each of their respective
present and former officers, directors, employees and agents, from and against
all losses, expenses, claims, damages or liabilities to which any of them may
become subject under applicable laws (including, but not limited to, the
Securities Act of 1933 or the Securities Exchange Act of 1934), and will
reimburse each of them for any legal, accounting or other expenses reasonably
incurred in connection with investigating or defending any such actions, whether
or not resulting in liability, insofar as such losses, expenses, claims, damages
or liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of material fact contained in the Registration Statement, the
Proxy Statement or any application for the approval of the transactions
contemplated by this Agreement) filed with any Regulatory Authority or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the Statements therein, in light of the
circumstances under which they were made not misleading.
(b) SouthTrust agrees to indemnify, defend and hold harmless the
Company, the Bank, and their respective subsidiaries and each of their
respective present and former officers, directors, employees and agents, from
and against all losses, expenses, claims, damages or liabilities to which any of
them may become subject under applicable laws (including, but not limited to,
the Securities Act of 1933 or the Securities Exchange Act of 1934), and will
reimburse each of them for any legal, accounting or other expenses reasonably
incurred in connection with investigating or defending any such actions, whether
or not resulting in liability, insofar as such losses, expenses, claims, damages
or liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of material fact contained in the Registration Statement, the
Proxy Statement or any application for the approval of the
A-36
<PAGE> 135
transactions contemplated by this Agreement) filed with any Regulatory Authority
or arise out of or are based upon the omission or alleged omission to state
therein a material fact necessary to make the Statements therein, in light of
the circumstances under which they were made not misleading.
(c) After the Effective Time of the Merger, directors, officers
and employees of the Company and the Bank shall have indemnification rights
having prospective application only. These prospective indemnification rights
shall consist of such rights to which directors, officers and employees of
SouthTrust and its subsidiaries would be entitled under the Restated Certificate
of Incorporation and Bylaws of SouthTrust or the particular subsidiary for which
they are serving as officers, directors or employees and under such directors'
and officers' liability insurance policy as SouthTrust may then make available
to officers, directors and employees of SouthTrust and its subsidiaries. In
addition to and not as a limitation on the foregoing, it is specifically
acknowledged, agreed and understood that no director, officer or employee of the
Company or the Bank shall be entitled to any indemnification for any claims or
actions arising out of or related to the transactions described in Disclosure
Schedule 7.6.
Section 6.5 Current Information. During the period from the date of this
Agreement to the Effective Time of the Merger or the time of termination or
abandonment hereunder, SouthTrust will cause one or more of its designated
representatives to confer on a regular and frequent basis with the Company and
to report with respect to the general status and the ongoing operations of
SouthTrust.
Section 6.6 Registration Statement. SouthTrust shall cause the
Registration Statement to be filed and shall use its best efforts to cause such
Registration Statement to become effective with the SEC and any such state
securities authority prior to the Effective Time of the Merger, which
Registration Statement shall in all material respects conform to the
requirements of the Securities Act of 1933 and the general rules and regulations
of the SEC under the Securities Act of 1933. The Company will furnish to
SouthTrust the information required to be included in the Registration Statement
with respect to the business and affairs of the Company, the Bank and their
respective subsidiaries before such Registration Statement is filed with the SEC
and again before any amendments are filed. SouthTrust shall take all actions
required to qualify or obtain exemptions from such qualifications for the
SouthTrust Shares to be issued in connection with the transactions contemplated
by this Agreement under applicable federal securities laws and state blue sky
securities laws, as appropriate.
Section 6.7 Reservation of Shares. SouthTrust, on behalf of ST-Sub,
shall reserve for issuance such number of SouthTrust Shares as shall be
necessary to pay the consideration contemplated in this Agreement. If at any
time the aggregate number of SouthTrust Shares remaining unissued (or in
treasury) shall not be sufficient to meet such obligation, SouthTrust shall take
all appropriate actions to increase the amount of its authorized common stock.
Section 6.8 Consideration. SouthTrust shall issue the SouthTrust Shares
and shall pay or cause to be paid all cash payments as and when the same shall
be required to be issued and paid pursuant to this Agreement.
ARTICLE VII
MUTUAL CONDITIONS TO CLOSING
The obligations of SouthTrust and ST-Sub on the one hand, and the
Company, on the other hand, to consummate the transactions provided for herein
shall be subject to the satisfaction of the following conditions, unless waived
as hereinafter provided for:
Section 7.1 Shareholder Approval. The Merger shall have been approved by
the requisite vote of the shareholders of the Company and the sole shareholder
of ST-Sub.
Section 7.2 Regulatory Approvals. All necessary Consents of the
Regulatory Authorities shall have been obtained and all notice and waiting
periods required by law to pass after receipt of such Consents shall have
passed, and all conditions to consummation of the Merger set forth in such
Consents shall have been satisfied.
A-37
<PAGE> 136
Section 7.3 Legal Proceedings. No court or governmental or regulatory
authority of any competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, order or similar restriction (whether temporary,
preliminary or permanent) or taken any other action which prohibits or makes
illegal the consummation of the transactions contemplated by this Agreement.
Section 7.4 Registration Statement and Listing. The Registration
Statement shall have been declared effective by the SEC, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no action, suit, proceeding or investigation by the SEC to suspend
the effectiveness of the Registration Statement shall have been initiated or
threatened by the SEC or any other regulatory authority. SouthTrust shall have
received all federal and state securities laws, or "Blue Sky" permits or other
authorizations or confirmations as to the availability of exemptions from
registration requirements, as may be necessary to issue the SouthTrust Shares
pursuant to the terms of this Agreement.
Section 7.5 Matters Relating to Employment Agreements. The employment
agreements between ST-Bank and each of Frederick C. Nixon, Susie B. Andrews and
Tami Chandler, set forth as EXHIBITS 7.5(A), (B) and (C) respectively, shall be
in full force and effect and shall not have been terminated by either Nixon,
Andrews or Chandler.
Section 7.6 Certain Stock Purchases. As soon as practicable following
the execution of this Agreement and in any event prior to the date of mailing of
the Proxy Statement, the Company will use its best efforts to cause the
individuals listed in Disclosure Schedule 7.6 (or otherwise identified by the
parties hereto) to offer to rescind the transactions listed in Disclosure
Schedule 7.6 in a manner mutually acceptable to SouthTrust and the Company. In
the event that any such individuals refuses or fails to offer to rescind any
such transaction, the Directors of the Company, jointly and severally, shall
defend, indemnify and hold harmless SouthTrust from and against any and all
liability, loss, claims or damages that may arise from or out of such
transactions or such failure or refusal.
