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FILED PURSUANT TO 424(b)3
REGISTRATION STATEMENT NO. 33-54231
Dear BNR Bancshares, Inc. Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
BNR Bancshares, Inc. ("BNR") to be held at BNR's main office, 107 East Main
Street, New Roads, Louisiana 70760, on August 26, 1994, at 10:00 a.m., local
time.
At this 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 BNR will merge (the
"Merger") with and into Regions, and Bank of New Roads (the "Bank"), a
wholly-owned subsidiary of BNR, will become a wholly-owned subsidiary of Regions
and will continue serving its current market as a state-chartered commercial
bank until combined with other banking subsidiaries of Regions operating in
Louisiana. Upon consummation of the Merger, each share of BNR common stock
issued and outstanding (except for certain shares held by BNR or Regions and
shares held by stockholders who perfect their dissenters' rights of appraisal)
will be converted into that number of shares of Regions common stock calculated
by dividing $79.70 by the average of the daily closing sale prices of Regions
common stock on the Nasdaq National Market over a specified period, subject to
minimum and maximum exchange ratios of 2.214 and 3.065 shares of Regions common
stock, respectively, for each share of BNR common stock.
The enclosed Notice of Special Meeting and Proxy Statement/Prospectus
includes a description of the proposed Merger and provides specific information
concerning the Special Meeting. 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
unanimously recommended by the Board to you for approval. Each member of the
Board of Directors of BNR has agreed to vote those BNR shares over which he has
voting authority (other than in a fiduciary capacity) in favor of the Merger.
Consummation of the Merger is subject to certain conditions, including approval
of the Agreement by BNR's stockholders and approval of the Merger by various
regulatory agencies.
Stockholders of BNR who perfect their dissenters' rights of appraisal, if
available, prior to the proposed Merger and comply with applicable law will be
entitled to receive the fair value of their BNR shares in cash, as provided by
applicable law.
It is very important that your shares be represented at the Special Meeting
even if you do not plan to attend in person. Approval of the Agreement requires
the affirmative vote of at least a majority of the voting power of BNR common
stock represented at the Special Meeting. Consequently, an abstention will have
the same effect as a vote against the proposal, but a nonvote, unlike an
abstention, would reduce the number of affirmative votes required for approval.
Whether or not you plan to attend the Special Meeting, you are urged to
complete, sign, and return promptly the enclosed proxy card. If you attend the
Special Meeting, you may vote in person if you wish, even if you previously have
returned your proxy card. The proposed Merger with Regions is a significant step
for BNR, and your vote on this matter is of great importance. On behalf of the
Board of Directors, we urge you to vote for approval of the Merger by marking
the enclosed proxy card "FOR" Item One.
Sincerely,
Charles Ray Smith
Chairman of the Board
F. J. Greely, Jr.
President and Chief Executive Officer
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BNR BANCSHARES, INC.
107 EAST MAIN STREET, NEW ROADS, LOUISIANA 70760
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 26, 1994
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of BNR Bancshares, Inc. ("BNR"), a bank holding company, will be held
at BNR's main office, 107 East Main Street, New Roads, Louisiana 70760, on
August 26, 1994, at 10:00 a.m., local time, for the following purposes:
1. Merger. To consider and vote upon the Agreement and Plan of
Merger, dated as of April 21, 1994 (the "Agreement"), by and between BNR
and Regions Financial Corporation ("Regions"), a copy of which is attached
as Appendix A to the accompanying Proxy Statement/Prospectus and
incorporated herein by this reference, and pursuant to which (i) Regions
will acquire all of the issued and outstanding common stock of BNR through
the merger of BNR with and into Regions (the "Merger"), (ii) each share of
BNR common stock (except for certain shares held by BNR or Regions and
shares held by stockholders who perfect their dissenters' rights of
appraisal) will be converted into that number of shares of Regions common
stock calculated by dividing $79.70 by the average of the daily closing
sale prices of Regions common stock in the National Market System of the
National Association of Securities Dealers Automated Quotation System (the
"Nasdaq National Market") over a specified period, subject to minimum and
maximum exchange ratios of 2.214 and 3.065 shares of Regions common stock,
respectively, for each share of BNR common stock, and (iii) each BNR
stockholder will receive cash in lieu of any remaining fractional share
interest, all as described more fully in the accompanying Proxy
Statement/Prospectus.
2. Other Business. To transact such other business as may come
properly before the Special Meeting, including adjourning the Special
Meeting to permit, if necessary, further solicitation of proxies.
Only stockholders of record at the close of business on July 27, 1994, are
entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
Stockholders of BNR 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 Louisiana law, which are attached to the accompanying
Proxy Statement/Prospectus as Appendix C. DISSENTING SHAREHOLDERS WHO COMPLY
WITH THE PROCEDURAL REQUIREMENTS OF THE BUSINESS CORPORATION LAW OF LOUISIANA
WILL BE ENTITLED TO RECEIVE PAYMENT OF THE FAIR CASH VALUE OF THEIR SHARES IF
THE MERGER IS EFFECTED UPON APPROVAL BY LESS THAN 80% OF THE CORPORATION'S TOTAL
VOTING POWER.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Special Meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Secretary of BNR
an instrument of revocation or a duly executed proxy bearing a later date at or
before the Special Meeting.
By Order of the Board of Directors
Charles Ray Smith
Secretary
New Roads, Louisiana
July 27, 1994
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BNR BANCSHARES, INC. REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD AUGUST 26, 1994 (PAR VALUE $.625)
</TABLE>
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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 BNR Bancshares, Inc.
("BNR") upon consummation of the proposed merger (the "Merger") described herein
by which BNR will merge with and into Regions pursuant to the terms of an
Agreement and Plan of Merger, dated as of April 21, 1994 (the "Agreement"),
between Regions and BNR.
At the effective date of the Merger (the "Effective Date"), except as
described herein, (i) BNR will merge with and into Regions, and (ii) each
outstanding share of the $10.00 par value common stock of BNR ("BNR Common
Stock") will be converted into that number of shares of Regions Common Stock
calculated by dividing $79.70 by the Average Closing Price, defined in the
Agreement as the average of the daily closing sale prices of Regions Common
Stock in the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotations System (the "Nasdaq National Market") (as
reported by The Wall Street Journal or, if not reported thereby, another
authoritative source chosen by Regions) for the 20 consecutive full trading days
on which such shares are traded on the Nasdaq National Market ending at the
close of trading on the fifth trading day preceding the Effective Date, subject
to minimum and maximum exchange ratios of 2.214 and 3.065 shares of Regions
Common Stock, respectively, for each share of BNR Common Stock. A copy of the
Agreement is attached to this Proxy Statement/Prospectus as Appendix A.
As a result of the Merger, the separate existence of BNR will cease, and
Bank of New Roads, a wholly-owned subsidiary of BNR (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 until combined with other
banking subsidiaries of Regions operating in Louisiana. For a further
description of the terms of the Merger, see "Description of the Transaction."
This Prospectus also constitutes a Proxy Statement of BNR and is being
furnished to the stockholders of BNR in connection with the solicitation of
proxies by the Board of Directors of BNR for use at its special meeting of
stockholders, including any adjournment or postponement thereof (the "Special
Meeting"), to be held on August 26, 1994, to consider and vote upon the proposed
Merger and related matters. This Proxy Statement/Prospectus and the accompanying
proxy card are first being mailed to stockholders of BNR on or about July 28,
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 July 27, 1994.
<PAGE> 4
AVAILABLE INFORMATION
Regions and BNR are subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "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 BNR. 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 BNR 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 BNR was
supplied by BNR.
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; and
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.
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 Stockholders"), but
does not incorporate other portions of the Regions Annual Report to
Stockholders. Only
2
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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 BNR pursuant to
the Exchange Act are hereby incorporated by reference herein:
1. BNR's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1993, as amended;
2. BNR's Quarterly Report on Form 10-Q for the quarter ended March 31,
1994; and
3. BNR's Current Report on Form 8-K dated as of March 16, 1994.
BNR's Annual Report on Form 10-KSB for the year ended December 31, 1993,
incorporates by reference specific portions of BNR's Annual Report to
Stockholders for that year (the "BNR Annual Report to Stockholders"), but does
not incorporate other portions of the BNR Annual Report to Stockholders. Only
the audited financial statements on pages 3-15 of the BNR Annual Report to
Stockholders are incorporated herein. Other portions of the BNR Annual Report to
Stockholders are NOT incorporated herein and are not a part of the Registration
Statement.
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 Special 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 BNR, FROM DANIEL J. DIETRICK, TREASURER, BNR
BANCSHARES, INC., P.O. BOX 250, NEW ROADS, LOUISIANA 70760, (TELEPHONE (504)
638-3791). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY AUGUST 19, 1994.
3
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TABLE OF CONTENTS
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AVAILABLE INFORMATION................................................................ 2
DOCUMENTS INCORPORATED BY REFERENCE.................................................. 2
SUMMARY.............................................................................. 6
The Parties........................................................................ 6
Special Meeting of BNR Stockholders................................................ 7
Record Date; Vote Required......................................................... 7
The Merger; Exchange Ratio......................................................... 7
Dissenting Stockholders............................................................ 7
Reasons for the Merger; Recommendation of BNR's Board of Directors................. 8
Opinion of BNR's Financial Advisor................................................. 8
Effective Date of the Merger....................................................... 8
Exchange of Stock Certificates..................................................... 8
Regulatory Approvals and Other Conditions.......................................... 8
Waiver, Amendment, and Termination of the Agreement................................ 9
Interests of Certain Persons in the Merger......................................... 9
Certain Federal Income Tax Consequences of the Merger.............................. 9
Certain Differences in Stockholders' Rights........................................ 9
Comparative Market Prices of Common Stock.......................................... 9
Comparative Per Share Data......................................................... 10
Selected Financial Data............................................................ 12
THE SPECIAL MEETING.................................................................. 16
General............................................................................ 16
Savings and Stock Bonus Plan....................................................... 16
Record Date; Vote Required......................................................... 17
DESCRIPTION OF THE TRANSACTION....................................................... 17
General............................................................................ 17
Exchange Ratio; Minimum and Maximum Limitations.................................... 18
Background of and Reasons for the Merger........................................... 18
Opinion of BNR's Financial Advisor................................................. 20
Effective Date of the Merger....................................................... 24
Distribution of Regions Stock Certificates and Payment for Fractional Shares....... 24
Conditions to Consummation of the Merger........................................... 25
Regulatory Approvals............................................................... 25
Waiver, Amendment, and Termination of the Agreement................................ 26
Conduct of Business Pending the Merger............................................. 26
Management Following the Merger.................................................... 28
Interests of Certain Persons in the Merger......................................... 28
Dissenting Stockholders............................................................ 30
Certain Federal Income Tax Consequences of the Merger.............................. 31
Accounting Treatment............................................................... 32
Expenses and Fees.................................................................. 33
Resales of Regions Common Stock.................................................... 33
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS....................................... 33
Antitakeover Provisions Generally.................................................. 33
Authorized Capital Stock........................................................... 34
Amendment of Certificate or Articles of Incorporation and Bylaws................... 34
Classified Board of Directors and Absence of Cumulative Voting..................... 35
Removal of Directors............................................................... 35
Limitations on Director Liability.................................................. 35
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Indemnification.................................................................... 36
Special Meetings of Stockholders................................................... 36
Actions by Stockholders Without a Meeting.......................................... 37
Stockholder Nominations and Proposals.............................................. 37
Business Combinations with Certain Persons......................................... 37
Mergers, Consolidations, and Sales of Assets Generally............................. 38
Dissenters' Rights of Appraisal.................................................... 39
Stockholders' Rights to Examine Books and Records.................................. 39
Dividends.......................................................................... 40
COMPARATIVE MARKET PRICES AND DIVIDENDS.............................................. 40
BUSINESS OF BNR...................................................................... 42
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF BNR.................................. 42
BUSINESS OF REGIONS.................................................................. 43
General............................................................................ 43
Recent Developments................................................................ 44
SUMMARY PRO FORMA FINANCIAL DATA..................................................... 46
SUPERVISION AND REGULATION........................................................... 48
General............................................................................ 48
Payment of Dividends............................................................... 50
Transactions with Affiliates....................................................... 50
Capital Adequacy................................................................... 51
Support of Subsidiary Institutions................................................. 52
Prompt Corrective Action........................................................... 52
Brokered Deposits.................................................................. 53
FDIC Insurance Assessments......................................................... 53
New Safety and Soundness Standards................................................. 54
Depositor Preference............................................................... 55
DESCRIPTION OF REGIONS COMMON STOCK.................................................. 55
STOCKHOLDER PROPOSALS................................................................ 55
EXPERTS.............................................................................. 55
OPINIONS............................................................................. 56
APPENDIX A -- Agreement and Plan of Merger........................................... A-1
APPENDIX B -- Opinion of Chaffe & Associates, Inc.................................... B-1
APPENDIX C -- Copy of Section 12:131 of Louisiana Business Corporation Law........... C-1
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SUMMARY
The following is a summary of certain information relating to the proposed
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
"BNR" refer to those entities, respectively, and where the context requires, to
those entities and their respective subsidiaries.
