<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 29, 1994
REGISTRATION NO. 33-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
REGIONS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
---------------------
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DELAWARE 6711 63-0589368
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
417 NORTH 20TH STREET
BIRMINGHAM, AL 35203
(205) 326-7100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
VIRGINIA L. MARTIN
LEGAL OFFICER
417 NORTH 20TH STREET
BIRMINGHAM, AL 35203
(205) 326-7080
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
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CHARLES C. PINCKNEY FRANK M. CONNER III JOHN E. NIEDRACH
LANGE, SIMPSON, ALSTON & BIRD HINE, NIEDRACH &
ROBINSON & SOMERVILLE 700 THIRTEENTH STREET, N.W. MCCLELLAN, P.C
417 NORTH 20TH STREET, SUITE SUITE 350 111 BRIDGEPOINT PLAZA
1700 BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20005 THIRD FLOOR
(205) 250-5000 (202) 508-3300 ROME, GA 30162
(706) 291-2531
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after this registration statement becomes
effective.
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. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock, $.625 par
value....................... 740,659 $12.60769* $9,338,000* $3,220
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</TABLE>
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* Calculated in accordance with Rule 457(f)(2).
---------------------
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 SECTION 8(A), SHALL
DETERMINE.
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<PAGE> 2
REGIONS FINANCIAL CORPORATION
CROSS-REFERENCE SHEET
<TABLE>
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CAPTION OR LOCATION IN
FORM S-4 ITEM PROXY STATEMENT/PROSPECTUS
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1. Forepart of registration statement and outside
front cover page of prospectus................. Outside Front Cover of Proxy
Statement/Prospectus; Facing Page of
Registration Statement; Cross-Reference
Sheet.
2. Inside front and outside back cover of
prospectus..................................... Available Information; Documents
Incorporated by Reference; Table of
Contents.
3. Risk factors, ratio of earnings to fixed
charges and other information.................. Summary; Comparative Market Prices and
Dividends.
4. Terms of the transaction....................... Summary; Description of the Transaction;
Effect of the Merger on Rights of
Stockholders; Description of Regions
Common Stock.
5. Pro forma financial information................ Summary; Summary Pro Forma Financial
Data.
6. Material contacts with the company being
acquired....................................... Summary; Description of the Transaction.
7. Additional information required for re-offering
by persons and parties deemed to be
underwriters................................... Not applicable.
8. Interest of named experts and counsel.......... Opinions.
9. Disclosure of Commission position on
indemnification for Securities Act
liabilities.................................... Not Applicable (See Part II, Item 20).
10. Information with respect to S-3 registrants.... Documents Incorporated by Reference;
Summary; Business of Regions; Summary Pro
Forma Financial Data.
11. Incorporation of certain information by
reference...................................... Documents Incorporated by Reference.
12. Information with respect to S-2 or S-3
registrants.................................... Available Information; Documents
Incorporated by Reference.
13. Incorporation of certain information by
reference...................................... Documents Incorporated by Reference.
14. Information with respect to registrants other
than S-2 or S-3 registrants.................... Not Applicable.
15. Information with respect to S-3 companies...... Not Applicable.
16. Information with respect to S-2 or S-3
companies...................................... Available Information; Documents
Incorporated by Reference; Summary.
17. Information with respect to companies other
than S-2 or S-3 companies...................... Not Applicable.
18. Information if proxies, consents, or
authorizations are to be solicited............. Documents Incorporated by Reference;
Summary; The Stockholder Meeting;
Description of the Transaction;
Description of Regions Common Stock.
19. Information if proxies, consents, or
authorizations are not to be solicited or in an
exchange offer................................. Not Applicable.
</TABLE>
<PAGE> 3
Dear First Community Bancshares, Inc. Stockholder:
You are cordially invited to attend the 1994 Annual Meeting of Stockholders
(the "Annual Meeting") of First Community Bancshares, Inc. ("First Community")
to be held at Holiday Inn Skytop, Highway 411 East, Rome, Georgia 30161 on
, 1994, at :00 .m., local time, notice of which is enclosed.
At the Annual Meeting, you will be asked to consider and vote on a proposal
to approve an Agreement and Plan of Merger (the "Agreement"), entered into with
Regions Financial Corporation ("Regions") pursuant to which First Community will
merge (the "Merger") with and into Regions, and First Rome Bank, a wholly-owned
subsidiary of First Community (the "Bank"), will become a wholly-owned
subsidiary of Regions and will continue serving its current markets as a
state-chartered commercial bank. Upon consummation of the Merger, each share of
First Community common stock issued and outstanding (except for certain shares
held by First Community or Regions and shares held by stockholders who perfect
their dissenters' rights of appraisal) will be converted into 0.95 of a share of
Regions common stock.
At the Annual Meeting, you also will be asked to consider and vote on a
proposal to elect four nominees to the Board of Directors of First Community,
each of whom currently serves as a director of First Community.
The accompanying Proxy Statement/Prospectus provides a description of the
proposed Merger and provides other specific information concerning the Annual
Meeting, the election of directors, and the management of First Community.
Please read these materials carefully and consider thoughtfully the information
set forth in them.
The Merger has been approved unanimously by your Board of Directors and is
recommended by the Board to you for approval. Each member of the Board of
Directors of First Community has agreed to vote such member's shares in favor of
the Merger. Consummation of the Merger is subject to certain conditions,
including approval of the Agreement by First Community stockholders and approval
of the Merger by various regulatory agencies.
Stockholders of First Community who perfect their dissenters' rights of
appraisal prior to the proposed Merger and comply with applicable law will be
entitled to receive the fair value of their First Community shares in cash, as
provided by applicable law.
It is important to understand that approval of the Agreement requires the
affirmative vote of a majority of the outstanding shares of First Community
common stock entitled to vote at the Annual Meeting. Consequently, a failure to
vote with respect to the Agreement will have the same effect as a vote against
the Agreement. Although a failure to vote with respect to election of directors
does not have the effect of a negative vote, your vote in the election of
directors for four positions also is important.
Accordingly, whether or not you plan to attend the Annual Meeting, you are
urged to complete, sign, and return promptly the enclosed proxy card. If you
attend the Annual Meeting, you may vote in person if you wish, even if you
previously have returned your proxy card. The proposed Merger with Regions is a
significant step for First Community, and your vote on this matter is of great
importance. On behalf of the Board of Directors, I urge you to vote for approval
of the Agreement by marking the enclosed proxy card "FOR" Item One and for the
election of the four nominees to the Board of Directors of First Community by
marking the enclosed proxy card "FOR" the nominees listed under Item Two.
Sincerely,
B. G. EARLY
President and Chief Executive Officer
<PAGE> 4
FIRST COMMUNITY BANCSHARES, INC.
TURNER MCCALL BOULEVARD AT FIFTH AVENUE, ROME, GEORGIA 30161
NOTICE OF THE 1994 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD , 1994
Notice is hereby given that the 1994 Annual Meeting of Stockholders (the
"Annual Meeting") of First Community Bancshares, Inc. ("First Community") will
be held at Holiday Inn Skytop, Highway 411 East, Rome, Georgia 30161, on
, 1994, at :00 .m., local time, for the following purposes:
1. Merger. To consider and vote upon the Agreement and Plan of
Merger, dated as of April 12, 1994 (the "Agreement"), by and between First
Community and Regions Financial Corporation ("Regions") pursuant to which
(i) Regions will acquire all of the issued and outstanding common stock of
First Community through the merger of First Community with and into Regions
(the "Merger"), (ii) each share of First Community common stock (except for
certain shares held by First Community or Regions and shares held by
stockholders who perfect their dissenters' rights of appraisal) will be
converted into 0.95 of a share of Regions common stock, and (iii) each
First Community stockholder will receive cash in lieu of any remaining
fractional share interest, all as described more fully in the accompanying
Proxy Statement/Prospectus.
2. Election of Directors. To elect the four nominees named in the
Proxy Statement/Prospectus as directors of First Community to serve
three-year terms or until their successors are duly elected and qualified.
3. Other Business. To transact such other business as may come
properly before the Annual Meeting, including adjourning the Annual Meeting
to permit, if necessary, further solicitation of proxies.
Only stockholders of record at the close of business on ,
1994, are entitled to receive notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof.
Stockholders of First Community have a right to dissent from the Merger and
obtain payment of the fair value of their shares in cash by complying with the
applicable provisions of Georgia law, which are attached to the accompanying
Proxy Statement/Prospectus as Appendix B.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Annual Meeting in person. The proxy may be
revoked by the person executing the proxy by filing with the Corporate Secretary
of First Community an instrument of revocation or a duly executed proxy bearing
a later date or by electing to vote in person at the Annual Meeting.
By Order of the Board of Directors
EDWARD HINE, JR.
Corporate Secretary
, 1994
<PAGE> 5
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FIRST COMMUNITY BANCSHARES, INC. REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR THE 1994 ANNUAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD , 1994 (PAR VALUE $.625)
</TABLE>
---------------------
This Prospectus of Regions Financial Corporation, a regional bank holding
company organized under the laws of the state of Delaware ("Regions"), relates
to the shares of common stock, par value $.625 per share, of Regions ("Regions
Common Stock"), which are issuable to the stockholders of First Community
Bancshares, Inc. ("First Community") upon consummation of the proposed merger
(the "Merger") described herein by which First Community will merge with and
into Regions pursuant to the terms of an Agreement and Plan of Merger, dated as
of April 12, 1994 (the "Agreement"), by and between Regions and First Community.
At the effective date of the Merger (the "Effective Date"), except as
described herein, (i) First Community will merge with and into Regions, and (ii)
each outstanding share of the $1.00 par value common stock of First Community
("First Community Common Stock") will be converted into 0.95 of a share of
Regions Common Stock. As a result of the Merger, the separate existence of First
Community will cease, and First Rome Bank, a wholly-owned subsidiary of First
Community (the "Bank"), will become a wholly-owned subsidiary of Regions and
will continue in operation serving its current markets as a state-chartered
commercial bank. For a further description of the terms of the Merger, see
"Description of the Transaction."
This Prospectus also serves as a Proxy Statement of First Community and is
being furnished to the stockholders of First Community in connection with the
solicitation of proxies by the Board of Directors of First Community for use at
its 1994 Annual Meeting of Stockholders (including any adjournment or
postponement thereof, the "Annual Meeting") to be held on , 1994, to
consider and vote upon (i) approval of the Agreement, including the Merger and
related matters, and (ii) the election of four nominees to the Board of
Directors of First Community. This Proxy Statement/Prospectus and the
accompanying proxy card are first being mailed to the stockholders of First
Community on or about , 1994.
---------------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is , 1994.
<PAGE> 6
AVAILABLE INFORMATION
Regions and First Community are subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, file reports, proxy statements, and other information with
the Securities and Exchange Commission ("SEC"). Copies of such reports, proxy
statements, and other information can be obtained, at prescribed rates, from the
SEC by addressing written requests for such copies to the Public Reference
Section at the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. In addition, such reports, proxy statements, and other information can be
inspected at the public reference facilities referred to above and at the
regional offices of the SEC at 7 World Trade Center, 13th Floor, New York, New
York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661.
This Proxy Statement/Prospectus constitutes part of a registration
statement on Form S-4 (including any exhibits and amendments thereto, the
"Registration Statement") filed by Regions with the SEC under the Securities Act
of 1933, as amended (the "Securities Act"), relating to the securities offered
hereby. This Proxy Statement/Prospectus does not include all of the information
in the Registration Statement, certain portions of which have been omitted
pursuant to the rules and regulations of the SEC. For further information about
Regions and the securities offered hereby, reference is made to the Registration
Statement. The Registration Statement may be inspected and copied, at prescribed
rates, at the SEC's public reference facilities at the addresses set forth
above. Regions Common Stock is traded in the Nasdaq National Market. Reports,
proxy statements, and other information concerning Regions may be inspected at
the offices of the National Association of Securities Dealers, Inc. (the
"NASD"), 1735 K Street, N.W., Washington, D.C. 20006.
No person is authorized to give any information or to make any
representations other than those included in this Proxy Statement/Prospectus,
and if given or made, such information or representations must not be relied
upon as having been authorized by Regions or First Community. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy, the securities offered hereby in any jurisdiction to or from
any person to or from whom it is unlawful to make such an offer or solicitation.
Neither the delivery of this Proxy Statement/Prospectus nor any distribution of
securities made hereunder shall under any circumstances create an implication
that there has been no change in the affairs of Regions or First Community since
the date hereof or that the information herein is correct as of any time
subsequent to the date hereof.
All information included or incorporated by reference in this Proxy
Statement/Prospectus with respect to Regions was supplied by Regions, and all
information included or incorporated by reference herein with respect to First
Community was supplied by First Community.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by Regions pursuant
to the Exchange Act are hereby incorporated by reference herein:
1. Regions' Annual Report on Form 10-K for the fiscal year ended
December 31, 1993;
2. Regions' Quarterly Report on Form 10-Q for the quarter ended March
31, 1994;
3. Regions' Current Reports on Form 8-K dated as of December 31, 1993,
and July 8 and 18, 1994;
4. The description of Regions Common Stock under the heading "Item 1.
Capital Stock to be Registered" in the registration statement on Form 8-A
of Regions relating to Regions Common Stock and in any amendment or report
filed for the purpose of updating such description; and
5. Regions' Reports on Form 10-C dated as of December 31, 1993, and
May 2, 1994.
Regions' Annual Report on Form 10-K for the year ended December 31, 1993,
incorporates by reference specific portions of Regions' Annual Report to
Stockholders for that year (the "Regions Annual Report to
2
<PAGE> 7
Stockholders"), but does not incorporate other portions of the Regions Annual
Report to Stockholders. Only those portions of the Regions Annual Report to
Stockholders captioned "Financial Summary & Review 1993," "Financial Statements
and Notes," and "Historical Financial Summary" are incorporated herein. Other
portions of the Regions Annual Report to Stockholders are NOT incorporated
herein and are not a part of the Registration Statement.
The following documents previously filed with the SEC by First Community
pursuant to the Exchange Act are hereby incorporated by reference herein:
1. First Community's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993; and
2. First Community's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994.
All documents filed by Regions pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus and
prior to the date of the Annual Meeting shall be deemed to be incorporated by
reference in this Proxy Statement/Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part hereof, except as so modified or superseded.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS ARE AVAILABLE
UPON REQUEST, WITHOUT CHARGE (EXCEPT FOR THE EXHIBITS THERETO), IF FILED BY
REGIONS, FROM RONALD C. JACKSON, STOCKHOLDER ASSISTANCE, REGIONS FINANCIAL
CORPORATION, P.O. BOX 1448, MONTGOMERY, ALABAMA 36102 (TELEPHONE (205)
832-8450), AND IF FILED BY FIRST COMMUNITY, FROM DEBRA MCGEE, FIRST COMMUNITY
BANCSHARES, INC., TURNER MCCALL BOULEVARD AT FIFTH AVENUE, ROME, GEORGIA 30161,
TELEPHONE (706) 291-1000. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY , 1994.
3
<PAGE> 8
TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION................................................................
DOCUMENTS INCORPORATED BY REFERENCE..................................................
SUMMARY..............................................................................
The Parties........................................................................
Annual Meeting of First Community Stockholders.....................................
Record Date; Vote Required.........................................................
The Merger; Exchange Ratio.........................................................
Dissenting Stockholders............................................................
Reasons for the Merger; Recommendation of First Community's Board of Directors.....
Effective Date.....................................................................
Exchange of Stock Certificates.....................................................
Regulatory Approvals and Other Conditions..........................................
Waiver, Amendment, and Termination of the Agreement................................
Interests of Certain Persons in the Merger.........................................
Certain Federal Income Tax Consequences of the Merger..............................
Certain Differences in Stockholders' Rights........................................
Comparative Market Prices of Common Stock..........................................
Comparative Per Share Data.........................................................
Selected Financial Data............................................................
THE STOCKHOLDER MEETING..............................................................
General............................................................................
Record Date; Vote Required.........................................................
DESCRIPTION OF THE TRANSACTION.......................................................
General............................................................................
Treatment of First Community Options...............................................
Background of and Reasons for the Merger...........................................
Effective Date of the Merger.......................................................
Distribution of Regions Stock Certificates and Payment for Fractional Shares.......
Conditions to Consummation of the Merger...........................................
Regulatory Approvals...............................................................
Waiver, Amendment, and Termination of the Agreement................................
Conduct of Business Pending the Merger.............................................
Management Following the Merger....................................................
Interests of Certain Persons in the Merger.........................................
Dissenting Stockholders............................................................
Certain Federal Income Tax Consequences of the Merger..............................
Accounting Treatment...............................................................
Expenses and Fees..................................................................
Resales of Regions Common Stock....................................................
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS.......................................
Antitakeover Provisions Generally..................................................
Authorized Capital Stock...........................................................
Amendment of Certificate or Articles of Incorporation and Bylaws...................
Classified Board of Directors and Absence of Cumulative Voting.....................
Removal of Directors...............................................................
Limitations on Director Liability..................................................
Indemnification....................................................................
Special Meetings of Stockholders...................................................
</TABLE>
4
<PAGE> 9
<TABLE>
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PAGE
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Actions by Stockholders Without a Meeting..........................................
Stockholder Nominations and Proposals..............................................
Business Combinations With Certain Persons.........................................
Mergers, Consolidations, and Sales of Assets Generally.............................
Dissenters' Rights of Appraisal....................................................
Stockholders' Rights to Examine Books and Records..................................
Dividends..........................................................................
COMPARATIVE MARKET PRICES AND DIVIDENDS..............................................
BUSINESS OF REGIONS..................................................................
General............................................................................
Recent Developments................................................................
SUMMARY PRO FORMA FINANCIAL DATA.....................................................
Selected Pro Forma Combined Data for Regions and First Community...................
Selected Pro Forma Combined Data for Regions, First Community, and Other
Acquisitions....................................................................
BUSINESS OF FIRST COMMUNITY..........................................................
Executive Officers.................................................................
Executive Compensation.............................................................
Voting Securities..................................................................
ELECTION OF DIRECTORS OF FIRST COMMUNITY.............................................
Information on Directors...........................................................
Security Ownership of Directors and Nominees for Election..........................
Meetings and Committees of the Board of Directors..................................
Certain Relationships and Related Transactions.....................................
SUPERVISION AND REGULATION...........................................................
General............................................................................
Payment of Dividends...............................................................
Transactions With Affiliates.......................................................
Capital Adequacy...................................................................
Support of Subsidiary Institutions.................................................
Prompt Corrective Action...........................................................
Brokered Deposits..................................................................
FDIC Insurance Assessments.........................................................
New Safety and Soundness Standards.................................................
Depositor Preference...............................................................
DESCRIPTION OF REGIONS COMMON STOCK..................................................
STOCKHOLDER PROPOSALS................................................................
EXPERTS..............................................................................
OPINIONS.............................................................................
APPENDIX A -- Agreement and Plan of Merger........................................... A-1
APPENDIX B -- Title 14, Chapter 2, Article 13 of the Georgia Business Corporation
Code Relating to Rights of Dissenting Stockholders................................. B-1
</TABLE>
5
<PAGE> 10
SUMMARY
The following is a summary of certain information relating to the Annual
Meeting, the Merger, and the offering of shares of Regions Common Stock to be
issued upon consummation thereof. This summary does not purport to be complete
and is qualified in its entirety by the more detailed information appearing
elsewhere or incorporated by reference in this Proxy Statement/Prospectus.
Stockholders are urged to read carefully the entire Proxy Statement/Prospectus,
including the Appendices. As used in this Proxy Statement/Prospectus, the terms
"Regions" and "First Community" refer to those entities, respectively, and,
where the context requires, to those entities and their respective subsidiaries.
THE PARTIES
First Community. First Community is a bank holding company organized under
the laws of the state of Georgia with its principal executive offices located in
Rome, Georgia. First Community operates principally through the Bank, which is a
state-chartered commercial bank and which provides a range of retail banking
services through two offices in Floyd County, Georgia. At March 31, 1994, First
Community had total consolidated assets of approximately $124 million, total
consolidated deposits of approximately $113 million, and total consolidated
stockholders' equity of approximately $9 million. First Community's principal
executive office is located at Turner McCall Boulevard at Fifth Avenue, Rome,
Georgia 30161, and its telephone number at such address is (706) 291-1000.
Additional information with respect to First Community and its subsidiaries
is included in documents incorporated by reference in this Proxy
Statement/Prospectus. Copies of such documents, consisting of First Community's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993, and
First Community's Quarterly Report on Form 10-Q for the quarter ended March 31,
1994, accompany this Proxy Statement/Prospectus.
Regions. Regions, formerly named First Alabama Bancshares, Inc., is a
regional bank holding company headquartered in Birmingham, Alabama, which
operated as of June 1, 1994, 243 banking offices in the states of Alabama,
Florida, Georgia, Louisiana, and Tennessee. At March 31, 1994, Regions had total
consolidated assets of approximately $10.4 billion, total consolidated deposits
of approximately $8.8 billion, and total consolidated stockholders' equity of
approximately $878 million. Regions operates five state-chartered commercial
bank subsidiaries and one federal stock savings bank in the states of Alabama,
Florida, Georgia, Louisiana, and Tennessee and four banking-related subsidiaries
engaged in mortgage banking, credit life insurance, leasing, and securities
brokerage activities with offices in various Southeastern states. Through its
subsidiaries, Regions offers a broad range of banking and banking-related
services.
During the 1994 fiscal year, Regions has completed the acquisitions of two
financial institutions in the states of Alabama and Louisiana (referred to as
the "Recently Completed Acquisitions") and has entered into definitive
agreements to acquire three financial institutions in addition to First
Community in the states of Alabama and Louisiana (referred to as the "Other
Pending Acquisitions"). Information with respect to the Recently Completed
Acquisitions and the Other Pending Acquisitions (referred to collectively as the
"Other Acquisitions") is included under "Business of Regions -- Recent
Developments" and "Summary Pro Forma Financial Information."
Regions was organized under the laws of the state of Delaware and commenced
operations in 1971 under the name First Alabama Bancshares, Inc. On May 2, 1994,
the name of First Alabama Bancshares, Inc. was changed to Regions Financial
Corporation. Regions is a registered bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). Regions' principal executive
offices are located at 417 North 20th Street, Birmingham, Alabama 35203, and its
telephone number at such address is (205) 326-7100.
Additional information with respect to Regions and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Documents Incorporated by
Reference," and "Business of Regions."
6
<PAGE> 11
ANNUAL MEETING OF FIRST COMMUNITY STOCKHOLDERS
The Annual Meeting will be held at :00 .m., local time, on ,
1994, at Holiday Inn Skytop, Highway 411 East, Rome, Georgia 30161, for the
purpose of considering and voting upon (i) approval of the Agreement and (ii)
the election of four nominees to the Board of Directors of First Community. See
"The Stockholder Meeting."
RECORD DATE; VOTE REQUIRED
Only holders of record of First Community Common Stock at the close of
business on , 1994 (the "Record Date"), will be entitled to vote at the
Annual Meeting. Assuming that a quorum is present, the affirmative vote of a
majority of the First Community Common Stock entitled to vote at the Annual
Meeting is required to approve the Agreement, and the affirmative vote of a
plurality of the shares of First Community Common Stock voted at the Annual
Meeting is required to elect the directors of First Community. As of the Record
Date, there were 699,909 shares of First Community Common Stock outstanding and
entitled to be voted.
The directors and executive officers of First Community and their
affiliates beneficially owned, as of the Record Date, 217,176 shares (or
approximately 31.0% of the outstanding shares) of First Community Common Stock.
The directors and executive officers of Regions and their affiliates
beneficially owned, as of the Record Date, no shares of First Community Common
Stock. As of that date, neither First Community nor Regions held any shares of
First Community Common Stock in a fiduciary capacity for others. See "The
Stockholder Meeting -- Record Date; Vote Required."
THE MERGER; EXCHANGE RATIO
The Agreement provides for the acquisition of First Community by Regions
pursuant to the Merger of First Community with and into Regions. At the
Effective Date, each share of First Community Common Stock (excluding any shares
held by First Community, Regions, or their respective subsidiaries, other than
shares held in a fiduciary capacity or in satisfaction of debts previously
contracted and shares held by stockholders who perfect their dissenters' rights
of appraisal) issued and outstanding at the Effective Date will be converted
into 0.95 of a share of Regions Common Stock (the "Exchange Ratio"). No
fractional shares of Regions Common Stock will be issued. Rather, cash (without
interest) will be paid in lieu of any fractional share interest to which any
First Community stockholder would be entitled upon consummation of the Merger,
based on the closing sale price of Regions Common Stock on the last trading day
prior to the Effective Date.
DISSENTING STOCKHOLDERS
Holders of First Community Common Stock entitled to vote on approval of the
Agreement have the right to dissent from the Merger and, upon consummation of
the Merger and the satisfaction of certain specified procedures and conditions,
to receive cash in respect of the fair value of such holder's shares of First
Community Common Stock in accordance with the applicable provisions of Section
14-2-1106 of the Georgia Business Corporation Code (the "Georgia Act"). The
procedures to be followed by dissenting stockholders are summarized under
"Description of the Transaction -- Dissenting Stockholders," and a copy of the
applicable provisions of the Georgia Act is set forth in Appendix B to this
Proxy Statement/Prospectus.
REASONS FOR THE MERGER; RECOMMENDATION OF FIRST COMMUNITY'S BOARD OF DIRECTORS
First Community's Board of Directors has unanimously approved the Merger
and the Agreement and has determined that the Merger is fair to, and in the best
interests of, First Community and its stockholders. Accordingly, First
Community's Board unanimously recommends that First Community's stockholders
vote FOR approval of the Agreement. Each member of the Board of Directors of
First Community has agreed to vote such member's shares of First Community
Common Stock in favor of the Agreement. In approving the Merger, First
Community's directors considered First Community's financial condition, the
financial terms, and the income tax consequences of the Merger, the likelihood
of the Merger being approved by regulatory
7
<PAGE> 12
authorities without undue conditions or delay, and legal advice concerning the
proposed Merger. See "Description of the Transaction -- Background of and
Reasons for the Merger."
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Georgia Certificate of Merger are filed
and become effective with, respectively, the Delaware Secretary of State and the
Georgia Secretary of State. Unless otherwise agreed upon in writing by Regions
and First Community, and subject to the conditions to the obligations of the
parties to effect the Merger, the parties will use their reasonable efforts to
cause the Effective Date to occur on the last business day of the month in which
occurs the last to occur of (i) the effective date (including the expiration of
any applicable waiting period) of the last federal or state regulatory approval
required for the Merger and (ii) the date on which the Agreement is approved by
the requisite vote of First Community stockholders; or such later date within 30
days thereof as specified by Regions. The parties expect that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the third quarter of 1994, although there can be no assurance
as to whether or when the Merger will occur. See "Description of the
Transaction -- Effective Date of the Merger," " -- Conditions to Consummation of
the Merger," and " -- Waiver, Amendment, and Termination of the Agreement."
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Date, Regions will cause First Alabama Bank,
acting in its capacity as exchange agent for Regions (the "Exchange Agent"), to
mail to the former stockholders of First Community a form letter of transmittal,
together with instructions for the exchange of such stockholders' certificates
representing shares of First Community Common Stock for certificates
representing shares of Regions Common Stock. FIRST COMMUNITY STOCKHOLDERS SHOULD
NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE THE FORM LETTER OF
TRANSMITTAL AND INSTRUCTIONS. See "Description of the
Transaction -- Distribution of Regions Stock Certificates and Payment for
Fractional Shares."
REGULATORY APPROVALS AND OTHER CONDITIONS
The Merger is subject to approval by the Board of Governors of the Federal
Reserve System (the "Federal Reserve") and the Department of Banking and Finance
of the State of Georgia (the "Georgia Department"). An application has been
filed with each of these agencies for the requisite approvals, and the Federal
Reserve has issued its approval of the Merger. There can be no assurance whether
the approval of the Georgia Department will be given or as to the timing or
conditions of such approval.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of the First Community stockholders,
receipt of an opinion of counsel as to the tax-free nature of certain aspects of
the Merger, and certain other conditions. See "Description of the
Transaction -- Conditions to Consummation of the Merger."
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date by mutual action of the Board of Directors of both
First Community and Regions, or by action of the Board of Directors of either
company under certain circumstances, including if the Merger is not consummated
by March 31, 1995, unless the failure to consummate the Merger by such time is
due to a breach of the Agreement by the party seeking to terminate. If for any
reason the Merger is not consummated, First Community will continue to operate
as a bank holding company under its present management. See "Description of the
Transaction -- Waiver, Amendment, and Termination of the Agreement."
8
<PAGE> 13
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of First Community's management and Board of Directors have
interests in the Merger in addition to their interests as stockholders of First
Community generally. Those interests relate to, among other things, provisions
in the Agreement regarding indemnification, treatment of outstanding options to
purchase First Community Common Stock, and eligibility for certain Regions
employee benefits. See "Description of the Transaction -- Interests of Certain
Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Consummation of the Merger is conditioned upon the receipt of an opinion of
counsel to the effect that, among other things, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the exchange in the Merger of First
Community Common Stock for Regions Common Stock will not give rise to gain or
loss to First Community stockholders, except to the extent of any cash received
in lieu of fractional share interests or as a result of a stockholder perfecting
such holder's dissenters' rights of appraisal. See "Description of the
Transaction -- Certain Federal Income Tax Consequences of the Merger."
DUE TO THE INDIVIDUAL NATURE OF THE TAX CONSEQUENCES OF THE MERGER, FIRST
COMMUNITY STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE
THE SPECIFIC EFFECT OF THE MERGER ON THEM UNDER FEDERAL, STATE, LOCAL, AND
FOREIGN TAX LAWS.
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS
On the Effective Date, First Community stockholders, whose rights are
governed by First Community's Articles of Incorporation and Bylaws and by the
Georgia Act, automatically will become Regions stockholders, and their rights as
Regions stockholders will be governed by Regions' Certificate of Incorporation
and Bylaws and by the Delaware General Corporation Law (the "Delaware GCL").
The rights of Regions stockholders differ from the rights of First
Community stockholders in certain important respects, some of which constitute
additional antitakeover provisions provided for in Regions' governing documents.
See "Effect of the Merger on Rights of Stockholders."
COMPARATIVE MARKET PRICES OF COMMON STOCK
Regions Common Stock is traded in the over-the-counter market and quoted on
the Nasdaq National Market. First Community Common Stock is not traded in any
established market.
The following table sets forth (i) the last sale price of Regions Common
Stock and the equivalent per share price (as explained below) of First Community
Common Stock on March 16, 1994, the last trading day immediately preceding
public announcement of the proposed acquisition of First Community by Regions,
and , 1994, the latest practicable date prior to the mailing of
this Proxy Statement/Prospectus, and (ii) the sale price in the latest known
transactions of purchase and sale of First Community Common Stock as of the
indicated dates, which occurred in February 1994 and 1994,
respectively.
<TABLE>
<CAPTION>
EQUIVALENT PER
SHARE PRICE OF
REGIONS FIRST COMMUNITY FIRST COMMUNITY
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------------------------- ------------ --------------- ---------------
<S> <C> <C> <C>
March 16, 1994.............................. $32.00 $ 22.00 $ 30.40
, 1994............................ -- -- --
</TABLE>
The equivalent per share price of First Community Common Stock at each
specified date represents the last sale price of a share of Regions Common Stock
on such date multiplied by the Exchange Ratio of 0.95. Stockholders are advised
to obtain current market quotations for Regions Common Stock and First Community
Common Stock. No assurance can be given as to the market price of Regions Common
Stock at or after the Effective Date.