(b) In addition to the foregoing, with respect to the individuals listed
and identified in Disclosure Schedule 7.6 (or otherwise identified by the
parties hereto) who are non-executive employees of the Company or the Bank, for
each transaction rescinded by such individuals, the Company will pay to the
respective non-executive employee an amount equal to the difference between (i)
the amount refunded to rescind the transaction and (ii) the product of the
market price of SouthTrust Common Stock at the close of business on the day
before the recision is effected multiplied by the Conversion Ratio.
Furthermore, with respect to each non-executive employee that rescinds such a
transaction, the Company will pay to each such non-executive employee an amount
sufficient to gross up the tax liability resulting to such non-executive
employee as a result of the payment described in the foregoing sentence. The
non-executive employees who are subject to this Section 7.6(b), and the
respective transactions, are identified on Disclosure Schedule 7.6.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF SOUTHTRUST AND ST-SUB
The obligations of SouthTrust and ST-Sub to consummate the Merger are
subject to the fulfillment of each of the following conditions, unless waived as
hereinafter provided for:
Section 8.1 Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement and in any certificate or
document delivered pursuant hereto shall be true and correct as of the date of
this Agreement and as of all times up to and including the Effective Time of the
Merger (as though made on and as of the Effective Time of the Merger except to
the extent such representations and warranties are by their express provisions
made as of a specified date and except for changes therein contemplated by this
Agreement).
Section 8.2 Performance of Obligations. The Company, the Bank and their
respective subsidiaries shall have performed all covenants, obligations and
agreements required to be performed by them under this Agreement prior to the
Effective Time of the Merger.
A-38
<PAGE> 137
Section 8.3 Certificate Representing Satisfaction of Conditions. The
Company shall have delivered to SouthTrust and ST-Sub a certificate of the Chief
Executive Officer of the Company dated as of the Closing Date as to the
satisfaction of the matters described in Sections 8.1 and 8.2 hereof, and such
certificate shall be deemed to constitute additional representations,
warranties, covenants, and agreements of the Company under Article III of this
Agreement.
Section 8.4 Absence of Adverse Facts. There shall have been no
determination by SouthTrust that any fact, event or condition exists or has
occurred that, in the reasonable judgment of SouthTrust, (a) would have a
Material Adverse Effect on, or which may be foreseen to have a Material Adverse
Effect on, the Company or the consummation of the transactions contemplated by
this Agreement, (b) would be of such significance with respect to the business
or economic benefits expected to be obtained by SouthTrust pursuant to this
Agreement as to render inadvisable the consummation of the transactions pursuant
to this Agreement or (c) would be materially adverse to the interests of
SouthTrust on a consolidated basis or (d) would render the Merger or the other
transactions contemplated by this Agreement impractical because of any state of
war, national emergency, banking moratorium or general suspension of trading on
NASDAQ, the New York Stock Exchange, Inc. or other national securities exchange.
Section 8.5 Opinion of Counsel. SouthTrust shall have received an
opinion of counsel from Pennington, Moore, Wilkinson, Bell & Dunbar, P.A. or
other counsel to the Company acceptable to SouthTrust in substantially the form
set forth in EXHIBIT 8.5 hereof.
Section 8.6 Consents Under Agreements. The Company shall have obtained
the consent or approval of each person (other than the Consents of the
Regulatory Authorities) whose consent or approval shall be required in order to
permit the succession by the Surviving Corporation to any obligation, right or
interest of the Company, the Bank and any of their respective subsidiaries under
any loan or credit agreement, note, mortgage, indenture, lease (other than any
lease or sublease described in and set forth on Disclosure Schedule 3.14(b)),
license, or other agreement or instrument, except those for which failure to
obtain such consents and approvals would not in the opinion of SouthTrust,
individually or in the aggregate, have a Material Adverse Effect on the
Surviving Corporation or upon the consummation of the transactions contemplated
by this Agreement.
Section 8.7 Consents Relating to Leased Real Property. The Company shall
have delivered evidence that each Consent described in Section 3.14(c) shall
have been obtained by the Company, the Bank and any of their respective
subsidiaries, as appropriate.
Section 8.8 Material Condition. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger by any Regulatory Authority which, in connection with
the grant of any Consent by any Regulatory Authority, imposes, in the judgment
of SouthTrust, any material adverse requirement upon SouthTrust or its
subsidiaries, including, without limitation, any requirement that SouthTrust
sell or dispose of any significant amount of the assets of the Company or the
Bank or any other banking or other Subsidiary of SouthTrust, provided that,
except for any such requirement relating to the above-described sale or
disposition of any significant assets of the Company or the Bank or any banking
or other subsidiary of SouthTrust, no such term or condition imposed by any
Regulatory Authority in connection with the grant of any Consent by any
Regulatory Authority shall be deemed to be a material adverse requirement unless
it materially differs from terms and conditions customarily imposed by any such
entity in connection with the acquisition of Bank under similar circumstances.
Section 8.9 Acknowledgment of Option Conversion. Each holder of a
Company Option outstanding immediately prior to the Effective Time of the Merger
shall have executed and delivered to SouthTrust such documents as SouthTrust,
with the advice of counsel, may deem necessary to reflect the conversion and
assumption of the Company Options provided for in Section 2.2.
A-39
<PAGE> 138
Section 8.10 Outstanding Shares of the Company. The total number of the
Company Shares outstanding as of the Effective Time of the Merger and the total
number of the Company Shares covered by any option, warrant, commitment, or
other right or instrument to purchase or acquire any Company Shares that are
outstanding as of the Effective Time of the Merger, including any securities or
rights convertible into or exchangeable for Company Shares, shall not exceed
422,000 shares in the aggregate.
Section 8.11 Dissenters. The holders of not more than five percent (5%)
of the outstanding Company Shares shall have elected to exercise their right to
dissent from the Merger and demand payment in cash for the fair or appraised
value of their shares.
Section 8.12 Pooling. SouthTrust, in the exercise of its discretion, and
after taking into account the holders of the outstanding Company Shares who
shall have elected to exercise their right to dissent from the Merger and demand
payment in cash for the fair or appraised value of their shares, shall not have
determined that the transactions contemplated by this Agreement fail to qualify
for pooling of interests accounting treatment.
Section 8.13 Certification of Claims. The Company shall have delivered a
certificate to SouthTrust that the Company is not aware of any pending or
threatened claim under the directors and officers insurance policy or the
fidelity bond coverage of the Company, the Bank or any of their respective
subsidiaries.
Section 8.14 Litigation. There shall be no actual or threatened causes
of action, investigations or proceedings (i) challenging the validity or
legality of this Agreement or the consummation of the transactions contemplated
by this Agreement, or (ii) seeking damages in connection with the transactions
contemplated by this Agreement, or (iii) seeking to restrain or invalidate the
transactions contemplated by this Agreement, which, in the case of (i) through
(iii), and in the judgment of SouthTrust, based upon advice of counsel, would
have a Material Adverse Effect with respect to the interests of SouthTrust.