THE PARTIES
BNR. BNR is a bank holding company organized under the laws of the State
of Louisiana with its principal executive office located in New Roads,
Louisiana. BNR operates principally through the Bank, which is a state-chartered
commercial bank and which provides a range of retail banking services through
five offices in Pointe Coupee Parish and one office in East Baton Rouge Parish,
Louisiana. At March 31, 1994, BNR had total consolidated assets of approximately
$142.7 million, total consolidated deposits of approximately $125.3 million, and
total consolidated stockholders' equity of approximately $15.6 million. BNR's
principal executive office is located at 107 East Main Street, New Roads,
Louisiana 70760, and its telephone number at such address is (504) 638-3791.
Additional information with respect to BNR and its subsidiaries is included
in documents incorporated by reference in this Proxy Statement/Prospectus.
Copies of such documents, consisting of BNR's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1993, as amended, including that portion of
the BNR Annual Report to Stockholders incorporated therein, BNR's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994, and BNR's Current
Report on Form 8-K dated as of March 16, 1994, accompany this Proxy
Statement/Prospectus.
REGIONS. Regions, formerly known as 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 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 BNR in the
States of Alabama, Georgia, 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
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SPECIAL MEETING OF BNR STOCKHOLDERS
The Special Meeting will be held at 10:00 a.m., local time, on August 26,
1994, at BNR's main office, 107 East Main Street, New Roads, Louisiana 70760,
for the purpose of considering and voting upon approval of the Agreement. See
"The Special Meeting."
RECORD DATE; VOTE REQUIRED
Only holders of record of BNR Common Stock at the close of business on July
27, 1994 (the "Record Date"), will be entitled to vote at the Special Meeting.
The affirmative vote of at least a majority of the voting power of BNR Common
Stock represented in person or by proxy at the Special Meeting will be required
to approve the Agreement. As of the Record Date, there were 326,218 shares of
BNR Common Stock outstanding and entitled to be voted.
The directors and executive officers of BNR and their affiliates
beneficially owned, as of the Record Date, 51,116 shares (or approximately
15.67% of the outstanding shares) of BNR Common Stock. Each member of the Board
of Directors of BNR has agreed to vote those BNR shares over which he has voting
authority (other than in a fiduciary capacity) in favor of the Merger. The
directors and executive officers of Regions and their affiliates beneficially
owned, as of the Record Date, no shares of BNR Common Stock. As of that date,
neither BNR nor Regions held any shares of BNR Common Stock in a fiduciary
capacity for others. See "The Special Meeting -- Record Date; Vote Required."
THE MERGER; EXCHANGE RATIO
The Agreement provides for the acquisition of BNR by Regions pursuant to
the Merger of BNR with and into Regions. At the Effective Date each share of BNR
Common Stock (excluding any shares held by BNR, 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 that number of shares of Regions Common Stock (the
"Exchange Ratio"), calculated by dividing $79.70 by the Average Closing Price
(the average of the daily closing sale prices of Regions Common Stock on the
Nasdaq National Market (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source chosen by Regions) for the 20
consecutive full trading days on which such shares are traded on the Nasdaq
National Market ending at the close of trading on the fifth trading day
preceding the Effective Date), subject to minimum and maximum exchange ratios of
2.214 and 3.065 shares of Regions Common Stock, respectively, for each share of
BNR Common Stock. See "Description of the Merger -- Exchange Ratio; Minimum and
Maximum Limitations."
No fractional shares of Regions Common Stock will be issued. Rather, cash
will be paid in lieu of any fractional share interest to which any BNR
stockholder would be entitled upon consummation of the Merger, based on the
Average Closing Price. See "Description of the Transaction -- General."
DISSENTING STOCKHOLDERS
Holders of BNR 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 holders' shares of BNR Common Stock in
accordance with the applicable provisions of Section 12:131 of the Louisiana
Business Corporation Law (the "Louisiana Act"). In the event that the Merger is
approved by 80% or more of the total voting power of BNR, then dissenters'
rights of appraisal, in accordance with the Louisiana Act, will not be
available. 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 Louisiana Act is set forth in
Appendix C to this Proxy Statement/Prospectus.
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REASONS FOR THE MERGER; RECOMMENDATION OF BNR'S BOARD OF DIRECTORS
BNR's Board of Directors has unanimously approved the Merger and the
Agreement and has determined that the Merger is in the best interests of BNR and
its stockholders. Accordingly, BNR's Board unanimously recommends that BNR's
stockholders vote FOR approval of the Agreement. In approving the Merger, BNR's
directors considered BNR's financial condition, the financial terms and the
income tax consequences of the Merger, the likelihood of the Merger being
approved by regulatory authorities without undue conditions or delay, legal
advice concerning the proposed Merger, and a report and opinion from Chaffe and
Associates, Inc. ("Chaffe") regarding the value of BNR and the fairness of the
terms of the Merger to BNR stockholders. See "Description of the
Transaction -- Background of and Reasons for the Merger." Each member of the
Board of Directors of BNR has agreed to vote such member's shares over which he
has voting authority (other than in a fiduciary capacity) in favor of the
Merger.
OPINION OF BNR'S FINANCIAL ADVISOR
Chaffe has rendered an opinion to BNR that, based upon and subject to the
procedures, matters and limitations described in its opinion and such other
matters as it considers relevant, as of the date of its opinion, the
consideration to be received in the Merger by the stockholders of BNR is fair to
the stockholders of BNR from a financial point of view. The opinion of Chaffe is
attached as Appendix B to this Proxy Statement/Prospectus. BNR stockholders are
urged to read the opinion in its entirety for a description of the procedures
followed, matters considered, and limitations on the reviews undertaken in
connection therewith. See "Description of the Transaction -- Opinion of BNR's
Financial Advisor."
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 Louisiana Certificate of Merger are filed
and become effective with, respectively, the Delaware Secretary of State and the
Louisiana Secretary of State. Unless otherwise agreed upon by Regions and BNR,
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 first business day following 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 BNR
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 BNR a form letter of transmittal, together
with instructions for the exchange of such stockholders' certificates
representing shares of BNR Common Stock for certificates representing shares of
Regions Common Stock. BNR 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 proposed Merger is subject to approval by the Board of Governors of the
Federal Reserve System (the "Federal Reserve") and the Louisiana Commissioner of
Financial Institutions (the "Louisiana Commissioner"). An application has been
filed with each of these agencies for the requisite approvals and each of such
agencies has approved the Merger.
8
<PAGE> 11
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of BNR 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
BNR 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. See "Description of
the Transaction -- Waiver, Amendment, and Termination of the Agreement."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of BNR's management and Board of Directors have interests
in the Merger in addition to their interests as stockholders of BNR generally.
Those interests relate to, among other things, provisions in the Agreement
regarding indemnification 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 BNR Common
Stock for Regions Common Stock will not give rise to gain or loss to BNR
stockholders, except to the extent of any cash received in lieu of fractional
share interests or as a result of a stockholder's perfecting such holder's
dissenter's 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, BNR
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, BNR stockholders, whose rights are governed by BNR's
Articles of Incorporation and Bylaws and by the Louisiana Act, automatically
will become Regions stockholders, and their rights as Regions stockholders will
be governed by Regions' Certificate of Incorporation and Bylaws and the Delaware
General Corporation Law (the "Delaware GCL").
The rights of Regions stockholders differ from the rights of BNR
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. BNR 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 BNR Common
Stock on March 16, 1994, the last trading day immediately preceding public
announcement of the proposed acquisition of BNR by Regions and July 21, 1994,
the latest practicable date prior to the mailing of this Proxy
Statement/Prospectus, and (ii) the sale
9
<PAGE> 12
price in the last known transaction of purchase and sale of BNR Common Stock,
which occurred in the fourth quarter of 1993.
<TABLE>
<CAPTION>
EQUIVALENT
PER
SHARE PRICE
REGIONS BNR OF BNR
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK
- ---------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
March 16, 1994................................ $ 32.00 $ 44.00 $ 79.70
July 21, 1994................................. 36.25 44.00 80.26
</TABLE>
The equivalent per share price of BNR Common Stock at each specified date
represents the last sale price of Regions Common Stock on such date multiplied
by assumed Exchange Ratios of 2.491 and 2.214, respectively (based on the last
sale price of Regions Common Stock as reported by the Nasdaq National Market on
the specified date). Stockholders are advised to obtain current market
quotations for Regions Common Stock and BNR Common Stock. No assurance can be
given as to the market price of Regions Common Stock at or after the Effective
Date.
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 BNR, (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 BNR 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) an equivalent pro forma basis per share of
BNR Common Stock, giving effect to the Merger and the Other Acquisitions. The
Regions and BNR pro forma combined information and the BNR pro forma Merger
equivalent information give effect to the Merger on a pooling-of-interests
accounting basis and assumes an Exchange Ratio of 2.3791 (based on the closing
sale price of Regions Common Stock as reported by the Nasdaq National Market on
June 16, 1994). See "Description of the Transaction -- Accounting Treatment."
The Regions, Merger, and Other Acquisitions pro forma combined information and
the BNR 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
Information -- Selected Pro Forma Combined Data for Regions, BNR, 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.
10
<PAGE> 13
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of Regions and
BNR, 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 Information."
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
--------------- ------------------------
1994 1993 1993 1992 1991
------ ------ ------ ------ ------
(UNAUDITED EXCEPT
(UNAUDITED) REGIONS AND BNR
HISTORICAL)
<S> <C> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions historical.................................... $ 0.81 $ 0.74 $ 3.01 $ 2.60 $ 2.16
BNR historical........................................ 1.24 1.84 7.45 5.71 2.73
Regions and BNR pro forma combined(1)................. 0.80 0.74 3.00 2.60 2.14
BNR pro forma Merger equivalent(2).................... 1.90 1.76 7.14 6.19 5.09
Regions, BNR, and Other Acquisitions pro forma
combined(3)......................................... 0.81 3.03 2.58 2.11
BNR pro forma Merger and Other Acquisitions
equivalent(2)....................................... 1.93 7.21 6.14 5.02
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical.................................... $ 0.30 $ 0.26 $ 1.04 $ 0.91 $ 0.87
BNR historical........................................ 0.00 0.00 2.50 2.00 1.50
BNR pro forma Merger equivalent(4).................... 0.71 0.62 2.47 2.16 2.07
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical.................................... $21.39 $18.09 $20.73 $17.62 $15.76
BNR historical........................................ 47.92 43.85 47.63 42.04 37.55
Regions and BNR pro forma combined (1)................ 21.36 18.10 20.72 17.62 15.76
BNR pro forma Merger equivalent(2).................... 50.82 43.06 49.29 41.92 37.49
Regions, BNR, and Other Acquisitions pro forma
combined(3)......................................... 21.15
BNR pro forma Merger and Other Acquisitions
equivalent(2)....................................... 50.32
</TABLE>
- ---------------
(1) Represents the pro forma combined information of Regions and BNR as if the
Merger were consummated on January 1, 1991, and were accounted for as a
pooling of interests.
(2) Represents pro forma combined information multiplied by the assumed Exchange
Ratio of 2.3791 shares of Regions Common Stock for each share of BNR Common
Stock (based on the closing sale price of Regions Common Stock as reported
by the Nasdaq National Market on June 16, 1994).
(3) Represents the pro forma combined information of Regions, BNR, 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 Information -- Selected Pro Forma
Combined Data for Regions, BNR, and Other Acquisitions."
(4) Represents historical dividends per share paid by Regions multiplied by the
assumed Exchange Ratio of 2.3791 shares of Regions Common Stock for each
share of BNR Common Stock (based on the closing sale price of Regions
Common Stock as reported by the Nasdaq National Market on June 16, 1994).
11
<PAGE> 14
(5) The combined and equivalent pro forma per share data assuming minimum and
maximum Exchange Ratios, respectively, of 2.214 and 3.065 shares of Regions
Common Stock for each share of BNR Common Stock is as follows:
<TABLE>
<CAPTION>
EXCHANGE RATIO
-----------------------------------------------------------------------
MINIMUM (2.214) MAXIMUM (3.065)
---------------------------------- ----------------------------------
THREE MONTHS YEAR THREE MONTHS YEAR
ENDED ENDED ENDED ENDED
MARCH 31, 1994 DECEMBER 31, 1993 MARCH 31, 1994 DECEMBER 31, 1993
-------------- ----------------- -------------- -----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions and BNR pro forma combined.. $ 0.80 $ 3.02 $ 0.80 $ 3.00
BNR pro forma Merger equivalent..... 1.77 6.69 2.45 9.20
Regions, BNR, and Other Acquisitions
pro forma combined................ 0.81 3.03 0.81 3.01
BNR pro forma Merger and Other
Acquisitions equivalent........... 1.79 6.71 2.48 9.23
DIVIDENDS DECLARED PER COMMON SHARE
BNR pro forma Merger equivalent..... 0.66 2.30 0.92 3.19
BOOK VALUE PER COMMON SHARE (PERIOD
END)
Regions and BNR pro forma
combined.......................... 21.39 20.74 21.25 20.61
BNR pro forma Merger equivalent..... 47.36 45.93 65.13 63.16
Regions, BNR, and Other Acquisitions
pro forma combined................ 21.17 21.04
BNR pro forma Merger and Other
Acquisitions equivalent........... 46.87 64.49
</TABLE>
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and BNR. The data should be read in conjunction with the
historical financial statements, related notes, and other financial information
concerning Regions and BNR incorporated by reference herein and, in the case of
BNR, accompanying this Proxy Statement/Prospectus. 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)
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA AND RATIOS)
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
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------------------ ---------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
----------- ---------- ----------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA AND RATIOS)
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
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%.