9
<PAGE> 14
COMPARATIVE PER SHARE DATA
The following table sets forth certain comparative per share data relating
to net income, cash dividends, and book value on (i) an historical basis for
Regions and First Community, (ii) a pro forma combined basis per share of
Regions Common Stock, giving effect to the Merger, (iii) an equivalent pro forma
basis per share of First Community Common Stock, giving effect to the Merger,
(iv) a pro forma combined basis per share of Regions Common Stock, giving effect
to the Merger and the Other Acquisitions, and (v) as appropriate, an equivalent
pro forma basis per share of First Community Common Stock, giving effect to the
Merger and the Other Acquisitions. The Regions and First Community pro forma
combined information and the First Community pro forma Merger equivalent
information give effect to the Merger on a pooling-of-interests accounting basis
and reflect the Exchange Ratio of 0.95 of a share of Regions Common Stock for
each share of First Community Common Stock. See "Description of the
Transaction -- Accounting Treatment." The Regions, Merger, and Other
Acquisitions pro forma combined information and the First Community pro forma
Merger and Other Acquisitions equivalent information give effect to (i) the
Merger as described in the preceding sentence and (ii) the Other Acquisitions as
described under "Summary Pro Forma Financial Data -- Selected Pro Forma Combined
Data for Regions, First Community, and Other Acquisitions." The pro forma data
are presented for informational purposes only and are not necessarily indicative
of the results of operations or combined financial position that would have
resulted had the Merger or the Other Acquisitions been consummated at the dates
or during the periods indicated, nor are they necessarily indicative of future
results of operations or combined financial position.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of Regions and
First Community, including the respective notes thereto, and the pro forma
financial information included or incorporated by reference herein. See
"Documents Incorporated by Reference," "-- Selected Financial Data," "Business
of Regions -- Recent Developments," and "-- Summary Pro Forma Financial Data."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------- --------------------------
1994 1993 1993 1992 1991
------ ------ ------ ------ ------
(UNAUDITED EXCEPT REGIONS
(UNAUDITED) AND FIRST COMMUNITY
HISTORICAL)
<S> <C> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions historical.............................. $ 0.81 $ 0.74 $ 3.01 $ 2.60 $ 2.16
First Community historical...................... 0.71 0.48 2.44 1.70 1.19
Regions and First Community pro forma
combined(1)................................... 0.81 0.73 3.00 2.58 2.14
First Community pro forma Merger
equivalent(2)................................. 0.77 0.69 2.85 2.45 2.03
Regions, First Community, and Other Acquisitions
pro forma combined(3)......................... 0.81 3.03 2.58 2.11
First Community pro forma Merger and Other
Acquisitions equivalent(2).................... 0.77 2.88 2.45 2.00
DIVIDENDS DECLARED PER
COMMON SHARE
Regions historical.............................. $ 0.30 $ 0.26 $ 1.04 $ 0.91 $ 0.87
First Community historical...................... 0.00 0.00 0.53 0.00 0.00
First Community pro forma Merger
equivalent(4)................................. 0.29 0.25 0.99 0.86 0.83
</TABLE>
10
<PAGE> 15
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------- --------------------------
1994 1993 1993 1992 1991
------ ------ ------ ------ ------
(UNAUDITED EXCEPT REGIONS
(UNAUDITED) AND FIRST COMMUNITY
HISTORICAL)
<S> <C> <C> <C> <C> <C>
BOOK VALUE PER COMMON SHARE
(PERIOD END)
Regions historical.............................. $21.39 $18.09 $20.73 $17.62 $15.76
First Community historical...................... 13.34 12.26 13.69 11.83 10.89
Regions and First Community pro forma
combined(1)................................... 21.27 18.00 20.63 17.53 15.67
First Community pro forma Merger
equivalent(2)................................. 20.21 17.10 19.60 16.65 14.89
Regions, First Community, and Other Acquisitions
pro forma combined(3)......................... 21.15
First Community pro forma Merger and Other
Acquisitions equivalent(2).................... 20.09
</TABLE>
- ---------------
(1) Represents the pro forma combined information of Regions and First Community
as if the Merger were consummated on January 1, 1991, and accounted for as
a pooling of interests.
(2) Represents pro forma combined information multiplied by the Exchange Ratio
of 0.95 of a share of Regions Common Stock for each share of First
Community Common Stock.
(3) Represents the pro forma combined information of Regions, First Community,
and the Other Acquisitions as if the Merger were consummated at the time
and pursuant to the accounting basis described in note (1) and the Other
Acquisitions were consummated at the time and pursuant to the accounting
bases described under "Summary Pro Forma Financial Data -- Selected Pro
Forma Combined Data for Regions, First Community, and Other Acquisitions."
(4) Represents historical dividends per share paid by Regions multiplied by the
Exchange Ratio of 0.95 of a share of Regions Common Stock for each share of
First Community Common Stock.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and First Community. The data should be read in
conjunction with the historical financial statements, related notes, and other
financial information concerning Regions and First Community incorporated by
reference or included herein. See "Documents Incorporated by Reference."
SELECTED HISTORICAL FINANCIAL DATA OF REGIONS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ ---------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
----------- ---------- ----------- ---------- ---------- ---------- ----------
(UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total interest income............ $ 170,906 $ 135,719 $ 555,667 $ 536,747 $ 556,821 $ 519,753 $ 496,392
Total interest expense........... 73,539 51,875 213,614 224,068 292,017 297,613 292,687
Net interest income.............. 97,367 83,844 342,053 312,679 264,804 222,140 203,705
Provision for loan losses........ 4,326 7,300 21,533 27,072 24,005 24,208 15,800
Net interest income after loan
loss provision................. 93,041 76,544 320,520 285,607 240,799 197,932 187,905
Total noninterest income
excluding security gains
(losses)....................... 36,516 30,582 131,949 119,130 101,964 94,730 71,976
Security gains (losses).......... 32 47 78 (53) (507) (982) 506
Total noninterest expense........ 80,145 66,091 287,026 264,659 230,340 195,611 176,707
Income tax expense............... 16,292 13,656 53,476 44,977 33,660 27,175 21,046
Net income....................... $ 33,152 $ 27,426 $ 112,045 $ 95,048 $ 78,256 $ 68,894 $ 62,634
Per Share:
Net income....................... $ 0.81 $ 0.74 $ 3.01 $ 2.60 $ 2.16 $ 1.91 $ 1.72
Cash dividends................... 0.30 0.26 1.04 0.91 0.87 0.84 0.76
Book value....................... 21.39 18.09 20.73 17.62 15.76 14.54 13.48
</TABLE>
11
<PAGE> 16
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ ---------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
----------- ---------- ----------- ---------- ---------- ---------- ----------
(UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Information:
Average number of shares
outstanding.................... 41,059 37,290 37,205 36,532 36,191 36,097 36,331
Balance Sheet Data (period end):
Total assets..................... $10,436,704 $7,836,913 $10,476,348 $7,881,026 $6,745,053 $6,344,406 $5,549,612
Securities....................... 2,478,939 1,637,036 2,368,445 1,670,170 1,575,725 1,489,200 1,133,087
Loans, net of unearned income.... 6,848,701 5,187,903 6,833,246 5,142,531 4,274,958 4,092,262 3,552,082
Total deposits................... 8,766,995 6,723,462 8,770,694 6,701,142 5,917,028 5,353,211 4,744,364
Long-term debt................... 449,665 141,718 462,862 136,990 18,782 19,707 45,343
Stockholders' equity............. 878,239 674,923 850,965 656,655 572,971 524,132 489,441
Performance Ratios:
Return on average assets(1)...... 1.30% 1.45% 1.40% 1.34% 1.23% 1.23% 1.20%
Return on average stockholders'
equity(1)...................... 15.55 16.71 16.14 15.64 14.27 13.64 13.25
Net interest margin(1)........... 4.25 4.98 4.82 4.98 4.78 4.67 4.65
Efficiency(2).................... 58.71 56.47 59.24 59.87 60.77 59.22 60.68
Dividend payout.................. 37.04 35.14 34.55 35.00 40.28 43.98 44.19
Asset Quality Ratios:
Net charge-offs (recoveries) to
average loans, net of unearned
income(1)...................... 0.10% (0.03)% 0.19% 0.28% 0.35% 0.44% 0.42%
Problem assets to net loans and
other real estate(3)........... 0.80 0.79 0.84 0.70 0.89 0.98 0.72
Nonperforming assets to net loans
and other real estate(4)....... 0.86 0.88 1.03 0.81 1.01 1.12 0.94
Allowance for loan losses to
loans, net of unearned
income......................... 1.51 1.57 1.47 1.43 1.28 1.10 1.05
Allowance for loan losses to
nonperforming assets(4)........ 175.45 176.98 143.05 175.92 126.32 98.18 110.71
Liquidity and Capital Ratios:
Average stockholders' equity to
average assets................. 8.35% 8.67% 8.70% 8.59% 8.63% 9.03% 9.06%
Average loans to average
deposits....................... 78.23 77.08 78.14 72.46 73.40 76.67 75.23
Tier 1 risk-based capital(5)..... 11.74 11.99 11.13 11.68 11.85 11.31 n/a
Total risk-based capital(5)...... 14.12 14.75 13.48 14.44 13.19 12.51 n/a
Tier 1 leverage(5)............... 7.99 8.30 10.11 8.44 8.40 7.65 8.36
</TABLE>
- ---------------
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses)
from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured loans, and
foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total risk-based capital ratios are 4.0% and
8.0%, respectively. The minimum leverage ratio of Tier 1 capital to total
adjusted assets is 3.0% to 5.0%.
12
<PAGE> 17
SELECTED HISTORICAL FINANCIAL DATA OF FIRST COMMUNITY
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total interest income....................... $ 2,201 $ 1,889 $ 8,058 $ 7,247 $ 6,189 $ 4,658 $ 2,653
Total interest expense...................... 965 916 3,805 3,743 3,595 2,783 1,693
Net interest income......................... 1,236 973 4,253 3,504 2,594 1,875 960
Provision for loan losses................... 108 77 168 431 279 213 128
Net interest income after loan loss
provision................................. 1,128 896 4,085 3,073 2,315 1,662 832
Total noninterest income excluding security
gains (losses)............................ 200 202 860 605 511 313 153
Security gains (losses)..................... 140 57 125 319 103 0 0
Total noninterest expense................... 712 667 2,691 2,348 1,833 1,375 1,043
Income tax expense.......................... 260 157 671 458 320 201 0
Net income (loss)........................... $ 496 $ 331 $ 1,708 $ 1,191 $ 776 $ 399 $ (58)
Per Share:
Net income (loss)........................... $ 0.71 $ 0.48 $ 2.44 $ 1.70 $ 1.19 $ 0.69 $ (0.11)
Cash dividends.............................. 0.00 0.00 0.53 0.00 0.00 0.00 0.00
Book value.................................. 13.34 12.26 13.69 11.83 10.89 9.94 9.74
Other Information:
Average number of shares outstanding........ 700 689 700 700 651 580 527
Balance Sheet Data (period end):
Total assets................................ $124,323 $104,144 $126,080 $ 98,254 $ 72,607 $ 56,969 $ 36,247
Securities.................................. 42,712 37,600 46,484 35,654 20,684 13,817 10,926
Loans, net of unearned income............... 72,390 56,904 68,540 54,465 45,431 35,356 17,207
Total deposits.............................. 112,760 93,336 113,865 87,791 62,891 49,231 30,524
Stockholders' equity........................ 9,338 8,448 9,584 8,283 7,091 5,767 5,133
Performance Ratios:
Return on average assets(1)................. 1.58% 1.31% 1.52% 1.39% 1.20% 0.86% (0.32)%
Return on average stockholders' equity(1)... 20.97 15.83 19.12 15.49 12.07 7.32 (2.26)
Net interest margin(1)...................... 4.32 4.22 4.22 4.29 4.27 4.41 3.82
Efficiency(2)............................... 49.58 56.77 52.63 57.14 59.03 62.84 93.71
Dividend payout............................. 0.00 0.00 21.92 0.00 0.00 0.00 0.00
Asset Quality Ratios:
Net charge-offs to average loans, net of
unearned income(1)........................ 0.05% 0.00% 0.04% 0.09% 0.12% 0.12% 0.00%
Problem assets to net loans and other real
estate(3)................................. 0.06 0.09 0.17 0.09 0.16 0.00 0.00
Nonperforming assets to net loans and other
real estate(4)............................ 0.29 0.99 0.86 0.31 0.47 0.29 0.14
Allowance for loan losses to loans, net of
unearned income........................... 1.65 1.84 1.63 1.78 1.29 1.00 1.00
Allowance for loan losses to nonperforming
assets(4)................................. 215.94 509.22 193.07 591.46 279.43 354.00 716.67
Liquidity and Capital Ratios:
Average stockholders' equity to average
assets.................................... 7.56% 8.27% 7.96% 9.00% 9.92% 11.69% 14.16%
Average loans to average deposits........... 62.19 61.49 61.00 66.30 72.05 65.91 56.37
Tier 1 risk-based capital(5)................ 8.81 10.78 9.29 9.20 11.48 13.77 25.44
Total risk-based capital(5)................. 10.11 12.10 10.52 10.42 12.53 14.67 26.32
Tier 1 leverage(5).......................... 6.58 8.23 6.74 7.49 8.92 9.56 13.88
</TABLE>
- ---------------
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses)
from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured loans, and
foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total risk-based capital ratios are 4.0% and
8.0%, respectively. The minimum leverage ratio of Tier 1 capital to total
adjusted assets is 3.0% to 5.0%.
13
<PAGE> 18
THE STOCKHOLDER MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of First
Community Common Stock in connection with the solicitation by the First
Community Board of Directors of proxies for use at the Annual Meeting, at which
First Community stockholders will be asked to vote upon a proposal (i) to
approve the Agreement, including the Merger and related matters, and (ii) to
elect nominees to four positions on the Board of Directors of First Community
(the "Election"). The Annual Meeting will be held at :00 .m., local
time, on , 1994, at Holiday Inn Skytop, Highway 411 East, Rome,
Georgia 30161.
First Community stockholders are requested promptly to sign, date, and
return the accompanying proxy card to First Community in the enclosed
postage-paid, addressed envelope. A stockholder's failure to return a properly
executed proxy card or to vote at the Annual Meeting will have the same effect
as a vote against the Agreement.
Any First Community stockholder who has delivered a proxy may revoke it at
any time before it is voted by giving notice of revocation in writing or
submitting to First Community a signed proxy card bearing a later date, provided
that such notice or proxy card is actually received by First Community before
the vote of stockholders or in open meeting prior to the taking of the
stockholder vote at the Annual Meeting. Any notice of revocation should be sent
to First Community Bancshares, Inc., Turner McCall Boulevard at Fifth Avenue,
Rome, Georgia 30161, Attention: Edward Hine, Jr., Corporate Secretary. A proxy
will not be revoked by death or supervening incapacity of the stockholder
executing the proxy unless, before the vote, notice of such death or incapacity
is filed with the Corporate Secretary. The shares of First Community Common
Stock represented by properly executed proxies received at or prior to the
Annual Meeting and not subsequently revoked will be voted as directed in such
proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES REPRESENTED BY PROXIES RECEIVED
WILL BE VOTED FOR APPROVAL OF THE AGREEMENT, FOR ELECTION OF THE FOUR NOMINEES
TO THE BOARD OF DIRECTORS OF FIRST COMMUNITY, AND IN THE DISCRETION OF THE PROXY
HOLDER, AS TO ANY OTHER MATTERS THAT MAY COME PROPERLY BEFORE THE ANNUAL
MEETING. IF NECESSARY, AND UNLESS CONTRARY INSTRUCTIONS ARE GIVEN, THE PROXY
HOLDER ALSO MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE ANNUAL MEETING TO
PERMIT FURTHER SOLICITATION OF PROXIES IN ORDER TO OBTAIN SUFFICIENT VOTES TO
APPROVE THE AGREEMENT. As of the date of this Proxy Statement/Prospectus, First
Community is unaware of any other matter to be presented at the Annual Meeting.
Solicitation of proxies will be made by mail but also may be made by
telephone or telegram or in person by the directors, officers, and employees of
First Community, who will receive no additional compensation for such
solicitation but may be reimbursed for out-of-pocket expenses. Brokerage houses,
nominees, fiduciaries, and other custodians will be requested to forward
solicitation materials to beneficial owners and will be reimbursed for their
reasonable out-of-pocket expenses.
FIRST COMMUNITY STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH
THEIR PROXY CARDS.
RECORD DATE; VOTE REQUIRED
First Community's Board of Directors has established the close of business
on , 1994, as the Record Date for determining the First Community
stockholders entitled to notice of and to vote at the Annual Meeting. Only First
Community stockholders of record as of the Record Date will be entitled to vote
at the Annual Meeting. The affirmative vote of the holders of a majority of the
First Community Common Stock entitled to vote at the Annual Meeting is required
in order to approve the Agreement. Therefore, an abstention or failure to return
a properly executed proxy card will have the same effect as a vote against the
Agreement, as will a broker's submitting a proxy card without exercising
discretionary voting authority with respect to the Agreement. Under Georgia law,
directors are elected by the affirmative vote of a plurality of the shares of
First Community Common Stock voted at the Annual Meeting, assuming a quorum is
present. Therefore, assuming a quorum is present, neither an abstention or
failure to return a properly executed proxy card, nor a broker's submitting a
proxy card without exercising discretionary voting authority, with respect to
the Election, will have any effect on the Election. As of the Record Date, there
were approximately 750 holders of the 699,909
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shares of First Community Common Stock outstanding and entitled to vote at the
Annual Meeting, with each share entitled to one vote. No person is known by
First Community to beneficially own more than 5.0% of the outstanding shares of
First Community Common Stock as of the Record Date.
The presence, in person or by proxy, of a majority of the outstanding
shares of First Community Common Stock is necessary to constitute a quorum of
the stockholders in order to take action at the Annual Meeting. For these
purposes, shares of First Community Common Stock that are represented in person
or by proxy at the Annual Meeting will be counted for quorum purposes regardless
of whether the holder of the shares or proxy fails to vote on the Agreement or
the Election, or whether a broker with discretionary authority fails to exercise
its discretionary voting authority with respect to the Agreement or the
Election. Once a quorum is established, approval of the Agreement requires the
affirmative vote of the holders of a majority of the First Community Common
Stock entitled to vote at the Annual Meeting, and election of four nominees to
the Board of Directors of First Community requires the affirmative vote of a
plurality of the shares of First Community Common Stock voted at the Annual
Meeting.
The directors and executive officers of First Community and their
affiliates beneficially owned, as of the Record Date, 217,176 shares (or
approximately 31.0% of the outstanding shares) of First Community Common Stock.
The directors and executive officers of Regions and their affiliates
beneficially owned, as of the Record Date, no shares of First Community Common
Stock. As of that date, no subsidiary of either First Community or Regions held
any shares of First Community Common Stock in a fiduciary capacity for others.
DESCRIPTION OF THE TRANSACTION
The following material describes certain aspects of the Merger. This
description does not purport to be complete and is qualified in its entirety by
reference to the Appendices hereto, including the Agreement, which is attached
as Appendix A to this Proxy Statement/Prospectus and incorporated herein by
reference. All stockholders are urged to read the Appendices in their entirety.
GENERAL
Upon consummation of the Merger, First Community will merge with and into
Regions, the separate existence of First Community will cease, and the Bank, a
wholly-owned subsidiary of First Community, will become a wholly-owned
subsidiary of Regions and will continue in operation servings its current
markets as a state-chartered commercial bank.
Each share of First Community Common Stock (excluding any shares held by
First Community, Regions, or their respective subsidiaries, other than shares
held in a fiduciary capacity or in satisfaction of debts previously contracted
and shares held by stockholders who perfect their dissenters' rights of
appraisal) issued and outstanding at the Effective Date will be converted into
0.95 of a share of Regions Common Stock. Each share of Regions Common Stock
outstanding immediately prior to the Effective Date will remain outstanding and
unchanged as a result of the Merger.
No fractional shares of Regions Common Stock will be issued in connection
with the Merger. In lieu of issuing fractional shares, Regions will make a cash
payment (without interest) equal to the fractional interest which a First
Community stockholder otherwise would receive multiplied by the closing sale
price of Regions Common Stock on the Nasdaq National Market on the last trading
day prior to the Effective Date.
TREATMENT OF FIRST COMMUNITY OPTIONS
The Agreement provides that all rights with respect to First Community
Common Stock pursuant to stock options or stock appreciation rights granted by
First Community under its stock option and other stock-based compensation plans
which are outstanding at the Effective Date, whether or not then exercisable,
will be converted into and will become rights with respect to Regions Common
Stock, and Regions will assume each of such options in accordance with the terms
of the plan under which it was issued and the agreement by which it is
evidenced. After the Effective Date, those options will become options to
purchase Regions Common Stock, with the exercise price and number of shares of
Regions Common Stock purchasable
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thereunder adjusted to reflect the Exchange Ratio. As of the date of this Proxy
Statement/Prospectus, the executive officers or directors of First Community who
hold outstanding options are B. G. Early and Steven E. Kemp, who hold options to
purchase 26,168 shares and 21,664 shares of First Community Common Stock,
respectively, none of which options are exercisable within 60 days of the Record
Date.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. During the last several years, there have been
significant developments in the banking and financial services industry. These
developments include an accelerated trend towards consolidation and geographic
expansion by regional bank holding companies, specialization of products and
services offered by banking institutions, increased competition from financial
institutions which are not subject to bank regulatory oversight, and increasing
regulatory compliance requirements for banking institutions.
In early 1993, the executive officers and executive committee of First
Community (the "Executive Committee") began to evaluate whether the interests of
the stockholders, officers and employees, customers and the community would be
better served by combining First Community with a regional bank holding company
if a fair price could be negotiated or by retaining its independent status. It
was the unanimous consensus of the Executive Committee and the full Board of
Directors that a merger at a fair price to stockholders with a regional bank
holding company which recognized the importance of the banking philosophy at
First Community, and also enhanced its relationship with its customers,
employees, and community, was in the best interest of all constituencies which
First Community serves. In reaching this conclusion, the Board of Directors
unanimously concluded that First Community had insufficient assets and was
unlikely to develop sufficient assets to justify the cost to be incurred to
develop new and specialized products to compete with those being offered by its
larger and better capitalized competitors and to justify the increased cost of
regulatory compliance. Further, the directors concluded that the current
favorable market evaluation of successful independent local bank holding
companies might not continue after the regional bank holding companies complete
their geographic expansion efforts.
First Community's Reasons for the Merger. During 1993, the directors of
First Community considered several indications of interest and one formalized
offer from regional bank holding companies other than Regions. Those indications
of interest were at a price which the Board of Directors concluded was too low
for the value represented by the First Community. The formal offer from the
other regional bank holding company was rejected by the Board of Directors,
because the directors concluded that the proposed merger would disrupt the
banking philosophy that had made First Community successful and also concluded
that the securities offered did not represent a value consistent with the best
short-or long-term interests of the stockholders.
As a result of those indications of interest from potential acquirers,
however, the Board of Directors had an opportunity to evaluate the value of
First Community as an enterprise, and in January, 1994, the executive officers
negotiated and the Board of Directors ratified the Agreement with Regions at a
favorable price per share for the stockholders of First Community, when compared
to the other indications of interest and the prices at which certain other
independent bank holding companies had been acquired during the last 2 years. In
addition to representing higher value to First Community stockholders than any
other indication which previously had been suggested in connection with a
possible merger with First Community, the proposed merger with Regions offered
continuity of interest in terms of banking philosophy, customer service,
employee motivation and loyalty, and service to the community. Prior to
approving the Merger, and without assigning any relative or specific weight to
the factors, the Board of Directors of First Community also considered the
following material factors:
(a) the information presented to the directors by the management of
First Community concerning the business, operations, earnings, asset
quality, and financial condition of First Community;
(b) the financial terms of the Merger, including the relationship of
the market value of the Exchange Ratio to the market value, tangible book
value, and earnings per share of First Community Common Stock;
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(c) the nonfinancial terms of the Merger, including the treatment of
the Merger as a tax-free exchange of First Community Common Stock for
Regions Common Stock for federal and state income tax purposes;
(d) the likelihood of the Merger being approved by applicable
regulatory authorities without undue conditions or delay;
(e) the information presented to the directors by the management of
Regions concerning the business, operations, earnings, asset quality, and
financial condition of Regions;
(f) the attractive nature of the Merger when compared to other
acquisitions of independent bank holding companies by regional bank holding
companies; and
(g) the positive impact the Merger would have for officers and
employees as part of Regions, and the new banking products which could be
offered to customers and the community upon the conclusion of the Merger.
The terms of the Agreement, including the Merger and related matters, were
the result of arms-length negotiations between representatives of First
Community and representatives of Regions. Based upon the consideration of the
foregoing factors, the Board of Directors of First Community unanimously
approved the Merger as being in the best interests of First Community and its
stockholders. Each member of the Board of Directors of First Community has
agreed to vote such member's shares in favor of the Agreement.
FIRST COMMUNITY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT FIRST
COMMUNITY STOCKHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT.
Regions' Reasons for the Merger. The Regions Board of Directors has
approved the Agreement and determined that the Merger is in the best interests
of Regions and its stockholders. In approving the Agreement, the Regions Board
considered a number of factors. Without assigning any relative or specific
weights to the factors, the Regions Board of Directors considered the following
material factors:
(a) a review, based in part on a presentation by Regions management,
of (i) the business, operations, earnings, and financial condition,
including the capital levels and asset quality, of First Community on an
historical, prospective, and pro forma basis and in comparison to other
financial institutions in the area, (ii) the demographic, economic, and
financial characteristics of the markets in which First Community operates,
including existing competition, history of the market areas with respect to
financial institutions, and average demand for credit, on an historical and
prospective basis, and (iii) the results of Regions' due diligence review
of First Community; and
(b) a variety of factors affecting and relating to the overall
strategic focus of Regions, including Regions' desire to expand into
markets in the general vicinity of its core markets.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Georgia Certificate of Merger relating to
the Merger are filed and declared effective with, respectively, the Delaware
Secretary of State and the Georgia Secretary of State. Unless otherwise agreed
upon in writing by Regions and First Community, and subject to the conditions to
the obligations of the parties to effect the Merger, the parties will use their
reasonable efforts to cause the Effective Date to occur on the last business day
of the month in which occurs the last to occur of: (i) the effective date
(including the expiration of any applicable waiting period) of the last federal
or state regulatory approval required for the Merger and (ii) the date on which
the Agreement is approved by the requisite vote of First Community stockholders;
or such later date within 30 days thereof as specified by Regions.
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No assurance can be provided that the necessary stockholder and regulatory
approvals can be obtained or that other conditions precedent to the Merger can
or will be satisfied. Regions and First Community anticipate that all conditions
to consummation of the Merger will be satisfied so that the Merger can be
consummated during the third quarter of 1994. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Regions or First Community generally may
terminate the Agreement if the Merger is not consummated by March 31, 1995,
unless the failure to consummate by that date is the result of a breach of the
Agreement by the party seeking termination. See " -- Conditions to Consummation
of the Merger" and " -- Waiver, Amendment, and Termination of the Agreement."
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
Promptly after the Effective Date, Regions will cause First Alabama Bank,
acting in the capacity of Exchange Agent, to mail to the former stockholders of
First Community a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of First
Community Common Stock for certificates representing shares of Regions Common
Stock.
FIRST COMMUNITY STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of certificates for First Community
Common Stock, together with a properly completed letter of transmittal, there
will be issued and mailed to each holder of First Community Common Stock
surrendering such items a certificate or certificates representing the number of
shares of Regions Common Stock to which such holder is entitled, if any, and a
check for the amount to be paid in lieu of any fractional share interest
(without interest). After the Effective Date, to the extent permitted by law,
First Community stockholders of record as of the Effective Date will be entitled
to vote at any meeting of holders of Regions Common Stock the number of whole
shares of Regions Common Stock into which their First Community Common Stock has
been converted, regardless of whether such stockholders have surrendered their
First Community Common Stock certificates. No dividend or other distribution
payable after the Effective Date with respect to Regions Common Stock, however,
will be paid to the holder of any unsurrendered First Community certificate
until the holder duly surrenders such certificate. Upon such surrender, all
undelivered dividends and other distributions and, if applicable, a check for
the amount to be paid in lieu of any fractional share interest will be delivered
to such stockholder, in each case without interest.
After the Effective Date, there will be no transfers of shares of First
Community Common Stock on First Community's stock transfer books. If
certificates representing shares of First Community Common Stock are presented
for transfer after the Effective Date, they will be canceled and exchanged for
the shares of Regions Common Stock and a check for the amount due in lieu of
fractional shares, if any, deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions, including,
but not limited to:
(a) approval from the Federal Reserve and the Georgia Department,
without any conditions or restrictions that, in the reasonable judgment of
Regions' Board of Directors, would so materially adversely impact the
economic or business benefits of the transactions contemplated by the
Agreement so as to render inadvisable the consummation of the Merger and
expiration of any applicable waiting period;
(b) the approval by the holders of a majority of the shares of First
Community Common Stock issued and outstanding;
(c) the absence of any action by any court or governmental authority
restraining or prohibiting the Merger;
(d) the receipt of a satisfactory opinion of counsel that the Merger
qualifies for federal income tax treatment as a reorganization under
Section 368(a) of the Code and that the exchange of First
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Community Common Stock for Regions Common Stock will not give rise to
recognition of gain or loss to First Community stockholders, except to the
extent of any cash received; and
(e) the approval for listing on the Nasdaq National Market of the
shares of Regions Common Stock to be issued in the Merger.
Consummation of the Merger also is subject to the satisfaction or waiver of
various other conditions specified in the Agreement, including, among others:
(i) the delivery by Regions and First Community of opinions of their respective
counsel and certificates executed by their respective chief executive officers
and chief financial officers as to compliance with the Agreement; (ii) as of the
Effective Date, the accuracy of certain representations and warranties and the
compliance in all material respects with the agreements and covenants of each
party; and (iii) the receipt by Regions of a letter dated not more than five
days prior to the date of the Proxy Statement/Prospectus and the Effective Date
from First Community's independent accountants with respect to certain financial
information regarding First Community.
REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. There can be no assurance that such regulatory approvals
will be obtained or as to the timing of such approvals. There also can be no
assurance that such approvals will not be accompanied by a conditional
requirement which causes such approvals to fail to satisfy the conditions set
forth in the Agreement. Applications for the approvals described below have been
submitted to the appropriate regulatory agencies, and the Federal Reserve has
issued its approval of the Merger.
Regions and First Community are not aware of any material governmental
approvals or actions that are required for consummation of the Merger, except as
described below. Should any other approval or action be required, it presently
is contemplated that such approval or action would be sought.
The Merger requires the prior approval of the Federal Reserve, pursuant to
Section 3 of the BHC Act. In granting its approval under Section 3 of the BHC
Act, the Federal Reserve considered, among other factors, the financial and
managerial resources and future prospects of the institutions and the
convenience and needs of the communities to be served. The relevant statutes
prohibit the Federal Reserve from approving the Merger (i) if it would result in
a monopoly or be in furtherance of any combination or conspiracy to monopolize
or attempt to monopolize the business of banking in any part of the United
States or (ii) if its effect in any section of the country may be to
substantially lessen competition or to tend to create a monopoly, or if it would
be a restraint of trade in any other manner, unless the Federal Reserve finds
that any anticompetitive effects are outweighed clearly by the public interest
and the probable effect of the transaction in meeting the convenience and needs
of the communities to be served. Under the BHC Act, the Merger may not be
consummated until the 30th day following the date of Federal Reserve approval,
during which time the United States Department of Justice may challenge the
transaction on antitrust grounds. The commencement of any antitrust action would
stay the effectiveness of the Federal Reserve's approval, unless a court
specifically orders otherwise.
The Merger also is subject to the approval of the Georgia Department. In
its evaluation, the Georgia Department will take into account considerations
similar to those applied by the Federal Reserve.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefitted
by the provision or (ii) amended by a written agreement between Regions and
First Community approved by their respective Boards of Directors; provided,
however, that after approval by the First Community stockholders, no amendment
that, pursuant to the Georgia Act, requires further approval by such
stockholders may be made without the further approval of such stockholders.
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The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date, either before or after approval by First Community
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final nonappealable
denial of any required regulatory approval, provided that the terminating
party is not then in material breach of any provision of the Agreement, or
by the Board of Directors of Regions if any required regulatory approval is
conditioned or restricted in the manner described under " -- Conditions to
Consummation of the Merger" above;
(b) by the Board of Directors of either party, if the holders of a
majority of the voting power of First Community Common Stock represented at
the Annual Meeting shall not have approved the Agreement, provided that the
terminating party is not then in material breach of any provision of the
Agreement;
(c) by mutual agreement of the Boards of Directors of Regions and
First Community;
(d) by the Board of Directors of either party, in the event of a
breach of any provision of the Agreement which meets certain standards
specified in the Agreement; or
(e) by the Board of Directors of either party if the Merger shall not
have been consummated by March 31, 1995, but only if the failure to
consummate the Merger by such date has not been caused by the terminating
party's breach of the Agreement.
If the Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination will not relieve the parties from the
consequences of any uncured willful breach of the Agreement giving rise to such
termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of First Community and Regions generally has agreed, unless the prior
consent of the other party is obtained, and except as otherwise contemplated by
the Agreement, to operate its business only in the ordinary course, preserve
intact its business organizations and assets, maintain its rights and
franchises, and take no action that would materially adversely affect the
ability of either party to perform its covenants and agreements under the
Agreement or to obtain any consent or approval required for the consummation of
the transactions contemplated by the Agreement. In addition, the Agreement
contains certain other restrictions applicable to the conduct of the business of
either First Community or Regions prior to consummation of the Merger, as
described below.