Section 8.15 Increase in Borrowing. As of the date of any Financial
Statement of the Company, any Financial Statement of the Bank or any Call Report
of the Bank subsequent to the execution of this Agreement, including the date of
the Financial Statements of the Company, the Financial Statements of the Bank
and the Call Report of the Bank that immediately precede the Effective Time of
the Merger, there shall not have been any material increase in the loan
agreements, notes or borrowing arrangements described in (i) through (iii) of
Section 3.5 and in Disclosure Schedule 3.5.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligation of the Company to consummate the Merger as contemplated
herein is subject to each of the following conditions, unless waived as
hereinafter provided for:
Section 9.1 Representations and Warranties. The representations and
warranties of SouthTrust and ST-Sub contained in this Agreement or in any
certificate or document delivered pursuant to the provisions hereof shall be
true and correct as of the date of this Agreement and as of the Effective Time
of the Merger (as though made on and as of the Effective Time of the Merger,
except to the extent such representations and warranties are by their express
provisions made as of a specified date and except for changes therein
contemplated by this Agreement.
Section 9.2 Performance of Obligations. SouthTrust and ST-Sub shall have
performed all covenants, obligations and agreements required to be performed by
them and under this Agreement prior to the Effective Time of the Merger.
Section 9.3 Certificate Representing Satisfaction of Conditions.
SouthTrust and ST-Sub shall have delivered to the Company a certificate dated as
of the Effective Time of the Merger as to the satisfaction of the
A-40
<PAGE> 139
matters described in Sections 9.1 and 9.2 hereof, and such certificate shall be
deemed to constitute additional representations, warranties, covenants, and
agreements of SouthTrust and ST-Sub under Article IV of this Agreement.
Section 9.4 Absence of Adverse Facts. There shall have been no
determination by the Company that any fact, event or condition exists or has
occurred that, in the reasonable judgment of the Company, (a) would have a
Material Adverse Effect on, or which may be foreseen to have a Material Adverse
Effect on SouthTrust on a consolidated basis or the consummation of the
transactions contemplated by this Agreement, or (b) would render the Merger or
the other transactions contemplated by this Agreement impractical because of any
state of war, national emergency, banking moratorium, or a general suspension of
trading on NASDAQ, the New York Stock Exchange, Inc. or other national
securities exchange.
Section 9.5 Consents Under Agreements. SouthTrust and ST-Sub shall have
obtained the consent or approval of each person (other than the Consents of
Regulatory Authorities) whose consent or approval shall be required in
connection with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease, license or other agreement or
instrument, except those for which failure to obtain such consents and approvals
would not, in the judgment of the Company, individually or in the aggregate,
have a Material Adverse Effect upon the consummation of the transactions
contemplated hereby.
Section 9.6 Opinion of Counsel. The Company shall have received the
opinion of Bradley Arant Rose & White LLP, counsel to SouthTrust, dated the
Effective Time of the Merger in substantially the form set forth in EXHIBIT 9.6
hereof.
Section 9.7 SouthTrust Shares. The SouthTrust Shares to be issued in
connection herewith shall be duly authorized and validly issued and, fully paid
and nonassessable, issued free of preemptive rights and free and clear of all
liens and encumbrances created by or through SouthTrust.
Section 9.8 Tax Opinion. The Company shall have received an opinion of
Bradley Arant Rose & White LLP on or before the Effective Time of the Merger, to
the effect, among others, that the Merger will constitute a tax-free
reorganization within the meaning of Section 368 of the Code and that no gain or
loss will be recognized by the shareholders of Company to the extent that they
receive SouthTrust Shares in exchange for their Company Shares in the Merger.
Section 9.9 Fairness Opinion. The Board of Directors of the Company
shall have received a letter from Allen C. Ewing & Co. (the "Fairness Opinion")
dated prior to or as of the date that the Proxy Statement is delivered to the
shareholders of the Company in connection with any meeting of the shareholders
of the Company to approve the Merger, stating that the Merger is fair, from a
financial point of view, and the Fairness Opinion shall not have been withdrawn
prior to or as of the Effective Time of the Merger.
ARTICLE X
TERMINATION, WAIVER AND AMENDMENT
Section 10.1 Termination. This Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time of the Merger:
(a) by the mutual consent in writing of the Board of Directors
of SouthTrust, ST-Sub and the Company; or
(b) by the Board of Directors of SouthTrust, ST-Sub, or the
Company if the Merger shall not have occurred on or prior to March 31, 2001,
provided that the failure to consummate the Merger on or before such date is not
caused by any breach of any of the representations, warranties, covenants or
other agreements contained herein by the party electing to terminate pursuant to
this Section 10.1(b);
A-41
<PAGE> 140
(c) by the Board of Directors of SouthTrust, ST-Sub or the
Company (provided that the terminating party is not then in breach of any
representation or warranty contained in this Agreement under the applicable
standard set forth in Section 8.1 of this Agreement in the case of the Company
and Section 9.1 in the case of SouthTrust or in breach of any covenant or
agreement contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement which
cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching party of such inaccuracy and which inaccuracy
would provide the terminating party the ability to refuse to consummate the
Merger under the applicable standard set forth in Section 8.1 of this Agreement
in the case of the Company and Section 9.1 of this Agreement in the case of
SouthTrust; or
(d) by the Board of Directors of SouthTrust, ST-Sub or the
Company (provided that the terminating party is not then in breach of any
representation or warranty contained in this Agreement under the applicable
standard set forth in Section 8.1 of this Agreement in the case of the Company
and Section 9.1 in the case of SouthTrust or in breach of any covenant or other
agreement contained in this Agreement) in the event of a material breach by the
other party of any covenant or agreement contained in this Agreement which
cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching party of such breach; or
(e) by the Board of Directors of SouthTrust, ST-Sub or the
Company in the event (i) any Consent of any Regulatory Authority required for
consummation of the Merger and the other transactions contemplated hereby shall
have been denied by final nonappealable action of such authority or if any
action taken by such authority is not appealed within the time limit for appeal,
or (ii) the shareholders of the Company fail to vote their approval of this
Agreement and the Merger and the transactions contemplated hereby as required by
applicable law at the Company's shareholders' meeting where the transactions
were presented to such shareholders for approval and voted upon;
(f) by the Board of Directors of SouthTrust, ST-Sub or the
Company (provided that the terminating party is not then in breach of any
representation or warranty contained in this Agreement under the applicable
standard set forth in Section 8.1 of this Agreement in this case of the Company
and Section 9.1 in the case of SouthTrust or in breach of any covenant or
agreement contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such party to consummate the Merger (other than
as contemplated by Section 10.1(e) of this Agreement) cannot be satisfied or
fulfilled by the date specified in Section 10.1(b) of this Agreement as the date
after which such party may terminate this Agreement; or
(g) by majority vote of the members of the entire Board of
Directors of the Company at any time during the five-business-day period
commencing on the first day following the end of the Determination Period, if
the Average Closing Price of SouthTrust Shares for the Determination Period
shall be less than $22.00.