13
<PAGE> 16
SELECTED HISTORICAL FINANCIAL DATA OF BNR
<TABLE>
<CAPTION>
THREE MONTHS
ENDING MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS EXCEPT FOR PER DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total interest income............ $ 2,393 $ 2,621 $ 10,131 $ 10,479 $ 11,245 $ 11,574 $ 11,465
Total interest expense........... 804 888 3,349 3,987 5,995 6,635 6,555
Net interest income.............. 1,589 1,733 6,782 6,492 5,250 4,939 4,910
Provision for loan losses........ 90 40 220 140 75 150 221
Net interest income after loan
loss provision................. 1,499 1,693 6,562 6,352 5,175 4,789 4,689
Total noninterest income
excluding security gains
(losses)....................... 265 249 961 840 1,209 655 598
Security gains (losses).......... 108 30 47 193 (590) (215) 75
Total noninterest expense........ 1,305 1,196 4,707 4,967 4,824 4,204 4,509
Income tax expense............... 163 178 825 563 84 194 44
Cumulative effect of change of
accounting method.............. -- -- 392 -- -- -- --
Net income......................... $ 404 $ 598 $ 2,430 $ 1,855 $ 886 $ 831 $ 809
Per Share:
Net income....................... $ 1.24 $ 1.84 $ 7.45 $ 5.71 $ 2.73 $ 2.56 $ 2.49
Cash dividends................... 0.00 0.00 2.50 2.00 1.50 1.50 1.50
Book value....................... 47.92 43.85 47.63 42.04 37.55 35.63 35.01
Other Information:
Average number of shares
outstanding.................... 326 326 326 325 325 325 325
Balance Sheet Data (period end):
Total assets..................... $142,687 $140,426 $136,718 $136,436 $133,323 $131,186 $119,781
Securities held to maturity...... 25,884 61,682 21,980 60,169 58,430 58,310 49,940
Securities available for sale.... 38,480 -- 34,873 -- -- -- --
Loans, net of unearned income.... 64,104 64,437 64,742 63,248 58,787 52,873 54,722
Total deposits................... 125,321 124,152 119,342 120,397 119,646 118,270 107,504
Long-term debt................... 0 0 0 0 0 0 0
Stockholders' equity............. 15,632 14,305 15,538 13,651 12,193 11,570 11,361
Performance Ratios:
Return on average assets(1)...... 1.16% 1.72% 1.75% 1.40% 0.67% 0.66% 0.68%
Return on average stockholders'
equity(1)...................... 10.30 16.94 16.48 15.11 7.45 7.25 7.25
Net interest margin(1)........... 4.91 5.38 5.30 5.35 4.46 4.53 4.68
Efficiency(2).................... 69.99 60.05 60.53 67.42 73.24 72.05 77.58
Dividend payout.................. 0.00 0.00 33.57 35.01 54.99 58.59 60.13
Asset Quality Ratios:
Net charge-offs to average loans,
net of unearned income(1)...... 0.08% 0.04% 0.14% 0.18% 0.22% 0.34% 0.92%
Problem assets to net loans and
other real estate(3)........... 2.28 2.31 2.37 2.38 3.75 5.49 7.50
Nonperforming assets to net loans
and other real estate(4)....... 2.29 2.41 2.43 2.42 3.79 5.62 7.54
Allowance for loan losses to
loans, net of unearned
income......................... 1.36 1.12 1.29 1.12 1.15 1.38 1.39
Allowance for loan losses to
nonperforming assets(4)........ 59.36 46.19 52.95 45.74 30.01 23.78 17.94
Liquidity and Capital Ratios:
Average stockholders' equity to
average assets................. 11.05% 10.03% 10.61% 9.98% 9.21% 9.35% 9.57%
Average loans to average
deposits....................... 51.51 51.68 54.47 53.24 47.91 48.53 51.18
Tier 1 risk-based capital(5)..... 22.42 21.39 22.23 19.09 17.42 17.17 N/A
Total risk-based capital(5)...... 23.67 20.36 23.44 20.08 18.39 18.25 N/A
Tier 1 leverage(5)............... 10.92 10.11 11.19 10.34 9.13 8.80 9.45
</TABLE>
14
<PAGE> 17
- ---------------
(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%.
15
<PAGE> 18
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of BNR
Common Stock in connection with the solicitation by the BNR Board of Directors
of proxies for use at the Special Meeting, at which BNR stockholders will be
asked to vote upon a proposal to approve the Agreement. The Special Meeting will
be held at 10:00 a.m., local time, on August 26, 1994, at the main offices of
BNR, located at 107 East Main Street, New Roads, Louisiana 70760.
BNR stockholders are requested promptly to sign, date, and return the
accompanying proxy card to BNR in the enclosed postage-paid, addressed envelope.
A stockholder's failure to return a properly executed proxy card or attend the
Special Meeting will result in such holder's shares of BNR Common Stock not
counting toward a quorum for the Special Meeting.
Any BNR 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
BNR a signed proxy card bearing a later date, provided that such notice or proxy
card is actually received by BNR at or before the Special Meeting. Any notice of
revocation should be sent to BNR Bancshares, Inc., 107 East Main Street, New
Roads, Louisiana 70760, Attention: Charles Ray Smith, 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 BNR Common Stock
represented by properly executed proxies received at or prior to the Special
Meeting and not subsequently revoked will be voted as directed in such proxies.
IF INSTRUCTIONS ARE NOT GIVEN, SHARES OF BNR COMMON STOCK REPRESENTED BY PROXIES
RECEIVED WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND IN THE DISCRETION OF
THE PROXY HOLDER AS TO ANY OTHER MATTERS THAT PROPERLY MAY COME BEFORE THE
SPECIAL MEETING. IF NECESSARY, AND UNLESS CONTRARY INSTRUCTIONS ARE GIVEN, THE
PROXY HOLDER ALSO MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL 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, BNR is
aware of no other matter to be presented at the Special Meeting.
Solicitation of proxies will be made by mail and also may be made by
telephone or telegram or in person by the directors, officers, and employees of
BNR, 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.
BNR stockholders should not forward any stock certificates with their proxy
cards.
SAVINGS AND STOCK BONUS PLAN
Each employee of the Bank who is a participant in the Bank's Savings and
Stock Bonus Plan (the "ESOP") may direct the trustee of the ESOP (the "Trustee")
as to the manner in which shares of BNR Common Stock allocated to such
participant's account under the ESOP (the "Plan Shares") shall be voted by the
Trustee at the Special Meeting on the proposal to approve the Agreement. Each
ESOP participant has received with this Proxy Statement/Prospectus a letter from
the Trustee providing instructions as to the voting of such participant's Plan
Shares and a Voting Instruction Card to be used by the participant to give
voting directions to the Trustee. In order to direct the Trustee with respect to
the voting of Plan Shares, an ESOP participant must complete, sign, and date the
Voting Instruction Card and return it to the Trustee in the envelope provided so
that it is received by the Trustee before the Special Meeting. The Trustee will
tabulate the instructions received prior to the Special Meeting and will
determine the aggregate votes for and against approval of the Agreement. At the
Special Meeting, the Trustee will vote the shares of BNR Common Stock held by it
on the record date for which it has received instructions in the manner so
determined. The Trustee will not vote any Plan Shares on the proposal to approve
the Agreement to the extent it does not receive
16
<PAGE> 19
instructions with respect thereto. Approximately 2,470 shares of BNR Common
Stock are held by the Trustee pursuant to the ESOP on behalf of the participants
of such plan.
RECORD DATE; VOTE REQUIRED
BNR's Board of Directors has established the close of business on July 27,
1994, as the Record Date for determining the BNR stockholders entitled to notice
of and to vote at the Special Meeting. Only BNR stockholders of record as of the
Record Date will be entitled to vote at the Special Meeting. The affirmative
vote of the holders of a majority of the voting power of BNR Common Stock
represented in person or by proxy at the Special Meeting is required in order to
approve the Agreement. Therefore, returning an executed proxy card marked as an
abstention 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. Nonvotes in the form of failing to
return a properly executed proxy card, unlike explicit abstentions, will have
the effect of reducing the number of affirmative votes required for approval of
the Agreement, but will not be counted toward a quorum at the Special Meeting.
As of the Record Date, there were 326,218 shares of BNR Common Stock outstanding
and entitled to vote at the Special Meeting, with each share entitled to one
vote. For information as to persons known by BNR to beneficially own more than
5.0% of the outstanding shares of BNR Common Stock as of the Record Date, see
"Voting Securities and Principal Stockholders of BNR."
The presence, in person or by proxy, of a majority of the outstanding
shares of BNR Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting. For these purposes,
shares of BNR Common Stock that are represented in person, or represented by
proxy, at the Special Meeting will be counted for quorum purposes regardless of
whether the holder of the shares or proxy fails to vote on the Agreement or
whether a broker with discretionary authority fails to exercise its
discretionary voting authority with respect to the Agreement. As discussed
above, once a quorum is established, approval of the Agreement requires the
affirmative vote of the holders of a majority of the voting power of BNR Common
Stock represented at the Special Meeting.
The directors and executive officers of BNR and their affiliates
beneficially owned, as of the Record Date, 51,116 shares (or approximately
15.67% of the outstanding shares) of BNR Common Stock. Each member of the Board
of Directors of BNR has agreed to vote the BNR shares over which he has voting
authority (other than in a fiduciary capacity) in favor of the Merger. The
directors and executive officers of Regions and their affiliates beneficially
owned, as of the Record Date, no shares of BNR Common Stock. As of that date, no
subsidiary of either BNR or Regions held any shares of BNR Common Stock in a
fiduciary capacity for others.
DESCRIPTION OF THE TRANSACTION
The following material describes certain aspects of the proposed 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, BNR will merge with and into Regions, the
separate existence of BNR will cease, and the Bank, a wholly-owned subsidiary of
BNR, will become a wholly-owned subsidiary of Regions and will continue in
operation serving its current markets as a state-chartered commercial bank until
combined with other banking subsidiaries of Regions operating in Louisiana. BNR
Common Stock will be converted into Regions Common Stock as described below
under "-- Exchange Ratio; Minimum and Maximum Limitations." Each share of
Regions Common Stock outstanding immediately prior to the Effective Date will
remain outstanding and unchanged as a result of the Merger.
17
<PAGE> 20
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 equal to the fractional interest which a BNR stockholder otherwise would
receive multiplied by the Average Closing Price.
EXCHANGE RATIO; MINIMUM AND MAXIMUM LIMITATIONS
Each share of BNR Common Stock (excluding any shares held by BNR, 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 that number of shares
of Regions Common Stock, subject to minimum and maximum limitations, calculated
by dividing $79.70 by the Average Closing Price. The Agreement defines "Average
Closing Price" as the average of the daily closing sale prices of Regions Common
Stock (as reported in The Wall Street Journal or, if not reported thereby,
another authoritative source chosen by Regions) for the 20 consecutive full
trading days on which such shares are traded on the Nasdaq National Market
ending on the fifth trading day preceding the Effective Date. If the Average
Closing Price is less than $26.00, the Exchange Ratio will be 3.065, and if the
Average Closing Price is greater than $36.00, the Exchange Ratio will be 2.214.
The operation of the Exchange Ratio is illustrated by the following table,
which shows the effect that various Average Closing Prices would have on the
Exchange Ratio and on the number of shares of Regions Common Stock that would be
issuable in the Merger.
<TABLE>
<CAPTION>
AVERAGE CLOSING NUMBER OF SHARES OF
PRICE OF REGIONS EXCHANGE REGIONS COMMON STOCK
COMMON STOCK RATIO ISSUABLE
- ---------------- -------- --------------------
<S> <C> <C>
$26.00 3.065 999,858
27.00 2.9519 962,963
28.00 2.8464 928,547
29.00 2.7483 896,545
30.00 2.6567 866,663
31.00 2.571 838,706
32.00 2.4906 812,479
33.00 2.4152 787,882
34.00 2.3441 764,688
35.00 2.2771 742,831
36.00 2.214 722,247
</TABLE>
This table is presented for illustration purposes only, and no inference is
intended or may be drawn concerning the actual Average Closing Price which may
occur or the resulting Exchange Ratio. Moreover, BNR stockholders should be
aware that the actual market value of a share of Regions Common Stock at the
Effective Date and at the time certificates for those shares are delivered
following surrender and exchange of certificates for shares of BNR Common Stock
may be more or less than the Average Closing Price. BNR stockholders are urged
to obtain information on the trading price of Regions Common Stock that is more
recent than that provided in this Proxy Statement/Prospectus. See "Comparative
Market Prices and Dividends."