First Community. First Community has agreed not to take certain action
relating to the operation of its business pending consummation of the Merger
without the prior approval of Regions. Those actions generally include, without
limitation: (i) amending its Articles of Incorporation or Bylaws; (ii) becoming
responsible for any obligation for borrowed money in excess of an aggregate of
$50,000 (except in the ordinary course of business consistent with past
practices); (iii) acquiring or exchanging any shares of its capital stock or
paying any dividend or other distribution in respect of its capital stock in
excess of a regular quarterly cash dividend of $.16 per share; (iv) issuing or
selling any additional shares of any First Community capital stock, any rights
to acquire any such stock, or any security convertible into such stock (except
as set forth in the Agreement or pursuant to the exercise of outstanding stock
options); (v) adjusting or reclassifying any of its capital stock; (vi)
acquiring control over any other entity; (vii) granting any increase in
compensation or benefits to employees or officers (except as previously
disclosed to Regions or as required by law), paying any bonus (except as
previously disclosed to Regions or in accordance with any existing program or
plan), entering into or amending any severance agreements with officers (except
as previously disclosed to Regions), or granting any increase in compensation or
other benefits to directors; (viii) entering into or amending any employment
contract that it does not have the unconditional right to terminate (except as
previously disclosed to Regions and except for any amendment required by law);
(ix) adopting any new employee benefit plan or program, or materially changing
any existing plan or program (except as previously disclosed to Regions and
except for any change required by law or advisable to maintain the tax qualified
status of any such plan); (x) making any significant change in any tax or
accounting methods or systems of internal accounting controls (except in
conformity to changes in tax laws or generally accepted accounting principles
("GAAP")); (xi) commencing
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any litigation (except in accordance with past practices); or (xii) modifying or
terminating any material contract.
In addition, First Community has agreed not to solicit, directly or
indirectly, any acquisition proposal from any other person or entity. First
Community also has agreed not to negotiate with respect to any such proposal,
provide nonpublic information to any party making such a proposal, or enter into
any agreement with respect to any such proposal, except in compliance with the
fiduciary obligations of its Board of Directors. In addition, First Community
has agreed to use reasonable efforts to cause its advisors and other
representatives not to engage in any of the foregoing activities.
Regions. The Agreement prohibits Regions, prior to the earlier of the
Effective Date or the termination of the Agreement, from taking any action that
would materially adversely affect the ability of either party to obtain the
requisite governmental approvals or to perform its covenants and agreements
under the Agreement.
MANAGEMENT FOLLOWING THE MERGER
Consummation of the Merger will not alter the present officers and
directors of Regions. Information concerning the management of Regions is
included in the documents incorporated herein by reference. See "Documents
Incorporated by Reference."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Agreement provides that Regions will, and will cause First Community
to, maintain all rights of indemnification existing in favor of each person
entitled to indemnification from First Community or any of its subsidiaries on
terms no less favorable than the rights provided in the Certificate of
Incorporation or Bylaws of First Community or its subsidiaries, as the case may
be, or the rights otherwise in effect on the date of the Agreement, and that
such rights will continue in full force and effect for six years from the
Effective Date with respect to matters occurring at or prior to the Effective
Date.
The Agreement also provides that, after the Effective Date, Regions will
provide generally to officers and employees of First Community and its
subsidiaries who become officers or employees of Regions or its subsidiaries,
employee benefits under employee benefit plans (other than stock option or other
plans involving the potential issuance of Regions Common Stock) on terms and
conditions that, taken as a whole, are substantially similar to those currently
provided by Regions and its subsidiaries to their similarly situated officers
and employees. For purposes of participation and vesting (but not benefit
accrual) under such employee benefit plans, service with First Community or its
subsidiaries prior to the Effective Date will be treated as service with Regions
or its subsidiaries. The Agreement further provides that Regions will cause
First Community to honor all employment, severance, consulting, and other
compensation contracts previously disclosed to Regions between First Community
or its subsidiaries and any current or former director, officer, or employee,
and all provisions for vested amounts earned or accrued through the Effective
Date under First Community's benefit plans.
As described above under " -- Treatment of First Community Options," the
Agreement also provides that all rights with respect to First Community Common
Stock pursuant to stock options or stock appreciation rights granted by First
Community under its stock option and other stock-based compensation plans which
are outstanding at the Effective Date, whether or not then exercisable, will be
converted into and will become rights with respect to Regions Common Stock, and
Regions will assume each of such options in accordance with its terms.
As of the Record Date, the directors and executive officers of First
Community owned no shares of Regions Common Stock.
DISSENTING STOCKHOLDERS
Pursuant to the provisions of Article 13 of the Georgia Act, if the Merger
is consummated, any holder of record of First Community Common Stock who (i)
gives to First Community, prior to the vote at the Annual Meeting with respect
to the approval of the Agreement, written notice of such holder's intent to
demand
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payment for such holder's shares, and (ii) does not vote in favor thereof, shall
be entitled to receive, upon compliance with the statutory requirements
summarized below, the fair value of such holder's shares as of the Effective
Date, excluding any appreciation or depreciation in anticipation of the Merger.
A stockholder of record may assert dissenters' rights as to fewer than all
the shares registered in such holder's name only if such holder dissents with
respect to all shares beneficially owned by any one beneficial stockholder and
such holder notifies First Community in writing of the name and address of each
person on whose behalf such holder asserts dissenters' rights. The rights of
such a partial dissenter are determined as if the shares as to which such holder
dissents and such holder's other shares were registered in the names of
different stockholders.
The written objection requirement referred to above will not be satisfied
under the Georgia statutory provisions by merely voting against approval of the
Agreement by proxy or in person at the Annual Meeting. Any holder of First
Community Common Stock who returns a signed proxy but fails to provide
instructions as to the manner in which such shares are to be voted will be
deemed to have voted in favor of the transaction and will not be entitled to
assert dissenters' rights of appraisal. In addition to not voting in favor of
the Agreement, a stockholder wishing to preserve the right to dissent and seek
appraisal must give a separate written notice of such holder's intent to demand
payment for such holder's shares if the Merger is effected, as hereinabove
provided.
Any written objection to the Agreement satisfying the requirements
discussed above should be addressed as follows: First Community Bancshares,
Inc., Turner McCall Boulevard at Fifth Avenue, Rome, Georgia 30161, Attention:
Corporate Secretary.
If the Merger is authorized at the Annual Meeting, First Community must
deliver a written dissenters' notice (the "Dissenters' Notice") to all holders
of First Community Common Stock who satisfied the foregoing requirements. The
Dissenters' Notice must be sent within ten days after the Effective Date and
must (i) state where the demand for payment must be sent and where and when
certificates for shares of First Community Common Stock must be deposited, (ii)
inform holders of uncertificated shares to what extent transfer of these shares
will be restricted after the demand for payment is received, (iii) set a date by
which First Community must receive the demand for payment (which date may not be
fewer than 30 nor more than 60 days after the Dissenters' Notice is delivered),
and (iv) be accompanied by a copy of Article 13 of the Georgia Act.
A stockholder of record who receives the Dissenters' Notice must demand
payment and deposit such holder's certificates in accordance with the
Dissenters' Notice. Such stockholder will retain all other rights of a
stockholder until those rights are canceled or modified by the consummation of
the Merger. A record stockholder who does not demand payment or deposit such
holder's shares certificates where required, each by the date set in the
Dissenters' Notice, is not entitled to payment for such holder's shares under
Article 13.
Except as described below, the surviving corporation resulting from the
Merger must, within ten days of the later of the Effective Date or receipt of a
payment demand, offer to pay to each dissenting stockholder who complied with
the payment demand and deposit requirements described above the amount the
surviving corporation estimates to be the fair value of such holder's shares,
plus accrued interest from the Effective Date. Such offer of payment must be
accompanied by (i) certain recent First Community financial statements, (ii) the
surviving corporation's estimate of the fair value of the shares, (iii) an
explanation of how the interest was calculated, (iv) a statement of the
dissenter's right to demand payment under Section 14-2-1327 of the Georgia Act,
and (v) a copy of the Article 13 of the Georgia Act. If the stockholder accepts
the surviving corporation's offer by written notice to the surviving corporation
within 30 days after the surviving corporation's offer, payment must be made
within 60 days after the later of the making of the offer or the Effective Date.
If the Merger is not effected within 60 days after the date set forth
demanding payment and depositing share certificates, First Community must return
the deposited certificates and release the transfer restrictions imposed on
uncertificated shares. If, after such return and release, the Merger is
effected, the surviving corporation must send a new Dissenter's Notice and
repeat the payment demand procedure described above.
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Section 14-2-1327 of the Georgia Act provides that a dissenting stockholder
may notify the surviving corporation in writing of such holder's own estimate of
the fair value or such holder's shares and the interest due, and may demand
payment of such holder's estimate, if (i) such holder believes that the amount
offered by the surviving corporation is less than the fair value of such
holder's shares or that the interest due has been calculated incorrectly, or
(ii) First Community, having failed to effect the Merger, does not return the
deposited certificates or release the transfer restrictions imposed on
uncertificated shares within 60 days after the date set for demanding payment. A
dissenting stockholder waives such holder's right to demand payment under
Section 14-2-1327 unless such holder notifies the surviving corporation of such
holder's demand in writing within 30 days after the surviving corporation makes
or offers payment for such holder's shares. If the surviving corporation does
not offer payment within ten days of the later of the Effective Date or receipt
of a payment demand, then (i) the stockholder may demand the financial
statements and other information required to accompany the surviving
corporation's payment offer, and the surviving corporation must provide such
information within ten days after receipt of the written demand, and (ii) the
stockholder may notify the surviving corporation of such holder's own estimate
of the fair value of such holder's shares and the amount of interest due, and
may demand payment of that estimate.
If a demand for payment under Section 14-2-1327 remains unsettled, the
surviving corporation must commence a nonjury equity valuation proceeding in the
Superior Court of Floyd County, Georgia, within 60 days after receiving the
payment demand and must petition the court to determine the fair value of the
shares and accrued interest. If the surviving corporation does not commence the
proceeding within those 60 days, it is required to pay each dissenting
stockholder whose demand remains unsettled, the amount demanded. The surviving
corporation is required to make all dissenting stockholders whose demands remain
unsettled parties to the proceeding and to serve a copy of the petition upon
each dissenting stockholder. The court may appoint appraisers to receive
evidence and to recommend a decision on fair value. Each dissenting stockholder
made a party to the proceeding is entitled to judgment for the fair value of
such holder's shares plus interest to the date of judgment.
The court in an appraisal proceeding commenced under the foregoing
provision must determine the costs of the proceeding, excluding fees and
expenses of attorneys and experts for the respective parties, and must assess
those costs against the surviving corporation, except that the court may assess
the costs against all or some of the dissenting stockholders to the extent the
court finds they acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Section 14-2-1327. The court also may assess the fees
and expenses of attorneys and experts for the respective parties against the
surviving corporation if the court finds the surviving corporation did not
substantially comply with the requirements of specified provisions of Article 13
of the Georgia Act, or against either the surviving corporation or a dissenting
stockholder if the court finds that such party acted arbitrarily, vexatiously,
or not in good faith with respect to the rights provided by Article 13 of the
Georgia Act.
If the court finds that the services of attorneys for any dissenting
stockholder were of substantial benefit to other dissenting stockholders
similarly situated, and that the fees for those services should not be assessed
against the surviving corporation, the court may award those attorneys
reasonable fees out of the amounts awarded the dissenting stockholders who were
benefitted. No action by any dissenting stockholder to enforce dissenters'
rights may be brought more than three years after the Effective Date, regardless
of whether notice of the Merger and of the right to dissent was given by First
Community or the surviving corporation in compliance with the Dissenters' Notice
and payment offer requirements.
The foregoing is a summary of the material rights of a dissenting
stockholder of First Community, but is qualified in its entirety by reference to
Article 13 of the Georgia Act, included in Appendix B to this Prospectus/Proxy
Statement. Any First Community stockholder who intends to dissent from approval
of the Agreement should carefully review the text of such provisions and should
also consult with such holder's attorney. No further notice of the events giving
rise to dissenters' rights or any steps associated therewith will be furnished
to First Community stockholders, except as indicated above or otherwise required
by law.
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Any dissenting First Community stockholder who perfects such holder's right
to be paid the value of such holder's shares will recognize taxable gain or loss
upon receipt of cash for such shares for federal income tax purposes. See
"Certain Federal Income Tax Consequences of the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THIS SUMMARY IS BASED ON THE FEDERAL INCOME TAX LAWS
NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES NOT TAKE INTO ACCOUNT
POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS, INCLUDING AMENDMENTS TO
APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN JUDICIAL OR ADMINISTRATIVE
RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT. THIS SUMMARY DOES NOT
PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY PERSON. IN PARTICULAR,
AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT ADDRESS THE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN PERSONS, TAX-EXEMPT
ENTITIES, DEALERS IN SECURITIES, INSURANCE COMPANIES, AND CORPORATIONS, AMONG
OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF THE MERGER UNDER ANY
STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. STOCKHOLDERS, THEREFORE, ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF
THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND
EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, Alston & Bird, special
counsel to Regions, has rendered an opinion to Regions and First Community
concerning certain federal income tax consequences of the proposed Merger under
federal income tax law. It is such firm's opinion that:
(a) Provided the Merger qualifies as a statutory merger under the
Delaware GCL and the Georgia Act, the Merger will be a reorganization
within the meaning of Section 368(a)(1)(A). First Community and Regions
will each be "a party to a reorganization" within the meaning of Section
368(b).
(b) First Community will recognize no gain or loss upon the transfer
of its assets to Regions in exchange solely for Regions Common Stock and
the assumption by Regions of the liabilities of First Community.
(c) No gain or loss will be recognized by Regions on receipt of First
Community's assets in exchange for Regions Common Stock.
(d) The basis of First Community's assets in the hands of Regions
will, in each case, be the same as the basis of those assets in the hands
of First Community immediately prior to the transaction.
(e) The holding period of the assets of First Community in the hands
of Regions will, in each case, include the period during which such assets
were held by First Community.
(f) The stockholders of First Community will recognize no gain or loss
upon the exchange of their First Community Common Stock solely for shares
of Regions Common Stock.
(g) The basis of the Regions Common Stock received by the First
Community stockholders in the proposed transaction will, in each instance,
be the same as the basis of the First Community Common Stock surrendered in
exchange therefor.
(h) The holding period of the Regions Common Stock received by the
First Community stockholders will, in each instance, include the period
during which the First Community Common Stock surrendered in exchange
therefor was held, provided that the First Community Common Stock was held
as a capital asset on the date of the exchange.
(i) The payment of cash to First Community stockholders in lieu of
fractional share interests of Regions Common Stock will be treated for
federal income tax purposes as if the fractional shares were distributed as
part of the exchange and then were redeemed by Regions. These cash payments
will be
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treated as having been received as distributions in full payment in
exchange for the stock redeemed as provided in Section 302(a).
(j) Where solely cash is received by a First Community stockholder in
exchange for such holder's shares of First Community Common Stock pursuant
to the exercise of dissenters' rights, such cash will be treated as having
been received in redemption of such holder's shares of First Community
Common Stock, subject to the provisions and limitations of Section 302.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, OR OTHER TAX
CONSEQUENCES OF THE MERGER. FIRST COMMUNITY STOCKHOLDERS SHOULD CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED
TRANSACTION TO THEM INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER STATE OR
LOCAL LAW.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a pooling of
interests, as that term is used pursuant to GAAP, for accounting and financial
reporting purposes. Under the pooling-of-interests method of accounting, assets,
liabilities, and equity of the acquired company are carried forward to the
combined entity at their historical amounts. See "Summary -- Comparative Per
Share Data."
EXPENSES AND FEES
The Agreement provides, in general, that each of the parties will bear and
pay its own expenses in connection with the transactions contemplated by the
Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that Regions
will bear and pay the filing fees and printing costs in connection with this
Proxy Statement/Prospectus.
RESALES OF REGIONS COMMON STOCK
The Regions Common Stock to be issued to First Community stockholders in
the Merger has been registered under the Securities Act, but that registration
does not cover resales of those shares by persons who control, are controlled
by, or are under common control with, First Community (such persons are referred
to hereinafter as "affiliates" and generally include executive officers,
directors, and 10% stockholders) at the time of the Annual Meeting. Affiliates
may not sell shares of Regions Common Stock acquired in connection with the
Merger, except pursuant to an effective registration statement under the
Securities Act or in compliance with SEC Rule 145 or another applicable
exemption from the Securities Act registration requirements.
Each person who First Community reasonably believes will be an affiliate of
First Community has delivered to Regions a written agreement providing that such
person generally will not sell, pledge, transfer, or otherwise dispose of any
Regions Common Stock to be received by such person upon consummation of the
Merger, except in compliance with the Securities Act and the rules and
regulations of the SEC promulgated thereunder.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of First Community Common Stock will be
exchanging their shares of a Georgia corporation governed by the Georgia Act and
First Community's Articles of Incorporation, as amended (the "Articles"), and
Bylaws, for shares of Regions, a Delaware corporation governed by the Delaware
GCL and Regions' Certificate of Incorporation (the "Certificate") and Bylaws.
Certain significant differences exist between the rights of First Community
stockholders and those of Regions stockholders. The differences deemed material
by First Community and Regions are summarized below. In particular, Regions'
Certificate and Bylaws contain several provisions that may be deemed to have an
antitakeover effect in that they could impede or prevent an acquisition of
Regions unless the potential acquirer has obtained the approval of Regions'
Board of Directors. The following discussion is necessarily general; it is not
intended to be a complete statement of all differences affecting the rights of
stockholders and their respective entities, and it is qualified in its entirety
by reference to the Georgia Act and the Delaware GCL as well as to Regions'
Certificate and Bylaws and First Community's Articles and Bylaws.
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ANTITAKEOVER PROVISIONS GENERALLY
The provisions of Regions' Certificate and Bylaws described below under the
headings, "Authorized Capital Stock," "Amendment of Certificate of Incorporation
and Bylaws," "Classified Board of Directors and Absence of Cumulative Voting,"
"Removal of Directors," "Director Exculpation," "Special Meetings of
Stockholders," "Actions by Stockholders Without a Meeting," "Stockholder
Nominations and Proposals," and "Mergers, Consolidations, and Sales of Assets
Generally," and the provisions of the Delaware GCL described under the heading
"Business Combinations With Certain Persons," are referred to herein as the
"Protective Provisions." In general, one purpose of the Protective Provisions is
to assist Regions' Board of Directors in playing a role in connection with
attempts to acquire control of Regions, so that the Board can further and
protect the interests of Regions and its stockholders as appropriate under the
circumstances, including, if the Board determines that a sale of control is in
their best interests, by enhancing the Board's ability to maximize the value to
be received by the stockholders upon such a sale.
Although Regions' management believes the Protective Provisions are,
therefore, beneficial to Regions' stockholders, the Protective Provisions also
may tend to discourage some takeover bids. As a result, Regions' stockholders
may be deprived of opportunities to sell some or all of their shares at prices
that represent a premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent that the Protective Provisions discourage
undesirable proposals, Regions may be able to avoid those expenditures of time
and money.
The Protective Provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of Regions
Common Stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the Protective
Provisions may decrease the market price of Regions Common Stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The Protective Provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the Board of Directors and
management. Furthermore, the Protective Provisions may make it more difficult
for Regions' stockholders to replace the Board of Directors or management, even
if a majority of the stockholders believes such replacement is in the best
interests of Regions. As a result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management.
AUTHORIZED CAPITAL STOCK
Regions. The Certificate authorizes the issuance of up to 120,000,000
shares of Regions Common Stock, of which 42,538,946 shares were issued,
including 1,474,579 treasury shares as of March 31, 1994. Regions' Board of
Directors may authorize the issuance of additional authorized shares of Regions
Common Stock without further action by Regions' stockholders, unless such action
is required in a particular case by applicable laws or regulations or by any
stock exchange upon which Regions' capital stock may be listed.
The authority to issue additional shares of Regions Common Stock provides
Regions with the flexibility necessary to meet its future needs without the
delay resulting from seeking stockholder approval. The authorized but unissued
shares of Regions Common Stock will be issuable from time to time for any
corporate purpose, including, without limitation, stock splits, stock dividends,
employee benefit and compensation plans, acquisitions, and public or private
sales for cash as a means of raising capital. Such shares could be used to
dilute the stock ownership of persons seeking to obtain control of Regions. In
addition, the sale of a substantial number of shares of Regions Common Stock to
persons who have an understanding with Regions concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Regions
Common Stock (or the right to receive Regions Common Stock) to Regions
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Regions.
First Community. First Community's authorized capital stock consists of
10,000,000 shares, which comprises 5,000,000 shares of preferred stock, of which
none is issued and outstanding, and 5,000,000 shares of First Community Common
Stock, of which 699,909 shares were issued and outstanding as of March 18, 1994.
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Pursuant to the Georgia Act, First Community's Board of Directors may
authorize the issuance of additional authorized shares of First Community Common
Stock without further action by First Community's stockholders. First
Community's Articles, as amended, deny the stockholders of First Community
preemptive rights to purchase or subscribe to any unissued authorized shares of
First Community Common Stock or any option or warrant for the purchase thereof.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
Regions. The Delaware GCL generally provides that the approval of a
corporation's board of directors and the affirmative vote of a majority of (i)
all shares entitled to vote thereon and (ii) the shares of each class of stock
entitled to vote thereon as a class, is required to amend a corporation's
certificate of incorporation, unless the certificate specifies a greater voting
requirement. The Certificate states that its provisions regarding authorized
capital stock, election, classification, and removal of directors, the approval
required for certain business combinations, meetings of stockholders, and
amendment of the Certificate and Bylaws may be amended or repealed only by the
affirmative vote of the holders of at least 75% of the outstanding shares of
Regions voting stock, voting together as a single class.
The Certificate also provides that the Board of Directors has the power to
adopt, amend, or repeal the Bylaws. Any action taken by the stockholders with
respect to adopting, amending, or repealing any Bylaws may be taken only upon
the affirmative vote of the holders of at least 75% of the voting power of
Regions' voting stock.
First Community. The Georgia Act generally provides that a Georgia
corporation's articles of incorporation may be amended by the affirmative vote
of a majority of the shares entitled to vote thereon, unless the articles of
incorporation provide for a higher or lower voting requirement. First
Community's Articles provide that the affirmative vote of a majority of the
outstanding voting shares is required to amend the Articles, except that a vote
of 80% of the outstanding stock is required for certain amendments, including
the provisions of the Articles dealing with authorized capital stock, election,
classification, and removal of directors, the approval required for certain
business combinations, and meetings of stockholders.
The Articles also provides that the Board of Directors has the power to
adopt, amend, or repeal the Bylaws. Any action taken by the stockholders with
respect to adopting, amending, or repealing any Bylaws may be taken only upon
the affirmative vote of the holders of at least 80% of the voting power of First
Community Common Stock.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
Regions. The Certificate provides that Regions' Board of Directors is
divided into three classes, with each class to be as nearly equal in number as
possible. The directors in each class serve three-year terms of office.
The effect of Regions' having a classified Board of Directors is that only
approximately one-third of the members of the Board is elected each year, which
effectively requires two annual meetings for Regions' stockholders to change a
majority of the members of the Board.
Pursuant to the Certificate, each stockholder generally is entitled to one
vote for each share of Regions stock held and is not entitled to cumulative
voting rights in the election of directors. With cumulative voting, a
stockholder has the right to cast a number of votes equal to the total number of
such holder's shares multiplied by the number of directors to be elected. The
stockholder has the right to cast all of such holder's votes in favor of one
candidate or to distribute such holder's votes in any manner among any number of
candidates. Directors are elected by a plurality of the total votes cast by all
stockholders. With cumulative voting, it may be possible for minority
stockholders to obtain representation on the Board of Directors. Without
cumulative voting, the holders of more than 50% of the shares of Regions Common
Stock generally have the ability to elect 100% of the directors. As a result,
the holders of the remaining Regions Common Stock effectively may not be able to
elect any person to the Board of Directors. The absence of cumulative voting,
therefore, could
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make it more difficult for a stockholder who acquires less than a majority of
the shares of Regions Common Stock to obtain representation on Regions' Board of
Directors.
First Community. Like Regions, First Community's Articles generally
provide for a classified board of directors with three classes, and provide that
voting stock does not have cumulative voting rights.
REMOVAL OF DIRECTORS
Regions. Under the Certificate, any director or the entire Board of
Directors may be removed only for cause and only by the affirmative vote of the
holders of at least 75% of Regions' voting stock.
First Community. Pursuant to First Community's Articles, a director may be
removed only for cause, and only by the affirmative vote of two-thirds of the
voting power of outstanding voting shares, unless such removal has been approved
by a majority of Continuing Directors (defined generally in the Articles as a
director unaffiliated with an interested stockholder), in which case the
affirmative vote of stockholders required is a majority of voting power of
shares outstanding.
LIMITATIONS ON DIRECTOR LIABILITY
Regions. The Certificate provides that a director of Regions will have no
personal liability to Regions or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability for (i) any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) the payment of certain unlawful dividends and
the making of certain unlawful stock purchases or redemptions, or (iv) any
transaction from which the director derived an improper personal benefit.
Although this provision does not affect the availability of injunctive or
other equitable relief as a remedy for a breach of duty by a director, it does
limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the likelihood
of stockholder derivative litigation against directors and may discourage or
deter stockholders or management from bringing a lawsuit against directors for
breach of their duties, even though such action, if successful, might have
benefitted Regions and its stockholders. The SEC has taken the position that
similar provisions added to other corporations' certificates of incorporation
would not protect those corporations' directors from liability for violations of
the federal securities laws.
First Community. The Georgia Act generally permits a corporation's
articles of incorporation to relieve directors of liability for money damages
for good faith conduct. The Articles provide that First Community directors
shall not be liable for money damages for breach of duty as a director, to the
fullest extent permitted by the Georgia Act, having the effect that First
Community directors will not be held liable for money damages except for actions
taken not in good faith or that involve intentional misconduct or certain
unlawful transactions. Such limitations on director liability are substantially
similar to those applicable to Regions.
INDEMNIFICATION
Regions. The Certificate provides that Regions will indemnify its
officers, directors, employees, and agents to the full extent permitted by the
Delaware GCL. Under Section 145 of the Delaware GCL as currently in effect,
other than in actions brought by or in the right of Regions, such
indemnification would apply if it were determined in the specific case that the
proposed indemnitee acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of Regions and, with
respect to any criminal proceeding, if such person had no reasonable cause to
believe that the conduct was unlawful. In actions brought by or in the right of
Regions, such indemnification probably would be limited to reasonable expenses
(including attorneys' fees) and would apply if it were determined in the
specific case that the proposed indemnitee acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests of
Regions, except that no indemnification may be made with respect to any matter
as to which such person is adjudged liable to Regions, unless, and only to the
extent that, the court determines upon application that, in view of all the
circumstances of the case, the proposed indemnitee is fairly and reasonably
entitled to indemnification for such expenses as the court deems proper. To the
extent
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that any director, officer, employee, or agent of Regions has been successful on
the merits or otherwise in defense of any action, suit, or proceeding, as
discussed herein, whether civil, criminal, administrative, or investigative,
such person must be indemnified against reasonable expenses incurred by such
person in connection therewith.
First Community. First Community's Bylaws provide for indemnification of
its directors, officers, employees, and agents in substantially the same manner
and with substantially the same effect as in the case of Regions, with one
principal exception. Unlike Regions' situation, the availability of
indemnification is at the sole discretion of the board of directors. First
Community has entered into indemnification agreements with each of its directors
under which First Community has agreed to provide mandatory indemnification
substantially similar to the indemnification of Regions directors described
above.
SPECIAL MEETINGS OF STOCKHOLDERS
Regions. Regions' Certificate and Bylaws provide that such meetings may be
called at any time, but only by the chief executive officer, the secretary, or
the Board of Directors of Regions. Regions stockholders do not have the right to
call a special meeting or to require that Regions' Board of Directors call such
a meeting. This provision, combined with other provisions of the Certificate and
the restriction on the removal of directors, would prevent a substantial
stockholder from compelling stockholder consideration of any proposal (such as a
proposal for a business combination) over the opposition of Regions' Board of
Directors by calling a special meeting of stockholders at which such stockholder
could replace the entire Board with nominees who were in favor of such proposal.
First Community. Under the Articles, a special meeting of First Community
stockholders may be called only by a majority of the board of directors, by the
Chairman of the Board, or by the holders of two-thirds of the voting power of
outstanding voting stock.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
Regions. The Certificate provides that any action required or permitted to
be taken by Regions stockholders must be effected at a duly called meeting of
stockholders and may not be effected by any written consent by the stockholders.
These provisions would prevent stockholders from taking action, including action
on a business combination, except at an annual or special meeting called by the
Board of Directors, even if a majority of the stockholders were in favor of such
action.
First Community. Under the Articles, no action requiring or permitting
stockholder approval may be approved by written consent, unless such action is
approved by a majority of the continuing directors. In that case, such action
may be authorized by written consent of the holders of not less than the minimum
voting power necessary to approve such action at a meeting of stockholders.
STOCKHOLDER NOMINATIONS AND PROPOSALS
Regions. Regions' Certificate and Bylaws provide that any nomination by
stockholders of individuals for election to the Board of Directors must be made
by delivering written notice of such nomination (the "Nomination Notice") to the
Secretary of Regions not less than 14 days nor more than 50 days before any
meeting of the stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given to
stockholders, the Nomination Notice must be delivered to the Secretary of
Regions not later than the seventh day following the day on which notice of the
meeting was mailed to stockholders. The Nomination Notice must set forth certain
background information about the persons to be nominated, including information
concerning (i) the name, age, business, and, if known, residential address of
each nominee, (ii) the principal occupation or employment of each such nominee,
and (iii) the number of shares of Regions capital stock beneficially owned by
each such nominee. The Board of Directors is not required to nominate in the
annual proxy statement any person so proposed; however, compliance with this
procedure would permit a stockholder to nominate the individual at the
stockholders' meeting, and any stockholder may vote such holder's shares in
person or by proxy for any individual such holder desires.
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First Community. Neither the Georgia Act, First Community's Articles nor
Bylaws sets forth any procedure for stockholder nominations and proposals.
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
Regions. Section 203 of the Delaware GCL ("Section 203") places certain
restrictions on "business combinations" (as defined in Section 203 to include,
generally, mergers, sales and leases of assets, issuances of securities, and
similar transactions) by Delaware corporations with an "interested stockholder"
(as defined in Section 203 to include, generally, the beneficial owner of 15% or
more of the corporation's outstanding voting stock). Section 203 generally
applies to Delaware corporations, such as Regions, that have a class of voting
stock listed on a national securities exchange, authorized for quotation on an
interdealer quotation system of a registered national securities association, or
held of record by more than 2,000 stockholders, unless the corporation expressly
elects in its certificate of incorporation or bylaws not to be governed by
Section 203.
Regions has not specifically elected to avoid the application of Section
203. As a result, Section 203 generally would prohibit a business combination by
Regions or a subsidiary with an interested stockholder within three years after
the person or entity becomes an interested stockholder, unless (i) prior to the
time when the person or entity becomes an interested stockholder, Regions' Board
of Directors approved either the business combination or the transaction
pursuant to which such person or entity became an interested stockholder, (ii)
upon consummation of the transaction in which the person or entity became an
interested stockholder, the interested stockholder held at least 85% of the
outstanding Regions voting stock (excluding shares held by persons who are both
officers and directors and shares held by certain employee benefit plans), or
(iii) once the person or entity becomes an interested stockholder, the business
combination is approved by Regions' Board of Directors and by the holders of at
least two-thirds of the outstanding Regions voting stock, excluding shares owned
by the interested stockholder.
First Community. The Articles provide that business combinations with
certain persons may not be consummated unless approved by the affirmative vote
of either (i) 80% of the voting power of outstanding voting stock or (ii) a
majority of the voting power of outstanding voting stock other than shares held
by any interested stockholder and its affiliates (as defined in the Articles).