For purposes of this Section 10.1(g), the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the daily last
sales prices of SouthTrust Shares as reported on NASDAQ (as reported by The Wall
Street Journal or, if not reported thereby, another authoritative source as
chosen by SouthTrust) during the Determination Period.
"Determination Period" shall mean the ten consecutive full
trading day period beginning 45 days prior to the Closing Date.
Section 10.2 Effect of Termination; Break-Up and Termination Fees. In
the event of the termination and abandonment of this Agreement pursuant to
Section 10.1 of this Agreement, the Agreement shall terminate and have no
effect, except that:
(a) The provisions of this Section 10.2, Section 10.5 and Article
11 of this Agreement shall survive any such termination and abandonment;
A-42
<PAGE> 141
(b) If, after the date of this Agreement, (i) an Acquisition
Transaction (as defined below) is offered, presented or proposed to the Company
or its shareholders, (ii) thereafter this Agreement and the Merger are
disapproved by the Company or by the shareholders of the Company and (iii)
within one year after termination of this Agreement as a result of disapproval
by the Company or by the shareholders of the Company, an Acquisition Transaction
is consummated or a definitive agreement is entered into by the Company relating
to an Acquisition Transaction (a "Trigger Event"), then immediately upon the
occurrence of a Trigger Event and in lieu of any other rights and remedies of
SouthTrust, the Company shall pay SouthTrust a cash amount of $1,000,000.00 as
an agreed-upon break-up fee (the "Break-Up Fee"). For purposes of this Section
10.2, "Acquisition Transaction" shall, with respect to the Company, mean any of
the following: (a) a merger or consolidation, or any similar transaction (other
than the Merger) of any company with either the Company, the Bank or any of
their respective subsidiaries, (b) a purchase, lease or other acquisition of all
or substantially all the assets of either the Company, the Bank or any of their
respective subsidiaries, (c) a purchase or other acquisition of "beneficial
ownership" by any "person" or "group" (as such terms are defined in Section
13(d)(3) of the Securities Exchange Act) (including by way of merger,
consolidation, share exchange, or otherwise) which would cause such person or
group to become the beneficial owner of securities representing 35% or more of
the voting power of either the Company, the Bank or any of their respective
subsidiaries, but excluding the acquisition of beneficial ownership by an
existing shareholder of the Company or by any employee benefit plan maintained
or sponsored by the Company, or (d) a bona fide tender or exchange offer to
acquire securities representing 35% or more of the voting power of the Company;
(c) The Company and SouthTrust agree that the Break-Up Fee
is fair and reasonable in the circumstances. If a court of competent
jurisdiction shall nonetheless, by a final, nonappealable judgment, determine
that the amount of any such Break-Up Fee exceeds the maximum amount permitted by
law, then the amount of such Break-Up Fee shall be reduced to the maximum amount
permitted by law in the circumstances, as determined by such court of competent
jurisdiction;
(d) Notwithstanding the foregoing, if this Agreement is
terminated by SouthTrust for any reason other than as provided in Section
10.1(b), and the Company is not in breach of any of its representations,
warranties, covenants or other agreements contained herein, then SouthTrust
shall pay to the Company a termination fee in an amount equal to $150,000. Such
payment shall be made within one business day following the notice of
termination of this Agreement.
(e) Notwithstanding the foregoing, if this Agreement is
terminated by the Company for any reason other than as provided in Section
10.1(b) or 10.1(g), and SouthTrust is not in breach of any of its
representations, warranties, covenants or other agreements contained herein,
then the Company shall pay to SouthTrust a termination fee in an amount equal to
$150,000. Such payment shall be made within one business day following the
notice of termination of this Agreement.
Section 10.3 Effect of Wrongful Termination. Notwithstanding the
foregoing provisions of Section 10.2, if the Merger fails to be consummated
because of the wrongful termination of this Agreement or a willful, knowing or
grossly negligent breach by SouthTrust, or ST-Sub on the one hand, or the
Company, on the other hand, of any representations, warranty, covenant,
undertaking, term or restriction contained herein, the other party shall have
all rights and remedies afforded by law.
Section 10.4 Amendments. To the extent permitted by law, this
Agreement may be amended by a subsequent writing signed by each of SouthTrust,
ST-Sub, and the Company.
Section 10.5 Waivers. Subject to Section 11.11 hereof, prior to or at
the Effective Time of the Merger, SouthTrust and ST-Sub, on the one hand, and
the Company, on the other hand, shall have the right to waive any default in the
performance of any term of this Agreement by the other, to waive or extend the
time for the compliance or fulfillment by the other of any and all of the
other's obligations under this Agreement and to waive any or all of the
conditions to its obligations under this Agreement, except any condition, which,
if not satisfied, would result in the violation of any law or any applicable
governmental regulation.
A-43
<PAGE> 142
Section 10.6 Non-Survival of Representations and Warranties. The
representations, warranties, covenants or agreements in this Agreement or in any
instrument delivered by SouthTrust or ST-Sub, or the Company shall not survive
the Effective Time of Merger, except that Sections 5.3(b), 6.3(b), 6.4, 6.6 and
7.6 shall survive the Effective Time of the Merger, and any representation,
warranty or agreement in any agreement, contract, report, opinion, undertaking
or other document or instrument delivered hereunder in whole or in part by any
person other than SouthTrust, ST-Sub, the Company (or directors and officers
thereof in their capacities as such) shall survive the Effective Time of Merger;
provided that no representation or warranty of SouthTrust, ST-Sub or the Company
contained herein shall be deemed to be terminated or extinguished so as to
deprive SouthTrust or ST-Sub, on the one hand, and the Company, on the other
hand, of any defense at law or in equity which any of them otherwise would have
to any claim against them by any person, including, without limitation, any
shareholder or former shareholder of either party. No representation or warranty
in this Agreement shall be affected or deemed waived by reason of the fact that
SouthTrust, ST-Sub or the Company and/or its representatives knew or should have
known that any such representation or warranty was, is, might be or might have
been inaccurate in any respect.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement among SouthTrust, ST-Sub and the
Company with respect to the transactions contemplated hereunder and this
Agreement supersedes all prior arrangements or understandings with respect
thereto, whether written or oral. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person, firm, corporation or entity,
other than the parties hereto and their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
Section 11.2 Definitions. Except as otherwise provided herein, the
capitalized terms set forth below (in their singular and plural forms as
applicable) shall have the following meanings:
"Affiliate" of a person shall mean (i) any other person directly
or indirectly through one or more intermediaries controlling, controlled by or
under common control of such person, (ii) any officer, director, partner,
employer or direct or indirect beneficial owner of any 10% or greater equity of
voting interest of such person or (iii) any other persons for which a person
described in clause (ii) acts in any such capacity.