No fractional shares of Regions Common Stock will be issued. Rather, cash
will be paid in lieu of any fractional share interest to which any BNR
stockholder would be entitled upon consummation of the Merger, based on the
Average Closing Price. See "Description of the Transaction -- General."
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. In the latter half of 1992, BNR received an
expression of interest from another bank holding company (the "Interested
Party") concerning a possible acquisition of BNR. The Board of BNR met a number
of times during 1992, 1993, and early 1994 to consider that expression of
interest, as well as to review possible strategies for increasing stockholder
value, enhancing the liquidity of
18
<PAGE> 21
BNR Common Stock, and related matters. Beginning in 1993, Chaffe provided
financial advice to the Board of BNR in connection with this review. During the
course of the BNR Board's review, in response to a request from BNR for
indications of interest, BNR provided financial and other information to certain
large financial institutions (including the Interested Party) from which BNR had
received indications of interest. At a meeting held on January 26, 1994, the BNR
Board considered various options available to BNR, including remaining an
independent bank holding company and negotiating a merger of BNR with a larger
financial institution, along with financial and investment banking advice and
analyses performed by Chaffe with respect thereto. At that meeting, the BNR
Board authorized further discussions with respect to the possible merger of BNR
with a larger financial institution.
In February 1994, Regions commenced discussions with BNR, and in connection
with those discussions, Regions received from BNR certain financial and other
information concerning BNR and the Bank. On March 16, 1994, the BNR Board met to
consider merger proposals that BNR had received from Regions, the Interested
Party, and another financial institution. Chaffe reviewed with the BNR Board the
status of negotiations with respect to the proposed merger of BNR with a larger
financial institution, the proposals that had been received from various of
those institutions, and Chaffe's analyses and recommendations with respect to
those proposals. Based on the Chaffe analyses and recommendation and
consideration of various other factors, the BNR Board approved entering into a
letter of intent and memorandum of understanding with Regions with respect to
the possible merger of BNR with and into Regions. From March 17, 1994, until
April 19, 1994, BNR and Regions negotiated the provisions of the Agreement. At a
meeting of the Board of BNR held on April 20, 1994, the BNR Board, after
receiving the opinion of Chaffe (discussed below), approved entering into the
Agreement with Regions.
BNR's Reasons for the Merger. In approving the Merger, the directors of
BNR considered a number of factors. Without assigning any relative or specific
weights to the factors, the BNR Board of Directors considered the following
material factors:
(a) the information presented to the directors by the management of
BNR concerning the business, operations, earnings, asset quality, and
financial condition of BNR, including compliance with regulatory capital
requirements on an historical and prospective basis;
(b) the financial terms of the Merger, including the relationship of
the value of the Regions Common Stock issuable in the Merger to the market
value, tangible book value, and earnings per share of BNR Common Stock, the
partial protection against a decline in the market value of Regions Common
Stock, and the partial participation in any appreciation in value of
Regions Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of
the Merger as a tax-free exchange of BNR 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 report of BNR's financial advisor reviewing a comparison of
BNR to selected peer banks, premiums paid in other merger transactions, a
mark-to-market analysis of BNR, and a discounted cash-flow analysis of BNR;
and
(f) the opinion rendered by BNR's financial advisor to the effect
that, from a financial point of view, the exchange of BNR Common Stock for
Regions Common Stock on the terms and conditions set forth in the Agreement
is fair to the holders of BNR Common Stock.
The terms of the Merger were the result of arms-length negotiations between
representatives of BNR and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of BNR
unanimously approved the Merger as being in the best interests of BNR and its
stockholders. Each member of the Board of Directors of BNR has agreed to vote
such member's shares in favor of the Merger.
BNR'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT BNR STOCKHOLDERS VOTE
FOR APPROVAL OF THE AGREEMENT.
19
<PAGE> 22
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 BNR 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 BNR 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 BNR; 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.
OPINION OF BNR'S FINANCIAL ADVISOR
General. Pursuant to an engagement letter dated as of July 6, 1993, (the
"Engagement Letter"), BNR retained Chaffe to act as its financial advisor.
Acting pursuant to the Engagement Letter, Chaffe, at the request of the Board of
Directors of BNR, acted as BNR's financial advisor in connection with the
Merger, including providing certain analyses of the financial terms of the
Merger. Chaffe is a recognized investment banking firm and is experienced in the
securities industry, in investment analysis and appraisal, and in related
corporate finance and investment banking activities, including mergers and
acquisitions, corporate recapitalizations, and valuations for estate, corporate,
and other purposes. It frequently is retained to perform similar services for
other banks and bank holding companies. BNR selected Chaffe as its financial
advisor on the basis of its experience and expertise in transactions similar to
the Merger and its reputation in the banking and investment communities.
Scope of Engagement. In connection with its engagement to act as BNR's
financial advisor with respect to the Merger, BNR instructed Chaffe to evaluate
the fairness to the BNR stockholders, from a financial point of view, of the
consideration to be paid pursuant to the provisions of the Agreement for the
shares of BNR Common Stock in the Merger and to conduct such investigations as
Chaffe deemed appropriate for such purposes. BNR did not place any limitations
on the scope or manner of Chaffe's investigation and review. The consideration
to be received by BNR's stockholders in the Merger was determined by BNR and
Regions in their negotiations.
Chaffe delivered an oral opinion to the BNR Board on April 20, 1994,
subsequently confirmed by written opinion of that date, and a written opinion
dated the date of this Proxy Statement/Prospectus (the "Proxy Statement
Opinion"), in each case to the effect that, based upon the procedures described
in its opinions and such other matters as Chaffe considered relevant, as of the
date of such opinions, the consideration to be received by BNR's stockholders in
the Merger for their shares of BNR Common Stock was fair to the BNR stockholders
from a financial point of view. The full text of Chaffe's written opinion as of
the date hereof (which is substantially identical to the opinion dated April 20,
1994) is attached hereto as Appendix B and is incorporated herein by reference.
The description of the opinion set forth herein is qualified in its entirety by
reference to Appendix B. BNR stockholders are urged to read the opinion in its
entirety for a description of the procedures followed, assumptions made, matters
considered, and limitations on the review undertaken by Chaffe. Chaffe's opinion
is directed to the BNR Board only, relates only to the consideration to be
received by BNR's stockholders in the Merger for their shares of BNR Common
Stock, and does not constitute a recommendation to any BNR stockholder as to how
such stockholder should vote at the Special Meeting.
Materials Reviewed. In connection with rendering its April 20, 1994
opinion, Chaffe reviewed materials bearing upon the transaction, and upon the
financial and operating condition of BNR, including, among other information:
(i) a draft of the Agreement; (ii) BNR's audited financial statements for the
years 1988 through 1993; (iii) BNR's unaudited financial statements for the
period ended March 31, 1994; (iv) BNR's Annual Report on Form 10-K for 1992, and
Form 10-KSB for 1993 and quarterly reports on Forms 10-Q for the
20
<PAGE> 23
quarters ended March 31, June 30, and September 30, 1993; (v) BNR's Federal
Reserve Forms FR-Y6 dated as of December 31, 1992, and 1993; (vi) BNR's income
tax returns for the year 1992; (vii) the Bank's CALL Reports for the quarters
ended March 31, June 30, September 30, and December 31, 1992, and March 31, June
30, September 30, and December 31, 1993; (viii) the Bank's Uniform Bank
Performance Reports for each quarter dated December 31, 1992, through December
31, 1993; (ix) the Bank's unaudited financial statements for the period ended
March 31, 1994; (x) the Bank's 1994 Budget; (xi) the Bank's capital plan for the
years 1993 through 1998, dated January 17, 1994, under two scenarios (without
and with acquisitions); (xii) the Articles of Incorporation and By-Laws of BNR,
and the Charter of the Bank; (xiii) various BNR and Bank management reports,
unaudited financial statements, information, documents, and correspondence; and
(xiv) statistical and financial information for BNR and the Bank and for
comparable companies derived from various statistical services, as well as
certain publicly available information. In addition, Chaffe reviewed: (xv)
Regions' audited financial statements for the years 1987 through 1990, 1992, and
1993; (xvi) Regions' Proxy Statement for the Annual Stockholders Meeting held in
1988 through 1991, 1993, and 1994; (xvii) Regions' Annual Reports on Form 10-K
for the years 1987 through 1990, 1992, and 1993, and quarterly reports on Form
10-Q for the quarters ended June 30 and September 30, 1993; (xviii) Regions'
unaudited quarterly statements for the quarters ended March 31, 1988, through
December 31, 1993; and (xix) statistical financial information for Regions and
for comparable companies derived from various statistical services, as well as
certain publicly available information and analysts' reports on Regions.
In connection with rendering the Proxy Statement Opinion, Chaffe reviewed,
in addition to the above, the following materials: (xx) the Agreement; (xxi) the
Registration Statement of which this Proxy Statement/ Prospectus is a part;
(xxii) BNR's unaudited financial statements for the period ended June 30, 1994;
(xxiii) BNR's Quarterly Report on Form 10-Q for the quarter ended March 31,
1994; (xxiv) BNR's income tax return for the year 1993; (xxv) the Bank's CALL
Report for the quarter ended March 31, 1994; (xxvi) the Bank's Uniform Bank
Performance Report for March 31, 1994; (xxvii) the Bank's unaudited financial
statements for the period ended June 30, 1994; (xxviii) various BNR and Bank
reports, information, documents, and correspondence; (xxix) Regions' audited
financial statements for 1991; (xxx) Regions' Proxy Statement for the Annual
Stockholders Meeting held in 1992; (xxxi) Regions' Annual Report on Form 10-K
for the year 1991 and quarterly report on Form 10-Q for the quarter ended March
31, 1993; (xxxii) Regions' Registration Statement on Form S-3, dated June 21,
1994; and (xxxiii) additional statistical information for BNR and Regions and
for comparable companies derived from various statistical services, as well as
certain publicly available information and analysts' reports on Regions.
Analysis of Selected Financial Data. In preparation of both the April 20,
1994 opinion and the Proxy Statement Opinion, Chaffe analyzed the historical
performance of BNR and considered the current financial condition, operations,
and prospects for BNR. Chaffe reviewed certain historical market information for
BNR Common Stock and noted that no independent market exists for such shares.
Chaffe analyzed information and data provided by the management of BNR
concerning the loans, other real estate, securities portfolio, fixed assets, and
operations of BNR, although Chaffe did not perform an independent review of
BNR's assets or liabilities. Chaffe relied solely on BNR for information as to
the adequacy of the loan loss reserve and the value of repossessed assets.
At April 20, 1994, Chaffe noted strengths of BNR, including its consistent
record of profitability (with a return on assets in 1993 of 1.47% and a return
on equity in 1993 of 13.11%), strong equity (with the ratio of tangible equity
to total assets as of March 31, 1994, of 10.97%), and low non-performing assets
(with the ratio of nonperforming assets to total assets as of the end of March
1994 of 0.95%). Chaffe also noted certain weaknesses of BNR, including its low
non-interest-bearing deposits (constituting 7.78% of all deposits as of the end
of March 1994) and a slightly high overhead expense (with the ratio of
noninterest expenses to average assets of 3.51% in 1993).
Also, Chaffe analyzed the historical performance of Regions and considered
the current financial condition, operations, and prospects for Regions. At April
20, 1994, Chaffe noted that, as of March 31, 1994, the return on average assets
annualized for 1994 was approximately 1.30% and the return on average equity,
also annualized for 1994, was approximately 15.55%. Regions' ratio of tangible
equity to total assets as of the
21
<PAGE> 24
end of March 1994 was 8.41%, and the ratio of nonperforming assets to total
assets as of the end of March 1994 was 0.63%.
Analysis of Transaction. In connection with rendering its opinions, and
preparing its various written and oral presentations to the BNR Board, Chaffe
performed a variety of financial analyses. Chaffe compared certain financial and
stock market data for peer groups of bank holding companies whose securities are
publicly traded; reviewed the financial terms of business combinations in the
commercial banking industry specifically and other industries generally;
considered a number of valuation methodologies, including, among others, those
that incorporate book value, deposit base premium, and capitalization of
earnings; and performed such other studies and analyses as Chaffe deemed
appropriate for purposes of its opinions. Chaffe's opinions were necessarily
based upon market, economic, and other conditions as they existed on, and could
be evaluated as of, the respective dates of its opinions.
In its review, Chaffe relied, without independent verification, upon the
accuracy and completeness of the historical and projected financial information
and other information reviewed by it for purposes of its opinions. Chaffe
expressed no opinion on the tax consequences of the proposed transaction or the
effect of any tax consequences on the value received by the holders of BNR
Common Stock.