Absent such provision, the Georgia Act would require only approval of a majority
of the voting power of a corporation's stock. For purpose of this provision, an
interested stockholder is defined as any person which has acquired beneficial
ownership of 10% or more of the voting power of First Community within a
preceding two year period, or any assignee thereof. If a proposed business
combination is approved by a majority of Continuing Directors, the stockholder
approval otherwise required by law would be sufficient, rather than the special
stockholder approval requirements of such provision. Also, if the consideration
to be received by stockholders meets certain minimum price requirements, based
principally upon good faith valuation by a majority of Continuing Directors, the
approval by the majority of the voting power of voting stock would be
sufficient, rather than the special approval requirements of such provision.
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
Regions. The Certificate generally requires the affirmative vote of the
holders of at least 75% of the outstanding voting stock of Regions to effect (i)
any merger or consolidation with or into any other corporation, or (ii) any sale
or lease of any substantial part of the assets of Regions to any party that
beneficially owns 5.0% or more of the outstanding shares of Regions voting
stock, unless the transaction was approved by Regions' Board of Directors before
the other party became a 5.0% beneficial owner or is approved by 75% or more of
the full Board after the party becomes such a 5.0% beneficial owner.
First Community. The Georgia Act generally requires the affirmative vote
of at least a majority of the voting power to effect (i) any merger or
consolidation with or into any other corporation, or (ii) any sale or lease of
any substantial part of the assets of the corporation if the corporation is not
insolvent. Such transactions are subject to the special approval requirements
described above. See " -- Business Combinations with Certain Persons."
30
<PAGE> 35
DISSENTERS' RIGHTS OF APPRAISAL
Regions. The rights of appraisal of dissenting stockholders of Regions are
governed by the Delaware GCL. Pursuant thereto, except as described below, any
stockholder has the right to dissent from any merger of which Regions could be a
constituent corporation. No appraisal rights are available, however, for (i) the
shares of any class or series of stock that is either listed on a national
securities exchange, quoted on the Nasdaq National Market, or held of record by
more than 2,000 stockholders or (ii) any shares of stock of the constituent
corporation surviving a merger if the merger did not require the approval of the
surviving corporation's stockholders, unless, in either case, the holders of
such stock are required by an agreement of merger or consolidation to accept for
that stock something other than: (a) shares of stock of the corporation
surviving or resulting from the merger or consolidation; (b) shares of stock of
any other corporation that will be listed at the effective date of the merger on
a national securities exchange, quoted on the Nasdaq National Market, or held of
record by more than 2,000 stockholders; (c) cash in lieu of fractional shares of
stock described in clause (a) or (b) immediately above; or (d) any combination
of the shares of stock and cash in lieu of fractional shares described in
clauses (a) through (c) immediately above. Because Regions Common Stock is
quoted on the Nasdaq National Market and is held of record by more than 2,000
stockholders, unless the exception described immediately above applies, holders
of Regions Common Stock do not have dissenters' rights of appraisal.
First Community. The rights of appraisal of dissenting stockholders under
Georgia law, while generally similar to those afforded under the Delaware GCL,
differ in certain details. For a full description of the rights of dissenting
stockholders under Georgia law, see "Description of the
Transaction -- Dissenting Stockholders."
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
Regions. The Delaware GCL provides that a stockholder may inspect books
and records upon written demand under oath stating the purpose of the
inspection, if such purpose is reasonably related to such person's interest as a
stockholder.
First Community. Pursuant to the Georgia Act, upon written notice of a
demand to inspect corporate records, a stockholder is entitled to inspect
specified corporate records, including articles of incorporation and bylaws,
minutes of stockholder and director meetings, stockholder list, and all
stockholder communications for preceding three years including financial
statements. Upon demonstration of a proper purpose, a stockholder may be
entitled to inspect other corporate records.
DIVIDENDS
Regions. The Delaware GCL provides that, subject to any restrictions in
the corporation's certificate of incorporation, dividends may be declared from
the corporation's surplus, or, if there is no surplus, from its net profits for
the fiscal year in which the dividend is declared and the preceding fiscal year.
Dividends may not be declared, however, if the corporation's capital has been
diminished to an amount less than the aggregate amount of all capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. Substantially all of the funds
available for the payment of dividends by Regions are derived from its
subsidiary depository institutions. There are various statutory limitations on
the ability of Regions' subsidiary depository institutions to pay dividends to
Regions. See "Supervision and Regulation -- Dividends."
First Community. Pursuant to the Georgia Act, a board of directors may
from time to time make distributions to its stockholders, subject to
restrictions in its articles of incorporation, provided that no distribution may
be made if, after giving it effect, (i) the corporation would not be able to pay
its debts as they become due in the usual course of business, or (ii) the
corporation's total assets would be less than the sum of its total liabilities
plus (unless the articles of incorporation permit otherwise) the amount that
would be needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution.
31
<PAGE> 36
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock is quoted on the Nasdaq National Market under the
symbol "RGBK." First Community Common Stock is not traded in any established
market. The following table sets forth, for the indicated periods, the high and
low closing sale prices for Regions Common Stock as reported on the Nasdaq
National Market, the high and low prices for First Community Common Stock and
the cash dividends declared per share of Regions Common Stock and First
Community Common Stock for the indicated periods. The stock prices and
historical dividends for Regions have been adjusted to reflect a 10% stock
dividend paid by Regions on April 1, 1993. The prices indicated for First
Community are based on actual transactions in First Community Common Stock of
which First Community management is aware; however, for the indicated period
there has been only a very limited number of transactions and all such
transactions have involved limited numbers of shares in First Community Common
Stock in the indicated periods, and no assurance can be given that the indicated
prices represent the actual market value of First Community Common Stock.
<TABLE>
<CAPTION>
REGIONS FIRST COMMUNITY
-------------------------------- --------------------------------
PRICE RANGE CASH DIVIDENDS PRICE RANGE CASH DIVIDENDS
--------------- DECLARED --------------- DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
------ ------ -------------- ------ ------ --------------
<S> <C> <C> <C> <C> <C> <C>
1992
First Quarter................. $28.13 $23.75 $.2275 $14.00 $14.00 $ --
Second Quarter................ 30.00 25.13 .2275 14.00 14.00 --
Third Quarter................. 30.75 27.50 .2275 14.00 14.00 --
Fourth Quarter................ 33.88 28.38 .2275 14.00 14.00 --
1993
First Quarter................. 38.38 31.25 .26 17.00 17.00 .125
Second Quarter................ 38.25 30.25 .26 17.00 17.00 .125
Third Quarter................. 35.25 31.25 .26 17.00 17.00 .125
Fourth Quarter................ 35.00 29.63 .26 17.00 17.00 .16
1994
First Quarter................. 33.50 30.13 .30 22.00 22.00 .16
Second Quarter................ 36.13 30.50 .30 24.00 24.00 .16
Third Quarter
(through )...... -- -- .30
</TABLE>
On , 1994, the last reported sale price of Regions Common Stock as
reported on the Nasdaq National Market, and the price of First Community Common
Stock in the last known transaction, which occurred in , were
$ and $ , respectively. On March 16, 1994, the last business
day prior to public announcement of the proposed Merger, the last reported sale
price of Regions Common Stock as reported on the Nasdaq National Market, and the
last known price of First Community Common Stock, were $32.00 and $22.00,
respectively.
The holders of Regions Common Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Regions has paid regular quarterly cash dividends since 1971. Although
Regions currently intends to continue to pay quarterly cash dividends on the
Regions Common Stock, there can be no assurance that Regions' dividend policy
will remain unchanged after completion of the Merger. The declaration and
payment of dividends thereafter will depend upon business conditions, operating
results, capital and reserve requirements, and the Board of Directors'
consideration of other relevant factors.
Regions is a legal entity separate and distinct from its subsidiaries and
its revenues depend in significant part on the payment of dividends from its
subsidiary financial institutions, particularly First Alabama Bank. Regions'
subsidiary depository institutions are subject to certain legal restrictions on
the amount of dividends they are permitted to pay. See "Supervision and
Regulation -- Dividends."
First Community paid a cash dividend in 1992 and 1993. No assurance can be
given that the Bank's earnings will permit the Bank to pay dividends to First
Community in the future, which dividends are First
32
<PAGE> 37
Community's principal source of funds. Under provisions of the Financial
Institutions Code of Georgia, the Bank may declare and pay cash dividends only
out of its retained earnings, and dividends may not be declared at any time at
which the paid-in capital and appropriated retained earnings of the Bank do not,
in combination, equal at least 20% of the Bank's capital stock account. In
addition, under current rules and regulations of the Georgia Department, prior
approval of the Georgia Department would be required before the Bank could
declare and pay cash dividends if either: (i) the Bank's ratio of equity capital
to adjusted total assets is less than 6.0%; (ii) the aggregate amount of
dividends declared or anticipated to be declared by the Bank in that calendar
year exceeds 50% of net profits, after taxes but before dividends, of the Bank
for the previous year; or (iii) the percentage of the Bank's adversely
classified assets as of the most recent examination of the Bank exceeds 80% of
the Bank's equity capital and reserves as reflected by such examination. Under
these limitations, the aggregate amount of dividends that could be paid by the
Bank in 1994 without prior approval of the Georgia Department is approximately
$933,500. The ability of First Community to pay dividends in the future will
depend on the Bank's ability to pay dividends, as well as its financial
condition and financial prospects, capital requirements, and other factors.
BUSINESS OF REGIONS
GENERAL
Regions is a regional bank holding company headquartered in Birmingham,
Alabama which operated as of June 1, 1994, 243 banking offices in the states of
Alabama, Florida, Georgia, Louisiana, and Tennessee. At March 31, 1994, Regions
had total consolidated assets of approximately $10.4 billion, total consolidated
deposits of approximately $8.8 billion, and total consolidated stockholders'
equity of approximately $878 million. Regions operates five state-chartered
commercial bank subsidiaries and one federal stock savings bank (collectively,
the "Subsidiary Institutions") in the states of Alabama, Florida, Georgia,
Louisiana, and Tennessee and four banking-related subsidiaries engaged in
mortgage banking, credit life insurance, leasing and securities brokerage
activities with offices in various Southeastern states. Through its
subsidiaries, Regions offers a broad range of banking and banking-related
services.
In Alabama, Regions operates through First Alabama Bank, which at March 31,
1994, had total consolidated assets of approximately $8.0 billion, total
consolidated deposits of approximately $6.9 billion, and total consolidated
stockholders' equity of approximately $658 million. First Alabama Bank operates
168 banking offices throughout Alabama.
In Florida, Regions operates through Regions Bank of Florida, which at
March 31, 1994, had total consolidated assets of approximately $473 million,
total consolidated deposits of approximately $422 million, and total
consolidated stockholders' equity of approximately $47 million. Regions Bank of
Florida operates 23 banking offices in the panhandle region of Florida.
In Georgia, Regions operates through Regions Bank of Georgia, which at
March 31, 1994, had total consolidated assets of approximately $106 million,
total consolidated deposits of approximately $96 million, and total consolidated
stockholders' equity of approximately $9 million. Regions Bank of Georgia
operates three banking offices in Columbus, Georgia.
In Louisiana, Regions operates through Secor Bank, Federal Savings Bank
("Secor"), a federal savings bank which Regions acquired on December 31, 1993,
and Guaranty Bancorp, Inc. ("Guaranty"), which Regions acquired on May 31, 1994.
At March 31, 1994, Secor's 15 Louisiana branches had total assets of
approximately $1.3 billion and total deposits of approximately $828 million. At
May 31, 1994, Guaranty had total consolidated assets of approximately $187
million, total consolidated deposits of approximately $173 million, and total
consolidated stockholders' equity of approximately $14 million. Secor and
Guaranty operate 21 banking offices in Louisiana.
In Tennessee, Regions operates through Regions Bank of Tennessee, which at
March 31, 1994, had total consolidated assets of approximately $455 million,
total consolidated deposits of approximately $396 million,
33
<PAGE> 38
and total consolidated stockholders' equity of approximately $37 million.
Regions Bank of Tennessee operates 24 banking offices in middle Tennessee.
Regions was organized under the laws of the state of Delaware and commenced
operations in 1971 under the name First Alabama Bancshares, Inc. On May 2, 1994,
the name of First Alabama Bancshares, Inc. was changed to Regions Financial
Corporation.
Regions continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with possible
business combinations. As a result, business combination discussions and, in
some cases, negotiations frequently take place, and future business combinations
involving cash, debt, or equity securities can be expected. Any future business
combination or series of business combinations that Regions might undertake may
be material, in terms of assets acquired or liabilities assumed, to Regions'
financial condition. Recent business combinations in the banking industry have
typically involved the payment of a premium over book and market values. This
practice could result in dilution of book value and net income per share for the
acquirer.
Additional information about Regions and its subsidiaries is included in
documents incorporated by reference in this Proxy Statement/Prospectus. See
"Available Information" and "Documents Incorporated by Reference."
RECENT DEVELOPMENTS
Second Quarter 1994 Operating Results. For the second quarter ended June
30, 1994, Regions had net income of $35,446,000 or $.84 per share, representing
a 27% increase in net income over the same period of 1993. For the six months
ended June 30, 1994, Regions had net income of $69,220,000 or $1.65 per share,
representing an 11% increase on a per-share basis in net income over the first
half of 1993. The annualized return on average total assets for the first half
of 1994 was 1.32%, and the annualized return on average stockholders' equity was
15.82%. At June 30, 1994, the ratio of stockholders' equity to total assets was
8.37%. As of June 30, 1994, Regions had total consolidated assets of
approximately $10.8 billion, total consolidated deposits of approximately $8.8
billion, and total consolidated stockholders' equity of approximately $905
million.
Recently Completed Acquisitions. Since December 31, 1993, Regions has
consummated the acquisitions (referred to as the "Recently Completed
Acquisitions") of Guaranty located in Baton Rouge, Louisiana, and First Fayette
Bancshares, Inc. ("First Fayette"), located in Fayette, Alabama, certain aspects
of which transactions are set forth below:
<TABLE>
<CAPTION>
CONSIDERATION
-----------------
APPROXIMATE
------------------- ACCOUNTING
INSTITUTION ASSET SIZE VALUE TYPE TREATMENT
---------------------------------------------- ---------- ----- -------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Guaranty Bancorp, Inc., and its subsidiary,
Guaranty Bank and Trust Company, located in
Baton Rouge, Louisiana...................... $189 $28 Regions Pooling of
Common Interests
Stock
First Fayette Bancshares, Inc. and its
subsidiary, First Bank of Fayette, located
in Fayette, Alabama......................... 77 17 Cash and Purchase
Notes
Totals.............................. $266 $45
======= ====
</TABLE>
Since December 31, 1993, Regions also has consummated certain transactions
with the Resolution Trust Corporation, as a result of which Regions acquired
four branch offices in Panama City, Florida, and one branch office in each of
Atmore and Brewton, Alabama with combined deposits of approximately $50 million.
34
<PAGE> 39
Other Pending Acquisitions. As of the date of this Proxy
Statement/Prospectus, Regions has pending three acquisitions in addition to the
acquisition of First Community (referred to as the "Other Pending Acquisitions")
in the states of Alabama and Louisiana, certain aspects of which transactions
are set forth below:
<TABLE>
<CAPTION>
CONSIDERATION
----------------- ANTICIPATED
ACCOUNTING
APPROXIMATE TREATMENT
------------------- -----------
INSTITUTION ASSET SIZE VALUE TYPE
---------------------------------------------- ---------- ----- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
American Bancshares, Inc. ("ABI") and its
subsidiary, First American Bank and Trust
Company of Louisiana, located in Monroe,
Louisiana................................... $304 $ 61 Regions Purchase
Common
Stock
BNR Bancshares, Inc. ("BNR") and its
subsidiary, Bank of New Roads, located in
New Roads, Louisiana........................ 143 26 Regions Pooling of
Common Interests
Stock
Union Bank & Trust Company ("Union"), located
in Montgomery, Alabama...................... 455 65 Regions Purchase
Common
Stock
Totals.............................. $902 $ 152
======= ====
</TABLE>
The Recently Completed Acquisitions and the Other Pending Acquisitions are
referred to collectively as the "Other Acquisitions."
If the Other Acquisitions and the Merger had been consummated on March 31,
1994, based on March 31, 1994 pro forma financial information, Regions' total
consolidated assets would have increased by approximately $1.3 billion to
approximately $11.7 billion; its total consolidated deposits would have
increased by approximately $1.2 billion to approximately $9.9 billion; and its
total consolidated stockholders' equity would have increased by approximately
$38 million to approximately $916 million. See "Summary Pro Form Financial Data"
and the related pro forma financial information in Regions' Current Report on
Form 8-K dated July 8, 1994. See "Documents Incorporated by Reference."
Consummation of the Other Pending Acquisitions is subject to the approval
of certain regulatory agencies and of the stockholders of the institutions to be
acquired and to the effectiveness of the registration statements filed or to be
filed with the SEC. Moreover, the closing of each transaction is subject to
various contractual conditions precedent. No assurance can be given that the
conditions precedent to consummating the Other Pending Acquisitions will be
satisfied in a manner that will result in the consummation of all of the Other
Pending Acquisitions.
In connection with the acquisitions of ABI and Union, Regions has announced
that it may purchase, in the open market, an equivalent number of some or all of
the shares of Regions Common Stock to be issued in such transactions. As a
result of the ABI and Union transactions, Regions anticipates that it may
purchase in the open market as much as approximately $126 million of Regions
Common Stock. The timing and amount of such possible purchases will be
determined based on the Regions Common Stock price, capital needs and other
factors. As of July 26, 1994, Regions had purchased, in the open market,
approximately $43.2 million of Regions Common Stock pursuant to this repurchase
program.
35
<PAGE> 40
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect, as
appropriate, to the acquisitions of First Community, the Recently Completed
Acquisitions, and the Other Pending Acquisitions as of the dates and for the
periods indicated and pursuant to the accounting bases described below. The
unaudited pro forma financial data are presented for informational purposes only
and are not necessarily indicative of the combined financial position or results
of operations which actually would have occurred if the transactions had been
consummated at the date and for the periods indicated or which may be obtained
in the future. The information should be read in conjunction with the unaudited
pro forma financial information included in Regions' Current Report on Form 8-K
dated July 8, 1994. For additional information relating to specific transactions
within the scope of the Recently Completed Acquisitions and the Other Pending
Acquisitions (referred to collectively as the "Other Acquisitions"), see
"Business of Regions -- Recent Developments."
SELECTED PRO FORMA COMBINED DATA FOR REGIONS AND FIRST COMMUNITY
The following unaudited pro forma combined data give effect to the
acquisition of First Community as of the date or at the beginning of the periods
indicated, assuming such acquisition is treated as a pooling of interests.
<TABLE>
<CAPTION>
AS OF
MARCH 31,
1994
-------------
(IN THOUSANDS
EXCEPT PER
SHARE DATA)
<S> <C>
Balance Sheet Data:
Total assets................................................................ $10,561,027
Securities.................................................................. 2,521,651
Loans, net of unearned income............................................... 6,921,091
Total deposits.............................................................. 8,879,755
Other borrowed money........................................................ 470,347
Stockholders' equity........................................................ 887,576
Book value per common share................................................. 21.27
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------
1994 1993 1992 1991
------------ -------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Income Statement Data:
Total interest income.......................... $173,107 $563,725 $543,993 $563,010
Total interest expense......................... 74,503 217,419 227,811 295,612
------------ -------- -------- --------
Net interest income............................ 98,604 346,306 316,182 267,398
Provision for loan losses...................... 4,434 21,701 27,503 24,283
------------ -------- -------- --------
Net interest income after loan loss
provision................................... 94,170 324,605 288,679 243,115
Total noninterest income....................... 36,888 133,012 120,002 102,071
Total noninterest expense...................... 80,857 289,718 267,007 232,174
Income tax expense............................. 16,552 54,146 45,527 34,054
------------ -------- -------- --------
Net income..................................... $ 33,649 $113,753 $ 96,147 $ 78,958
============ ======== ======== ========
Net income per share........................... $ 0.81 $ 3.00 $ 2.58 $ 2.14
Average common shares outstanding.............. 41,724 37,870 37,197 36,856
</TABLE>
36
<PAGE> 41
SELECTED PRO FORMA COMBINED DATA FOR REGIONS, FIRST COMMUNITY, AND OTHER
ACQUISITIONS
The following unaudited pro forma combined data as of March 31, 1994, and
for the three months ended March 31, 1994, and the year ended December 31, 1993,
give effect to (i) the acquisitions of First Community, Guaranty, and BNR by
Regions, assuming such acquisitions are accounted for as poolings of interests,
and (ii) the acquisitions of First Fayette, Union, and ABI by Regions, assuming
such acquisitions are treated as purchases for accounting purposes, as if all
such transactions had been consummated on March 31, 1994, in the case of the
data included under "Balance Sheet Data," and on January 1, 1993, in the case of
the data included under "Income Statement Data." The following unaudited pro
forma financial data for the years ended December 31, 1992, and 1991, give
effect to the acquisitions of First Community, Guaranty, and BNR by Regions,
assuming such acquisitions are accounted for as poolings of interests and had
been consummated on January 1, 1991.
<TABLE>
<CAPTION>
AS OF
MARCH 31,
1994
-------------
(IN THOUSANDS
EXCEPT PER
SHARE DATA)
<S> <C>
Balance Sheet Data:
Total assets.................................................................. $ 11,694,320
Securities.................................................................... 2,800,867
Loans, net of unearned income................................................. 7,501,312
Total deposits................................................................ 9,931,363
Other borrowed money.......................................................... 471,472
Stockholders' equity.......................................................... 916,323
Book value per common share................................................... 21.15
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------
1994 1993 1992 1991
------------ -------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Income Statement Data:
Total interest income............................ $189,181 $630,718 $567,482 $586,474
Total interest expense........................... 81,408 246,310 236,915 307,841
------------ -------- -------- --------
Net interest income.............................. 107,773 384,408 330,567 278,633
Provision for loan losses........................ 4,182 23,922 28,605 25,164
------------ -------- -------- --------
Net interest income after loan loss provision.... 103,591 360,486 301,962 253,469
Total noninterest income......................... 40,084 144,121 122,287 103,786
Total noninterest expense........................ 90,989 329,508 276,838 241,123
Income tax expense............................... 17,575 55,656 47,199 34,841
------------ -------- -------- --------
Income before cumulative effect of change in
accounting principle.......................... $ 35,111 $119,443 $100,212 $ 81,291
========== ======== ======== ========
Income before cumulative effect of change in
accounting principle per share................ $ 0.81 $ 3.03 $ 2.58 $ 2.11
Average common shares outstanding................ 43,329 39,475 38,802 38,461
</TABLE>
37
<PAGE> 42
BUSINESS OF FIRST COMMUNITY
First Community is a bank holding company organized under the laws of the
State of Georgia with its principal executive offices located in Rome, Georgia.
First Community operates principally through the Bank, which is a
state-chartered commercial bank and which provides a range of retail banking
services through two offices in Floyd County, Georgia. At March 31, 1994, First
Community had total consolidated assets of approximately $124 million, total
consolidated deposits of approximately $113 million, and total consolidated
stockholders' equity of approximately $9 million. First Community's principal
executive office is located at Turner McCall Boulevard at Fifth Avenue, Rome,
Georgia 30161, and its telephone number at such address is (706) 291-1000.
Additional information with respect to First Community and its subsidiaries
is included in documents incorporated by reference in this Proxy
Statement/Prospectus. Copies of such documents, consisting of First Community's
Annual Report on Form 10-K for the fiscal year ended December 31, 1993, and
First Community's Quarterly Report on Form 10-Q for the quarter ended March 31,
1994, accompany this Proxy Statement/Prospectus.
EXECUTIVE OFFICERS
The following officers serve as the executive officers of First Community
and/or the Bank. Each officer serves at the pleasure of the respective Board of
Directors. A brief biography of the educational and professional or business
background of each executive officer follows the table:
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------------- --- ------------------------------------------------
<S> <C> <C>
B. G. Early.......................... 65 Director of First Community and Chief Executive
Officer of First Community and the Bank
Steven E. Kemp....................... 43 Director and President of First Community and
the Bank
</TABLE>
B. G. EARLY has been a banker since 1946. He graduated from Louisiana State
University's School of Banking in 1961. He was employed by Rome Bank and Trust
and its successor, The Citizens and Southern National Bank, from 1946 to January
1987. He was first elected an officer of that bank in 1951 and retired as its
Executive Vice President. Mr. Early was a member of the Board of Directors of
that bank until his retirement. Since that time, Mr. Early was involved in the
organization of First Community and the Bank, and Mr. Early has served as
Chairman of the Board and President of both First Community and the Bank since
their respective inceptions. Mr. Early is active in numerous civic and community
organizations.
STEVEN E. KEMP obtained his undergraduate degree from Berry College in 1972
and an M.B.A. from Berry College in 1982. He is a graduate of the School of
Banking of the South, Louisiana State University. Mr. Kemp has been in banking
for 21 years, having previously served as Vice President of First Union National
Bank of Georgia and Calhoun First National Bank. He has been employed by the
Bank since September 1989. He currently serves on the Boards of the Rome-Floyd
Chamber of Commerce, the Kiwanis Club of Rome, the Floyd County Development
Authority, the YMCA, and the Floyd Healthcare Foundation.
38
<PAGE> 43
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation of B. G. Early, the President and Chief Executive Officer of First
Community and the Bank during 1991, 1992, and 1993. No other officer earned
compensation in excess of $100,000 during any of these years.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS
- ------------------------------------------------------------------------- --------------------- PAYOUTS
(E) -------
---------- (F)
OTHER ---------- (G) (H) (I)
(A) (B) (C) (D) ANNUAL RESTRICTED -------- ------- ---------------
- ---------------------------------- ----- -------- ------ COMPEN- STOCK OPTIONS/ LTIP ALL OTHER
NAME YEAR SALARY BONUS SATION(1) AWARDS SARS(2) PAYOUTS COMPENSATION(3)
- ---------------------------------- ----- -------- ------ ---------- ---------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
B. G. Early....................... 1993 $113,333 -0- $12,438 12,992 $ 3,510
1992 87,333 $5,000 11,698 2,292 18,847
1991 79,000 4,050 9,211 2,292 22,478
</TABLE>
- ---------------
(1) Consists of the following perquisites and other benefits:
<TABLE>
<CAPTION>
1993 1992 1991
------- ------ ------
<S> <C> <C> <C>
Dues........................................ $ 1,638 $2,018 $2,011
Car Allowance............................... 10,800 9,680 7,200
</TABLE>
(2) In each of 1991 and 1992, Mr. Early was granted options to acquire 2,292
shares of First Community Common Stock at the higher of book or market
value as of the date on which any respective option was earned. In 1993,
Mr. Early was granted options to acquire 12,992 shares of First Community
Common Stock. The terms of these options are discussed in greater detail in
the table immediately below.
(3) Mr. Early's salary, prior to the Bank's commencement of operations, was
accrued at an annualized rate of $50,000, for a total amount of $70,833.
The Bank paid the accrued salary to Mr. Early in 96 semi-monthly
installments of $737.85 each, the last of which payments was made in 1992.
Column (i) reflects the following amounts paid for this accrued salary and
for life and health insurance premiums for the benefit of Mr. Early:
<TABLE>
<CAPTION>
1993 1992 1991
------ ------- -------
<S> <C> <C> <C>
Accrued Salary............................. -0- $14,078 $17,708
Life and Health Insurance Premiums......... $3,510 4,769 4,769
</TABLE>
Options/SAR Grants in Last Fiscal Year. The following table sets forth the
stock options granted to Mr. Early during 1993.
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- ---------------------------------------------------------------------------------------------- -------------------
(A) (B) (C) (D) (E) (F) (G)
- -------------- -------------------- -------------------- ------------ ----------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS
UNDERLYING OPTIONS/ GRANTED TO EMPLOYEES EXERCISE OR EXPIRATION
NAME SARS GRANTED(1) IN FISCAL YEAR BASE PRICE DATE 5% 10%
- -------------- -------------------- -------------------- ------------ ----------------- -------- --------
B. G. Early... 12,292 31.20% $14.00/share December 31, 2003 $108,224 $274,273
</TABLE>
- ---------------
(1) These options for First Community Common Stock were granted to Mr. Early
under First Community's incentive stock option plans adopted during 1989
and 1992. Under the plans, the officers of the Bank, upon achievement of
annual objectives set by the directors (such as deposit and asset growth,
profitability, return on assets, and increase in value of First Community
Common Stock), may earn options to acquire First Community Common Stock at
the higher book or market value as of the date on which the option is
earned. The options cannot be exercised for five years and will lapse in
the event that the officer leaves the employ of the Bank for any reason
other than death, permanent disability, or
39
<PAGE> 44
retirement at age 65. The objectives of the plans are to reward superior
performance which provides value for the stockholders and to reduce the
likelihood of trained bank officers' leaving the employ of the Bank.
Options granted during 1993 under this plan expire on December 31, 2003.
Aggregated Option/SAR Exercises in Last Fiscal Yend and FY-End Option/SAR
Values. The following table details stock options exercised by Mr. Early during
the 1993 fiscal year and the value of his unexercised stock options at the end
of fiscal year 1993 based upon the excess of the market value of the underlying
shares at fiscal year-end over the exercise price for such shares.
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
- ------------------------------ --------------- -------------- --------------------- ----------------
<S> <C> <C> <C> <C>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END AT FY-END(1)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------------------ --------------- -------------- --------------------- ----------------
B. G. Early................... -- -- Options for 19,168 $83,132.00.
shares of common All options for
stock of the Company. 19,168 shares
All unexercisable. unexercisable.
</TABLE>
- ---------------
(1) This amount is calculated based upon a fair market value of $17.50 per share
of First Community Common Stock at the last fiscal year-end.
Defined Benefit Plan. During 1993, the Bank adopted a defined benefit
pension plan in which B. G. Early participates. Under the terms of the plan,
retirement benefits are based upon 60% of final salary up to $100,000, and the
benefits are reduced proportionately for less than 15 years of service.
The pension plan covers base salary in determining final compensation. See
column (c) of the Summary Compensation Table. Benefits are not subject to
deduction for Social Security or other offset amounts.
Mr. Early has reached normal retirement age under the pension plan, and he
has been credited with eight years of service. The estimated annual benefit
payable to Mr. Early upon his retirement at or after normal retirement age will
be $30,336.
VOTING SECURITIES
No person is known by First Community to beneficially own 5.0% or more of
First Community Common Stock, as of the Record Date.
40
<PAGE> 45
ELECTION OF DIRECTORS OF FIRST COMMUNITY
The number of directors established for First Community in the manner
provided in the Bylaws is 14. The Board of Directors of First Community
recommends the election of Villa Sulzbacher Hizer, David G. Hunter, Robert H.
Ledbetter, and Charles O. Sennett to serve as directors of First Community and
to hold office for a term of three years or until their successors are duly
elected and qualified. The terms of office of ten directors of First Community
continue after the Annual Meeting. The proxies will be voted for the nominees,
unless otherwise directed. If any nominee is not available for election, the
proxies will be voted for such substitute nominees as the Board of Directors may
designate. First Community has no reason to believe that any substitute nominee
or nominees will be required. The proxies will not be voted for more than four
nominees. Under Georgia law, directors are elected by a plurality of the shares
of First Community Common Stock voted at the Annual Meeting.
INFORMATION ON DIRECTORS
The following table sets forth the names of the directors, as well as their
ages and their positions with First Community. Certain of the present directors
are also nominees for election as directors, and those directors also have been
designated as nominees below, as noted. A brief biography of the educational and
professional or business background of each director follows the table.
<TABLE>
<CAPTION>
YEAR TERM
POSITION WITH OF OFFICE
NAME AGE FIRST COMMUNITY EXPIRES
--------------------------------- --- --------------------------------- ---------
<S> <C> <C> <C>
Lydell Ayers..................... 65 Director 1995
Mary Sibley Mooney Banks......... 46 Director 1996
Bruce Blalock.................... 53 Director 1995
B. G. Early...................... 65 Chairman of the Board, Chief 1996
Executive Officer, and Director
Peter Gilbert.................... 54 Director 1996
Edward Hine, Jr.................. 41 Corporate Secretary and Director 1996
Villa Sulzbacher Hizer........... 44 Director 1997
(Nominee)
David G. Hunter.................. 47 Director 1997
(Nominee)
Steven E. Kemp................... 43 President and Director 1995
Robert H. Ledbetter.............. 58 Director 1997
(Nominee)
Larry G. Morrow, Sr.............. 46 Director 1996
E. Leeon Rhodes.................. 51 Director 1995
Charles O. Sennett............... 59 Director 1997
(Nominee)
Bill G. Waters................... 61 Director 1995
</TABLE>
LYDELL AYERS is President and owner of Higgins Shoe Stores, Inc. and has
been a leading retailer in Floyd County for many years. Mr. Ayers is active in
numerous civic and community organizations with a particular interest in the
commercial redevelopment of downtown Rome.