"Consent" shall mean a consent, approval or authorization,
waiver, clearance, exemption or similar affirmation by any person pursuant to
any lease, contract, permit, law, regulation or order.
"Environmental Law" means any applicable federal, state or local
law, statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree or injunction relating to (i) the
protection, preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water supply,
surface soil, subsurface soil, plant and animal life or any other natural
resource), and/or (ii) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of any substance presently listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether by
type or by substance as a component; "Loan Property" means any property owned by
the Company, the Bank or any of their subsidiaries, or in which the Company, the
Bank or any of their subsidiaries holds a security interest, and, where required
by the context, includes the owner or operator of such property, but only with
respect to such property; "Hazardous Material" means any pollutant, contaminant,
or hazardous substance within the meaning of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., or any
similar federal, state or local law; and "Participation Facility" means any
facility in which the Company, the Bank or any of their subsidiaries has engaged
in Participation in the Management of such facility, and, where required by the
context, includes the owner or
A-44
<PAGE> 143
operator of such facility, but only with respect to such facility;
"Participation in the Management" of a facility has the meaning set forth in 40
C.F.R.ss. 300.1100(c).
"Material Adverse Effect," with respect to any party, shall mean
any event, change or occurrence which, together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business or results of operation, financial performance or prospects of such
party and their respective subsidiaries, taken as a whole, or (ii) the ability
of such party to perform its obligations under this Agreement or to consummate
the Merger and the other transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Alabama
State Banking Department, the Office of the Comptroller of the State of Florida,
the Federal Trade Commission (the "FTC"), the United States Department of
Justice (the "Justice Department"), the Board of Governors of the Federal
Reserve System (the "FRB"), the Federal Deposit Insurance Corporation (the
"FDIC"), and all state regulatory agencies having jurisdiction over the parties,
the National Association of Securities Dealers, Inc., all national securities
exchanges and the Securities and Exchange Commission (the "SEC").
Section 11.3 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by first class or registered or certified mail, postage
prepaid, telegram or telex or other facsimile transmission addressed as follows:
If to the Company, then to:
First Bank Holding Company
1997 Capital Circle
Tallahassee, Florida 32312
Attention: Frederick C. Nixon
Fax: (850) 385-7427
with a copy to:
Pennington, Moore, Wilkinson, Bell & Dunbar, P.A.
215 South Monroe Street, 2nd Floor
Tallahassee, Florida 32301
Attention: Ben M. Wilkinson
Fax: (850) 222-2126
If to ST-Sub or SouthTrust, then to:
SouthTrust Corporation
420 North 20th Street
Birmingham, Alabama 35203
Attention: Alton E. Yother
Fax: (205) 254-5022
with a copy to:
Bradley Arant Rose & White LLP
2001 Park Place, Suite 1400
Birmingham, Alabama 35203
Attention: Paul S. Ware, Esq.
Fax: (205) 521-8800
A-45
<PAGE> 144
All such notices or other communications shall be deemed to have
been delivered (i) upon receipt when delivery is made by hand, (ii) on the third
(3rd) business day after deposit in the United States mail when delivery is made
by first class, registered or certified mail, and (iii) upon transmission when
made by telegram, telex or other facsimile transmission if evidenced by a sender
transmission completed confirmation.
Section 11.4 Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction or other competent authority to be invalid, void or unenforceable
or against public or regulatory policy, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall remain in full
force and effect and in no way shall be affected, impaired or invalidated, if,
but only if, pursuant to such remaining terms, provisions, covenants and
restrictions the Merger may be consummated in substantially the same manner as
set forth in this Agreement as of the later of the date this Agreement was
executed or last amended.
Section 11.5 Costs and Expenses. Expenses incurred by the Company on
the one hand and SouthTrust on the other hand, in connection with or related to
the authorization, preparation and execution of this Agreement, the solicitation
of shareholder approval and all other matters related to the closing of the
transactions contemplated hereby, including all fees and expenses of agents,
representatives, counsel and accountants employed by either such party or its
affiliates, shall be borne solely and entirely by the party which has incurred
same.
Section 11.6 Captions. The captions as to contents of particular
articles, sections or paragraphs contained in this Agreement and the table of
contents hereto are inserted only for convenience and are in no way to be
construed as part of this Agreement or as a limitation on the scope of the
particular articles, sections or paragraphs to which they refer.
Section 11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document with the same force and
effect as though all parties had executed the same document.
Section 11.8 Governing Law. This Agreement is made and shall be
governed by and construed in accordance with the laws of the State of Alabama
without respect to its conflicts of laws principles.
Section 11.9 Persons Bound; No Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, distributees, and assigns, but notwithstanding the
foregoing, this Agreement may not be assigned by any party hereto unless the
prior written consent of the other parties is first obtained (other than by
ST-Bank to another affiliate of SouthTrust).
Section 11.10 Exhibits and Schedules. Each of the exhibits and schedules
attached hereto is an integral part of this Agreement and shall be applicable as
if set forth in full at the point in the Agreement where reference to it is
made.
Section 11.11 Waiver. The waiver by any party of the performance of any
agreement, covenant, condition or warranty contained herein shall not invalidate
this Agreement, nor shall it be considered a waiver of any other agreement,
covenant, condition or warranty contained in this Agreement. A waiver by any
party of the time for performing any act shall not be deemed a waiver of the
time for performing any other act or an act required to be performed at a later
time. The exercise of any remedy provided by law, equity or otherwise and the
provisions in this Agreement for any remedy shall not exclude any other remedy
unless it is expressly excluded. The waiver of any provision of this Agreement
must be signed by the party or parties against whom enforcement of the waiver is
sought. This Agreement and any exhibit, memorandum or schedule hereto or
delivered in connection herewith may be amended only by a writing signed on
behalf of each party hereto.
Section 11.12 Construction of Terms. Whenever used in this Agreement,
the singular number shall include the plural and the plural the singular.
Pronouns of one gender shall include all genders. Accounting terms used and not
otherwise defined in this Agreement have the meanings determined by, and all
calculations with respect to accounting or financial matters unless otherwise
provided for herein, shall be computed in accordance with generally
A-46
<PAGE> 145
accepted accounting principles, consistently applied. References herein to
articles, sections, paragraphs, subparagraphs or the like shall refer to the
corresponding articles, sections, paragraphs, subparagraphs or the like of this
Agreement. The words "hereof", "herein", and terms of similar import shall refer
to this entire Agreement. Unless the context clearly requires otherwise, the use
of the terms "including", "included", "such as", or terms of similar meaning,
shall not be construed to imply the exclusion of any other particular elements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered, and their respective seals hereunto affixed, by their
officers thereunto duly authorized, and have caused this Agreement to be dated
as of the date and year first above written.