The following is a summary of selected analyses performed by Chaffe in
connection with the opinions. The summary set forth below does not purport to be
a complete description of the analyses performed in this regard. Chaffe believes
that the summary set forth below and Chaffe's analyses must be considered as a
whole and that selecting portions of its analyses, without considering all of
its analyses, creates an incomplete view of the process underlying Chaffe's
opinions.
Analysis of Selected Merger Transactions. In connection with its April 20,
1994 opinion, Chaffe performed an analysis of premiums paid for selected banks
with comparable characteristics to BNR. Comparable transactions were considered
to be transactions in the United States for the period January 1, 1993, through
March 28, 1994, in which the seller had total assets of between $50 million and
$500 million, a leverage ratio greater than 8.0%, a return on average assets
greater than 0.50%, and nonperforming assets less than 2.0% of total assets. In
addition, Chaffe performed an analysis of premiums paid for a similar group of
selected banks, limited in geographic area to 17 states in the southern United
States. Finally, Chaffe performed an analysis of premiums paid for substantially
all Louisiana banks sold during the period January 1, 1993 through March 28,
1994. The Louisiana transactions considered in this analysis included, in
addition to the Merger (Acquiror/Acquiree): Premier Bancorp/Red River Valley
Bank; Premier Bancorp/Heritage Financial Corp.; Premier Bancorp/National Bank of
Commerce; Premier Bancorp/Alerion Corp.; First Alabama Bancshares/Guaranty
Bancorp; Hibernia Corporation/First Continental Bank; Hibernia Corporation/First
Bancorp of Louisiana; Hibernia Corporation/Bastrop National Bank; Hibernia
Corporation/ Commercial Bancshares, Inc.; First Bancorp of Louisiana/Southern
National; First Commerce Corporation/ First Acadiana National Bank; and Hancock
Holding Company/First State B&T Company. With respect to each of these groups of
transactions and the proposed merger, Chaffe compared the prices to be received
by the stockholders of each institution being acquired as a multiple of its
tangible equity, its earnings per share for
22
<PAGE> 25
the four quarters prior to such a transaction, its premium over tangible equity
to core deposits, and its total assets. The following table summarizes certain
results of this analysis:
<TABLE>
<CAPTION>
REGIONS/ U.S. SOUTHERN LOUISIANA
BNR PEER GROUP PEER GROUP PEER GROUP
-------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Seller Total Assets
- Mean.................................... $154,327 $143,555 $198,756
- Median.................................. $142,440 114,040 102,799 173,316
Seller Tangible Equity...................... 10.97% 9.68% 9.37% 9.72%
Seller YTD ROAA*............................ 1.30 1.39 1.34 1.38
Seller YTD ROAE*............................ 11.79 13.16 13.17 16.69
Seller NPA/Assets........................... 0.95 0.77 0.59 1.44
Price/Tangible Equity....................... 166.00 168.57 179.22 169.15
Price/4-Quarter EPS......................... 14.10x 13.82x 14.04x 12.07x
Price-Tangible Equity/Core Deposits......... 9.43 9.05 9.56 9.56
Price/Assets................................ 18.25 17.17 17.70 16.38
</TABLE>
- ---------------
* BNR earnings for the four quarters ended March 31, 1994, net of FASB 109
adjustment.
In connection with the Proxy Statement Opinion, Chaffe performed an
additional analysis of premiums paid for selected banks with comparable
characteristics to BNR. Each of the above described peer groups was updated
through July 21, 1994. Additional Louisiana transactions considered in this
analysis included (Acquiror/Acquiree): First Commerce Corporation/Lakeside
Bancshares, Inc.; First Commerce Corporation/First Bancshares, Inc.; Hibernia
Corporation/Pioneer Bancshares; Regions Financial Corporation/ American
Bancshares, Inc.; Deposit Guaranty/LBO Bancorp, Inc.; First Commerce
Corporation/City Bancorp, Inc.; Iberville Trust & Savings Bank/Bayoulands
Financial Corporation; and Hancock Holding Company/Washington Bancorp. With
respect to each of these groups of transactions and the proposed merger, Chaffe
compared the prices to be received by stockholders of each institution being
acquired in the same manner as described above, and found results substantially
similar to those shown above, with the exception of the Louisiana transactions.
The Louisiana peer group showed the following median pricing multiples:
Price-to-tangible equity -- 186.47%; price-to-earnings per share for the four
quarters prior to such a transaction -- 13.07x; price-to-premium over tangible
equity divided by core deposits -- 10.73%; and price-to-assets -- 17.32%.
Conclusions based on these analyses are not mathematical. Accordingly, an
analysis of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies, as well as other factors that affect the public trading value or
the acquisition value of the companies to which BNR is being compared.
Discounted Cash Flow Analysis. Using discounted cash flow ("DCF")
analysis, Chaffe estimated the present value of the future stream of after-tax
cash flows that BNR could produce through 1999, under various circumstances,
assuming that BNR performed in accordance with the capital plans prepared by
management. Chaffe estimated the terminal value for BNR under various
assumptions and then discounted the cash flow streams and terminal value as
appropriate, using differing discount rates (ranging from 8.3% to 12.5%), chosen
to reflect different assumptions regarding the required rates of return of BNR
and the inherent risks surrounding the capital plans. Additional DCF analyses
were performed at the time of the Proxy Statement Opinion, using similar
methodology and discount rates to the previously described DCF analysis, and
found substantial similar results to those previously found.
Certain Limitations. In arriving at its fairness opinion, Chaffe
considered the analyses outlined above. Chaffe did not rely on any single
analysis, but relied on a combination of factors derived from all of the
analytical procedures employed. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description. The summary set forth above does not purport to be a
complete description of Chaffe's analyses. Chaffe believes that the summary set
forth above
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<PAGE> 26
and Chaffe's analyses must be considered as a whole and that selecting portions
of its analyses, without considering all of its analyses, creates an incomplete
view of the process underlying Chaffe's opinions.
The analyses performed by Chaffe are not necessarily indicative of actual
values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. Additionally, analyses relating to
the value of businesses do not purport to be appraisals or necessarily reflect
the prices at which businesses actually may be sold. Furthermore, Chaffe may
have given various analyses more or less weight than other analyses and may have
deemed various assumptions more or less probable than other assumptions, so that
the ranges of valuations resulting from any particular analysis described above
should not be taken to be Chaffe's view of the actual value of either BNR or
Regions. The fact that any specific analysis has been referred to in the summary
above is not meant to indicate that such analysis was given greater weight than
any other analysis.
Compensation. Prior to its retention in July 1993 to act as BNR's
financial advisor, Chaffe had provided no services to BNR. Chaffe has not
provided any services to Regions. Neither Chaffe nor any of its officers or
employees has any interest in BNR Common Stock or Regions Common Stock.
BNR has paid Chaffe approximately $150,000 in fees for its services since
July 6, 1993, including its services in rendering the Proxy Statement Opinion.
The fees received by Chaffe in connection with its services to BNR were not
dependent or contingent upon the occurrence or lack thereof of any transaction.
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 Louisiana Certificate of Merger relating
to the Merger are filed and declared effective with, respectively, the Delaware
Secretary of State and the Louisiana Secretary of State. Unless otherwise agreed
upon by Regions and BNR, 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
the last of the following events occurs: (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 BNR stockholders; or such later
date within 30 days thereof as specified by Regions.
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 BNR 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 BNR 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 the Exchange Agent to
mail to the former stockholders of BNR a form letter of transmittal, together
with instructions for the exchange of such stockholders' certificates
representing shares of BNR Common Stock for certificates representing shares of
Regions Common Stock.
BNR 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 BNR Common Stock, together with a properly completed
letter of transmittal, there will be issued and mailed to each holder of BNR
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,
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BNR 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 BNR Common Stock has been converted,
regardless of whether such stockholders have surrendered their BNR Common Stock
certificates. Whenever a dividend or other distribution is declared by Regions
on the Regions Common Stock, the record date for which is at or after the
Effective Date, the declaration shall include dividends or other distributions
on all shares issuable pursuant to the Agreement, but no dividend or other
distribution payable after the Effective Date with respect to Regions Common
Stock will be paid to the holder of any unsurrendered BNR certificate until the
holder duly surrenders such certificate. However, upon surrender of such BNR
Common Stock certificate, both the Regions 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.
After the Effective Date, there will be no transfers of shares of BNR
Common Stock on BNR's stock transfer books. If certificates representing shares
of BNR 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 Louisiana Commissioner,
without any conditions or restrictions that, in the reasonable judgment of
BNR's Board of Directors (as to approval conditioning or restricting the
operations of BNR) or Regions' Board of Directors, would so materially
adversely impact the economic or business benefits of the transactions
contemplated by the Agreement as to render inadvisable the consummation of
the Merger;
(b) the approval by the required vote of the holders of BNR Common
Stock represented at the Special Meeting;
(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 BNR Common Stock for
Regions Common Stock will not give rise to recognition of gain or loss to
BNR 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 BNR 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 and (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.
REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. Applications for the approvals described below have been
submitted to the appropriate regulatory agencies, and each of such agencies has
approved the Merger without the imposition of a condition as described above
under "-- Conditions to Consummation of the Merger."
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Regions and BNR 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 lessen
substantially the 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 Louisiana Commissioner.
In its evaluation, the Louisiana Commissioner considered factors 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 BNR
approved by their respective Boards of Directors; provided, however, that after
approval by the BNR stockholders, no amendment decreasing the consideration to
be received by BNR stockholders may be made without the further approval of such
stockholders.
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date, either before or after approval by BNR
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final denial of any
required regulatory approval, or by the Board of Directors of Regions if
any required regulatory approval is conditioned or restricted in the manner
described above under "-- Conditions to Consummation of the Merger";
(b) by the Board of Directors of either party, if the stockholders of
BNR fail to vote their approval of the Agreement;
(c) by mutual agreement of the Boards of Directors of Regions and BNR;
(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 and knowing breach of the Agreement giving
rise to such termination.
CONDUCT OF BUSINESS PENDING THE MERGER
BNR generally has agreed, unless the prior consent of Regions is obtained,
and except as otherwise contemplated by the Agreement, to operate its business
only in the ordinary course, preserve intact its business
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organizations and assets, and maintain its rights and franchises. Regions has
agreed to continue to conduct its business in a manner designed in its
reasonable judgment to enhance the long-term value of Regions Common Stock, to
enhance the business prospects of Regions and its subsidiaries, and to the
extent consistent therewith, to preserve intact the core businesses and goodwill
of Regions. Each of BNR and Regions has agreed not to take any action that would
affect, adversely and materially, 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 BNR or Regions prior to
consummation of the Merger, as described below.
BNR. BNR 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) incurring, or permitting any of its
subsidiaries to incur, any additional debt or other obligation for borrowed
money in excess of an aggregate of $150,000 (except in the ordinary course of
business consistent with past practices); (iii) acquiring or exchanging any
shares of its capital stock or any securities convertible into such shares, or
paying any distribution in respect of its capital stock, other than dividends at
generally the 1993 annualized rate; (iv) issuing, selling, or otherwise
disposing of any additional shares of BNR capital stock or of capital stock of
any BNR company, 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
capital stock ; (vi) acquiring direct or indirect control over any other entity;
(vii) granting any increase in compensation or benefits to employees or officers
of any BNR company (except as disclosed to Regions or as required by law),
paying any bonus (except as disclosed to Regions or in accordance with any
existing program or plan), entering into or amending any severance agreements
with officers (except as disclosed to Regions), or granting any increase in
compensation or other benefits to directors of any BNR company; (viii) entering
into or amending any employment contract between any BNR company and any person
that it does not have the unconditional right to terminate (except as disclosed
to Regions and except for any amendment required by law); (ix) adopting any new
employee benefit plan or program of any BNR company or materially changing any
existing plan or program of any BNR company (except as 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 any material litigation (except in accordance with
past practices) or settling any litigation for an amount in excess of $100,000
or imposing material restrictions on the operations of any BNR company; or (xii)
modifying or terminating any material contract.
In addition, BNR has agreed not to solicit, directly or indirectly, any
acquisition proposal from any other person or entity. BNR 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, BNR 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 and 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. Regions has further agreed not to acquire or enter any
agreement to acquire any bank or other financial institution having its
principal business location in Pointe Coupee Parish, Louisiana before the
consummation of the Merger. Regions has agreed not to amend its Certificate of
Incorporation or By-laws in any manner which is adverse to and discriminates
against holders of BNR Common Stock.
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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
Indemnification and Advancement of Expenses. The Agreement provides that
Regions will, and will cause the Bank to, maintain all rights of indemnification
and advancement of expenses existing in favor of each person entitled to
indemnification from BNR or any of its subsidiaries on terms no less favorable
than the rights provided in the Articles of Incorporation or Bylaws of BNR 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 ten years from the Effective Date with respect to matters occurring
at or prior to the Effective Date. In addition, the Agreement further provides
that, for a period of one year after the Effective Date, Regions shall use its
reasonable efforts to maintain in effect BNR's existing directors' and officers'
liability insurance policy (or comparable policies) with respect to claims
arising from facts or events which occurred prior to the Effective Date and
covering persons who are currently covered by such insurance; provided that
Regions shall not be obligated to make premium payments for such one-year period
in respect of such policy which exceed 150% of the annual premium payment for
the prior fiscal year.