MARY SIBLEY MOONEY BANKS attended Vanderbilt University and later the
University of Alabama where she obtained her Bachelor of Science degree in 1968.
She also has pursued graduate studies in Home Economics at the University of
Georgia. Mrs. Banks is an officer of both Rome Printing Co. and News Publishing
Co. Prior to 1972, Mrs. Banks was employed at National City Bank of Rome, and
from 1972 to 1980, she was the owner of The Grey Goose gift shop. Mrs. Banks is
active in numerous civic and community organizations.
41
<PAGE> 46
BRUCE BLALOCK is active in management and as an investor in the carpet
industry. He presently is employed by, is a stockholder in, and is President of
Southern Carpet Screens, Inc. in Rome. He is also a stockholder and director of
Gravure, Inc. and Southern Engravers, Inc., both of which are textile engraving
firms.
B. G. EARLY has been a banker since 1946. He graduated from Louisiana State
University's School of Banking in 1961. He was employed by Rome Bank and Trust
and its successor, The Citizens and Southern National Bank, from 1946 to January
1987. He was first elected an officer of that bank in 1951 and retired as its
Executive Vice President. Mr. Early was a member of the Board of Directors of
that bank until his retirement. Since that time, Mr. Early has pursued the
organization of First Community and the Bank, and Mr. Early has served as
Chairman of the Board and President of both First Community and the Bank since
their respective inceptions. Mr. Early is active in numerous civic and community
organizations.
PETER GILBERT, M.D. obtained his undergraduate degree from the University
of Virginia and his medical degree from the Medical College of Georgia. He has
been a physician with the Harbin Clinic Professional Association since 1972. He
is active in numerous civic and professional associations and is past president
of the Floyd-Polk-Chattooga Medical Association and the Seventh District Medical
Society.
EDWARD HINE, JR. obtained both his undergraduate and law degrees from Emory
University. He has actively pursued the practice of law since 1976, forming his
own practice, now Hine, Niedrach & McClellan, P.C., in 1980. Mr. Hine was a
member of the Georgia General Assembly, serving in the State Senate as a
representative of the 52nd District (Floyd County and a portion of Bartow
County) from 1983 until 1988. Since 1991, he also has been active in River Ford
Corporation, a real estate development company.
VILLA SULZBACHER HIZER attended Converse College from 1966 through 1968 and
later obtained her B.A. in Mathematics from the University of Georgia in 1970.
She is presently Vice President and Treasurer of North Georgia Distributing Co.
Mrs. Hizer is active in numerous civic and community organizations.
DAVID G. HUNTER obtained his B.S. degree from Valdosta State College. He
has been employed by A. G. Edwards & Sons, Inc. since 1977 and is currently Vice
President -- Investments and Branch Co-Manager. He was a Senior Examiner with
the Georgia Department of Banking and Finance from 1972 to 1977. Mr. Hunter is
active in numerous civic and community associations.
ROBERT H. LEDBETTER, a graduate of Georgia Tech, is Chairman and Chief
Executive Officer of R. H. Ledbetter Properties, Inc., which is involved in real
estate development and management projects. He is involved in numerous real
estate partnerships in Georgia and Alabama and serves on the Board of Directors
of the Boys Club of Rome and Chesapeake International of Durham, North Carolina.
He previously served on the Board of Trustees of Culver Educational Foundation,
Culver, Indiana, Rome-Floyd County Industrial Development Authority, and
Darlington School of Rome, Georgia.
LARRY G. MORROW, SR. attended Morehouse College in 1964 and 1965. He has
been employed with Norfolk Southern Corporation since 1966 where he is currently
Senior Coordinator, Terminal Operations -- EDI. He is also a partner in Jewelry
Unlimited, a partnership located in Rome, Georgia. Mr. Morrow is a director of
Coosa Valley Technical Institute and is active in numerous civic and community
organizations.
E. LEEON RHODES, M.D. obtained both undergraduate and medical degrees from
Emory University in 1963 and 1967, respectively. He has been a physician with
Harbin Clinic Professional Association since 1975 and has served as that
entity's Treasurer since 1982. Dr. Rhodes currently serves as Chairman of the
Department of Surgery at Redmond Park Hospital, Rome, Georgia.
CHARLES O. SENNETT, M.D. obtained his medical degree from Mississippi in
1959. He has been employed with Coosa Valley Pathology, P.C. since 1969 and is
currently Director of Laboratories at Floyd Medical Center. Dr. Sennett is a
director of and investor in numerous health-related endeavors, both profit and
nonprofit.
BILL G. WATERS obtained his B.A. degree from Berry College and his Masters
of Health Administration degree from Columbia Pacific University. He has been
employed by Floyd Medical Center since 1966 and has served as that institution's
President since 1984. He has served on the Boards of Directors of numerous
health-related organizations.
42
<PAGE> 47
Since First Community's inception, each of the present directors of First
Community has served on First Community's Board except E. Leeon Rhodes, David G.
Hunter, and Robert H. Ledbetter, who have served since October 26, 1988, Bill G.
Waters, who has served since November 17, 1993, and Steven E. Kemp, who has
served since April 20, 1994. First Community's Articles of Incorporation
establish three-year staggered terms for directors.
There are no family relationships among the directors, nominees for
election as director, or executive officers. None of the above executive
officers has been involved in any bankruptcy filing, criminal proceeding,
securities violation, or similar proceeding.
There are no arrangements or understandings between any of the above listed
officers and any person pursuant to which any such officer was selected.
SECURITY OWNERSHIP OF DIRECTORS AND NOMINEES FOR ELECTION
The following table sets forth certain information as of March 31, 1994,
regarding the beneficial ownership of First Community Common Stock of (i) each
director, (ii) each nominee for election as a director, (iii) the Chief
Executive Officer of First Community and the Bank, and (iv) all directors and
executive officers of First Community or the Bank, as a group.
<TABLE>
<CAPTION>
FIRST COMMUNITY
COMMON STOCK OWNED
----------------------------------------------
AMOUNTS AND NATURE
OF BENEFICIAL OWNER PERCENT OF CLASS
AS OF MARCH 31, AS OF MARCH 31,
NAME OF BENEFICIAL OWNER 1994(1) 1994
- ---------------------------------------------------------- ---------------------- -------------------
<S> <C> <C>
Lydell Ayers.............................................. 8,100(2) 1.16%
Mary Sibley Mooney Banks.................................. 3,476(3) 0.50
Bruce Blalock............................................. 7,040(4) 1.01
B. G. Early............................................... 33,055(5) 4.72
Peter Gilbert............................................. 24,200(6) 3.46
Edward Hine, Jr........................................... 10,560(7) 1.51
Villa Sulzbacher Hizer.................................... 24,750(8) 3.54
David G. Hunter........................................... 15,400(9) 2.20
Steven E. Kemp............................................ 2,735(10) 0.39
Robert H. Ledbetter....................................... 33,550(11) 4.79
Larry G. Morrow, Sr....................................... 5,500 0.79
E. Leeon Rhodes........................................... 16,500(12) 2.36
Charles O. Sennett........................................ 27,500(13) 3.93
Bill G. Waters............................................ 4,810 0.69
All Directors and Executive Officers as a Group
(14 persons).............................................. 217,176 31.03
</TABLE>
- ---------------
(1) All shares are beneficially owned, and sole voting power is held by the
person named, unless specified otherwise.
(2) Includes 3,410 shares owned by Mr. Ayers jointly with his spouse and 4,960
shares held in an individual retirement account.
(3) Includes 396 shares Ms. Banks owns as custodian for her minor children.
(4) Includes 220 shares owned by Mr. Blalock jointly with his adult child.
(5) Does not include 26,168 shares of First Community Common Stock subject to
options which are not exercisable within 60 days of the Record Date.
(6) Includes 5,500 shares owned by a trust of which Dr. Gilbert is a
beneficiary.
43
<PAGE> 48
(7) Includes 110 shares owned by Mr. Hine as custodian for his minor child;
3,850 shares owned by pension plans of which Mr. Hine is a co-trustee and a
beneficiary; and 1,100 shares owned by a trust of which Mr. Hine is a
trustee.
(8) Includes 5,500 shares owned by Ms. Hizer jointly with her spouse; 11,000
shares owned by a corporation in which Ms. Hizer is an officer; 2,200
shares owned by two trusts of which Ms. Hizer is a co-trustee; and 550
shares owned by a trust of which Ms. Hizer is a beneficiary and a
co-trustee.
(9) Includes 1,650 shares owned by a trust of which Mr. Hunter is a
beneficiary.
(10) Includes 785 shares held in an individual retirement account, but does not
include 21,664 shares of First Community Common Stock subject to options
which are not exercisable within 60 days of the Record Date.
(11) Includes 1,650 shares owned by Mr. Ledbetter's adult children.
(12) Includes 10,450 shares owned by a trust of which Dr. Rhodes is a
beneficiary.
(13) Includes 11,000 shares owned by a trust of which Dr. Sennett is a
co-trustee and a beneficiary.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of First Community held 12 regular meetings during
the year ended December 31, 1993. All of the Directors attended at least 75% of
the meetings of the Board of Directors and the meetings held by all committees
of the Board on which the directors served.
The Board of Directors has established several standing committees,
including a Nominating Committee, a Personnel Committee, and an Audit Committee.
The Nominating Committee may recommend to the Board of Directors nominees
for election as directors of First Community. The Nominating Committee met twice
during 1993. The Nominating Committee is composed of Peter Gilbert, Chairman, E.
Leeon Rhodes, Edward Hine, Jr., Robert H. Ledbetter, Mary Sibley Mooney Banks,
and B. G. Early. The Nominating Committee will consider suggestions from all
sources, including stockholders, regarding possible candidates for director. In
the event the Merger is not consummated and First Community continues in
existence, any suggestions for the next slate of nominees for election as
directors, together with appropriate biographical information, should be
submitted no later than December 31, 1994, to the attention of B. G. Early, P.O.
Box 5267, Rome, Georgia 30161.
The Personnel Committee is responsible for considering matters relating to
compensation. The Personnel Committee did not meet during 1993. Personnel
Committee members include Villa Sulzbacher Hizer, Chairman, David G. Hunter,
Lydell Ayers, Larry G. Morrow, Sr., Edward Hine, Jr., and Peter Gilbert.
The Audit Committee is responsible for establishing methods by which First
Community reviews its operations for prudent controls and compliance with
established policies and procedures. The Audit Committee did not meet during
1993. Audit Committee members include Bruce Blalock, Chairman, Larry G. Morrow,
Sr., Villa Sulzbacher Hizer, Lydell Ayers, and Edward Hine, Jr.
During 1993, the Bank paid to each director (including the two honorary
directors who serve in an advisory capacity and have no voting rights) a fee of
$250 per month as compensation for each director's services and also paid $50
per month to Edward Hine, Jr. as compensation for his services as Corporate
Secretary of the meetings. Also during 1993, the Bank paid a fee of $50 per
month to each of Lydell Ayers, B. G. Early, Villa Sulzbacher Hizer, David G.
Hunter, E. Leeon Rhodes, Robert H. Ledbetter, and Steven E. Kemp as compensation
for each person's services as a member of the Loan Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the ordinary course of business, First Community and the Bank have had,
and anticipate that they will continue to have, transactions with various
directors, officers, and their associates.
All loans and commitments to extend loans included in such transactions
were made in accordance with applicable laws in the ordinary course of business
and on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other unaffiliated
persons of
44
<PAGE> 49
similar credit standing, and in the opinion of management, such loans do not
involve more than a normal risk of collectability or present any other
unfavorable features. In management's opinion, the aggregate amount of
extensions of credit outstanding at any time from the beginning of the last
fiscal year to date to any director or executive officer and their associates
did not exceed the maximum permitted under applicable banking regulations.
Legal fees will be paid to the law firm of Hine, Niedrach & McClellan, P.C.
in which Edward Hine, Jr., a director and officer of First Community and the
Bank, is a principal. The Company and the Bank have retained Hine, Niedrach &
McClellan, P.C. as their general counsel. The legal fees paid to Hine, Niedrach
& McClellan, P.C. during 1993 did not exceed 5.0% of that firm's gross revenues
for its last full fiscal year. In addition to fees paid to the firm by First
Community and the Bank, independent, third-party borrowers paid legal fees to
that firm in connection with certain transactions in which that firm represented
the Bank.
45
<PAGE> 50
SUPERVISION AND REGULATION
The following discussion sets forth certain of the material elements of the
regulatory framework applicable to banks and bank holding companies and provides
certain specific information related to Regions.
GENERAL
Regions is a bank holding company, registered with the Federal Reserve
under the BHC Act. As such, Regions and its subsidiaries are subject to the
supervision, examination, and reporting requirements of the BHC Act and the
regulations of the Federal Reserve.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or control
more than 5.0% of the voting shares of the bank, (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of the bank, or (iii) it may merge or consolidate with any other bank
holding company.
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business of
banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy and consideration of convenience and needs issues includes the parties'
performance under the Community Reinvestment Act of 1977 (the "CRA"), both of
which are discussed below.
The BHC Act prohibits the Federal Reserve from approving a bank holding
company's application to acquire a bank or bank holding company located outside
the state in which the deposits of its banking subsidiaries were greatest on the
date the company became a bank holding company (Alabama in the case of Regions),
unless such acquisition is specifically authorized by statute of the state in
which the bank or bank holding company to be acquired is located. Alabama has
adopted reciprocal interstate banking legislation permitting Alabama-based bank
holding companies to acquire banks and bank holding companies in other states
and allowing bank holding companies located in the states of Arkansas, the
District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland,
Mississippi, North Carolina, South Carolina, Tennessee, Texas, Virginia, and
West Virginia to acquire Alabama banks and bank holding companies.
The BHC Act generally prohibits Regions from engaging in activities other
than banking or managing or controlling banks or other permissible subsidiaries
and from acquiring or retaining direct or indirect control of any company
engaged in any activities other than those activities determined by the Federal
Reserve to be so closely related to banking or managing or controlling banks as
to be a proper incident thereto. In determining whether a particular activity is
permissible, the Federal Reserve must consider whether the performance of such
an activity reasonably can be expected to produce benefits to the public, such
as greater convenience, increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices. For example, factoring accounts receivable, acquiring or servicing
loans, leasing personal property, conducting discount securities brokerage
activities, performing certain data processing services, acting as agent or
broker in selling credit life insurance and certain other types of insurance in
connection with credit transactions, and performing certain insurance
underwriting activities all have been determined by the Federal Reserve to be
permissible activities of bank holding companies. The BHC Act does not place
territorial limitations on permissible non-banking activities of bank holding
companies. Despite prior approval, the Federal Reserve has the power to order a
holding company or its subsidiaries to terminate any activity or to terminate
its ownership or control of any subsidiary when it has reasonable cause to
believe that continuation of such activity or such
46
<PAGE> 51
ownership or control constitutes a serious risk to the financial safety,
soundness, or stability of any bank subsidiary of that bank holding company.
Each of the Subsidiary Institutions is a member of the Federal Deposit
Insurance Corporation ("FDIC"), and as such, their deposits are insured by
either the Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF") administered by the FDIC, to the extent provided by law. Each
Subsidiary Institution is also subject to numerous state and federal statutes
and regulations that affect its business, activities, and operations, and each
is supervised and examined by one or more state or federal bank regulatory
agencies.
Because each of Regions' subsidiary banks is a state-chartered bank that is
not a member of the Federal Reserve System, such banks are subject to
supervision and examination by the FDIC. Regions' subsidiary savings bank is a
federally-chartered savings bank that is a member of the Federal Home Loan Bank
System and is subject to supervision and examination by the Office of Thrift
Supervision ("OTS") and to the back-up supervisory authority of the FDIC. Such
agencies regularly examine the operations of the Subsidiary Institutions and are
given authority to approve or disapprove mergers, consolidations, the
establishment of branches, and similar corporate actions. Such agencies also
have the power to prevent the continuance or development of unsafe or unsound
banking practices or other violations of law.
The Subsidiary Institutions are subject to the provisions of the CRA. Under
the terms of the CRA, the appropriate federal bank regulatory agency is
required, in connection with its examination of a Subsidiary Institution, to
assess such institution's record in assessing and meeting the credit needs of
the community served by that institution, including low and moderate-income
neighborhoods. The regulatory agency's evaluation of the institution's record is
made available to the public. Further, such assessment is required of any
institution which has applied to (i) charter a national bank, (ii) obtain
deposit insurance coverage for a newly chartered institution, (iii) establish a
new branch office that will accept deposits, (iv) relocate an office, or (v)
merge or consolidate with, or acquire the assets or assume the liabilities of, a
federally regulated financial institution. In the case of a bank holding company
applying for approval to acquire a bank or other bank holding company, the
Federal Reserve will assess the records of each Subsidiary Institution of the
applicant bank holding company, and such records may be the basis for denying
the application.
In December 1993, the federal banking agencies proposed to revise their CRA
regulations in order to provide clearer guidance to depository institutions on
the nature and extent of their CRA obligations and the methods by which those
obligations will be assessed and enforced. The proposed regulations would
substitute for the current process-based CRA assessment factors a new evaluation
system that would rate institutions based on their actual performance in meeting
community credit needs. Under the proposal, all depository institutions would be
subject to three CRA-related tests: a lending test; an investment test; and a
service test. The lending test, which would be the primary test for all
institutions other than wholesale and limited-purpose banks, would evaluate an
institution's lending activities by comparing the institution's share of
housing, small business, and consumer loans in low-and moderate-income areas in
its service area with its share of such loans in the other parts of its service
area. The agencies would also evaluate the institution's performance independent
of other lenders by examining the ratio of such loans made by the institution to
low-and moderate-income areas to all such loans made by the institution. At the
election of an institution, the agencies would also consider "indirect" loans
made by affiliates and subsidiaries of the institution as well as lending
consortia and other lenders in which the institution had made lawful
investments.
The focus of the investment test, under which wholesale and limited-purpose
institutions would normally be evaluated, would be the amount of assets
(compared to its risk-based capital) that an institution has devoted to
"qualified investments" that benefit low-and moderate-income individuals and
areas in the institution's service area. The service test would evaluate an
institution based on the percentage of its branch offices that are located in or
are readily accessible to low-and moderate-income areas. Smaller institutions,
those having total assets of less than $250 million, would be evaluated under
more streamlined criteria.
The joint agency CRA proposal provides that an institution evaluated under
a given test would receive one of five ratings for that test: outstanding; high
satisfactory; low satisfactory; needs to improve; or substantial non-compliance.
The ratings for each test would then be combined to produce an overall composite
rating of
47
<PAGE> 52
either outstanding, satisfactory (including both high and low satisfactory),
needs to improve, or substantial non-compliance. In the case of a
retail-oriented institution, its lending test rating would form the basis for
its composite rating. That rating would then be increased by up to two levels in
the case of outstanding or high satisfactory investment performance, increased
by one level in the case of outstanding service, and decreased by one level in
the case of substantial non-compliance in service. An institution found to have
engaged in illegal lending discrimination would be rebuttably presumed to have a
less-than-satisfactory composite CRA rating.
Under the proposal, an institution's CRA rating will continue to be taken
into account by a regulator in considering various types of applications. In
addition, an institution receiving a rating of "substantial non-compliance"
would be subject to civil money penalties or a cease and desist order under
Section 8 of the Federal Deposit Insurance Act (the "FDIA").
It is uncertain at this time whether, when, or in what form the CRA
proposal will ultimately be adopted by the federal banking agencies in its
current form.
PAYMENT OF DIVIDENDS
Regions is a legal entity separate and distinct from its banking and other
subsidiaries. The principal source of cash flow of Regions, including cash flow
to pay dividends to its stockholders, is dividends from the Subsidiary
Institutions. There are statutory and regulatory limitations on the payment of
dividends by the Subsidiary Institutions to Regions as well as Regions to its
stockholders.
As state nonmember banks, the subsidiary banks are subject to the
respective laws and regulations of the states of Alabama, Florida, Georgia,
Louisiana, and Tennessee and to the regulations of the FDIC as to the payment of
dividends. The subsidiary savings bank is subject to the regulations of the OTS
as to payment of dividends.
If, in the opinion of the federal regulatory agencies, an institution under
its jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the institution, could
include the payment of dividends), such authority may require, after notice and
hearing, that such institution cease and desist from such practice. The Federal
Reserve, the FDIC, and the OTS have indicated that paying dividends that deplete
an institution's capital base to an inadequate level would be an unsafe and
unsound banking practice. Under the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"), an insured institution may not pay any
dividend if payment would cause it to become undercapitalized or once it is
undercapitalized. See " -- Prompt Corrective Action." Moreover, the Federal
Reserve and the FDIC have issued policy statements which provide that bank
holding companies and insured banks should generally only pay dividends out of
current operating earnings.
At March 31, 1994, under dividend restrictions imposed under federal and
state laws, the Subsidiary Institutions, without obtaining governmental
approvals, could declare aggregate dividends to Regions of approximately $214
million.
The payment of dividends by Regions and the Subsidiary Institutions may
also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.
TRANSACTIONS WITH AFFILIATES
There are various restrictions on the extent to which Regions and its
nonbank subsidiaries can borrow or otherwise obtain credit from the Subsidiary
Institutions. Each Subsidiary Institution (and its subsidiaries) is limited in
engaging in borrowing and other "covered transactions" with nonbank or
non-savings bank affiliates to the following amounts: (i) in the case of any
such affiliate, the aggregate amount of covered transactions of the Subsidiary
Institution and its subsidiaries may not exceed 10% of the capital stock and
surplus of such Subsidiary Institution; and (ii) in the case of all affiliates,
the aggregate amount of covered transactions of the Subsidiary Institution and
its subsidiaries may not exceed 20% of the capital stock and surplus of such
Subsidiary Institution. "Covered transactions" are defined by statute to include
a loan or extension of credit, as well as a purchase of securities issued by an
affiliate, a purchase of assets (unless otherwise exempted by the
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Federal Reserve), the acceptance of securities issued by the affiliate as
collateral for a loan and the issuance of a guarantee, and the issuance of a
guarantee, acceptance, or letter of credit on behalf of an affiliate. Covered
transactions are also subject to certain collateralization requirements.
Further, a bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit, lease, or sale of property or furnishing of services.
CAPITAL ADEQUACY
Regions and the Subsidiary Institutions are required to comply with the
capital adequacy standards established by the Federal Reserve in the case of
Regions, the FDIC in the case of the subsidiary banks, and the OTS in the case
of the subsidiary savings bank. There are two basic measures of capital adequacy
for bank holding companies that have been promulgated by the Federal Reserve: a
risk-based measure and a leverage measure. All applicable capital standards must
be satisfied for a bank holding company to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance sheet items.
The minimum guideline for the ratio of total capital ("Total Capital") to
risk-weighted assets (including certain off-balance-sheet items, such as standby
letters of credit) is 8.0%. At least half of the Total Capital must be composed
of common stock, minority interests in the equity accounts of consolidated
subsidiaries, noncumulative perpetual preferred stock, and a limited amount of
cumulative perpetual preferred stock, less goodwill and certain other intangible
assets ("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves. At March 31, 1994,
Regions' consolidated Tier 1 Capital and Total Capital ratios were 11.7% and
14.1%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets (the "Leverage Ratio"), of 3.0% for bank holding companies
that meet certain specified criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3.0% plus an additional cushion of 100 to 200 basis
points. Regions' Leverage Ratio at March 31, 1994 was 8.0%. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital leverage ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
Each of Regions' subsidiary banks is subject to risk-based and leverage
capital requirements adopted by the FDIC and Regions' subsidiary savings bank is
subject to tangible, risk-based, and core capital requirements adopted by the
OTS. Each of Regions' Subsidiary Institutions was in compliance with applicable
minimum capital requirements as of December 31, 1993. Neither Regions nor any of
the Subsidiary Institutions has been advised by any federal banking agency of
any specific minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. See " -- Prompt Corrective
Action."
The federal bank regulators continue to indicate their desire to make the
capital requirements applicable to banking organizations responsive to risks in
addition to credit risk. In this regard, the Federal Reserve, the FDIC, and the
OTS have, pursuant to FDICIA, proposed an amendment to the risk-based capital
standards which would calculate the change in an institution's net economic
value attributable to increases and
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<PAGE> 54
decreases in market interest rates and would require banks with excessive
interest rate risk exposure to hold additional amounts of capital against such
exposures.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Regions is expected to act as a source of
financial strength to, and to commit resources to support, each of the
Subsidiary Institutions. This support may be required at times when, absent such
Federal Reserve policy, Regions may not be inclined to provide it. In addition,
any capital loans by a bank holding company to any of the Subsidiary
Institutions are subordinate in right of payment to deposits and to certain
other indebtedness of such Subsidiary Institution. In the event of a bank
holding company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a Subsidiary
Institution will be assumed by the bankruptcy trustee and entitled to a priority
of payment.
Under the FDIA, a depository institution insured by the FDIC can be held
liable for any loss incurred by, or reasonably expected to be incurred by, the
FDIC after August 9, 1989 in connection with (i) the default of a commonly
controlled FDIC-insured depository institution or (ii) any assistance provided
by the FDIC to any commonly controlled FDIC-insured depository institution "in
danger of default." "Default" is defined generally as the appointment of a
conservator or receiver and "in danger of default" is defined generally as the
existence of certain conditions indicating that a default is likely to occur in
the absence of regulatory assistance.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories ("well-capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized") and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed. Generally, subject to a
narrow exception, the FDICIA requires the banking regulator to appoint a
receiver or conservator for an institution that is critically undercapitalized.
The federal banking agencies have specified by regulation the relevant capital
level for each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital ratio of 10% or greater,
a Tier 1 Capital ratio of 6.0% or greater, and a Leverage Ratio of 5.0% or
greater, and (ii) is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by the appropriate
federal banking agency, is deemed to be "well-capitalized." An institution with
a Total Capital ratio of 8.0% or greater, a Tier 1 Capital ratio of 4.0% or
greater, and a Leverage Ratio of 4.0% or greater is considered to be "adequately
capitalized." A depository institution that has a Total Capital ratio of less
than 8.0%, a Tier 1 Capital ratio of less than 4.0%, or a Leverage Ratio of less
than 4.0% is considered to be "undercapitalized." A depository institution that
has a Total Capital ratio of less than 6.0%, a Tier 1 Capital ratio of less than
3.0%, or a Leverage Ratio of less than 3.0% is considered to be "significantly
undercapitalized" and an institution that has a tangible equity capital to
assets ratio equal to or less than 2.0% is deemed to be "critically
undercapitalized." For purposes of the regulation, the term "tangible equity"
includes core capital elements counted as Tier 1 capital for purposes of the
risk-based capital standards plus the amount of outstanding cumulative perpetual
preferred stock (including related surplus), minus all intangible assets with
certain exceptions. 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.
In the case of an institution that is categorized as undercapitalized,
significantly undercapitalized, or critically undercapitalized, the institution
is required to submit an acceptable capital restoration plan to its appropriate
federal banking agency. Under FDICIA, a bank holding company must guarantee that
a subsidiary depository institution meet its capital restoration plan, subject
to certain limitations. The obligation
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of a controlling bank holding company under FDICIA to fund a capital restoration
plan is limited to the lesser of 5.0% of an undercapitalized subsidiary's assets
or the amount required to meet regulatory capital requirements. An
undercapitalized institution is also generally prohibited from increasing its
average total assets, making acquisitions, establishing any branches, or
engaging in any new line of business except in accordance with an accepted
capital restoration plan or with the approval of the FDIC. In addition, the
appropriate federal banking agency is given authority with respect to any
undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.
For those institutions that are (i) significantly undercapitalized or (ii)
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the appropriate
federal banking agency must require the institution to take one or more of the
following actions: (i) sell enough shares, including voting shares, to become
adequately capitalized; (ii) merge with (or be sold to) another institution (or
holding company), but only if grounds exist for appointing a conservator or
receiver; (iii) restrict certain transactions with banking affiliates as if the
"sister bank" exception to the requirements of Section 23A of the Federal
Reserve Act did not exist; (iv) otherwise restrict transactions with bank or
nonbank affiliates; (v) restrict interest rates that the institution pays on
deposits to "prevailing rates" in the institution's "region;" (vi) restrict
asset growth or reduce total assets; (vii) alter, reduce, or terminate
activities; (viii) hold a new election of directors; (ix) dismiss any director
or senior executive officer who held office for more than 180 days immediately
before the institution became undercapitalized; provided that in requiring
dismissal of a director or senior officer, the agency must comply with certain
procedural requirements, including the opportunity for an appeal in which the
director or officer will have the burden of proving his or her value to the
institution; (x) employ "qualified" senior executive officers; (xi) cease
accepting deposits from correspondent depository institutions; (xii) divest
certain nondepository affiliates which pose a danger to the institution; or
(xiii) be divested by a parent holding company. In addition, without the prior
approval of the appropriate federal banking agency, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer without
regulatory approval.
At March 31, 1994, all of the Subsidiary Institutions had the requisite
capital levels to qualify as well capitalized.
BROKERED DEPOSITS
The FDIC has adopted regulations governing the receipt of brokered
deposits. Under the regulations, a depository institution cannot accept, roll
over, or renew brokered deposits unless (i) it is well capitalized or (ii) it is
adequately capitalized and receives a waiver from the FDIC. A depository
institution that cannot receive brokered deposits also cannot offer
"pass-through" insurance on certain employee benefit accounts. Whether or not it
has obtained such a waiver, an adequately capitalized depository institution may
not pay an interest rate on any deposits in excess of 75 basis points over
certain prevailing market rates specified by regulation. There are no such
restrictions on a depository institution that is well capitalized. Because all
of the Subsidiary Institutions of Regions had at March 31, 1994, the requisite
capital levels to qualify as well capitalized, Regions believes the brokered
deposits regulation will have no material effect on the funding or liquidity of
any of the Subsidiary Institutions.
FDIC INSURANCE ASSESSMENTS
In July 1993, the FDIC adopted a new risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The new
system, which went into effect on January 1, 1994 and replaces a transitional
system that the FDIC had utilized for the 1993 calendar year, assigns an
institution to one of three capital categories: (i) well capitalized; (ii)
adequately capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized
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for prompt corrective action purposes. An institution is also assigned by the
FDIC to one of three supervisory subgroups within each capital group. The
supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation provided to the FDIC by the institution's primary federal
regulator and information which the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the final risk-based assessment system, as well as the
prior transitional system, there are nine assessment risk classifications (i.e.,
combinations of capital groups and supervisory subgroups) to which different
assessment rates are applied. Assessment rates for 1994 for both the BIF and the
SAIF, as they had during 1993, will range from .23% of deposits for an
institution in the highest category (i.e., "well-capitalized" and "healthy") to
.31% of deposits for an institution in the lowest category (i.e.,
"undercapitalized" and "substantial supervisory concern").
The FDIC is authorized to raise insurance premiums in certain
circumstances. The current assessment rates for the BIF and the SAIF are
designed to increase the reserve ratios (i.e., the ratios of reserves to insured
deposits) for both funds to a designated ratio (i.e., 1.25%) within a specified
period of time. Once the designated ratio is reached, the FDIC is to set future
assessment rates at such levels that will maintain a fund's reserve ratio at the
designated level. The attainment by either fund of its designated reserve ratio
could cause a reduction in assessment rates for that fund.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
NEW SAFETY AND SOUNDNESS STANDARDS
In November 1993, federal banking agencies issued for comment proposed
safety and soundness standards relating to internal controls, information
systems and internal audit systems, loan documentation, credit underwriting,
interest rate exposure, asset growth, compensation, fees, and benefits. With
respect to internal controls, information systems, and internal audit systems,
the standards describe the functions that adequate internal controls and
information systems must be able to perform, including (i) monitoring adherence
to prescribed policies, (ii) effective risk management, (iii) timely and
accurate financial, operational, and regulatory reporting, (iv) safeguarding and
managing assets, and (v) compliance with applicable laws and regulations. The
standards also include requirements that (i) those performing internal audits be
qualified and independent, (ii) internal controls and information systems be
tested and reviewed, (iii) corrective actions be adequately documented, and (iv)
that results of an audit be made available for review of management actions.