FIRST BANK HOLDING COMPANY
By: /s/ F. C. NIXON
-------------------------------------------
Name: F. C. Nixon
------------------------------------------
Its: Chief Executive Officer
ATTEST:
By: /s/ SUSIE B. ANDREWS
--------------------------
Name: Susie B. Andrews
------------------------
Its: Secretary
[CORPORATE SEAL]
SOUTHTRUST OF ALABAMA, INC.
By: /s/ JOHN D. BUCHANAN
--------------------------------------------
Name: John D. Buchanan
------------------------------------------
Its: Vice President
------------------------------------------
ATTEST:
By: /s/ ALTON E. YOTHER
----------------------------
Name: Alton E. Yother
------------------------
Its: Secretary
[CORPORATE SEAL]
A-47
<PAGE> 146
SOUTHTRUST CORPORATION
By: /s/ JOHN D. BUCHANAN
-----------------------------------------
Name: John D. Buchanan
---------------------------------------
Its: Senior Vice President
----------------------------------------
ATTEST:
By: /s/ ALTON E. YOTHER
-----------------------
Name: Alton E. Yother
---------------------
Its: Secretary
[CORPORATE SEAL]
The undersigned directors of First Bank Holding Company hereby execute this
Agreement for the purpose of evidencing their consent and agreement to Sections
1.3, 5.4 and 7.6 of this Agreement.
DIRECTORS:
/s/ KATHLEEN B. ATKINS
---------------------------------------------
Kathleen B. Atkins
/s/ MICHAEL L. BLANKENSHIP
---------------------------------------------
Michael L. Blankenship
/s/ WILLIAM E. CHILDERS
---------------------------------------------
William E. Childers
/s/ NANCY T. COUNCIL
---------------------------------------------
Nancy T. Council
/s/ WILLIAM G. DONNELLAN
---------------------------------------------
William G. Donnellan
/s/ ELAINE N. DUGGAR
---------------------------------------------
Elaine N. Duggar
/s/ THOMAS E. DUGGAR
---------------------------------------------
Thomas E. Duggar
/s/ WILLIAM D. GUNTER
---------------------------------------------
William D. Gunter
A-48
<PAGE> 147
/s/ F. C. NIXON
---------------------------------------------
F.C. Nixon
/s/ J. LEE VAUSE
---------------------------------------------
J. Lee Vause
/s/ STEPHEN R. WINN
---------------------------------------------
Stephen R. Winn
A-49
<PAGE> 148
EXHIBIT B - OPINION OF ALLEN C. EWING & CO.
ALLEN C. EWING & CO.
October 26, 2000
Board of Directors
First Bank Holding Company
1997 Capital Circle, N.E.
Tallahassee, Florida 32308
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of First Bank Holding Company (the "Company") of
Tallahassee, Florida, the registered bank holding for First Bank (the "Bank"),
in regard to the terms of the proposed acquisition of 100% of the shares of the
Company by SouthTrust of Alabama, Inc., an Alabama Corporation ("ST-Sub"), a
wholly-owned subsidiary of SouthTrust Corporation, a Delaware corporation
("SouthTrust") of Birmingham, Alabama (the "Transaction"). This Transaction
involves a merger of the Company with and into ST-Sub, whereby the existence of
the Company shall cease and SouthTrust shall survive. The shareholders of the
Company will receive registered shares of SouthTrust in a tax-free
reorganization pursuant to Section 368(a)(1) of the Internal Revenue Code.
In arriving at its opinion, Ewing relied upon the accuracy and completeness of
the information provided by the Company, which was used in the preparation of
the accompanying analysis. Ewing did not conduct an independent verification of
such information or perform an independent appraisal of the Company's assets and
liabilities.
Based upon the accompanying analysis and our knowledge of and experience in the
valuation of Florida banks and their securities, it is our opinion that the
terms of the Transaction are fair, from a financial point of view, to the
shareholders of the Company.
The opinion of Allen C. Ewing & Co. ("Ewing") is directed to the Board of
Directors and does not constitute a recommendation to any shareholder as to how
such shareholder should vote at the shareholders' meeting held in connection
with the proposed Transaction. Ewing has not been requested to opine as to, and
the opinion does not address, the Board's underlying business decision to
support and recommend the acquisition to the shareholders.
Very truly yours,
ALLEN C. EWING & CO.
By: /s/ BENJAMIN C. BISHOP, JR.
-------------------------------------------
Benjamin C. Bishop, Jr.
B-1
<PAGE> 149
EXHIBIT C
FLORIDA BUSINESS CORPORATION ACT DISSENT PROVISIONS
FLORIDA BUSINESS CORPORATION ACT
SECTIONS 607.1301, 607.1302 AND 607.1320
607.1301 DISSENTERS' RIGHTS; DEFINITIONS.
The following definitions apply to ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value of
the shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on which
the corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of a
merger pursuant to s. 607.1104, the day prior to the date on which a copy of the
plan of merger was mailed to each shareholder of record of the subsidiary
corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT.
(1) Any shareholder of a corporation has the right to dissent from, and obtain
payment of the fair value of his or her shares in the event of, any of the
following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its parent
under s. 607.1104, and the shareholders would have been entitled to vote on
action taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation, other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to the
shareholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation is a
party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely affect
such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of his or
her shares;
2. Altering or abolishing the voting rights pertaining to any of his or
her shares, except as such rights may be affected by the voting rights of new
shares then being authorized of any existing or new class or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any of his
or her shares, when such exchange, cancellation, or reclassification would alter
or abolish the shareholder's voting rights or alter his or her percentage of
equity in the corporation, or effecting a reduction or cancellation of accrued
dividends or other arrearages in respect to such shares;
C-1
<PAGE> 150
4. Reducing the stated redemption price of any of the shareholder's
redeemable shares, altering or abolishing any provision relating to any sinking
fund for the redemption or purchase of any of his or her shares, or making any
of his or her shares subject to redemption when they are not otherwise
redeemable;
5. Making noncumulative, in whole or in part, dividends of any of the
shareholder's preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of the shareholder's
preferred shares; or
7. Reducing any stated preferential amount payable on any of the
shareholder's preferred shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of incorporation
provide that a voting or nonvoting shareholder is entitled to dissent and obtain
payment for his or her shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his or her shares which are
adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered in
his or her name. In that event, the shareholder's rights shall be determined as
if the shares as to which he or she has dissented and his or her other shares
were registered in the names of different shareholders.