The Agreement further provides that Regions will indemnify and hold
harmless BNR and each of its directors and officers against any losses, claims,
damages, or liabilities arising out of or based upon an untrue statement or
alleged untrue statement of material fact contained in this Proxy
Statement/Prospectus or arising out of or based upon the omission or alleged
omission to state herein a material fact required to be stated herein or
necessary to make the statements herein not misleading and will reimburse each
such person for any legal or other expenses reasonably incurred by such person
in connection with investigating or defending any such action or claim;
provided, however, that Regions will not be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in this Proxy Statement/Prospectus in reliance upon and in
conformity with information furnished to Regions by any indemnified person.
Employee Benefits. The Agreement also provides that, after the Effective
Date, Regions will provide generally to officers and employees of BNR and its
subsidiaries who become officers or employees of Regions or its subsidiaries,
employee benefits under employee benefit plans (other than stock option plans)
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 BNR 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 BNR
to honor all employment, severance, consulting, and other compensation contracts
disclosed to Regions between BNR 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 BNR's benefit plans.
Directors' Deferred Compensation Agreements. The Bank maintains a deferred
compensation plan for its directors (the "Plan"). Under the Plan, each
participating director may elect to defer receipt of Board fees. The total
amount of this deferred compensation is an unfunded liability of the Bank, and
interest accrues on this amount during each year at a rate equal to the Bank's
"Annual Asset Earnings Rate," defined to mean the Bank's annual total interest
income divided by its average earnings assets, adjusted annually. All current
directors of the Bank are participants in the Plan and have entered into
deferred compensation agreements with the Bank to evidence such participation.
In general, the Plan is intended to permit each participant to receive his or
her deferred benefits following retirement payable over 15 years. The benefits
may become payable before retirement under certain circumstances, including if
the participant dies or ceases to be a director. The amount of these payments is
determined generally by the length of participation in the Plan, the aggregate
amount deferred by the participant, and the rate of interest.
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The deferred compensation agreement of each participant provides that, if
the participant resigns or is removed as a director of the Bank, or not
nominated for re-election, in each case for actions inimical to the Bank's
interests, the agreement terminates. In that event, the participant is entitled
to receive the value of his account, plus accrued interest to the date of
payment in a lump sum. If a participant ceases to be a director before
retirement for any other reason, other than death, the participant is entitled
to be paid his accrued benefits in installments over the 15-year period
following the date on which he or she ceases to be a director, or the
participant may elect to defer receipt of such benefits until his or her planned
retirement date.
The deferred compensation agreements have special provisions that apply if
a participant ceases to be a director of the Bank after the occurrence of a
"Change in Control," as defined in the Plan. A Change in Control under the Plan
is deemed to have occurred if a person, other than the Bank's Employee Stock
Ownership Trust, becomes the beneficial owner of securities of the Bank having
25% or more of the total votes that may be cast in the election of directors. A
Change in Control also is deemed to have occurred if, during any period of two
consecutive years, individuals who constitute the Board of Directors of the Bank
at the beginning of such period cease for any reason to constitute at least a
majority of the Board, unless the election or the nomination for election by the
Bank's stockholders of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period. The Merger will constitute a Change in Control under
the Plan since, as a result of the Merger, Regions will acquire all (i.e., more
than 25%) of the securities of the Bank entitled to vote in the election of
directors. If a participant ceases to be a director of the Bank within 24 months
following the occurrence of a Change in Control for any reason other than death
or actions inimical to the Bank's interests, the participant is entitled under
the Plan to receive the benefits such participant otherwise would be entitled to
receive under such circumstances, but increased in amount by 50%. Furthermore,
if the Plan as a whole is terminated following a Change in Control, the
participants become entitled to receive a lump sum plan termination benefit in
lieu of any other benefits payable under the Plan equal to the greater of the
value of the participant's account at the date of termination increased in
amount by 30% or a lump sum amount specified in such participant's agreement.
With the exception of two participants whose account balances were less than
$3,000, the participants' account balances range from approximately $21,186 to
$114,224, and the lump sum amounts payable to such participants range from
approximately $21,362 to $170,080. Accordingly, if within 24 months after the
Merger a director ceases to be a director, other than as a result of death or
for reasons inimical to the Bank, or if the Plan as a whole is terminated
following the Merger, one or more current directors would become eligible to
receive the additional benefits payable under the Plan in connection with a
Change in Control.
Change of Control Arrangement. The Bank is party to a change of control
compensation agreement with Mr. Greely, the President and Chief Executive
Officer of BNR and the Bank. Mr. Greely became President and Chief Executive
Officer effective September 10, 1993, and the purpose of the change of control
agreement was to assure that, notwithstanding the occurrence of any change of
control affecting BNR or the Bank, Mr. Greely would receive his monthly base
salary for a period of at least two years beginning September 10, 1993.
Accordingly, if Mr. Greely's employment with the Bank is terminated for any
reason other than death or for cause (as defined in the change of control
agreement), and he ceases to be paid monthly compensation at a rate equal to his
monthly base salary of $7,083.33 by the Bank or its successors, he will be
entitled to receive a lump sum payment equal to $170,000 reduced by the sum of
$7,083.33 for each month after September 10, 1993, for which he shall have been
paid his monthly base salary of $7,083.33. Under this agreement, a change of
control includes (i) an acquisition of 35% or more of the combined voting power
of BNR's outstanding stock by a person other than BNR or persons who are
directors of BNR, (ii) the occurrence of any merger, consolidation, or
reorganization to which BNR or the Bank is a party and is not the surviving
entity, or (iii) the sale of all or substantially all of the assets of BNR or
the Bank. Also, if Mr. Greely's base salary is reduced after the occurrence of a
change in control but before September 10, 1995, Mr. Greely will be entitled to
receive on September 10, 1995, an amount equal to the difference between the
amount he is actually paid during that period, and the sum of $7,083.33 for each
month elapsed during such period. The change of control agreement does not
entitle Mr. Greely to receive any fringe benefits or directors fees following
the termination of his employment.
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Regions Stock Ownership. As of the Record Date, directors and executive
officers of BNR owned no shares of Regions Common Stock.
DISSENTING STOCKHOLDERS
General. Each BNR stockholder who objects to the Merger shall be entitled
to the rights and remedies of dissenting stockholders provided in Section 12:131
of the Louisiana Act, a copy of which is included as Appendix C to this Proxy
Statement/Prospectus.
Statutory Requirements. The following is a summary of the steps to be
taken by a BNR stockholder who is interested in perfecting such holder's
dissenter's rights and should be read in conjunction with the full text of
Section 12:131 of the Louisiana Act. Each of the steps enumerated below must be
taken in strict compliance with the applicable provisions of the statute in
order for holders of BNR Common Stock to perfect their dissenters' rights. If
the Merger is approved by 80% or more of the total voting power of BNR, then
dissenters' rights of appraisal, in accordance with the Louisiana Act, will not
be available.
Any written objection, demand, or notice required by the Louisiana Act in
connection with the exercise of dissenters' rights should be sent to BNR at 107
East Main Street, New Roads, Louisiana 70760, Attention: Charles Ray Smith,
Corporate Secretary. It is recommended that all required documents to be
delivered by mail be sent by registered or certified mail with return receipt
requested.
Any holder of BNR Common Stock who disapproves of or objects to the
proposed Merger and who wishes to receive in cash the "fair value" of such
shares (determined immediately before the Merger is consummated) may elect to do
so by taking all of the following steps:
(a) Such stockholder must file with BNR, prior to or at the Special
Meeting, a written objection to the proposed Merger.
(b) Such stockholder must vote such holder's shares of BNR Common
Stock against the Merger. If the Merger is approved by the required vote,
but by less than 80% of the total voting power, and the Merger authorized
thereby is effected, BNR promptly thereafter shall give written notice
thereof, by registered mail, to each stockholder who filed such written
objection to, and voted such holder's shares against, the Merger, at such
stockholder's last address on BNR's records.
(c) Each such stockholder, within 20 days after the mailing of such
notice to such holder, but not thereafter, must file with BNR a demand in
writing for the fair cash value of such holder's shares of BNR Common Stock
as of the day before such vote was taken, and such holder must state in
such demand the value demanded, and a post office address to which the
reply of BNR may be sent.
(d) At the same time, such stockholder must deposit in escrow in a
chartered bank or trust company located in Pointe Coupee Parish the
certificates representing such holder's shares of BNR Common Stock, duly
endorsed and transferred to BNR upon the sole condition that such
certificates shall be delivered to BNR upon payment of the value of the
shares determined in accordance with the provisions of Section 12:131 of
the Louisiana Act.
(e) With the demand, the stockholder must deliver to BNR the written
acknowledgment of such bank or trust company that it so holds such holder's
certificates of BNR Common Stock.
Unless the objection, demand, and acknowledgment are made and delivered by
the stockholder within the required time period, such holder conclusively shall
be presumed to have acquiesced in the Merger. If BNR does not agree to the value
so stated and demanded, or does not agree that a payment is due, within 20 days
after receipt of such demand and acknowledgment, it shall notify the stockholder
in writing, at the designated post office address, of its disagreement and shall
state in such notice the value it will agree to pay if any payment should be
held to be due; otherwise it shall be liable for, and shall pay to the
dissatisfied stockholder, the value demanded.
In case of disagreement as to such fair cash value, or as to whether any
payment is due, after compliance by the parties with the provisions described
above, the dissatisfied stockholder, within 60 days after receipt of
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<PAGE> 33
notice in writing of BNR's disagreement, but not thereafter, may file suit
against BNR, or the merged or consolidated corporation, as the case may be, in
the district court of Pointe Coupee Parish, praying the court to fix and decree
the fair cash value of the dissatisfied stockholder's shares of BNR Common Stock
as of the day before such corporate action complained of was taken, and the
court, on such evidence as may be adduced in relation thereto, shall determine
summarily whether any payment is due and, if so, such cash value and render
judgment accordingly. Any stockholder entitled to file such suit, within such
60-day period, but not thereafter, may intervene as a plaintiff in such suit
filed by another stockholder and recover therein judgment against BNR for the
fair cash value of such holder's shares of BNR Common Stock. Failure of the
stockholder to bring suit, or to intervene in such a suit, within 60 days after
receipt of notice of disagreement by BNR conclusively shall bind the stockholder
(i) by BNR's statement that no payment is due or (ii) if BNR does not contend
that no payment is due, to accept the value of such holder's shares of BNR
Common Stock as fixed by BNR in its notice of disagreement.
Any stockholder who fails to take each of the required actions outlined
above in a timely manner will not be entitled to exercise the rights of a
dissenting stockholder. Any stockholder who timely takes each of the required
actions outlined above thereafter shall retain all rights of a stockholder,
except the right to receive shares of Regions Common Stock, until those rights
are modified by the effectuation of the proposed Merger.
A stockholder, upon filing a demand for the value of such holder's shares,
shall cease to have any of the rights of a stockholder, except the rights
accorded by Section 12:131 of the Louisiana Act. Such a demand may be withdrawn
by the stockholder at any time before BNR gives notice of disagreement, as
provided by the Louisiana Act. After such notice of disagreement is given,
withdrawal of a notice of election shall require the written consent of BNR. If
a notice of election is withdrawn, or the Merger is abandoned or rescinded, or a
court shall determine that the stockholder is not entitled to receive payment
for such holder's shares of BNR Common Stock, or the stockholder shall otherwise
lose such holder's dissenter's rights, such holder shall not have the right to
receive payment for such holder's shares of BNR Common Stock, such holder's
share certificates shall be returned (and, on such holder's request, new
certificates shall be issued in exchange for the old ones endorsed to BNR), and
such holder shall be reinstated to all rights as a stockholder as of the filing
of his demand for value, including any intervening preemptive rights, and the
right to payment of any intervening dividend or other distribution, or if any
such rights have expired or any such dividend or distribution other than in cash
has been completed, in lieu thereof, at the election of BNR, the fair value
thereof in cash as determined by the BNR Board or, if the Merger shall have been
consummated, the Regions Board as of the time of such expiration or completion,
but without prejudice otherwise to any corporate proceedings that may have been
taken in the interim.
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
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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 BNR 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 Louisiana Act, the Merger will be a reorganization
within the meaning of Section 368(a)(1)(A). BNR and Regions will each be "a
party to a reorganization" within the meaning of Section 368(b).
(b) BNR 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 BNR.
(c) No gain or loss will be recognized by Regions on receipt of BNR's
assets in exchange for Regions Common Stock.
(d) The basis of BNR's assets in the hands of Regions will, in each
case, be the same as the basis of those assets in the hands of BNR
immediately prior to the transaction.
(e) The holding period of the assets of BNR in the hands of Regions
will, in each case, include the period during which such assets were held
by BNR.