As in the case of internal controls and information systems, the proposal
establishes general principles and standards, rather than specific requirements,
that must be followed in other areas. For example, loan documentation and credit
underwriting practices must be such that they enable the institution to make an
informed lending decision and assess credit risk on an ongoing basis. Similarly,
an institution must manage interest rate risk "in a manner that is appropriate
to the size of [the institution] and the complexity of its assets and
liabilities" and must conduct any asset growth in accordance with a plan that
has taken a variety of factors such as deposit volatility, capital, and interest
rate risk into account. The proposal also prohibits "excessive compensation,"
which is defined as amounts paid that are unreasonable or disproportionate to
the services performed by an officer, employee, director, or principal
stockholder in light of all circumstances. In order to help alert institutions
and their regulators to deteriorating financial conditions, the proposed rule
also would impose a maximum ratio of classified assets to total capital of 1.0
and, in the case of an institution that had incurred a net loss over the last
four quarters, would require that institution to have sufficient capital to
absorb a similar loss over the next four quarters and still remain in compliance
with its minimum capital requirements.
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DEPOSITOR PREFERENCE
Legislation recently enacted by Congress establishes a nationwide depositor
preference rule in the event of a bank failure. Under this arrangement, all
deposits and certain other claims against a bank, including the claim of the
FDIC as subrogee of insured depositors, would receive payment in full before any
general creditor of the bank would be entitled to any payment in the event of an
insolvency or liquidation of the bank.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 120,000,000 shares of Regions Common Stock,
of which 42,538,946 shares were issued, including 1,474,579 treasury shares, at
March 31, 1994. No other class of stock is authorized.
Holders of Regions Common Stock are entitled to receive such dividends as
may be declared by the Board of Directors out of funds legally available
therefore. Dividend payments are subject to certain limitations imposed in
Regions' debt instruments. Under the most restrictive of such limitations, $724
million was available for payment of dividends as of December 31, 1993. However,
the ability of Regions to pay dividends is further affected by the ability of
its Subsidiary Institutions to pay dividends, which is limited by applicable
regulatory requirements and capital guidelines. At March 31, 1994, under such
requirements and guidelines, the Subsidiary Institutions had $214 million of
undivided profits legally available for the payment of dividends. See
"Supervision and Regulation -- Dividends."
For a further description of Regions Common Stock, see "Effect of the
Merger on Rights of Stockholders."
STOCKHOLDER PROPOSALS
Regions expects to hold its next annual meeting of stockholders after the
Merger during April 1995. Under SEC rules, proposals of Regions stockholders
intended to be presented at that meeting must be received by Regions at its
principal executive offices no later than November 16, 1994, for consideration
by Regions for possible inclusion in such proxy materials.
If the Merger is not consummated, stockholder proposals of First Community
stockholders intended to be presented at the next annual meeting of stockholders
of First Community must be received by First Community at its principal
executive offices a reasonable time before the date of First Community's proxy
statement released to its stockholders for that meeting for consideration by
First Community for possible inclusion in such proxy materials.
EXPERTS
The consolidated financial statements of First Community as of December 31,
1993, and 1992, and for each of the years in the three-year period ended
December 31, 1993, have been incorporated by reference herein in reliance upon
the report of Read, Martin, Slickman & Sheats, independent auditors, and on the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Regions, incorporated by reference
in this Registration Statement, have been audited by Ernst & Young, independent
auditors, for the periods indicated in their report thereon which is included in
the Annual Report to Stockholders which is incorporated by reference in its
Annual Report on Form 10-K for the year ended December 31, 1993. The financial
statements audited by Ernst & Young have been incorporated herein by reference
in reliance on their report given on their authority as experts in accounting
and auditing.
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OPINIONS
The legality of the shares of Regions Common Stock to be issued in the
Merger will be passed upon by Lange, Simpson, Robinson & Somerville, Birmingham,
Alabama. Henry E. Simpson, partner in the law firm of Lange, Simpson, Robinson &
Somerville, is a member of the Board of Directors of Regions. As of July 15,
1994, attorneys in the law firm of Lange, Simpson, Robinson & Somerville owned
an aggregate of 120,695 shares of Regions Common Stock.
Certain tax consequences of the transaction have been passed upon by Alston
& Bird, Atlanta, Georgia.
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APPENDIX A
FINAL AGREEMENT
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST COMMUNITY BANCSHARES, INC.
AND
FIRST ALABAMA BANCSHARES, INC.
DATED AS OF APRIL 12, 1994
A-1
<PAGE> 60
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Parties.............................................................................. A-5
Preamble............................................................................. A-5
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER........................................ A-5
1.1 Merger....................................................................... A-5
1.2 Time and Place of Closing.................................................... A-5
1.3 Effective Time............................................................... A-5
ARTICLE 2 -- TERMS OF MERGER......................................................... A-6
2.1 Certificate of Incorporation................................................. A-6
2.2 Bylaws....................................................................... A-6
2.3 Directors and Officers....................................................... A-6
ARTICLE 3 -- MANNER OF CONVERTING SHARES............................................. A-6
3.1 Conversion of Shares......................................................... A-6
3.2 Anti-Dilution Provisions..................................................... A-6
3.3 Shares Held by First Community or FAB........................................ A-6
3.4 Dissenting Shareholders...................................................... A-6
3.5 Fractional Shares............................................................ A-7
3.6 Conversion of Stock Options; Restricted Stock................................ A-7
ARTICLE 4 -- EXCHANGE OF SHARES...................................................... A-7
4.1 Exchange Procedures.......................................................... A-7
4.2 Rights of Former First Community Shareholders................................ A-8
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF FIRST COMMUNITY....................... A-8
5.1 Organization, Standing, and Power............................................ A-8
5.2 Authority; No Breach By Agreement............................................ A-9
5.3 Capital Stock................................................................ A-9
5.4 First Community Subsidiaries................................................. A-10
5.5 Financial Statements......................................................... A-10
5.6 Absence of Undisclosed Liabilities........................................... A-10
5.7 Absence of Certain Changes or Events......................................... A-10
5.8 Tax Matters.................................................................. A-11
5.9 Environmental Matters........................................................ A-11
5.10 Compliance With Laws......................................................... A-12
5.11 Employee Benefit Plans....................................................... A-12
5.12 Material Contracts........................................................... A-13
5.13 Legal Proceedings............................................................ A-14
5.14 Statements True and Correct.................................................. A-14
5.15 Tax and Regulatory Matters................................................... A-14
5.16 State Takeover Laws.......................................................... A-14
5.17 Directors' Agreements........................................................ A-14
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF FAB................................... A-14
6.1 Organization, Standing, and Power............................................ A-14
6.2 Authority; No Breach By Agreement............................................ A-15
6.3 Capital Stock................................................................ A-15
6.4 Financial Statements......................................................... A-15
6.5 Absence of Undisclosed Liabilities........................................... A-16
6.6 Absence of Certain Changes or Events......................................... A-16
</TABLE>
A-2
<PAGE> 61
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
6.7 Compliance With Laws......................................................... A-16
6.8 Legal Proceedings............................................................ A-16
6.9 Statements True and Correct.................................................. A-16
6.10 Tax and Regulatory Matters................................................... A-17
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION................................ A-17
7.1 Affirmative Covenants of First Community..................................... A-17
7.2 Negative Covenants of First Community........................................ A-17
7.3 Covenants of FAB............................................................. A-19
7.4 Adverse Changes in Condition................................................. A-19
7.5 Reports...................................................................... A-19
ARTICLE 8 -- ADDITIONAL AGREEMENTS................................................... A-19
8.1 Registration Statement; Proxy Statement; Shareholder Approval................ A-19
8.2 Exchange Listing............................................................. A-19
8.3 Applications................................................................. A-19
8.4 Filings with State Offices................................................... A-20
8.5 Agreement as to Efforts to Consummate........................................ A-20
8.6 Investigation and Confidentiality............................................ A-20
8.7 Press Releases............................................................... A-20
8.8 Certain Actions.............................................................. A-20
8.9 Tax Treatment................................................................ A-21
8.10 Agreements of Affiliates..................................................... A-21
8.11 Employee Benefits and Contracts.............................................. A-21
8.12 Indemnification.............................................................. A-21
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE....................... A-22
9.1 Conditions to Obligations of Each Party...................................... A-22
9.2 Conditions to Obligations of FAB............................................. A-23
9.3 Conditions to Obligations of First Community................................. A-24
ARTICLE 10 -- TERMINATION............................................................ A-24
10.1 Termination.................................................................. A-24
10.2 Effect of Termination........................................................ A-25
10.3 Non-Survival of Representations and Covenants................................ A-25
ARTICLE 11 -- MISCELLANEOUS.......................................................... A-25
11.1 Definitions.................................................................. A-25
11.2 Expenses..................................................................... A-30
11.3 Brokers and Finders.......................................................... A-30
11.4 Entire Agreement............................................................. A-30
11.5 Amendments................................................................... A-31
11.6 Waivers...................................................................... A-31
11.7 Assignment................................................................... A-31
11.8 Notices...................................................................... A-31
11.9 Governing Law................................................................ A-32
11.10 Counterparts................................................................. A-32
11.11 Captions..................................................................... A-32
11.12 Enforcement of Agreement..................................................... A-32
11.13 Severability................................................................. A-32
Signatures........................................................................... A-33
</TABLE>
A-3
<PAGE> 62
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<S> <C>
1. Form of Directors' Agreement. (Section 5.17).
2. Form of agreement of affiliates of First Community. (Section 8.10, 9.2(f)).
3. Matters as to which Hine, Niedrach & McClellan, P.C. will opine. (Section 9.2(d)).
4. Form of Claims Letter (Section 9.2(g)).
5. Matters as to which Lange, Simpson, Robinson & Somerville will opine. (Section
9.3(d)).
</TABLE>
A-4
<PAGE> 63
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of April 12, 1994, by and between FIRST COMMUNITY BANCSHARES, INC.
("First Community"), a corporation organized and existing under the laws of the
State of Georgia, with its principal office located in Rome, Georgia; and FIRST
ALABAMA BANCSHARES, INC. ("FAB"), a corporation organized and existing under the
laws of the State of Delaware, with its principal office located in Birmingham,
Alabama.
PREAMBLE
The Boards of Directors of First Community and FAB are of the opinion that
the transactions described herein are in the best interests of the parties and
their respective shareholders. This Agreement provides for the acquisition of
First Community by FAB pursuant to the merger of First Community into and with
FAB. At the effective time of such merger, the outstanding shares of the capital
stock of First Community shall be converted into shares of the common stock of
FAB (except as provided herein). As a result, shareholders of First Community
shall become shareholders of FAB and each of the subsidiaries of First Community
shall continue to conduct its business and operations as a wholly owned
subsidiary of FAB. The transactions described in this Agreement are subject to
the approvals of the shareholders of First Community, the Board of Governors of
the Federal Reserve System, and the appropriate state regulatory authorities and
the satisfaction of certain other conditions described in this Agreement. It is
the intention of the parties to this Agreement that the merger for federal
income tax purposes shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, First Community shall be merged into and with FAB in accordance
with the provisions of Sections 14-2-1107 and 14-2-1103 of the GBCC and with the
effect provided in Section 14-2-1106 of the GBCC and of Section 258 of the DGCL
and with the effect provided in Section 259 of the DGCL (the "Merger"). FAB
shall be the Surviving Corporation of the Merger and shall continue to be
governed by the Laws of the State of Delaware. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the Boards of Directors of First Community and FAB.
1.2 Time and Place of Closing. The Closing will take place at 9:00 A.M. on
the date that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their chief executive officers or chief financial officers, may
mutually agree. The place of Closing shall be at the offices of FAB, in
Birmingham, Alabama, or such other place as may be mutually agreed upon by the
Parties.
1.3 Effective Time. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Georgia
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Georgia and the Delaware Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Delaware (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the chief
executive officers or chief financial officers of each Party, the Parties shall
use their reasonable efforts to cause the Effective Time to occur on the last
business day of the month in which occurs the last to occur of (i) the effective
date (including expiration of any applicable waiting period) of the last
required Consent of any Regulatory Authority having authority over and approving
or exempting the Merger, and (ii) the date on
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which the shareholders of First Community approve this Agreement to the extent
such approval is required by applicable Law; or such later date within 30 days
thereof as may be specified by FAB.
ARTICLE 2
TERMS OF MERGER
2.1 Certificate of Incorporation. The Certificate of Incorporation of FAB
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation after the Effective Time until
otherwise amended or repealed.
2.2 Bylaws. The Bylaws of FAB in effect immediately prior to the Effective
Time shall be the Bylaws of the Surviving Corporation after the Effective Time
until otherwise amended or repealed.
2.3 Directors and Officers. The directors of FAB in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of FAB in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be elected, shall
serve as the officers of the Surviving Corporation from and after the Effective
Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of FAB Common Stock issued and outstanding immediately
prior to the Effective Time shall remain issued and outstanding from and
after the Effective Time.
(b) Each share of First Community Common Stock (excluding shares held
by First Community or any of its Subsidiaries or by FAB or any of its
Subsidiaries, in each case other than in a fiduciary capacity or as a
result of debts previously contracted, and excluding shares held by
shareholders who perfect their dissenters' rights of appraisal as provided
in Section 3.4 of this Agreement) issued and outstanding at the Effective
Time shall be converted into .95 of a share of FAB Common Stock (the
"Exchange Ratio").
3.2 Anti-dilution Provisions. In the event First Community changes the
number of shares of First Community Common Stock issued and outstanding prior to
the Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted. In the event FAB changes the number of shares of FAB
Common Stock issued and outstanding prior to the Effective Time as a result of a
stock split, stock dividend, or similar recapitalization with respect to such
stock and the record date therefor (in the case of a stock dividend) or the
effective date thereof (in the case of a stock split or similar recapitalization
for which a record date is not established) shall be prior to the Effective
Time, the Exchange Ratio shall be proportionately adjusted.
3.3 Shares Held by First Community or FAB. Each of the shares of First
Community Common Stock held by any First Community Company or by any FAB
Company, in each case other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
3.4 Dissenting Shareholders. Any holder of shares of First Community
Common Stock who perfects such holder's dissenters' rights of appraisal in
accordance with and as contemplated by Section 14-2-1106 of the GBCC shall be
entitled to receive the value of such shares in cash as determined pursuant to
such
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provision of Law; provided, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has complied with the
applicable provisions of the GBCC and surrendered to First Community the
certificate or certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting shareholder of
First Community fails to perfect, or effectively withdraws or loses, his right
to appraisal and of payment for his shares, FAB shall issue and deliver the
consideration to which such holder of shares of First Community Common Stock is
entitled under this Article 3 (without interest) upon surrender by such holder
of the certificate or certificates representing shares of First Community Common
Stock held by him.
3.5 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of First Community Common Stock exchanged
pursuant to the Merger, or of options to purchase shares of First Community
Common Stock, who would otherwise have been entitled to receive a fraction of a
share of FAB Common Stock (after taking into account all certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of FAB Common Stock multiplied
by the market value of one share of FAB Common Stock at the Effective Time, in
the case of shares exchanged pursuant to the Merger, or the date of exercise, in
the case of options. The market value of one share of FAB Common Stock at the
Effective Time or the date of exercise, as the case may be, shall be the last
sale price of such common stock on the NASDAQ/NMS (as reported by The Wall
Street Journal or, if not reported thereby, any other authoritative source) on
the last trading day preceding the Effective Time, in the case of shares
exchanged pursuant to the Merger, and the date of exercise, in the case of
options. No such holder will be entitled to dividends, voting rights, or any
other rights as a shareholder in respect of any fractional shares.
3.6 Conversion of Stock Options; Restricted Stock.
(a) At the Effective Time, all rights with respect to First Community
Common Stock pursuant to stock options or stock appreciation rights ("First
Community Options") granted by First Community under the First Community
Stock Plans, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to FAB
Common Stock, and FAB shall assume each First Community Option, in
accordance with the terms of the First Community Stock Plan and stock
option agreement by which it is evidenced. From and after the Effective
Time, (i) each First Community Option assumed by FAB may be exercised
solely for shares of FAB Common Stock (or cash in the case of stock
appreciation rights), (ii) the number of shares of FAB Common Stock subject
to such First Community Option shall be equal to the number of shares of
First Community Common Stock subject to such First Community Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
and (iii) the per share exercise price under each such First Community
Option shall be adjusted by dividing the per share exercise price under
each such First Community Option by the Exchange Ratio and rounding down to
the nearest cent. It is intended that the foregoing assumption shall be
undertaken in a manner that will not constitute a "modification" as defined
in Section 424 of the Internal Revenue Code, as to any stock option which
is an "incentive stock option." First Community agrees to take all
necessary steps to effectuate the foregoing provisions of this Section 3.6.
(b) All restrictions or limitations on transfer with respect to First
Community Common Stock awarded under the First Community Stock Plans or any
other plan, program, or arrangement of any First Community Company, to the
extent that such restrictions or limitations shall not have already lapsed,
and except as otherwise expressly provided in such plan, program, or
arrangement, shall remain in full force and effect with respect to shares
of FAB Common Stock into which such restricted stock is converted pursuant
to Section 3.1 of this Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time, FAB and First
Community shall cause the exchange agent selected by FAB (the "Exchange Agent")
to mail to the former shareholders of First
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Community appropriate transmittal materials (which shall specify that delivery
shall be effected, and risk of loss and title to the certificates theretofore
representing shares of First Community Common Stock shall pass, only upon proper
delivery of such certificates to the Exchange Agent). After the Effective Time,
each holder of shares of First Community Common Stock (other than shares to be
canceled pursuant to Section 3.3 of this Agreement or as to which dissenters'
rights of appraisal have been perfected as provided in Section 3.4 of this
Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Agreement. To the extent
required by Section 3.5 of this Agreement, each holder of shares of First
Community Common Stock issued and outstanding at the Effective Time also shall
receive, upon surrender of the certificate or certificates representing such
shares, cash in lieu of any fractional share of FAB Common Stock to which such
holder may be otherwise entitled (without interest). FAB shall not be obligated
to deliver the consideration to which any former holder of First Community
Common Stock is entitled as a result of the Merger until such holder surrenders
his certificate or certificates representing the shares of First Community
Common Stock for exchange as provided in this Section 4.1. The certificate or
certificates of First Community Common Stock so surrendered shall be duly
endorsed as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, neither FAB, First Community, nor the Exchange Agent
shall be liable to a holder of First Community Common Stock for any amounts paid
or property delivered in good faith to a public official pursuant to any
applicable abandoned property Law.
4.2 Rights of Former First Community Shareholders. At the Effective Time,
the stock transfer books of First Community shall be closed as to holders of
First Community Common Stock immediately prior to the Effective Time and no
transfer of First Community Common Stock by any such holder shall thereafter be
made or recognized. Until surrendered for exchange in accordance with the
provisions of Section 4.1 of this Agreement, each certificate theretofore
representing shares of First Community Common Stock (other than shares to be
canceled pursuant to Sections 3.3 and 3.4 of this Agreement) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 3.1 and 3.5 of this Agreement in exchange
therefor. To the extent permitted by Law, former shareholders of record of First
Community shall be entitled to vote after the Effective Time at any meeting of
FAB shareholders the number of whole shares of FAB Common Stock into which their
respective shares of First Community Common Stock are converted, regardless of
whether such holders have exchanged their certificates representing First
Community Common Stock for certificates representing FAB Common Stock in
accordance with the provisions of this Agreement. Whenever a dividend or other
distribution is declared by FAB on the FAB Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include dividends
or other distributions on all shares issuable pursuant to this Agreement, but no
dividend or other distribution payable to the holders of record of FAB Common
Stock as of any time subsequent to the Effective Time shall be delivered to the
holder of any certificate representing shares of First Community Common Stock
issued and outstanding at the Effective Time until such holder surrenders such
certificate for exchange as provided in Section 4.1 of this Agreement. However,
upon surrender of such First Community Common Stock certificate, both the FAB
Common Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered cash payments to be paid for
fractional share interests (without interest) shall be delivered and paid with
respect to each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FIRST COMMUNITY
First Community hereby represents and warrants to FAB as follows:
5.1 Organization, Standing, and Power. First Community is a corporation
duly organized and validly existing, and in good standing under the Laws of the
State of Georgia, and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its material Assets.
First
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Community is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First Community.
5.2 Authority; No Breach by Agreement.
(a) First Community has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery,
and performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of First Community, subject to the approval of this Agreement by the
holders of a majority of the outstanding First Community Common Stock,
which is the only shareholder vote required for approval of this Agreement
and consummation of the Merger by First Community. Subject to such
requisite shareholder approval, this Agreement represents a legal, valid,
and binding obligation of First Community, enforceable against First
Community in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by First
Community, nor the consummation by First Community of the transactions
contemplated hereby, nor compliance by First Community with any of the
provisions hereof, will (i) conflict with or result in a breach of any
provision of First Community's Articles of Incorporation or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant
to, or result in the creation of any Lien on any Asset of any First
Community Company under, any Contract or Permit of any First Community
Company, where such Default or Lien, or any failure to obtain such Consent,
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on First Community, or, (iii) subject to receipt of the
requisite approvals referred to in Section 9.1(b) of this Agreement,
violate any Law or Order applicable to any First Community Company or any
of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules
of the NYSE and the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents,
filings, or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on First Community, no notice to, filing with, or Consent
of, any public body or authority is necessary for the consummation by First
Community of the Merger and the other transactions contemplated in this
Agreement.
5.3 Capital Stock. The authorized capital stock of First Community
consists of (i) 5,000,000 shares of First Community Common Stock, of which
699,909 shares are issued and outstanding as of the date of this Agreement and
not more than 779,641 shares will be issued and outstanding at the Effective
Time and (ii) 5,000,000 shares of First Community Preferred Stock, of which no
shares are issued and outstanding as of the date of this Agreement. All of the
issued and outstanding shares of capital stock of First Community are duly and
validly issued and outstanding and are fully paid and nonassessable under the
GBCC. None of the outstanding shares of capital stock of First Community has
been issued in violation of any preemptive rights of the current or past
shareholders of First Community. First Community has reserved 200,000 shares of
First Community Common Stock for issuance under the First Community Stock Plans,
pursuant to which options to purchase not more than 79,732 shares of First
Community Common Stock are outstanding. Except as set forth above or as
disclosed in Section 5.3 of the First Community Disclosure Memorandum, there are
no shares of capital stock or other equity securities of First Community
outstanding and no outstanding Rights relating to the capital stock of First
Community.
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5.4 First Community Subsidiaries. First Community has disclosed in Section
5.4 of the First Community Disclosure Memorandum all of the First Community
Subsidiaries as of the date of this Agreement. Except as disclosed in Section
5.4 of the First Community Disclosure Memorandum, First Community or one of its
Subsidiaries owns all of the issued and outstanding shares of capital stock of
each First Community Subsidiary. No equity securities of any First Community
Subsidiary are or may become required to be issued (other than to another First
Community Company) by reason of any Rights, and there are no Contracts by which
any First Community Subsidiary is bound to issue (other than to another First
Community Company) additional shares of its capital stock or Rights or by which
any First Community Company is or may be bound to transfer any shares of the
capital stock of any First Community Subsidiary (other than to another First
Community Company). There are no Contracts relating to the rights of any First
Community Company to vote or to dispose of any shares of the capital stock of
any First Community Subsidiary. All of the shares of capital stock of each First
Community Subsidiary held by a First Community Company are fully paid and
(except pursuant to 12 USC Section 55 in the case of national banks and
comparable, applicable state Law, if any, in the case of state depository
institutions) nonassessable under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the First Community Company free and clear of any Lien. Each First Community
Subsidiary is either a bank, a savings association, or a corporation, and is
duly organized, validly existing, and (as to corporations) in good standing
under the Laws of the jurisdiction in which it is incorporated or organized, and
has the corporate power and authority necessary for it to own, lease, and
operate its Assets and to carry on its business as now conducted. Each First
Community Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First Community. Each First Community Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Bank Insurance Fund or the Savings Association Insurance
Fund, as appropriate.
5.5 Financial Statements. First Community has included in Section 5.5 of
the First Community Disclosure Memorandum copies of all First Community
Financial Statements for periods ended prior to the date hereof and will deliver
to FAB copies of all First Community Financial Statements prepared subsequent to
the date hereof. The First Community Financial Statements (as of the dates
thereof and for the periods covered thereby) (i) are or, if dated after the date
of this Agreement, will be in accordance with the books and records of the First
Community Companies, which are or will be, as the case may be, complete and
correct and which have been or will have been, as the case may be, maintained in
accordance with good business practices, and (ii) present or will present, as
the case may be, fairly the consolidated financial position of the First
Community Companies as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows of the First
Community Companies for the periods indicated, in accordance with GAAP (subject
to any exceptions as to consistency specified therein or as may be indicated in
the notes thereto or, in the case of interim financial statements, to normal
recurring year-end adjustments that are not material in amount of effect).
5.6 Absence of Undisclosed Liabilities. No First Community Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First Community, except Liabilities
which are accrued or reserved against in the consolidated balance sheets of
First Community as of December 31, 1993 included in the First Community
Financial Statements or reflected in the notes thereto. No First Community
Company has incurred or paid any Liability since December 31, 1993, except for
such Liabilities incurred or paid in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First Community.
5.7 Absence of Certain Changes or Events. Since December 31, 1993, except
as disclosed in Section 5.7 of the First Community Disclosure Memorandum, (i)
there have been no events, changes, or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on
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First Community, and (ii) the First Community Companies have not taken any
action, or failed to take any action, prior to the date of this Agreement, which
action or failure, if taken after the date of this Agreement, would represent or
result in a material breach or violation of any of the covenants and agreements
of First Community provided in Article 7 of this Agreement.
5.8 Tax Matters.
(a) All Tax returns required to be filed by or on behalf of any of the
First Community Companies have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on
or before December 31, 1993, and on or before the date of the most recent
fiscal year end immediately preceding the Effective Time, and all returns
filed are complete and accurate to the Knowledge of First Community. All
Taxes shown on filed returns have been paid. There is no audit examination,
deficiency, refund Litigation, or penalties owed with respect to any Taxes,
except as reserved against in the First Community Financial Statements
delivered prior to the date of this Agreement or as disclosed in Section
5.8 of the First Community Disclosure Memorandum. All Taxes and other
Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
(b) None of the First Community Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due for any of
the First Community Companies for the period or periods through and
including the date of the respective First Community Financial Statements
has been made and is reflected on such First Community Financial
Statements.
(d) Deferred Taxes of the First Community Companies have been provided
for in accordance with GAAP.
(e) Each of the First Community Companies is in compliance with, and
its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable
information reporting and Tax withholding requirements under federal,
state, and local Tax Laws, and such records identify with specificity all
accounts subject to backup withholding under Section 3406 of the Internal
Revenue Code.
5.9 Environmental Matters.
(a) To the Knowledge of First Community, each First Community Company,
its Participation Facilities, and its Loan Properties are, and have been,
in compliance with all Environmental Laws, except for such instances of
non-compliance that are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on First Community.
(b) To the Knowledge of First Community, there is no Litigation
pending or threatened before any court, governmental agency, or authority
or other forum in which any First Community Company or any of its Loan
Properties or Participation Facilities has been or, with respect to
threatened Litigation, may be named as a defendant or potentially
responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release
into the environment of any Hazardous Material, whether or not occurring
at, on, under, or involving a site owned, leased, or operated by any First
Community Company or any of its Loan Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on First Community, and to the Knowledge of First Community,
there is no reasonable basis for any such Litigation.
(c) To the Knowledge of First Community, there have been no releases
of Hazardous Material in, on, under, or affecting any Participation
Facility, or Loan Property, except such as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on First
Community.
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5.10 Compliance with Laws. First Community is duly registered as a bank
holding company under the BHC Act. Each First Community Company has in effect
all Permits necessary for it to own, lease, or operate its material Assets and
to carry on its business as now conducted, and there has occurred no Default
under any such Permit. Except as disclosed in Section 5.10 of the First
Community Disclosure Memorandum, none of the First Community Companies:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First Community; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any First Community
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First Community, (ii) threatening
to revoke any Permits, or (iii) requiring any First Community Company to
enter into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding, or to
adopt any Board resolution or similar undertaking, which restricts
materially the conduct of its business, or in any manner relates to its
capital adequacy, its credit or reserve policies, its management, or the
payment of dividends.
5.11 Employee Benefit Plans.
(a) First Community has disclosed in Section 5.11 of the First
Community Disclosure Memorandum, and has delivered or made available to FAB
prior to the execution of this Agreement copies in each case of, all
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus, or other
incentive plan, all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit
plans, including "employee benefit plans" as that term is defined in
Section 3(3) of ERISA, currently adopted, maintained by, sponsored in whole
or in part by, or contributed to, by any First Community Company or
Affiliate thereof for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries and
under which employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries are eligible to participate
(collectively, the "First Community Benefit Plans"). Any of the First
Community Benefit Plans which is an "employee pension benefit plan," as
that term is defined in Section 3(2) of ERISA, is referred to herein as a
"First Community ERISA Plan." Each First Community ERISA Plan which is also
a "defined benefit plan" (as defined in Section 414(j) of the Internal
Revenue Code) is referred to herein as a "First Community Pension Plan." No
First Community Pension Plan is or has been a multiemployer plan within the
meaning of Section 3(37) of ERISA.
(b) All First Community Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on First
Community. No First Community Company has engaged in a transaction with
respect to any First Community Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject any
First Community Company to a tax or penalty imposed by either Section 4975
of the Internal Revenue Code or Section 502(i) of ERISA.
(c) Except as disclosed in Section 5.11(c) of the First Community
Disclosure Memorandum, no First Community Pension Plan has any "unfunded
current liability," as that term is defined in Section 302(d)(8)(A) of
ERISA, and the fair market value of the assets of any such plan exceeds the
plan's "benefit liabilities," as that term is defined in Section
4001(a)(16) of ERISA, when determined under actuarial factors that would
apply if the plan terminated in accordance with all applicable legal
requirements. Since the date of the most recent actuarial valuation, there
has been (i) no material change in the financial position of any First
Community Pension Plan, (ii) no change in the actuarial
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assumptions with respect to any First Community Pension Plan, and (iii) no
increase in benefits under any First Community Pension Plan as a result of
plan amendments or changes in applicable Law which is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on First
Community or materially adversely affect the funding status of any such
plan. Neither any First Community Pension Plan nor any "single-employer
plan," within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any First Community Company, or the single-employer
plan of any entity which is considered one employer with First Community
under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (an "ERISA Affiliate") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA. No First Community Company
has provided, or is required to provide, security to a First Community
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Code.
(d) No Liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by any First Community Company with respect
to any ongoing, frozen, or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate. No First Community Company has
incurred any withdrawal Liability with respect to a multiemployer plan
under Subtitle B of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate). No notice of a "reportable event,"
within the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
First Community Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof.
(e) Except as disclosed in Section 5.11 of the First Community
Disclosure Memorandum, no First Community Company has any Liability for
retiree health and life benefits under any of the First Community Benefit
Plans and there are no restrictions on the rights of such First Community
Company to amend or terminate any such Plan without incurring any Liability
thereunder.
(f) Except as disclosed in Section 5.11 of the First Community
Disclosure Memorandum, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including severance, unemployment compensation,
golden parachute, or otherwise) becoming due to any director or any
employee of any First Community Company from any First Community Company
under any First Community Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any First Community Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any such
benefit.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any First Community Company and their respective
beneficiaries, other than entitlements accrued pursuant to funded
retirement plans subject to the provisions of Section 412 of the Internal
Revenue Code or Section 302 of ERISA, have been fully reflected on the
First Community Financial Statements to the extent required by and in
accordance with GAAP.
5.12 Material Contracts. Except as disclosed in Section 5.12 of the First
Community Disclosure Memorandum or otherwise reflected in the First Community
Financial Statements, none of the First Community Companies, nor any of their
respective Assets, businesses, or operations, is a party to, or is bound or
affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000, (ii) any Contract
relating to the borrowing of money by any First Community Company or the
guarantee by any First Community Company of any such obligation (other than
Contracts evidencing deposit liabilities, purchases of federal funds,
fully-secured repurchase agreements, and Federal Home Loan Bank advances of
depository institution Subsidiaries, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), (iii) any
Contracts between or among First Community Companies, and (iv) any other
Contract or amendment thereto that would be required to be filed as an exhibit
to a Form 10-K filed by First Community with the SEC as of the date of this
Agreement that has not been filed as an exhibit to First Community's Form 10-K
filed for the fiscal year ended December 31, 1993 (together with all
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Contracts referred to in Section 5.11(a) of this Agreement, the "First Community
Contracts"). None of the First Community Companies is in Default under any First
Community Contract. All of the indebtedness of any First Community Company for
money borrowed is prepayable at any time by such First Community Company without
penalty or premium.