(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a proposed
sale or exchange of property, to the holders of shares of any class or series
which, on the record date fixed to determine the shareholders entitled to vote
at the meeting of shareholders at which such action is to be acted upon or to
consent to any such action without a meeting, were either registered on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc., or held of record by not fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment for his or her
shares under this section may not challenge the corporate action creating his or
her entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
(1) (a) If a proposed corporate action creating dissenters' rights
under s. 607.1302 is submitted to a vote at a shareholders' meeting, the meeting
notice shall state that shareholders are or may be entitled to assert
dissenters' rights and be accompanied by a copy of ss. 607.1301, 607.1302, and
607.1320. A shareholder who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written notice of
the shareholder's intent to demand payment for his or her shares if the proposed
action is effectuated, and
2. Not vote his or her shares in favor of the proposed action. A proxy or
vote against the proposed action does not constitute such a notice of intent to
demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each shareholder
simultaneously with any request for the shareholder's written consent or, if
such a request is not made, within 10 days after the date the corporation
received written consents without a meeting from the requisite number of
shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his or her shares pursuant to
paragraph (1)(a) or, in the case of
C-2
<PAGE> 151
action authorized by written consent, to each shareholder, excepting any who
voted for, or consented in writing to, the proposed action.
(3) Within 20 days after the giving of notice to him or her, any
shareholder who elects to dissent shall file with the corporation a notice of
such election, stating the shareholder's name and address, the number, classes,
and series of shares as to which he or she dissents, and a demand for payment of
the fair value of his or her shares. Any shareholder failing to file such
election to dissent within the period set forth shall be bound by the terms of
the proposed corporate action. Any shareholder filing an election to dissent
shall deposit his or her certificates for certificated shares with the
corporation simultaneously with the filing of the election to dissent. The
corporation may restrict the transfer of uncertificated shares from the date the
shareholder's election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his
or her shares. After such offer, no such notice of election may be withdrawn
unless the corporation consents thereto. However, the right of such shareholder
to be paid the fair value of his or her shares shall cease, and the shareholder
shall be reinstated to have all his or her rights as a shareholder as of the
filing of his or her notice of election, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim,
if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder is
not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value for
such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the dissenting
shareholder holds, as of the latest available date and not more than 12 months
prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month period
ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12 month period, for the portion thereof during which
it was in existence.
(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his or her shares shall be made within 90 days
after the making of such offer or the consummation of the proposed action,
whichever is later. Upon payment of the agreed value, the dissenting shareholder
shall cease to have any interest in such shares.
C-3
<PAGE> 152
(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his or her shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a copy
of the initial pleading in such proceeding upon each dissenting shareholder who
is a resident of this state in the manner provided by law for the service of a
summons and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to judgment
against the corporation for the amount of the fair value of their shares. The
court may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him or her within 10 days after final
determination of the proceedings. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair rate
of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the shares,
if the court finds that the action of such shareholders in failing to accept
such offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the surviving
corporation.
C-4
<PAGE> 153
First Bank Holding Company
1997 Capital Circle, N.E.
Tallahassee, Florida 32308
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS - DECEMBER {__}, 2000
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF FIRST BANK HOLDING COMPANY)
The undersigned shareholder of First Bank Holding Company ("First Bank
Holding") hereby appoints {____________} and {____________}, and each or either
of them, with full power of substitution, as attorneys and proxies to vote all
of the shares of common stock which the undersigned is entitled to vote, with
all powers which the undersigned would possess if personally present at the
Special Meeting of the Shareholders of First Bank Holding to be held in the
principal banking office of First Bank Holding at 1997 Capital Circle, N.E.
Tallahassee, Florida, on December {__}, 2000, at 5:30 p.m., and at any
adjournment or postponement thereof, upon the matters set forth in the Notice of
the Special Meeting, the Proxy Statement/Prospectus, and in their discretion,
upon such other matters as may properly come before the meeting. The undersigned
hereby acknowledges receipt of the accompanying Notice of Special Meeting of
Shareholders and Proxy Statement/Prospectus.
This Proxy, when properly executed and returned to First Bank Holding,
will be voted as directed.
1. Proposal to approve the Agreement and Plan of Merger, dated as
of September 28, 2000, by and between SouthTrust of Alabama, Inc., an Alabama
corporation and First Bank Holding Company, and joined in by SouthTrust
Corporation, a Delaware corporation, whereby First Bank Holding will be merged
with and into SouthTrust of Alabama and the holders of First Bank Holding common
stock will receive 1.7456 shares of SouthTrust Corporation common stock, with
cash being paid in lieu of issuing fractional shares, for each share of First
Bank Holding common stock, all pursuant to and in accordance with the terms and
conditions of the Merger Agreement, all as more fully described in the Proxy
Statement/Prospectus dated November {__}, 2000;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Other Matters:
[ ] In their discretion, upon such other matters as may
properly come before the special meeting of
shareholders or any adjournment or postponements thereof.
[ ] Authority withheld to vote upon such matters.
UNLESS OTHERWISE SPECIFIED, THE PROXY WILL BE VOTED FOR PROPOSAL (1). PLEASE
RETURN THIS PROXY IN THE SELF-ADDRESSED POSTAGE PAID ENVELOPE PROVIDED AS
PROMPTLY AS PRACTICAL, REGARDLESS OF WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING IN PERSON. IF YOU DO ATTEND, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN
PERSON SHOULD YOU SO DESIRE.
------------------ ----------------------------
(Signature(s) of Shareholder)
Dated: , 2000
---------------
----------------------------
(co-owner, if any)
Dated: , 2000
---------------
Please date and sign exactly as name appears hereon. If shares are held jointly,
each shareholder should sign. Agents, executors, administrators, guardians,
trustees, etc., should use full title, and, if more than one, all should sign.
If the shareholder is a corporation or other entity, please sign full corporate
or entity name by an authorized officer.
<PAGE> 154
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The restated certificate of incorporation and the restated by-laws of
the registrant provide that the registrant shall indemnify its officers,
directors, employees and agents to the extent permitted by the General
Corporation Law of the State of Delaware, which permits a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, against expenses (including attorney's fees), judgments, fines and
settlements incurred by him in connection with any such suit or proceeding, if
he acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the corporation, and, in the case of a
derivative action on behalf of the corporation, if he was not adjudged to be
liable for negligence or misconduct.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this registration
statement:
2 Agreement and Plan of Merger of SouthTrust of Alabama, Inc. and First
Bank Holding Company Joined in by SouthTrust Corporation and the
Directors of First Bank Holding Company (included as Exhibit A to the
proxy statement/prospectus filed as part of this registration
statement).
3(a) Composite Restated Bylaws of SouthTrust Corporation, as amended.
*3(b) Composite Restated Certificate of Incorporation of SouthTrust
Corporation which was filed as Exhibit 3 to the Registration
Statement on Form S-3 of SouthTrust Corporation (Registration
No. 333-34947).
*4(a) Certificate of Designation of Preferences and Rights of Series 1999
Junior Participating Preferred Stock, adopted December 16, 1998 and
effective February 22, 1999, which was filed as Exhibit A to Exhibit
1 to SouthTrust Corporation's Registration Statement on Form 8-A
(File No. 001-14781).