(f) The stockholders of BNR will recognize no gain or loss upon the
exchange of their BNR Common Stock solely for shares of Regions Common
Stock.
(g) The basis of the Regions Common Stock received by the BNR
stockholders in the proposed transaction will, in each instance, be the
same as the basis of the BNR Common Stock surrendered in exchange therefor.
(h) The holding period of the Regions Common Stock received by the BNR
stockholders will, in each instance, include the period during which the
BNR Common Stock surrendered in exchange therefor was held, provided that
the BNR Common Stock was held as a capital asset on the date of the
exchange.
(i) The payment of cash to BNR 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).
(j) Where solely cash is received by a BNR stockholder in exchange for
his BNR Common Stock pursuant to the exercise of dissenters' rights, such
cash will be treated as having been received in redemption of his BNR
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. BNR 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."
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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 BNR 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, BNR (such persons are referred to hereinafter as
"affiliates" and generally include executive officers, directors, and 10%
stockholders) at the time of the Special 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 whom BNR reasonably believes to be an affiliate of BNR 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 BNR Common Stock will be exchanging
their shares of a Louisiana corporation governed by the Louisiana Act and BNR'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 BNR stockholders and those of Regions
stockholders. Certain differences identified by BNR 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 Louisiana Act and the Delaware GCL
as well as to Regions' Certificate and Bylaws and BNR's Articles and Bylaws.
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
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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.
BNR. BNR's authorized capital stock consists of 5,000,000 shares of BNR
Common Stock, of which 337,500 shares were issued, including 11,282 treasury
shares, as of March 31, 1994. Under the Louisiana Act, the BNR Board may issue
additional authorized shares of BNR Common Stock without further action of the
BNR stockholders. The Louisiana Act provides that stockholders will have only
such preemptive rights to purchase or subscribe to any unissued authorized
shares or any option or warrant for the purchase thereof as may be provided in
the articles of incorporation. The BNR Articles do not grant any preemptive
rights to the BNR stockholders.
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.
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BNR. The Louisiana Act generally provides that a Louisiana corporation's
articles of incorporation may be amended by the affirmative vote of at least
two-thirds of the voting power present, or by such larger or smaller percentage
of the voting power present, but not less than a majority, as the articles of
incorporation require. The BNR Articles provide that those provisions of the BNR
Articles that pertain to (i) the election, classification, and removal of
directors, (ii) the approval required for certain business combinations, and
(iii) the amendment of the BNR Articles, may be amended or repealed only by the
affirmative vote of the holders of 75% of the total voting power of BNR. All
other provisions of the BNR Articles, including those pertaining to authorized
capital stock and meetings of stockholders, may be amended, altered, changed, or
repealed by the affirmative vote of a majority of the voting power present. The
BNR Articles and Bylaws also provide that the BNR Board may adopt, amend, or
repeal the BNR Bylaws, and the BNR stockholders may adopt, amend, or repeal any
Bylaws by the affirmative vote of the holders of 75% of the total voting power
of BNR's voting 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 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.
BNR. The BNR Articles and Bylaws state that BNR's Board shall be divided
into three classes as nearly equal in number as possible, with the directors in
each class to serve three-year terms of office.
The BNR Bylaws also state that each stockholder of BNR is entitled to one
vote for each share of BNR stock held. The Louisiana Act states that the
articles of incorporation may provide for cumulative voting, but the BNR
Articles do not provide for cumulative voting.
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 75% or more of Regions' voting stock.
BNR. Pursuant to BNR's Articles, any director may be removed, at any
special meeting called for that purpose, only for cause and only by the
affirmative vote of 75% or more of the voting power of BNR.
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
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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.
BNR. The BNR Articles provide that a director of BNR will not have
personal liability to BNR or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability resulting from (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 which involve intentional misconduct or a
knowing violation of law, (iii) unlawful distribution of the corporation's
assets to, or redemption or repurchase of the corporation's shares from,
stockholders of BNR, under and to the extent provided in the Louisiana Act, or
(iv) any transaction in which the director derived an improper personal benefit.
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 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.
BNR. The BNR Articles and Bylaws provide that BNR shall indemnify the
officers and directors of the Bank, and may indemnify the employees and agents
of BNR or the Bank, to the full extent permitted by Section 12:83 of the
Louisiana Act. The provisions of the Louisiana Act permit more extensive
indemnification than that provided under the Delaware GCL and provides that the
indemnification and advancement of expenses provisions under the Louisiana Act
are not exclusive of any other rights to which the person receiving
indemnification or advancement of expenses is entitled under, among other
things, any bylaws of the corporation; provided that no such other
indemnification measure shall permit indemnification of any person for the
results of such person's willful or intentional misconduct.
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
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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.
BNR. Under BNR's Bylaws, special meetings of the stockholders, for any
purpose or purposes, may be called by the president, Board of Directors, or the
holders of not less than one-third of all shares of BNR 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.
BNR. Under the Louisiana Act, any action which may be taken at a meeting
of BNR's stockholders may be taken without a meeting if the written consent
thereto is signed by all of the stockholders entitled to vote thereon.
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.
BNR. Neither the Louisiana Act nor the BNR Articles or Bylaws set forth
any provisions expressly forbidding or permitting a stockholder to submit a
proposal for consideration at a stockholders' meeting or to nominate any person
for election as a director or 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 quotations 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
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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.
BNR. Sections 12:132-134 of the Louisiana Act (the "Fair Price
Provisions") place restrictions on "business combinations" (as defined in
Section 12:132(4) of the Louisiana Act to include, generally, mergers,
consolidations, share exchanges, sales and leases of assets, issuances of
securities, and similar transactions) by certain Louisiana corporations
(including BNR) with an "interested stockholder" (as defined in Section
12:132(9) of the Louisiana Act to include, generally, the beneficial owner of
10% or more of the voting power of the then outstanding voting stock). The Fair
Price Provisions generally do not apply if the stockholders receive in the
business combination consideration for their shares determined under a set of
complex provisions, the effect of which can be to deter certain acquisitions of
stock of a corporation that is subject to the Fair Price Provisions.
A corporation is entitled under certain circumstances to elect not to be
subject to the Fair Price Provisions of the Louisiana Act respecting business
combinations. If such election is not made, and if Sections 12:132-134 of the
Louisiana Act otherwise apply, Section 12:133 generally would prohibit a
business combination by BNR with an interested stockholder unless the business
combination is recommended by BNR's Board of Directors and approved by the
affirmative vote of at least each of the following: (i) 80% of the votes
entitled to be cast by outstanding shares of BNR voting stock voting together as
a single voting group and (ii) 66 2/3% of the votes entitled to be cast by
holders of BNR voting stock, other than voting stock held by the interested
stockholder who is a party to the business combination with BNR, voting together
as a single voting group. By resolution of its Board, BNR has elected not to
have the provisions of Sections 12:132-134 apply to the proposed Merger and,
accordingly, Section 133 does not apply to the Merger.
Under Sections 12:135 through 140.2 of the Louisiana Act (the "Control
Share Law"), a person who acquires shares in certain Louisiana corporations
(including BNR) and as a result increases such person's voting power in the
corporation to or above any of three threshold levels (i.e., 20%, 33 1/3%, and
50%), acquires the voting rights with respect to such shares only to the extent
granted by a majority of the pre-existing, disinterested stockholders of the
corporation. Certain acquisitions of shares are exempted from the provisions of
the Control Share Law, including acquisitions pursuant to a merger,
consolidation, or share exchange agreement to which the issuing public
corporation is a party. Since Regions' acquisition of BNR Common Stock is to be
made pursuant to a merger and BNR and Regions are parties to the Agreement with
respect thereto, the Control Share Law does not apply to the Merger.
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.
BNR. Under BNR's Articles, the affirmative vote or consent of the holders
of 75% or more of the total voting power of BNR is required to approve (i) a
merger or consolidation of BNR or the Bank, with or into any other corporation,
(ii) any sale or lease of all or any substantial part of the assets of BNR or
the Bank to any other corporation, person, or other entity, or (iii) any sale or
lease to BNR or the Bank of any assets (except assets having an aggregate fair
market value of an amount less than 5.0% of the consolidated stockholders'
equity of BNR as reflected on its most recent year-end audited financial
statements) in exchange for voting securities of BNR or the Bank (or securities
convertible into such voting securities or
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options, warrants, or rights to purchase such voting securities or securities
convertible into such voting securities), if such other corporation, person, or
entity which is a party to such transaction, is the beneficial owner, directly
or indirectly, of 5.0% or more of BNR's outstanding common stock. However, the
foregoing 75% approval is not required (x) if BNR's Board of Directors approves
a memorandum of understanding with the other party to the transaction before
such party becomes a beneficial owner of more than 5.0% of the outstanding
shares of BNR Common Stock, or such transaction is unanimously approved by the
full Board at any time prior to the consummation of such transaction or (y) in
any merger or consolidation of BNR with, or any sale or lease to BNR or the Bank
of any assets of or sale or lease by BNR or the Bank of any of its assets to,
any corporation of which a majority of the outstanding shares of stock entitled
to vote in elections of directors is owned of record or beneficially by BNR.
BNR's Board approved a memorandum of understanding with Regions at a time when
Regions did not have beneficial ownership of any shares of BNR Common Stock and
has unanimously approved the Merger. Accordingly, this provision of the BNR
Articles is not applicable to the Merger.
For transactions to which the foregoing 75% approval is not required,
certain other provisions of BNR's Articles and the Louisiana Act apply. The
Louisiana Act generally requires the affirmative vote of at least two-thirds of
the voting power present, or such larger or smaller vote, but not less than a
majority, of the voting power present or the total voting power as the articles
of incorporation may prescribe to effect (i) any merger or consolidation with or
into any other corporation or (ii) any sale or lease of any substantial part of
BNR's assets. The BNR Articles provide that a majority of BNR's voting power is
sufficient to constitute corporate action, unless a higher vote is made
mandatory by law or by another provision of the BNR Articles.
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.
BNR. The rights of appraisal of dissenting stockholders under Louisiana
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 Louisiana 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.
BNR. The Louisiana Act provides that any stockholder (other than a
business competitor) who has been a stockholder of record for at least 5.0% of
the outstanding shares of any class of stock of the corporation for at least six
months has the right to examine and inspect records and accounts of the
corporation upon at least five days written notice, so long as there is a
reasonable purpose. A business competitor who has held not
39
<PAGE> 42
less than 25% of all outstanding shares of a corporation for a period of six
months also may exercise this right of inspection.
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."
BNR. Pursuant to the Louisiana Act, the Board of BNR from time to time may
declare dividends in cash, property, or its own shares out of surplus, except
earned surplus reserved by the Board, unless BNR is insolvent or would thereby
be made insolvent or the declaration or payment of the dividend would be
contrary to any restrictions contained in the articles of incorporation. If the
corporation has no surplus available for dividends, it may pay dividends out of
its net profit for the then current or the preceding fiscal year or both.
However, no dividend may be paid at a time when, either before or after the
payment of the dividend, the corporation's liabilities exceed its assets or the
net assets are less than the aggregate amount payable on liquidation upon the
issued shares, if any, which have a preferential right to participate in the
corporation's assets in the event of liquidation. No dividends may be paid in
shares, other than treasury shares, except upon transfer to stated capital from
capital surplus of (i) an amount not less than the aggregate par value of the
issued par value shares and (ii) such amount as the board of directors of the
corporation may determine in respect of issued shares without par value. No
dividend payable in shares of any class shall be paid to stockholders of any
other class, unless the articles of incorporation so permit or such payment is
authorized by the holders of a majority of the shares of the class in which the
payment is to be made. Substantially all of the funds available for the payment
of dividends by BNR are derived from the Bank. There are various statutory
limitations on the ability of the Bank to pay dividends to BNR.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock is quoted on the Nasdaq National Market under the
symbol "RGBK." BNR 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 BNR Common Stock and the cash dividends declared per
share of Regions Common Stock and BNR 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 BNR are based on actual transactions in BNR Common Stock of which
BNR 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 BNR Common Stock in the indicated periods, and no
assurance can be given that the indicated prices represent the actual market
value of the BNR Common Stock.
<TABLE>
<CAPTION>
REGIONS BNR
-------------------------------- --------------------------------
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 $20.00 $20.00 $ --
Second Quarter...................... 30.00 25.13 .2275 29.00 25.00 --
Third Quarter....................... 30.75 27.50 .2275 33.00 25.00 --
Fourth Quarter...................... 33.88 28.38 .2275 31.50 31.50 2.00
</TABLE>
40
<PAGE> 43
<TABLE>
<CAPTION>
REGIONS BNR
-------------------------------- --------------------------------
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>
1993
First Quarter....................... $38.38 $31.25 $ .26 $40.00 $37.00 $ --
Second Quarter...................... 38.25 30.25 .26 30.00 30.00 --
Third Quarter....................... 35.25 31.25 .26 -- -- --
Fourth Quarter...................... 35.00 29.63 .26 44.00 44.00 2.50
1994
First Quarter....................... 33.50 30.13 .30 44.00 44.00 --
Second Quarter...................... 36.13 30.50 .30 44.00 44.00 --
Third Quarter (through July 21)..... 36.50 34.63 .30 44.00 44.00 --
</TABLE>
On July 21, 1994, the last reported sale price of Regions Common Stock as
reported on the Nasdaq National Market, and the price of BNR Common Stock in the
last known transaction, which occurred in the fourth quarter of 1993, were
$36.25 and $44.00, 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 BNR Common Stock, were $32.00 and $44.00, 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's 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's
subsidiary depository institutions are subject to certain legal restrictions on
the amount of dividends they are permitted to pay. See "Supervision and
Regulation -- Dividends."