5.13 Legal Proceedings. Except as disclosed in Section 5.13 of the First
Community Disclosure Memorandum, there is no Litigation instituted or pending,
or, to the Knowledge of First Community, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any First Community
Company, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First Community, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any First Community Company. Section 5.13 of the First Community Disclosure
Memorandum includes a summary report of all Litigation as of the date of this
Agreement to which any First Community Company is a party and which names a
First Community Company as a defendant or cross-defendant.
5.14 Statements True and Correct. No statement, certificate, instrument,
or other writing furnished or to be furnished by any First Community Company or
any Affiliate thereof to FAB pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, each report and other
document, including financial statements, exhibits, and schedules thereto, filed
by a First Community Company with any Regulatory Authority complied in all
material respects with all applicable Laws, and as of its respective date, each
such report and document did not, in all material respects, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. All documents that any
First Community Company or any Affiliate thereof is responsible for filing with
any Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.15 Tax and Regulatory Matters. No First Community Company or any
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede receipt of any Consents of Regulatory Authorities referred to
in Section 9.1(b) of this Agreement or result in the imposition of a condition
or restriction of the type referred to in the last sentence of such Section.
5.16 State Takeover Laws. To the extent applicable, each First Community
Company has taken all necessary action to exempt the transactions contemplated
by this Agreement from any applicable state takeover Law, including Parts 2 and
3 of Article 11 of the GBCC.
5.17 Directors' Agreements. Each of the directors of First Community has
executed and delivered to FAB an agreement in substantially the form of Exhibit
1.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF FAB
FAB hereby represents and warrants to First Community as follows:
6.1 Organization, Standing, and Power. FAB is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its material Assets. FAB is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be
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so qualified or licensed, except for such jurisdictions in which the failure to
be so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on FAB.
6.2 Authority; No Breach by Agreement.
(a) FAB has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of FAB. This Agreement represents a legal, valid, and binding obligation of
FAB, enforceable against FAB in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding may be
brought).
(b) Neither the execution and delivery of this Agreement by FAB, nor
the consummation by FAB of the transactions contemplated hereby, nor
compliance by FAB with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of FAB's Certificate of
Incorporation or Bylaws, or (ii) constitute or result in a Default under,
or require any Consent pursuant to, or result in the creation of any Lien
on any Asset of any FAB Company under, any Contract or Permit of any FAB
Company, where such Default or Lien, or any failure to obtain such Consent,
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FAB, or, (iii) subject to receipt of the requisite
approvals referred to in Section 9.1(b) of this Agreement, violate any Law
or Order applicable to any FAB Company or any of their respective material
Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules
of the NYSE and the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents,
filings, or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FAB, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by FAB of the Merger
and the other transactions contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of FAB consists of
60,000,000 shares of FAB Common Stock, of which 41,049,325 shares were issued
and outstanding and 1,470,700 shares were held as treasury shares as of December
31, 1993. All of the issued and outstanding shares of FAB Common Stock are, and
all of the shares of FAB Common Stock to be issued in exchange for shares of
First Community Common Stock upon consummation of the Merger, when issued in
accordance with the terms of this Agreement, will be, duly and validly issued
and outstanding, and fully paid and nonassessable under the DGCL. None of the
outstanding shares of FAB Common Stock has been, and none of the shares of FAB
Common Stock to be issued in exchange for shares of First Community Common Stock
upon consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past shareholders of FAB.
6.4 Financial Statements. FAB has disclosed in Section 6.4 of the FAB
Disclosure Memorandum all FAB Financial Statements for periods ended prior to
the date hereof and will deliver to First Community copies of all FAB Financial
Statements prepared subsequent to the date hereof. The FAB Financial Statements
(as of the dates thereof and for the periods covered thereby) (i) are or, if
dated after the date of this Agreement, will be in accordance with the books and
records of the FAB Companies, which are or will be, as the case may be, complete
and correct and which have been or will have been, as the case may be,
maintained in accordance with good business practices, and (ii) present or will
present, as the case may be, fairly the consolidated financial position of the
FAB Companies as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows of the FAB Companies
for the periods indicated, in accordance with GAAP (subject to exceptions as to
consistency specified therein or as may be
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indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year-end adjustments that are not material in amount or
effect).
6.5 Absence of Undisclosed Liabilities. No FAB Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FAB, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of FAB as of December 31, 1993, included in
the FAB Financial Statements or reflected in the notes thereto. No FAB Company
has incurred or paid any Liability since December 31, 1993, except for such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on FAB.
6.6 Absence of Certain Changes or Events. Since December 31, 1993, except
as disclosed in the FAB Financial Statements delivered prior to the date of this
Agreement, (i) there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FAB, and (ii) the FAB Companies have not taken any
action, or failed to take any action, prior to the date of this Agreement, which
action or failure, if taken after the date of this Agreement would represent or
result in a material breach or violation of any of the covenants and agreements
of FAB provided in Article 7 of this Agreement.
6.7 Compliance with Laws. FAB is duly registered as a bank holding company
under the BHC Act. Each FAB Company has in effect all Permits necessary for it
to own, lease, or operate its material Assets and to carry on its business as
now conducted, and there has occurred no Default under any such Permit, other
than Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FAB. No FAB Company:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FAB; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any FAB Company is not in
compliance with any of the Laws or Orders which such governmental authority
or Regulatory Authority enforces, where such noncompliance is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on FAB, (ii) threatening to revoke any Permits, or (iii) requiring any FAB
Company to enter into or consent to the issuance of a cease and desist
order, formal agreement, directive, commitment or memorandum of
understanding, or to adopt any Board resolution or similar undertaking,
which restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
6.8 Legal Proceedings. There is no Litigation instituted or pending, or,
to the Knowledge of FAB, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any FAB Company, or against any Asset, interest,
or right of any of them, that is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on FAB, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any FAB Company, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FAB.
6.9 Statements True and Correct. No statement, certificate, instrument, or
other writing furnished or to be furnished by any FAB Company or any Affiliate
thereof to First Community pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, each report and other
document, including financial statements, exhibits, and schedules thereto, filed
by a FAB Company with any Regulatory Authority complied in all material respects
with all applicable Laws, and as of its respective date, each such report and
document did not, in all material respects, contain any untrue statement of a
material
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fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
6.10 Tax and Regulatory Matters. No FAB Company or any Affiliate thereof
has taken any action or has any Knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the transactions contemplated hereby, including
the Merger, from qualifying as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, or (ii) materially impede receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of First Community. Unless the prior written
consent of FAB shall have been obtained, and except as otherwise expressly
contemplated herein, First Community shall and shall cause each of its
Subsidiaries to, from the date of this Agreement until the Effective Time or
termination of this Agreement, (i) operate its business only in the usual,
regular, and ordinary course, (ii) preserve intact its business organization and
Assets and maintain its rights and franchises, and (iii) take no action which
would (x) adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c) of this Agreement, or (y) adversely affect the ability
of any Party to perform its covenants and agreements under this Agreement.
7.2 Negative Covenants of First Community. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
First Community covenants and agrees that it will not do or agree or commit to
do, or permit any of its Subsidiaries to do or agree or commit to do, any of the
following without the prior written consent of the chief executive officer,
president, or chief financial officer of FAB, which consent shall not be
unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any First Community Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a First Community Company to
another First Community Company) in excess of an aggregate of $50,000 (for
the First Community Companies on a consolidated basis) except in the
ordinary course of the business of First Community Subsidiaries consistent
with past practices (which shall include, for First Community Subsidiaries
that are depository institutions, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank or
Federal Home Loan Bank, and entry into repurchase agreements fully secured
by U.S. government or agency securities), or impose, or suffer the
imposition, on any Asset of any First Community Company of any Lien or
permit any such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan"
accounts established in the ordinary course of business, the satisfaction
of legal requirements in the exercise of trust powers, and Liens in effect
as of the date hereof that are disclosed in the First Community Disclosure
Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of any First Community Company, or declare or pay any
dividend or make any other distribution in respect of First Community's
capital stock, provided that First Community (to the extent legally and
contractually permitted to do so, but shall not be obligated to, declare
and pay regular quarterly cash dividends on the shares of First Community
Common Stock at a rate not in excess of $.16 per share with usual and
regular record and payment dates in accordance with past practice as
disclosed in Section 7.2(c) of the First Community Disclosure Memorandum;
provided, that any dividend declared or payable on the shares of First
Community Common Stock for the quarterly period during which the Effective
Time occurs shall, unless otherwise agreed upon in writing by FAB and First
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Community, be declared (with a record date prior to the Effective Time)
only if the normal record date for payment of such quarterly dividend to
holders of FAB Common Stock is before the Effective Time; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof
in existence on the date hereof, or as disclosed in Section 7.2(d) of the
First Community Disclosure Memorandum, issue, sell, pledge, encumber,
authorize the issuance of, enter into any Contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of First Community Common Stock or any
other capital stock of any First Community Company, or any Rights to
acquire such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any
First Community Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of First Community
Common Stock, or sell, lease, mortgage, or otherwise dispose of or
otherwise encumber any shares of capital stock of any First Community
Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another First Community Company) or any Asset having a book
value in excess of $100,000 other than in the ordinary course of business
for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities or securities of like maturity or grade,
purchase any securities or make any material investment, either by purchase
of stock or securities, contributions to capital, Asset transfers, or
purchase of any Assets, in any Person other than a wholly owned First
Community Subsidiary, or otherwise acquire direct or indirect control over
any Person, other than in connection with (i) foreclosures in the ordinary
course of business, or (ii) acquisitions of control by a depository
institution Subsidiary in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any First Community Company, except in accordance with past
practice or previously approved by the Board of Directors of First
Community, in each case as disclosed in Section 7.2(g) of the First
Community Disclosure Memorandum or as required by Law; pay any severance or
termination pay or any bonus other than pursuant to written policies or
written Contracts in effect on the date of this Agreement and disclosed in
Section 7.2(g) of the First Community Disclosure Memorandum; and enter into
or amend any severance agreements with officers of any First Community
Company; grant any increase in fees or other increases in compensation or
other benefits to directors of any First Community Company except in
accordance with past practice disclosed in Section 7.2(g) of the First
Community Disclosure Memorandum; or except as disclosed in Section 7.2(g)
of the First Community Disclosure Memorandum, voluntarily accelerate the
vesting of any stock options or other stock-based compensation or employee
benefits; or
(h) enter into or amend any employment Contract between any First
Community Company and any Person (unless such amendment is required by Law)
that the First Community Company does not have the unconditional right to
terminate without Liability (other than Liability for services already
rendered), at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any First Community Company
or make any material change in or to any existing employee benefit plans of
any First Community Company other than any such change that is required by
Law or that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any First
Community Company for material money damages or restrictions upon the
operations of any First Community Company; or
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(l) modify, amend, or terminate any material Contract (including any
loan Contract with an Affiliate)or waive, release, compromise, or assign
any material rights or claims.
7.3 Covenants of Fab. From the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement, FAB covenants and
agrees that, except as disclosed in Section 7.3 of the FAB Disclosure
Memorandum, it shall (x) continue to conduct its business and the business of
its Subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the FAB Common Stock and the business prospects of the FAB
Companies and to the extent consistent therewith use all reasonable efforts to
preserve intact the FAB Companies' core businesses and goodwill with their
respective employees and the communities they serve, and (y) take no action
which would (i) materially adversely affect the ability of any Party to obtain
any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentences of Section 9.1(b) or 9.1(c) of this Agreement, or (ii) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement; provided, that the foregoing shall not prevent
any FAB Company from discontinuing or disposing of any of its Assets or business
if such action is, in the judgment of FAB, desirable in the conduct of the
business of FAB and its Subsidiaries.
7.4 Adverse Changes in Condition. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of it's representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval. At a
date determined by FAB in its sole discretion after execution of this Agreement,
FAB shall file the Registration Statement with the SEC, and shall use its
reasonable efforts to cause the Registration Statement to become effective under
the 1933 Act and take any action required to be taken under the applicable state
Blue Sky or securities Laws in connection with the issuance of the shares of FAB
Common Stock upon consummation of the Merger. First Community shall furnish all
information concerning it and the holders of its capital stock as FAB may
reasonably request in connection with such action. First Community shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. In connection with the Shareholders' Meeting, (i) First
Community shall mail the Proxy Statement to its shareholders, (ii) the Parties
shall furnish to each other all information concerning them that they may
reasonably request in connection with such Proxy Statement, (iii) the Board of
Directors of First Community shall recommend (subject to compliance with their
fiduciary duties as advised by counsel) to its shareholders the approval of this
Agreement, and (iv) the Board of Directors and officers of First Community shall
(subject to compliance with their fiduciary duties as advised by counsel) use
their reasonable efforts to obtain such shareholders' approval.
8.2 Exchange Listing. FAB shall use its reasonable efforts to list, prior
to the Effective Time, on the NASDAQ/NMS the shares of FAB Common Stock to be
issued to the holders of First Community Common Stock pursuant to the Merger.
8.3 Applications. FAB shall promptly prepare and file, and First Community
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consum-
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mate the transactions contemplated by this Agreement. FAB shall permit First
Community reasonable opportunity to review and comment upon such applications
prior to the filing thereof with the Regulatory Authorities.
8.4 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, FAB shall execute and file the Georgia Certificate
of Merger with the Secretary of State of the State of Georgia and FAB shall
execute and file the Delaware Certificate of Merger with the Secretary of State
of the State of Delaware in connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it
and its Subsidiaries and of their respective financial and legal conditions
as the other Party reasonably requests, provided that such investigation
shall be reasonably related to the transactions contemplated hereby and
shall not interfere unnecessarily with normal operations. First Community
shall cooperate with FAB in obtaining, at FAB's election and expense,
environmental audits of any or all of the properties owned or occupied by
First Community. No investigation by a Party shall affect the
representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to
it by the other Party concerning its and its Subsidiaries' businesses,
operations, and financial positions and shall not use such information for
any purpose except in furtherance of the transactions contemplated by this
Agreement. If this Agreement is terminated prior to the Effective Time,
each Party shall promptly return all documents and copies thereof, and all
work papers containing confidential information received from the other
Party.
8.7 Press Releases. Prior to the Effective Time, First Community and FAB
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 Certain Actions. Except with respect to this Agreement and the
transactions contemplated hereby, no First Community Company nor any Affiliate
thereof nor any investment banker, attorney, accountant, or other representative
(collectively, "Representatives") retained by any First Community Company shall
directly or indirectly solicit any Acquisition Proposal by any Person. Except to
the extent necessary to comply with the fiduciary duties of First Community's
Board of Directors, no First Community Company or any Affiliate or
Representative thereof shall furnish any non-public information that it is not
legally obligated to furnish, negotiate with respect to, or enter into any
Contract with respect to, any Acquisition Proposal, but First Community may
communicate information about such an Acquisition Proposal to its shareholders
if and to the extent that it is required to do so in order to comply with its
legal obligations. First Community shall promptly notify FAB orally and in
writing in the event that it receives any inquiry or proposal relating to any
such transaction. First Community shall (i) immediately cease and cause to be
terminated any existing
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activities, discussions, or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and (ii) direct and use its reasonable
efforts to cause all of its Representatives not to engage in any of the
foregoing.
8.9 Tax Treatment. Each of the Parties undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not, to qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 Agreement of Affiliates. First Community has disclosed in Section
8.10 of the First Community Disclosure Memorandum all Persons whom it reasonably
believes is an "affiliate" of First Community for purposes of Rule 145 under the
1933 Act. First Community shall use its reasonable efforts to cause each such
Person to deliver to FAB not later than 30 days prior to the Effective Time, a
written agreement, substantially in the form of Exhibit 2, providing that such
Person will not sell, pledge, transfer, or otherwise dispose of the shares of
First Community Common Stock held by such Person except as contemplated by such
agreement or by this Agreement and will not sell, pledge, transfer, or otherwise
dispose of the shares of FAB Common Stock to be received by such Person upon
consummation of the Merger except in compliance with applicable provisions of
the 1933 Act and the rules and regulations thereunder. FAB shall not be required
to maintain the effectiveness of the Registration Statement under the 1933 Act
for the purposes of resale of FAB Common Stock by such affiliates.
8.11 Employee Benefits and Contracts. Following the Effective Time, FAB
shall provide generally to officers and employees of the First Community
Companies employee benefits under employee benefit plans (other than stock
option or other plans involving the potential issuance of FAB Common Stock
except as set forth in Section 8.11 of this Agreement), on terms and conditions
which when taken as a whole are substantially similar to those currently
provided by the FAB Companies to their similarly situated officers and
employees. For purposes of participation and vesting (but not accrual of
benefits) under such employee benefit plans, the service of the employees of the
First Community Companies prior to the Effective Time shall be treated as
service with a FAB Company participating in such employee benefit plans. FAB
also shall cause First Community and its Subsidiaries to honor in accordance
with their terms all employment, severance, consulting, and other compensation
Contracts disclosed in Section 8.11 of the First Community Disclosure Memorandum
to FAB between any First Community Company and any current or former director,
officer, or employee thereof, and all provisions for vested benefits or other
vested amounts earned or accrued through the Effective Time under the First
Community Benefit Plans.
8.12 Indemnification.
(a) For a period of six years after the Effective Time, FAB shall, and
shall cause First Community to, indemnify, defend, and hold harmless the
present and former directors, officers, employees, and agents of the First
Community Companies (each, an "Indemnified Party") against all Liabilities
arising out of actions or omissions occurring at or prior to the Effective
Time (including the transactions contemplated by this Agreement) to the
full extent permitted under Georgia Law and by First Community's Articles
of Incorporation and Bylaws or any Contract providing for indemnification
as in effect on the date hereof, including provisions relating to advances
of expenses incurred in the defense of any Litigation. Without limiting the
foregoing, in any case in which approval by First Community is required to
effectuate any indemnification, FAB shall cause First Community to direct,
at the election of the Indemnified Party, that the determination of any
such approval shall be made by independent counsel mutually agreed upon
between FAB and the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 8.12, upon learning of any such Liability or
Litigation, shall promptly notify FAB thereof. In the event of any such
Litigation (whether arising before or after the Effective Time), (i) FAB or
First Community shall have the right to assume the defense thereof and FAB
shall not be liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
FAB or First Community elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between FAB or First Community and the
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Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and FAB or First Community shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; provided, that FAB shall be obligated
pursuant to this paragraph (b) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will
cooperate in the defense of any such Litigation, and (iii) FAB shall not be
liable for any settlement effected without its prior written consent; and
provided further that First Community shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become
final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(a) Shareholder Approval. The shareholders of First Community shall
have approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by
Law or by the provisions of any governing instruments.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to
the raising of additional capital or the disposition of Assets) which in
the reasonable judgment of the Board of Directors of FAB would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger. No Consent obtained from any Regulatory
Authority which is necessary to consummate the transactions contemplated
hereby shall condition or restrict the operations of First Community after
the Effective Time in a manner which in the reasonable judgment of the
Board of Directors of First Community would so materially adversely impact
the economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable the consummation of the Merger.
(c) Consents and Approvals. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of
any Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party. No Consent so obtained
which is necessary to consummate the transactions contemplated hereby shall
be conditioned or restricted in a manner which in the reasonable judgment
of the Board of Directors of FAB would so materially adversely impact the
economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable the consummation of the Merger.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act
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relating to the issuance or trading of the shares of FAB Common Stock
issuable pursuant to the Merger shall have been received.
(f) Exchange Listing. The shares of FAB Common Stock issuable
pursuant to the Merger shall have been approved for listing on the
NASDAQ/NMS.
(g) Tax Matters. Each Party shall have received a written opinion of
Alston & Bird, special counsel to FAB, in form reasonably satisfactory to
it (the "Tax Opinion"), to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) the exchange in the Merger of First Community Common Stock for
FAB Common Stock will not give rise to gain or loss to the shareholders of
First Community with respect to such exchange (except to the extent of any
cash received), and (iii) neither First Community nor FAB will recognize
gain or loss as a consequence of the Merger. In rendering such Tax Opinion,
counsel for FAB shall be entitled to rely upon representations of officers
of First Community and FAB reasonably satisfactory in form and substance to
such counsel.
9.2 Conditions to Obligations of Fab. The obligations of FAB to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by FAB pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. The representations and
warranties of First Community set forth or referred to in this Agreement
shall be true and correct in all respects as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date), except (i) as expressly
contemplated by this Agreement, or (ii) for representations and warranties
(other than the representations and warranties set forth in Section 5.3 of
this Agreement, which shall be true in all material respects) the
inaccuracies of which relate to matters that are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on First
Community.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of First Community to be performed and complied
with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and
complied with in all material respects.
(c) Certificates. First Community shall have delivered to FAB (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Sections 9.2(a) and 9.2(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by First Community's Board of Directors and
shareholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery, and performance of this Agreement, and
the consummation of the transactions contemplated hereby, all in such
reasonable detail as FAB and its counsel shall request.
(d) Opinion of Counsel. FAB shall have received an opinion of Hine,
Niedrach & McClellan, P.C., counsel to First Community, dated as of the
Effective Time, in form reasonably satisfactory to FAB, as to the matters
set forth in Exhibit 3.
(e) Accountant's Letters. FAB shall have received from Read, Martin,
Slickman & Sheats letters dated not more than five days prior to (i) the
date of the Proxy Statement and (ii) the Effective Time, with respect to
certain financial information regarding First Community, in form and
substance reasonably satisfactory to FAB, which letters shall be based upon
customary specified procedures undertaken by such firm.
(f) Affiliates Agreements. FAB shall have received from each
affiliate of First Community the affiliates letter referred to in Section
8.10 of this Agreement.
(g) Claims Letters. Each of the directors and officers of First
Community shall have executed and delivered to FAB letters in substantially
the form of Exhibit 4.
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9.3 Conditions to Obligations of First Community. The obligations of First
Community to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by First Community pursuant to Section
11.6(b) of this Agreement:
(a) Representations and Warranties. The representations and
warranties of FAB set forth or referred to in this Agreement shall be true
and correct in all respects as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 6.3 of this Agreement,
which shall be true in all material respects) the inaccuracies of which
relate to matters that are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on FAB.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of FAB to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(c) Certificates. FAB shall have delivered to First Community (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Sections 9.3(a) and 9.3(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by FAB's Board of Directors evidencing the taking
of all corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as First Community and
its counsel shall request.
(d) Opinion of Counsel. First Community shall have received an
opinion of Lange, Simpson, Robinson & Somerville, counsel to FAB, dated as
of the Effective Time, in form reasonably acceptable to First Community, as
to the matters set forth in Exhibit 5.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of First
Community, this Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time:
(a) By mutual consent of the Board of Directors of FAB and the Board
of Directors of First Community; or
(b) By the Board of Directors of either Party in the event of a
material breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within 30
days after the giving of written notice to the breaching Party of such
breach and which breach would provide the non-breaching Party the ability
to refuse to consummate the Merger under the standard set forth in Section
9.2(a) of this Agreement in the case of FAB and Section 9.3(a) of this
Agreement in the case of First Community; or
(c) By the Board of Directors of either Party in the event of a
material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching Party of such breach;
or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority
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is not appealed within the time limit for appeal, or (ii) the shareholders
of First Community fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the GBCC at the
Shareholders' Meeting where the transactions were presented to such
shareholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by March 31, 1995, if the failure to
consummate the transactions contemplated hereby on or before such date is
not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party in the event that any of
the conditions precedent to the obligations of such Party to consummate the
Merger cannot be satisfied or fulfilled by the date specified in Section
10.1(e) of this Agreement; or
(g) By the Board of Directors of FAB, at any time prior to the 31st
day after execution of this Agreement without any Liability in the event
that the review of the Assets, business, financial condition, results of
operations, and prospects of First Community undertaken by FAB during such
time period causes the Board of Directors of FAB to determine, in its
reasonable good faith judgment, that a fact or circumstance exists or is
likely to exist or result which materially and adversely impacts one or
more of the economic benefits to FAB of the transactions contemplated by
this Agreement so as to render inadvisable the consummation of the Merger.
10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant to
Section 10.1(b), 10.1(c), or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.
10.3 Non-survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions. Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"Acquisition Proposal" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or assets of, or other business combination involving such Party
or any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, such Party or any
of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by,
or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger, including
the Exhibits delivered pursuant hereto and incorporated herein by
reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly,
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in whole or in part, whether or not carried on the books and records of
such Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Closing" shall mean the closing of the transactions contemplated
hereby, as described in Section 1.2 of this Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, or undertaking of any kind or character, or other document to
which any Person is a party or that is binding on any Person or its capital
stock, Assets, or business.
"Default" shall mean (i) any breach or violation of or default under
any Contract, Order, or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of control or both would constitute a
breach or violation of or default under any Contract, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time
or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order, or Permit.
"Delaware Certificate of Merger" shall mean the Delaware Certificate
of Merger to be executed by FAB and filed with the Secretary of State of
the State of Delaware relating to the Merger as contemplated by Section 1.1
of this Agreement.
"DGCL" shall mean the General Corporation Law of Delaware.
"Effective Time" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.3 of this Agreement.
"Environmental Laws" shall mean all Laws pertaining to pollution or
protection of the environment and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over pollution or protection of the
environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning provided in Section 5.11 of
this Agreement.
"ERISA Plan" shall have the meaning provided in Section 5.11 of this
Agreement.
"Exchange Agent" shall have the meaning provided in Section 4.1 of
this Agreement.
"Exchange Ratio" shall have the meaning provided in Section 3.1(b) of
this Agreement.
"Exhibits" 1 through 5, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"FAB Common Stock" shall mean the $0.625 par value common stock of
FAB.
"FAB Companies" shall mean, collectively, FAB and all FAB
Subsidiaries.
"FAB Disclosure Memorandum" shall mean the written information
entitled "First Alabama Bancshares, Inc. Disclosure Memorandum" delivered
prior to the date of this Agreement to First Community describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such
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disclosure is being made. Information disclosed with respect to one Section
shall not be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"FAB Financial Statements" shall mean (i) the consolidated statements
of condition (including related notes and schedules, if any) of FAB as of
December 31, 1993 and 1992, and the related statements of income, changes
in shareholders' equity, and cash flows (including related notes and
schedules, if any) for each of the three years ended December 31, 1993,
1992, and 1991, as filed by FAB in SEC Documents and (ii) the consolidated
statements of condition of FAB (including related notes and schedules, if
any) and related statements of income, changes in shareholders' equity, and
cash flows (including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to December 31,
1993.
"FAB Subsidiaries" shall mean the Subsidiaries of FAB at the Effective
Time.
"First Community Benefit Plans" shall have the meaning set forth in
Section 5.11 of this Agreement.
"First Community Common Stock" shall mean the $1.00 par value common
stock of First Community.
"First Community Companies" shall mean, collectively, First Community
and all First Community Subsidiaries.
"First Community Disclosure Memorandum" shall mean the written
information entitled "First Community Bancshares, Inc. Disclosure
Memorandum" delivered prior to the date of this Agreement to FAB describing
in reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information disclosed
with respect to one Section shall not be deemed to be disclosed for
purposes of any other Section not specifically referenced with respect
thereto.
"First Community Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of First
Community as of December 31, 1993, 1992, and 1991, and the related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for each of the three
fiscal years ended December 31, 1993, 1992, and 1991, as filed by First
Community in SEC Documents, and (ii) the consolidated balance sheets of
First Community (including related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC Documents
filed with respect to periods ended subsequent to December 31, 1993.
"First Community Preferred Stock" shall mean the $1.00 par value
preferred stock of First Community.
"First Community Stock Plans" shall mean the existing stock options
and other stock-based compensation plans of First Community disclosed in
Section 11.1 of the First Community Disclosure Memorandum.
"First Community Subsidiaries" shall mean the Subsidiaries of First
Community, which shall include the First Community Subsidiaries described
in Section 5.4 of this Agreement and any corporation, bank, savings
association, or other organization acquired as a Subsidiary of First
Community in the future and owned by First Community at the Effective Time.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"Georgia Certificate of Merger" shall mean the Georgia Certificate of
Merger to be executed by FAB and filed with the Secretary of State of the
State of Georgia relating to the Merger as contemplated by Section 1.1 of
this Agreement.
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"Hazardous Material" shall mean any pollutant, contaminant, or toxic
or hazardous substance, pollutant, chemical, or waste within the meaning of
the Comprehensive Environment Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq., or any similar federal, state, or local Law
(and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities,
polychlorinated biphenyls, and petroleum and petroleum products).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR Act" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person shall mean the knowledge
of the chairman, president, chief financial officer, chief accounting
officer, chief credit officer, general counsel, any assistant or deputy
general counsel, or any senior or executive vice president of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities, or business, including those promulgated, interpreted,
or enforced by any of the Regulatory Authorities.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute, or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (ii) for depository institution
Subsidiaries of a Party, pledges to secure deposits, and other Liens
incurred in the ordinary course of the banking business.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative, or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information about a potential claim
relating to or affecting a Party, its business, its Assets (including
Contracts related to it), or the transactions contemplated by this
Agreement, but shall not include regular, periodic examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"Loan Property" shall mean any property owned by the Party in question
or by any of its Subsidiaries or in which such Party or Subsidiary 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.
"Material" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event, change, or
occurrence which, together with any other event, change, or occurrence, has
a material adverse impact on (i) the financial position, business, or
results of operations of such Party and its Subsidiaries, taken as a whole,
or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "material adverse impact"
shall not be deemed to include the impact of (x) changes in banking and
similar Laws of general applicability or
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interpretations thereof by courts or governmental authorities, or (y)
changes in GAAP or regulatory accounting principles generally applicable to
banks and savings associations and their holding companies.
"Merger" shall mean the merger of First Community into and with FAB
referred to in Section 1.1 of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ/NMS" shall mean the National Market System of the National
Association of Securities Dealers' Automated Quotations System.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"Participation Facility" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such
facility or property.
"Party" shall mean either First Community or FAB, and "PARTIES" shall
mean both First Community and FAB.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"Person" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
"Proxy Statement" shall mean the proxy statement used by First
Community to solicit the approval of its shareholders of the transactions
contemplated by this Agreement, which shall include the prospectus of FAB
relating to the issuance of the FAB Common Stock to holders of First
Community Common Stock.
"Registration Statement" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by FAB
under the 1933 Act with respect to the shares of FAB Common Stock to be
issued to the shareholders of First Community in connection with the
transactions contemplated by this Agreement and which shall include the
Proxy Statement.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of Thrift Supervision
(including its predecessor, the Federal Home Loan Bank Board), the Office
of the Comptroller of the Currency, Federal Deposit Insurance Corporation,
all state regulatory agencies having jurisdiction over the Parties and
their respective Subsidiaries, the NYSE, the NASD, and the SEC.
"Rights" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock
of a Person or by which a Person is or may be bound to issue additional
shares of its capital stock or other Rights.
"SEC" shall mean the United States Securities and Exchange Commission.
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"SEC Documents" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to
be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"Shareholders' Meeting" shall mean the meeting of the shareholders of
First Community to be held pursuant to Section 8.1 of this Agreement,
including any adjournment or adjournments thereof.
"Subsidiaries" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 50% or
more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its
parent; provided, there shall not be included any such entity acquired
through foreclosure or any such entity the equity securities of which are
owned or controlled in a fiduciary capacity.
"Surviving Corporation" shall mean FAB as the surviving corporation
resulting from the Merger.
"Tax" or "Taxes" shall mean any federal, state, county, local, or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, including interest, penalties,
and additions imposed thereon or with respect thereto.
Any singular term in this Agreement shall be deemed to include the plural,
and any plural term the singular. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration, and application fees, printing fees, and
fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that FAB shall bear and pay the
filing fees payable in connection with the Registration Statement and the
Proxy Statement and printing costs incurred in connection with the printing
of the Registration Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 Brokers and Finders. Each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or being retained by
First Community or FAB, each of First Community and FAB, as the case may be,
agrees to indemnify and hold the other Party harmless of and from any Liability
in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
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11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties; provided, that after any such
approval by the holders of First Community Common Stock, there shall be made no
amendment that pursuant to the GBCC requires further approval by such
shareholders without the further approval of such shareholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, FAB, acting through its Board
of Directors, chief executive officer, or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by First Community, to waive or extend the time for the
compliance or fulfillment by First Community of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of FAB under this Agreement, except any
condition which, if not satisfied, would result in the violation of any
Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of FAB.
(b) Prior to or at the Effective Time, First Community, acting through
its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of
any term of this Agreement by FAB, to waive or extend the time for the
compliance or fulfillment by FAB of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of First Community under this Agreement, except any condition
which, if not satisfied, would result in the violation of any Law. No such
waiver shall be effective unless in writing signed by a duly authorized
officer of First Community.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of
such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be
or construed as a further or continuing waiver of such condition or breach
or a waiver of any other condition or of the breach of any other term of
this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
<TABLE>
<S> <C>
First Community: First Community Bancshares, Inc.