*4(b) Amended and Restated Shareholder's Rights of Agreement, dated as of
August 1, 2000, between SouthTrust Corporation and American Stock
Transfer & Trust Company, Rights Agent, which was filed as Exhibit 1
to SouthTrust Corporation's Registration Statement on Form 8-A (File
No. 001-14781).
*4(c) Indenture, dated as of May 1, 1987 between SouthTrust Corporation and
National Westminster Bank USA, which was filed as Exhibit 4(a) to
SouthTrust Corporation's Registration Statement on Form S-3
(Registration No. 33-13637).
*4(d) Subordinated Indenture, dated as of May 1, 1992, between SouthTrust
Corporation and Chemical Bank, which was filed as Exhibit 4(b)(ii) to
the Registration Statement on Form S-3 of SouthTrust Corporation
(Registration No. 33-52717).
*4(e) Form of Senior Indenture which was filed as Exhibit 4(b)(i) to the
Registration Statement on Form S-3 of SouthTrust Corporation
(Registration No. 33-52717).
5 Opinion of Bradley Arant Rose & White LLP as to the legality of the
securities being registered.
8 Form of Opinion of Bradley Arant Rose & White LLP regarding certain
tax matters.
23(a) Consent of Arthur Andersen LLP (with respect to SouthTrust
Corporation).
23(b) Consent of James D. A. Holley & Co., P.A. (with respect to First Bank
Holding Company).
23(c) Consent of Allen C. Ewing & Co.
23(d) Consent of Bradley Arant Rose & White LLP (included in Exhibit 5 and
Exhibit 8).
24 Powers of Attorney.
--------------
* Incorporated by reference.
<PAGE> 155
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities
offered (if the total dollar value of
securities offered would not exceed that
which was registered) and any deviation from
the low or high end of the estimated maximum
offering range may be reflected in the form
of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no
more than a 20 percent change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in
the effective registration statement;
(iii) to include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) (1) The undersigned registrant hereby undertakes as
follows: that prior to any public reoffering of the
securities registered hereunder through use of a
prospectus which is a part of this registration
statement, by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering
prospectus will contain the information called for
by the applicable registration form with respect to
reofferings by persons who may be deemed
underwriters, in addition to the information called
for by the other items of the applicable form.
<PAGE> 156
(2) The registrant undertakes that every prospectus: (i)
that is filed pursuant to paragraph (1) immediately
preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is
used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not
be used until such amendment is effective, and that,
for purposes of determining any liability under the
Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered
therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has
been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
(e) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11, or 13 of
this Form, within one business day of receipt of such
request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the
effective date of the registration statement through the date
of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information
concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in
the registration statement when it became effective.
<PAGE> 157
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Birmingham,
State of Alabama, on October 31, 2000.
SOUTHTRUST CORPORATION
By: /s/ Wallace D. Malone, Jr.
--------------------------------------
Its: Chairman of the Board of Directors,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Wallace D. Malone, Jr. Chairman, President, Chief Executive October 31, 2000
----------------------------- Officer, Director
Wallace D. Malone, Jr. (Principal Executive Officer)
/s/ Alton E. Yother Secretary, Treasurer and October 31, 2000
----------------------------- Controller (Principal
Alton E. Yother Accounting and
Financial Officer)
/s/ Julian W. Banton Director October 31, 2000
----------------------------- (Chairman and Chief Executive
Julian W. Banton Officer, SouthTrust Bank)
* Director October 31, 2000
-----------------------------
Carl F. Bailey
* Director October 31, 2000
-----------------------------
John M. Bradford
Director
----------------------------- ----------------
William A. Coley
* Director October 31, 2000
-----------------------------
H. Allen Franklin
* Director October 31, 2000
-----------------------------
William C. Hulsey
</TABLE>
<PAGE> 158
<TABLE>
<S> <C> <C>
* Director October 31, 2000
-----------------------------
Donald M. James
* Director October 31, 2000
-----------------------------
Allen J. Keesler, Jr.
* Director October 31, 2000
-----------------------------
Rex J. Lysinger
* Director October 31, 2000
-----------------------------
Van L. Richey
By /s/ Alton E. Yother October 31, 2000
------------------------------
Alton E. Yother
Attorney-in-fact
</TABLE>
<PAGE> 159
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
2 Agreement and Plan of Merger of SouthTrust of Alabama, Inc. and First
Bank Holding Company Joined in by SouthTrust Corporation and the
Directors of First Bank Holding Company (included as Exhibit A to the
proxy statement/prospectus filed as part of this registration
statement).
3(a) Composite Restated Bylaws of SouthTrust Corporation, as amended.
*3(b) Composite Restated Certificate of Incorporation of SouthTrust
Corporation which was filed as Exhibit 3 to the Registration
Statement on Form S-3 of SouthTrust Corporation (Registration
No. 333-34947).
*4(a) Certificate of Designation of Preferences and Rights of Series 1999
Junior Participating Preferred Stock, adopted December 16, 1998 and
effective February 22, 1999, which was filed as Exhibit A to Exhibit
1 to SouthTrust Corporation's Registration Statement on Form 8-A
(File No. 001-14781).
*4(b) Amended and Restated Shareholder's Rights of Agreement, dated as of
August 1, 2000, between SouthTrust Corporation and American Stock
Transfer & Trust Company, Rights Agent, which was filed as Exhibit 1
to SouthTrust Corporation's Registration Statement on Form 8-A (File
No. 001-14781).
*4(c) Indenture, dated as of May 1, 1987 between SouthTrust Corporation and
National Westminster Bank USA, which was filed as Exhibit 4(a) to
SouthTrust Corporation's Registration Statement on Form S-3
(Registration No. 33-13637).
*4(d) Subordinated Indenture, dated as of May 1, 1992, between SouthTrust
Corporation and Chemical Bank, which was filed as Exhibit 4(b)(ii) to
the Registration Statement on Form S-3 of SouthTrust Corporation
(Registration No. 33-52717).
*4(e) Form of Senior Indenture which was filed as Exhibit 4(b)(i) to the
Registration Statement on Form S-3 of SouthTrust Corporation
(Registration No. 33-52717).
5 Opinion of Bradley Arant Rose & White LLP as to the legality of the
securities being registered.
8 Form of Opinion of Bradley Arant Rose & White LLP regarding certain
tax matters.
23(a) Consent of Arthur Andersen LLP (with respect to SouthTrust
Corporation).
23(b) Consent of James D. A. Holley & Co., P.A. (with respect to First Bank
Holding Company).
23(c) Consent of Allen C. Ewing & Co.
23(d) Consent of Bradley Arant Rose & White LLP (included in Exhibit 5 and
Exhibit 8).
24 Powers of Attorney.
</TABLE>
--------------
* Incorporated by reference.