Turner McCall Boulevard at Fifth Avenue
Rome, Georgia 30161
Telecopy Number:
Attention: B. G. Early
Chairman of the Board, President,
and Chief Executive Officer
</TABLE>
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<TABLE>
<S> <C>
Copy to Counsel: Hine, Niedrach & McClellan, P.C.
111 Bridgepoint Plaza
3rd Floor
Rome, Georgia 30161
Telecopy Number: (706) 291-1301
Attention: John E. Niedrach
FAB: First Alabama Bancshares, Inc.
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive
Financial Officer
Copy to Counsel: First Alabama Bancshares, Inc.
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: L. Burton Barnes, III
Corporate Secretary and General
Counsel
</TABLE>
11.9 Governing Law. Except to the extent the laws of the State of Georgia
apply to the Merger, this Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
11.12 Enforcement of Agreement. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
ATTEST: FIRST COMMUNITY BANCSHARES, INC.
/s/ EDWARD HINE, JR. By: /s/ B. G. EARLY
--------------------- ----------------
Edward Hine, Jr. B. G. Early
Secretary Chairman of the Board, President and
Chief Executive Officer
[CORPORATE SEAL]
ATTEST: FIRST ALABAMA BANCSHARES, INC.
/s/ VIRGINIA L. MARTIN By: /s/ WILLIAM E. JORDAN
----------------------- ----------------------
Virginia L. Martin William E. Jordan
Assistant Secretary Regional President
</TABLE>
[CORPORATE SEAL]
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APPENDIX B
EXCERPTS FROM THE GEORGIA BUSINESS CORPORATION CODE
RELATING TO DISSENTING STOCKHOLDERS
TITLE 14, CHAPTER 2, ARTICLE 13
DISSENTERS' RIGHTS
PART 1
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
14-2-1301. Definitions. As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(2) "Corporation" means the issuer of shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Code Section 14-2-1302 and who exercises that right
when and in the manner required by Code Sections 14-2-1320 through
14-2-1327.
(4) "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable
under all the circumstances.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
14-2-1302. Right to dissent. (a) A record shareholder of the corporation
is entitled to dissent from, and obtain payment of the fair value of his shares
in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If approval of the shareholders of the corporation is required
for the merger by Code Section 14-2-1103 or the articles of
incorporation and the shareholder is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is merged with its
parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all of
the property of the corporation if a shareholder vote is required on the
sale or exchange pursuant to Code Section 14-2-1202, but not including a
sale pursuant to court order of a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within one year after the date of sale;
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(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it;
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights;
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired
for cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of the shares of
the class; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent that Article 9 of this chapter, the articles of incorporation,
bylaws, or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment for their
shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the corporation action fails to comply with procedural
requirements of this chapter of the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporate action was
obtained by fraudulent and deceptive means, regardless of whether the
shareholder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there shall be no
right of dissent in favor of the holder of shares of any class or series which,
at the record date fixed to determine the shareholders entitled to receive
notice of and to vote at a meeting at which a plan of merger or share exchange
or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the holders of
shares of the class or series are required under the plan of merger or
share exchange to accept for their shares anything except shares of the
surviving corporation or another publicly held corporation which at the
effective date of the merger or share exchange are either listed on a
national securities exchange or held of record by more than 2,000
shareholders, except for scrip or cash payments in lieu of fractional
shares; or
(2) The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise.
14-2-1303. Dissent by nominees and beneficial owners. A record shareholder
may assert dissenters' rights as to fewer than all the shares registered in his
name only if he dissents with respect to all shares beneficially owned by any
one beneficial shareholder and notifies the corporation in writing of the name
and address of each person on whose behalf he asserts dissenters' rights. The
rights of a partial dissenter under this Code section are determined as if the
shares as to which he dissents and his other shares were registered in the names
of different shareholders.
PART 2
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
14-2-1320. Notice of dissenters' rights. (a) If proposed corporate action
creating dissenters' rights under Code Section 14-2-1302 is submitted to a vote
at a shareholders' meeting, the meeting notice must state that shareholders are
or may be entitled to assert dissenters' rights under this article and be
accompanied by a copy of this article.
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(b) If corporate action creating dissenters' rights under Code Section
14-2-1302 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Code Section
14-2-1322.
14-2-1321. Notice of intent to demand payment. (a) If proposed corporate
action creating dissenters' rights under Code Section 14-2-1302 is submitted to
a vote at a shareholders' meeting, a record shareholder who wishes to assert
dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his shares
under this article.
14-2-1322. Dissenters' notice. (a) If proposed corporate action creating
dissenters' rights under Code Section 14-2-1302 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after the
corporate action was taken and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the
date the notice required in subsection (a) of this code section is
delivered; and
14-2-1323. Duty to demand payment. (a) A record shareholder sent a
dissenters' notice described in Code Section 14-2-1322 must demand payment and
deposit his certificates in accordance with the terms of the notice.
(b) A record shareholder who demands payment and deposits his shares under
subsection (a) of this Code section retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the proposed
corporate action.
(c) A record shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
14-2-1324. Share restrictions. (a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is taken or the restrictions
released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
14-2-1325. Offer of payment. (a) Except as provided in Code Section
14-2-1327, within ten days of the later of the date the proposed corporate
action is taken or receipt of a payment demand, the corporation shall offer to
pay each dissenter who complied with Code Section 14-2-1323 the amount the
corporation estimates to be the fair value of his shares, plus accrued interest.
The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
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(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Code
Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written notice to
the corporation within 30 days after the corporation's offer, payment for his
shares shall be made within 60 days after the making of the offer or the taking
of the proposed corporate action, whichever is later.
14-2-1326. Failure to take action. (a) If the corporation does not take
the proposed action within 60 days after the date set for demanding payment and
depositing share certificates, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure.
14-2-1327. Procedure if shareholder dissatisfied with payment or
offer. (a) A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of his estimate of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under Code Section
14-2-1325 is less than the fair value of his shares or that the interest
due is incorrectly calculated; or
(2) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this Code section
unless he notifies the corporation of his demand in writing under subsection (a)
of this Code section within 30 days after the corporation offered payment for
his shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set forth in
subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information required under
subjection (b) of Code Section 14-2-1325, and the corporation shall provide
the information to the shareholder within ten days after receipt of a
written demand for the information; and
(2) The shareholder may at any time, subject to the limitations period
of Code Section 14-2-1332, notify the corporation of his own estimate of
the fair value of his shares and the amount of interest due and demand
payment of his estimate of the fair value of his shares and interest due.
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PART 3
JUDICIAL APPRAISAL OF SHARES
14-2-1330. Court action. (a) If a demand for payment under Code Section
14-2-1327 remains unsettled, the corporation shall commence a proceeding within
60 days after receiving the payment demand and petition the court to determine
the fair value of the shares and accrued interest. If the corporation does not
commence the proceeding within the 60 day period, it shall pay each dissenter
whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding, which shall be a nonjury
equitable valuation proceeding, in the superior court of the county where a
corporation's registered office is located. If the surviving corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in the 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 any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this Code section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them or in any amendment to it. Except as otherwise
provided in this chapter, Chapter 11 of Title 9, known as the "Georgia Civil
Practice Act," applies to any proceeding with respect to dissenters' rights
under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount which the court finds to be the fair value of his shares, plus
interest to the date of judgment.
14-2-1331. Court costs and counsel fees. (a) The court in an appraisal
proceeding commenced under Code Section 14-2-1330 shall determine all costs of
the proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court, but not including fees and expenses of attorneys and
experts for the respective parties. The court shall assess the costs against the
corporation, except that the court may assess the costs against all or some of
the dissenters, in amounts the court finds equitable, to the extent the court
finds the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Code Section 14-2-1327.
(b) The court may also assess the fees and expenses of attorneys and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Code Sections 14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these attorneys reasonable fees to be paid out of the amounts
awarded the dissenters who were benefitted.
14-2-1332. Limitation of actions. No action by any dissenter to enforce
dissenters' rights shall be brought more than three years after the corporation
action was taken, regardless of whether notice of the corporation action and of
the right to dissent was given by the corporation in compliance with the
provisions of Code Section 14-2-1320 and Code Section 14-2-1322.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. -- INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 10 of the Certificate of Incorporation of the Registrant provides:
"(a) The corporation shall indemnify its officers, directors,
employees, and agents to the full extent permitted by the General
Corporation Law of Delaware. (b) No director of the corporation shall be
personally liable to the corporation or its stockholders for monetary
damages, for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith which
involved intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit."
Section 145 of the Delaware General Corporation law empowers the Company to
indemnify its officers and directors under certain circumstances. The pertinent
provisions of that statute read as follows:
"(a) A corporation may 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, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
"(b) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
"(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
"(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such
II-1
<PAGE> 98
determination shall be made (1) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders.
"(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be
paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees)
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
"(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
"(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
"(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
"(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
"(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person."
The Company has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a
director or officer whose actions in his capacity result in liability, or to the
Registrant, in the event it has indemnified the director or officer. Major
exclusions from coverage include libel, slander, personal profit based on inside
information, illegal payments, dishonesty, accounting of securities profits in
violation of Section 16(b) of the Securities Exchange Act of 1934 and acts
within the scope of the Pension Reform Act of 1974.
II-2
<PAGE> 99
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -------------------------------------------------------------------------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger dated as of April 12, 1994, by and between First
Community Bancshares, Inc. and Regions Financial Corporation (formerly First Alabama
Bancshares, Inc.) -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by
reference from the Registration Statement of Regions Financial Corporation on Form
S-4, Registration No. 33-54231.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from
Registration Statement of Regions Financial Corporation on Form S-4, Registration
Number 33-54231.
5. -- Form of Opinion re: legality.
8. -- Form of Opinion re: tax matters.
23.1 -- Consent of Ernst & Young.
23.2 -- Consent of Read, Martin, Slickman & Sheats.
23.3 -- Consent of Lange, Simpson, Robinson & Somerville -- to be included in Exhibit 5.
23.4 -- Consent of Alston & Bird -- to be included in Exhibit 8.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the
signature page of the registration statement.
</TABLE>
ITEM 22. UNDERTAKINGS.
A. 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 Section 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.
B. 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.
C.(1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the
II-3
<PAGE> 100
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. 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.
E. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 101
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 this the 29th day of July, 1994.
REGISTRANT:
REGIONS FINANCIAL CORPORATION
By: /s/ RICHARD D. HORSLEY
--------------------------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial 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.
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Horsley and Virginia L. Martin, his
true and lawful attorneys-in-fact and agents, with full power of substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments to this registration statement, and to file the same with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------ ---------------------
<C> <S> <C>
/s/ J. STANLEY MACKIN Chairman of the Board July 29, 1994
- --------------------------------------------- and Chief Executive
J. Stanley Mackin Officer and Director
/s/ RICHARD D. HORSLEY Vice Chairman of the July 29, 1994
- --------------------------------------------- Board and Executive
Richard D. Horsley Financial Officer and
Director
/s/ ROBERT P. HOUSTON Executive Vice President July 29, 1994
- --------------------------------------------- and Comptroller
Robert P. Houston
Director
- ---------------------------------------------
Sheila S. Blair
/s/ JAMES B. BOONE, JR. Director July 29, 1994
- ---------------------------------------------
James B. Boone, Jr.
/s/ ALBERT P. BREWER Director July 29, 1994
- ---------------------------------------------
Albert P. Brewer
/s/ JAMES S.M. FRENCH Director July 29, 1994
- ---------------------------------------------
James S.M. French
/s/ CATESBY ap C. JONES Director July 29, 1994
- ---------------------------------------------
Catesby ap C. Jones
</TABLE>
II-5
<PAGE> 102
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------ ---------------------
<C> <S> <C>
/s/ OLIN B. KING Director July 29, 1994
- ---------------------------------------------
Olin B. King
/s/ H. MANNING MCPHILLIPS, JR. Director July 29, 1994
- ---------------------------------------------
H. Manning McPhillips, Jr.
/s/ HENRY E. SIMPSON Director July 29, 1994
- ---------------------------------------------
Henry E. Simpson
/s/ ROBERT E. STEINER, III Director July 29, 1994
- ---------------------------------------------
Robert E. Steiner, III
/s/ LEE J. STYSLINGER, JR. Director July 29, 1994
- ---------------------------------------------
Lee J. Styslinger, Jr.
</TABLE>
II-6
<PAGE> 103
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBER PAGE
- ------- --------------------------------------------------------------------------- ------------
<S> <C> <C> <C>
2.1 -- Agreement and Plan of Merger dated as of April 12, 1994, by and between
First Community Bancshares, Inc. and Regions Financial Corporation
(formerly First Alabama Bancshares, Inc.) -- included as Appendix A to the
Proxy Statement/Prospectus.................................................
4.1 -- Certificate of Incorporation of Regions Financial
Corporation -- incorporated by reference from the Registration Statement of
Regions Financial Corporation on Form S-4, Registration No. 33-54231.......
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from
Registration Statement of Regions Financial Corporation on Form S-4,
Registration Number 33-54231...............................................
5. -- Form of Opinion re: legality...............................................
8. -- Form of Opinion re: tax matters............................................
23.1 -- Consent of Ernst & Young...................................................
23.2 -- Consent of Read, Martin, Slickman & Sheats.................................
23.3 -- Consent of Lange, Simpson, Robinson & Somerville -- to be included in
Exhibit 5..................................................................
23.4 -- Consent of Alston & Bird -- to be included in Exhibit 8....................
24. -- Power of Attorney -- the manually signed power of attorney is set forth in
the signature page of the registration statement...........................
</TABLE>
II-7
<PAGE> 1
EXHIBIT 5
LANGE, SIMPSON, ROBINSON & SOMERVILLE
ATTORNEYS & COUNSELORS
417 20TH STREET NORTH, SUITE 1700
BIRMINGHAM, ALABAMA 35203-3272
------------
TELEPHONE (205) 250-5000
FACSIMILE (205) 250-5034
August __, 1994
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation -- S4 Registration
Statement, No. ________
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the merger between First Community
Bancshares, Inc. ("First Community") and Regions (the "Merger") and in
connection with the registration of shares of common stock of Regions, par
value $.625 per share ("Regions Common Stock"), on Form S-4 under the
Securities Act of 1933. The Merger provides for issuance of shares of Regions
Common Stock to the stockholders of First Community upon consummation of the
Merger. The number of shares of Regions Common Stock to be issued in the
Merger will not exceed 740,659 shares of Regions Common Stock.
We have examined and are familiar with the registration statement on Form
S-4 (33-______) filed with the Securities and Exchange Commission, as such
registration statement has been amended to date. We have examined and are
familiar with the records relating to the organization of Regions and the
proceedings taken by its directors to date, and we have examined such other
documents and records as we have deemed relevant for purposes of rendering this
opinion.
Based on the foregoing it is our opinion that upon satisfaction of the
conditions precedent to consummation of the Merger, or waiver of such shares of
Regions Common Stock issued
<PAGE> 2
pursuant to the Merger will be duly authorized, validly issued and outstanding,
fully paid and non-assessable, with no personal liability attaching to the
ownership thereof.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to Lange, Simpson, Robinson &
Somerville under the caption "Opinions" in the proxy statement/prospectus
forming a part of the registration statement.
Very truly yours,
<PAGE> 1
EXHIBIT 8
[LETTERHEAD]
August , 1994
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
First Community Bancshares, Inc.
Turner McCall Boulevard at Fifth Avenue
Rome, Georgia 30161
RE: PROPOSED MERGER OF FIRST COMMUNITY BANCSHARES, INC. WITH AND INTO
REGIONS FINANCIAL CORPORATION
Ladies and Gentlemen:
We have acted as special tax counsel to Regions Financial Corporation
("Regions"), a corporation organized and existing under the laws of the State of
Delaware, in connection with the proposed merger of First Community Bancshares,
Inc. ("First Community"), a corporation organized and existing under the laws of
the State of Georgia, with and into Regions. The Merger will be effected
pursuant to the Agreement and Plan of Merger, dated as of April 12, 1994, by and
between First Community Bancshares, Inc. and First Alabama Bancshares, Inc. (the
"Merger Agreement"); after the signing of the Merger Agreement, First Alabama
Bancshares, Inc. changed its name to Regions Financial Corporation. For purposes
of this opinion and the Certificates of Representations related thereto,
references to Regions Financial Corporation or "Regions" are intended as
references to the corporation previously known as First Alabama Bancshares, Inc.
In our capacity as counsel to Regions, our opinion has been requested with
respect to certain of the federal income tax consequences of the proposed
Merger.
In rendering this opinion, we have examined (i) the Internal Revenue Code
of 1986, as amended (the "Code") and Treasury Regulations, (ii) the legislative
history of applicable sections of the Code, and (iii) appropriate Internal
Revenue Service and court decisional authority. In addition, we have relied upon
certain information made known to us as more fully described below. All
capitalized terms used herein without definition shall have the respective
meanings specified in the Merger Agreement, and unless otherwise specified, all
section references herein are to the Code.
<PAGE> 2
Regions Financial Corporation
First Community Bancshares, Inc.
August , 1994
Page 2
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined such documents
as we have deemed appropriate, including:
(1) the Merger Agreement;
(2) the proxy statement/prospectus included in Regions' Registration
Statement on Form S-4, being filed with the Securities and Exchange
Commission with respect to the proposed transaction; and
(3) such additional documents as we have considered relevant.
In our examination of such documents, we have assumed, with your consent,
that all documents submitted to us as photocopies faithfully reproduce the
originals thereof, that such originals are authentic, that all such documents
have been or will be duly executed to the extent required, and that all
statements set forth in such documents are accurate.
We have also obtained such additional information and representations as we
have deemed relevant and necessary through consultation with various officers
and representatives of Regions and First Community and through certificates
provided by the management of Regions and by the management of First Community.
You have advised us that the proposed transaction will enable the combined
organization to realize certain economies of scale, yield a wider array of
banking and banking-related services to consumers and businesses, and provide
for a stronger market position and for greater financial resources to meet
competitive challenges within the Rome, Georgia market area. To achieve these
goals, the following will occur pursuant to the Merger Agreement:
(1) First Community will merge with and into Regions pursuant to the
General Corporation Law of Delaware and the Georgia Business Corporation
Code. Regions will acquire all the assets and assume all the liabilities of
First Community. First Community's separate corporate existence will cease
to exist, and Regions will be the surviving corporation. Thereafter,
Regions will continue to conduct its business and will continue to operate
the businesses of First Community conducted prior to the Merger.
(2) Each share of First Community Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares as to which
dissenters' rights are duly exercised and except as provided below) shall,
as of the Effective Time, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to receive
certificates representing .95 shares of Regions Common Stock, subject to
adjustment as provided in the Merger Agreement. At the Effective Time, any
and all shares of First Community Common Stock held by any First Community
Company or any Regions Company (in each case 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 in exchange therefor. In
the event Regions or First Community changes the number of shares of
Regions Common Stock or First Community Common Stock, respectively, issued
and outstanding prior to the Effective Time as a result of a stock split,
stock dividend, or similar recapitalization, the number of shares of
Regions Common Stock into which shares of First Community Common Stock
shall be converted shall be equitably adjusted to reflect the effect of
such stock split, stock dividend, or similar recapitalization.
<PAGE> 3
Regions Financial Corporation
First Community Bancshares, Inc.
August , 1994
Page 3
(3) No fractional shares of Regions Common Stock will be issued as a
result of the Merger. In lieu of the issuance of fractional shares, cash
adjustments (without interest) will be paid to the holders of First
Community Common Stock, in respect of any fraction of a share of Regions
Common Stock that would otherwise be issuable, in an amount equal to such
fractional part of a share of Regions Common Stock multiplied by the market
value of one share of Regions Common Stock at the Effective Time, in the
case of shares exchanged pursuant to the Merger, or the date of exercise,
in the case of options. The market value of one share of Regions Common
Stock at the Effective Time or the date of exercise, as the case may be,
shall be the last sale price of such common stock on the NASDAQ/NMS (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source) on the last trading day preceding the Effective Time,
in the case of shares exchanged pursuant to the Merger, and the date of
exercise, in the case of options. No such holder shall be entitled to
dividends, voting rights, or any other stockholder right in respect of any
fractional share.
(4) At the Effective Time, all rights with respect to First Community
Common Stock pursuant to stock options or stock appreciation rights ("First
Community Options") granted by First Community under the First Community
Stock Plans, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to
Regions Common Stock, and Regions shall assume each First Community Option,
in accordance with the terms of the First Community Stock Plan and stock
option agreement by which it is evidenced. From and after the Effective
Time, (i) each First Community Option assumed by Regions may be exercised
solely for shares of Regions Common Stock (or cash in the case of stock
appreciation rights), (ii) the number of shares of Regions Common Stock
subject to such First Community Option shall be equal to the number of
shares of First Community Common Stock subject to such First Community
Option immediately prior to the Effective Time multiplied by the Exchange
Ratio, and (iii) the per share exercise price under each such First
Community Option shall be adjusted by dividing the per share exercise price
under each such First Community Option by the Exchange Ratio and rounding
down to the nearest cent. It is intended that the foregoing assumption
shall be undertaken in a manner that will not constitute a "modification"
as defined in Section 424 of the Code, as to any stock option which is an
"incentive stock option." All restrictions or limitations on transfer with
respect to First Community Stock awarded under the First Community Stock
Plans or any other plan, program, or arrangement of any First Community
Company, to the extent that such restrictions or limitations shall not have
already lapsed, and except as otherwise expressly provided in such plan,
program, or arrangement, shall remain in full force and effect with respect
to shares of Regions Common Stock into which such restricted stock is
converted.
(5) Any holder of shares of First Community Common Stock who objects
to the Merger and who exercises his statutory dissenters' rights of
appraisal will be entitled to receive the value of such shares in cash
calculated and determined pursuant to the applicable provisions of the
Georgia Business Corporation Code and shall not be entitled to receive the
consideration otherwise provided by the Merger Agreement.
<PAGE> 4
Regions Financial Corporation
First Community Bancshares, Inc.
August , 1994
Page 4
With your consent, we have also assumed that the following statements are
true on the date hereof and will be true on the date the proposed transaction is
consummated:
(1) The fair market value of the Regions Common Stock and other
consideration received by the stockholders of First Community will be, in
each instance, approximately equal to the fair market value of the First
Community Common Stock surrendered in exchange therefor.
(2) There is no plan or intention on the part of the stockholders of
First Community who own one percent (1%) or more of the First Community
stock, and to the best of the knowledge of the management of First
Community, there is no plan or intention on the part of the remaining
stockholders of First Community to sell, exchange or otherwise dispose of a
number of shares of Regions Common Stock to be received in the proposed
transaction that would reduce their holdings in Regions Common Stock
received to a number of shares having, in the aggregate, a value as of the
Effective Time of less than fifty percent (50%) of the total value of all
of the stock of First Community outstanding immediately prior to the
Effective Time. For purposes of this representation, shares of First
Community stock exchanged for cash or other property, surrendered by
dissenters or exchanged for cash in lieu of fractional shares of Regions
stock will be treated as outstanding First Community stock as of the
Effective Time. Moreover, shares of First Community stock and shares of
Regions stock held by First Community stockholders and otherwise sold,
redeemed or disposed of prior or subsequent to the transaction will be
considered in making this representation.
(3) Regions has no plan or intention to reacquire any of its stock
issued in the transaction.
(4) Regions has no plan or intention to sell or otherwise dispose of
any of the assets of First Community acquired in the transaction, except
for dispositions made in the ordinary course of business or transfers to a
corporation controlled by Regions.
(5) The liabilities of First Community assumed by Regions and the
liabilities to which the transferred assets of First Community are subject
were incurred by First Community in the ordinary course of its business.
(6) Following the transaction, Regions will continue the historic
business of First Community or use a significant portion of First
Community's historic business assets in a business.
(7) Regions, First Community, and the stockholders of First Community
will pay their respective expenses, if any, incurred in connection with the
transaction.
(8) There is no intercorporate indebtedness existing between First
Community and Regions that was issued, acquired, or will be settled at a
discount.
(9) First Community is not under the jurisdiction of a court in a case
under Title 11 of the United States Code or a receivership, foreclosure, or
similar proceeding in a federal or state court.
(10) The fair market value and the total adjusted basis of the assets
of First Community transferred to Regions will each equal or exceed the sum
of the liabilities assumed by Regions plus the amount of the liabilities,
if any, to which the transferred assets are subject.
<PAGE> 5
Regions Financial Corporation
First Community Bancshares, Inc.
August , 1994
Page 5
(11) The payment of cash in lieu of fractional shares of Regions stock
is solely for the purpose of avoiding the expense and inconvenience to
Regions of issuing fractional shares and does not represent separately
bargained for consideration. The total cash consideration that will be paid
in the transaction to the First Community stockholders instead of issuing
fractional shares of Regions stock will not exceed one percent (1%) of the
total consideration that will be issued in the transaction to the First
Community stockholders in exchange for their shares of First Community
stock. The fractional share interests of each First Community stockholder
will be aggregated, and no First Community stockholder will receive cash in
an amount equal to or greater than the value of one full share of Regions
stock.
(12) None of the compensation received by any stockholder-employees of
First Community will be separate consideration for, or allocable to, any of
their shares of First Community stock; none of the shares of Regions stock
received by any stockholder-employees will be separate consideration for,
or allocable to, any employment agreement; and the compensation paid to any
stockholder-employees will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length
for similar services.
(13) At all times during the five-year period ending at the Effective
Time, the fair market value of all of First Community's United States real
property interests was and will have been less than fifty percent (50%) of
the total fair market value of (a) its United States real property
interests, (b) its interests in real property located outside the United
States, and (c) its other assets used or held for use in a trade or
business. For purposes of the preceding sentence, (x) United States real
property interests include all interests (other than an interest solely as
a creditor) in real property and associated personal property (such as
movable walls and furnishings) located in the United States or the Virgin
Islands and interests in any corporation (other than a controlled
corporation) owning any United States real property interest, (y) First
Community is treated as owning its proportionate share (based on the
relative fair market value of its ownership interest to all ownership
interests) of the assets owned by any controlled corporation or any
partnership, trust, or estate in which First Community is a partner or
beneficiary, and (z) any such entity in turn is treated as owning its
proportionate share of the assets owned by any controlled corporation or
any partnership, trust, or estate in which the entity is a partner or
beneficiary. As used in this paragraph, "controlled corporation" means any
corporation at least fifty percent (50%) of the fair market value of the
stock of which is owned by First Community, in the case of a first tier
subsidiary of First Community or by a controlled corporation, in the case
of a lower-tier subsidiary.
(14) For each of Regions and First Community, not more than
twenty-five percent (25%) of the fair market value of its adjusted total
assets consists of stock and securities of any one issuer, and not more
than fifty percent (50%) of the fair market value of its adjusted total
assets consists of stock and securities of five or fewer issuers. For
purposes of the preceding sentence, (a) a corporation's adjusted total
assets exclude cash, cash items (including accounts receivable and cash
equivalents), and United States government securities, (b) a corporation's
adjusted total assets exclude stock and securities issued by any subsidiary
at least fifty percent (50%) of the voting power or fifty percent (50%) of
the total fair market value of the stock of which is owned by the
corporation, but the corporation is treated as owning directly a ratable
share (based on the percentage of the fair market value of the subsidiary's
stock owned by the corporation) of the assets owned by any such subsidiary,
and (c) all corporations that are members
<PAGE> 6
Regions Financial Corporation
First Community Bancshares, Inc.
August , 1994
Page 6
of the same "controlled group" within the meaning of section 1563(a) of the
Code are treated as a single issuer.
(15) First Community has not filed, and holds no assets subject to, a
consent under section 341(f) of the Code and the regulations thereunder.
(16) First Community is not a party to, and holds no assets subject
to, a "safe harbor lease" under former section 168(f)(8) of the Code and
the regulations thereunder.
(17) The Merger Agreement represents the entire understanding of First
Community and Regions with respect to the Merger.
OPINIONS
Based solely on the information submitted and the representations set forth
above and assuming that the Merger will take place as described in the Merger
Agreement and that the representations made by Regions and First Community
(including the representation that First Community stockholders will maintain
sufficient equity ownership interests in Regions after the Merger) are true and
correct at the time of the consummation of the Merger, we are of the opinion
that:
(1) Provided the Merger qualifies as a statutory merger under the
General Corporation Law of Delaware and the Georgia Business Corporation
Code, the Merger will be a reorganization within the meaning of section
368(a)(1)(A). First Community and Regions will each be "a party to a
reorganization" within the meaning of section 368(b).
(2) First Community will recognize no gain or loss upon the transfer
of its assets to Regions in exchange solely for Regions Common Stock and
the assumption by Regions of the liabilities of First Community. Sections
361(a) and 357(a).
(3) No gain or loss will be recognized by Regions on receipt of First
Community's assets in exchange for Regions Common Stock. Section 1032(a).
(4) The basis of First Community's assets in the hands of Regions
will, in each case, be the same as the basis of those assets in the hands
of First Community immediately prior to the transaction. Section 362(b).
(5) The holding period of the assets of First Community in the hands
of Regions will, in each case, include the period during which such assets
were held by First Community. Section 1223(2).
(6) The stockholders of First Community will recognize no gain or loss
upon the exchange of their First Community Common Stock solely for shares
of Regions Common Stock. Section 354(a)(1).
(7) The basis of the Regions Common Stock received by the First
Community stockholders in the proposed transaction will, in each instance,
be the same as the basis of the First Community Common Stock surrendered in
exchange therefor. Section 358(a)(1).
(8) The holding period of the Regions Common Stock received by the
First Community stockholders will, in each instance, include the period
during which the First Community Common Stock
<PAGE> 7
Regions Financial Corporation
First Community Bancshares, Inc.
August , 1994
Page 7
surrendered in exchange therefor was held, provided that the First
Community Common Stock was held as a capital asset on the date of the
exchange. Section 1223(1).
(9) The payment of cash to First Community stockholders in lieu of
fractional share interests of Regions Common Stock will be treated for
federal income tax purposes as if the fractional shares were distributed as
part of the exchange and then were redeemed by Regions. These cash payments
will be treated as having been received as distributions in full payment in
exchange for the stock redeemed as provided in section 302(a). Rev. Rul.
66-365, 1966-2 C.B. 116 and Rev. Proc. 77-41, 1977-2 C.B. 574.
(10) Where solely cash is received by a First Community stockholder in
exchange for his First Community Common Stock pursuant to the exercise of
dissenters' rights, such cash will be treated as having been received in
redemption of his First Community Common Stock, subject to the provisions
and limitations of section 302.
The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time with
retroactive effect. In addition, our opinions are based solely on the documents
that we have examined, the additional information that we have obtained, and the
statements set out herein, which we have assumed and you have confirmed to be
true on the date hereof and will be true on the date on which the proposed
transaction is consummated. Our opinions cannot be relied upon if any of the
facts contained in such documents or if such additional information is, or later
becomes, inaccurate, or if any of the statements set out herein is, or later
becomes, inaccurate. Finally, our opinions are limited to the tax matters
specifically covered thereby, and we have not been asked to address, nor have we
addressed, any other tax consequences of the proposed transaction.
We consent to this opinion as an exhibit to the Registration Statement
filed by Regions relating to the proposed Merger and to the references to our
firm in the proxy statement/prospectus included in the Registration Statement.
This opinion is being provided solely for the use of Regions, First Community
and their stockholders. No other person or party shall be entitled to rely on
this opinion.
Very truly yours,
ALSTON & BIRD
By:
--------------------------------------
Terence J. Greene
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Regions Financial
Corporation for the registration of up to 740,659 shares of its common stock
and to the incorporation by reference therein of our report dated February 4,
1994, with respect to the consolidated financial statements of Regions
Financial Corporation (formerly First Alabama Bancshares, Inc.) included in its
Annual Report to Stockholders which is incorporated by reference in its Annual
Report (Form 10-K) for the year ended December 31, 1993, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young
Birmingham, Alabama
July 28, 1994
<PAGE> 1
EXHIBIT 23.2
CONSENT OF READ, MARTIN, SLICKMAN & SHEATS, CPA'S
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of our report dated January 31, 1994 (except
for Note 15, Subsequent Events, as to which the date is March 18, 1994),
relating to the financial statements of First Community Bancshares, Inc. and
Subsidiary, which is incorporated by reference in such Prospectus. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
/s/ Read, Martin, Slickman & Sheats,
CPA's
Rome, Georgia
July 29, 1994