The holders of BNR Common Stock are entitled to receive dividends when and
if declared by the Board of Directors out of funds that are legally available
therefor. BNR has paid regular annual dividends for many years. If the Merger
were not consummated, it would be the intention of BNR to continue paying annual
cash dividends. However, there can be no assurance that BNR's dividend policy
would remain unchanged, since the declaration and payment of dividends in the
future would depend on business conditions, operating results, capital and
reserve requirements, the judgment of the Board of Directors and other factors.
41
<PAGE> 44
BUSINESS OF BNR
BNR is a bank holding company organized under the laws of the State of
Louisiana with its principal executive office located in New Roads, Louisiana.
BNR operates principally through the Bank, which is a state-chartered commercial
bank and which provides a range of retail banking services through five offices
in Pointe Coupee Parish and one office in East Baton Rouge Parish, Louisiana. At
March 31, 1994, BNR had total consolidated assets of approximately $142.7
million, total consolidated deposits of approximately $125.3 million, and total
consolidated stockholders' equity of approximately $15.6 million. BNR's
principal executive office is located at 107 East Main Street, New Roads,
Louisiana 70760, and its telephone number at such address is (504) 638-3791.
Additional information with respect to BNR and its subsidiaries is included
in documents incorporated by reference in this Proxy Statement/Prospectus.
Copies of such documents, consisting of BNR's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1993, as amended, including that portion of
the BNR Annual Report to Stockholders incorporated by reference therein, BNR's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, and BNR's
Current Report on Form 8-K dated as of March 16, 1994, accompany this Proxy
Statement/Prospectus.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF BNR
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of BNR Common Stock, as of June 16, 1994.
<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------- ----------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock Madeleine B. Caillet 18,336 5.62%
P.O. Box 67 Direct
Oscar, Louisiana 70762
</TABLE>
42
<PAGE> 45
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 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, 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.
43
<PAGE> 46
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 Purchase
--------- ----- and
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.
44
<PAGE> 47
Other Pending Acquisitions. As of the date of this Proxy
Statement/Prospectus, Regions has pending three acquisitions in addition to the
acquisition of BNR (referred to as the "Other Pending Acquisitions") in the
States of Alabama, Georgia, and Louisiana, certain aspects of which transactions
are set forth below:
<TABLE>
<CAPTION>
CONSIDERATION
---------------
APPROXIMATE ANTICIPATED
------------------ ACCOUNTING
INSTITUTION ASSET SIZE VALUE TYPE TREATMENT
------------------------------------------- ---------- ----- ------- ----------
(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
First Community Bancshares, Inc. ("First
Community") and its subsidiary, First
Bank of Rome, located in Rome, Georgia... 124 24 Regions Pooling of
Common Interests
Stock Stock
Union Bank & Trust Company ("Union"),
located in Montgomery, Alabama........... 455 65 Regions Purchase
--------- ----- Common
Stock
Totals........................... $883 $150
========= =====
</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 all 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
Information" 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 15, 1994, Regions had purchased, in the open market,
approximately $24.7 million of Regions Common Stock pursuant to this repurchase
program.
45
<PAGE> 48
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect, as
appropriate, to the acquisitions of BNR, 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 BNR
The following unaudited pro forma combined data give effect to the
acquisition of BNR 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.......................................................... $ 10,579,391
Securities............................................................ 2,543,304
Loans, net of unearned income......................................... 6,912,806
Total deposits........................................................ 8,892,316
Other borrowed money.................................................. 469,794
Stockholders' equity.................................................. 893,871
Book value per common share........................................... 21.36
</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.................... $173,299 $565,798 $547,226 $568,066
Total interest expense................... 74,343 216,963 228,055 298,012
------------ -------- -------- --------
Net interest income...................... 98,956 348,835 319,171 270,054
Provision for loan losses................ 4,416 21,753 27,212 24,080
------------ -------- -------- --------
Net interest income after loan loss
provision............................. 94,540 327,082 291,959 245,974
Total noninterest income................. 36,921 133,034 120,110 102,076
Total noninterest expense................ 81,450 291,733 269,626 235,164
Income tax expense....................... 16,455 54,300 45,540 33,744
------------ -------- -------- --------
Income before cumulative effect of change
in accounting principle............... $ 33,556 $114,083 $ 96,903 $ 79,142
========== ======== ======== ========
Income before cumulative effect of change
in accounting principle per share..... $ 0.80 $ 3.00 $ 2.60 $ 2.14
Average common shares outstanding........ 41,835 37,981 37,308 36,967
</TABLE>
SELECTED PRO FORMA COMBINED DATA FOR REGIONS, BNR, 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 BNR, Guaranty,
46
<PAGE> 49
and First Community 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 BNR, Guaranty, and First
Community 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>
47
<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 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
48
<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
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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.
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 it
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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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 Regions' 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 -- 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 BNR stockholders
intended to be presented at the next annual meeting of stockholders of BNR must
be received by BNR at its principal executive offices a reasonable time before
the date of BNR's proxy statement released to its stockholders for that meeting
for consideration by BNR for possible inclusion in such proxy materials.
EXPERTS
The consolidated financial statements of BNR 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
Hannis T. Bourgeois & Co., L.L.P., 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 Regions Annual Report to Stockholders and the 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 June 16,
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
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
BNR BANCSHARES, INC.
AND
FIRST ALABAMA BANCSHARES, INC.
DATED AS OF APRIL 21, 1994
A-1
<PAGE> 60
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <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 BNR or FAB......................................... A-6
3.4 Dissenting Shareholders........................................... A-6
3.5 Fractional Shares................................................. A-7
ARTICLE 4 -- EXCHANGE OF SHARES...................................................... A-7
4.1 Exchange Procedures............................................... A-7
4.2 Rights of Former BNR Shareholders................................. A-7
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF BNR................................... A-8
5.1 Organization, Standing, and Power................................. A-8
5.2 Authority; No Breach By Agreement................................. A-8
5.3 Capital Stock..................................................... A-9
5.4 BNR Subsidiaries.................................................. A-9
5.5 Financial Statements.............................................. A-9
5.6 Absence of Undisclosed Liabilities................................ A-10
5.7 Absence of Certain Changes or Events.............................. A-10
5.8 Tax Matters....................................................... A-10
5.9 Environmental Matters............................................. A-10
5.10 Compliance With Laws.............................................. A-11
5.11 Employee Benefit Plans............................................ A-11
5.12 Material Contracts................................................ A-12
5.13 Legal Proceedings................................................. A-13
5.14 Statements True and Correct....................................... A-13
5.15 Tax and Regulatory Matters........................................ A-13
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-14
6.3 Capital Stock..................................................... A-15
6.4 FAB Subsidiaries.................................................. A-15
6.5 Financial Statements.............................................. A-15
6.6 Absence of Undisclosed Liabilities................................ A-15
6.7 Absence of Certain Changes or Events.............................. A-15
6.8 Compliance With Laws.............................................. A-16
6.9 Legal Proceedings................................................. A-16
6.10 Statements True and Correct....................................... A-16
6.11 Tax and Regulatory Matters........................................ A-17
</TABLE>
A-2
<PAGE> 61
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION................................ A-17
7.1 Affirmative Covenants of BNR...................................... A-17
7.2 Negative Covenants of BNR......................................... 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-20
8.1 Registration Statement; Proxy Statement; Shareholder Approval..... A-20
8.2 Exchange Listing.................................................. A-21
8.3 Applications...................................................... A-21
8.4 Filings with State Offices........................................ A-21
8.5 Agreement as to Efforts to Consummate............................. A-21
8.6 Investigation and Confidentiality................................. A-21
8.7 Press Releases.................................................... A-22
8.8 Certain Actions................................................... A-22
8.9 Tax Treatment..................................................... A-22
8.10 Agreements of Affiliates.......................................... A-22
8.11 Employee Benefits and Contracts................................... A-22
8.12 Indemnification................................................... A-22
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE....................... A-23
9.1 Conditions to Obligations of Each Party........................... A-23
9.2 Conditions to Obligations of FAB.................................. A-24
9.3 Conditions to Obligations of BNR.................................. A-25
ARTICLE 10 -- TERMINATION............................................................ A-26
10.1 Termination....................................................... A-26
10.2 Effect of Termination............................................. A-26
10.3 Non-Survival of Representations and Covenants..................... A-26
ARTICLE 11 -- MISCELLANEOUS.......................................................... A-27
11.1 Definitions....................................................... A-27
11.2 Expenses.......................................................... A-31
11.3 Brokers and Finders............................................... A-32
11.4 Entire Agreement.................................................. A-32
11.5 Amendments........................................................ A-32
11.6 Waivers........................................................... A-32
11.7 Assignment........................................................ A-32
11.8 Notices........................................................... A-32
11.9 Governing Law..................................................... A-33
11.10 Counterparts...................................................... A-33
11.11 Captions.......................................................... A-33
11.12 Enforcement of Agreement.......................................... A-33
11.13 Severability...................................................... A-33
Signatures........................................................................... A-34
</TABLE>
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- ----------------------------------------------------------------------------
<C> <C> <S> <C>
1 -- Form of Directors' Agreement. (Section 5.17).
2 -- Form of agreement of affiliates of BNR. (Section 8.10, 9.2(f)).
3 -- Matters as to which Stone, Pigman, Walther, Wittmann & Hutchinson 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>
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<PAGE> 63
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of April 21, 1994, by and between BNR BANCSHARES, INC. ("BNR"), a
corporation organized and existing under the laws of the State of Louisiana,
with its principal office located in New Roads, Louisiana; 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 BNR 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 BNR by
FAB pursuant to the merger of BNR into and with FAB. At the effective time of
such merger, the outstanding shares of the capital stock of BNR shall be
converted into shares of the common stock of FAB (except as provided herein). As
a result, shareholders of BNR shall become shareholders of FAB and each of the
subsidiaries of BNR 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 BNR, 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, BNR shall be merged into and with FAB in accordance with the
provisions of Sections 12:111 and 12:112 of the LBCL and with the effect
provided in Section 12:115 of the LBCL 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 BNR 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 Louisiana
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Louisiana 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
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 which the shareholders of BNR 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.
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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 BNR Common Stock (excluding shares held by BNR 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 and exchanged for that number of shares of FAB Common Stock (the
"Exchange Ratio") equal to the quotient obtained by dividing (i) $79.70 by
(ii) the Average Closing Price; provided, however, that in the event the
Average Closing Price is (a) less than $26.00, the Exchange Ratio shall be
3.065, or (b) greater than $36.00, the Exchange Ratio shall be 2.214
($26.00 and $36.00 are collectively referred to as the "Average Closing
Price Limitations").
3.2 Anti-Dilution Provisions. In the event BNR changes the number of
shares of BNR 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 BNR or FAB. Each of the shares of BNR Common Stock held
by any BNR 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 BNR Common Stock who
perfects such holder's dissenters' rights of appraisal in accordance with and as
contemplated by Part XIII of the LBCL shall be entitled to receive the value of
such shares in cash as determined pursuant to such provision of Law; provided,
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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 LBCL, including the provisions of Section 131 thereof relating to the
deposit in escrow, endorsement, and transfer of the certificate or certificates
representing the shares for which payment is being made. In the event that a
dissenting shareholder of BNR fails to perfect, or effectively withdraws or
loses, his right to appraisal and of payment for his shares, such Person shall
not have the right to receive payment in cash for his shares and, instead, as of
the Effective Time the shares of BNR Common Stock held by such Person shall be
converted into and exchanged for that number of shares of FAB Common Stock
determined under Section 3.1 of this Agreement and the delivery of certificates
representing such FAB Common Stock and any dividends or other distributions in
respect thereof to which such holder may be entitled shall be governed by
Section 4.1 of this Agreement.
3.5 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of BNR Common Stock exchanged pursuant to the
Merger, 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. The
market value of one share of FAB Common Stock at the Effective Time shall be the
Average Closing Price, subject, however, to the Average Closing Price
Limitations. No such holder will be entitled to dividends, voting rights, or any
other rights as a shareholder in respect of any fractional shares.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time, FAB and BNR
shall cause the exchange agent selected by FAB (the "Exchange Agent") to mail to
the former shareholders of BNR appropriate transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of BNR Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). After the
Effective Time, each holder of shares of BNR 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 and not withdrawn or forfeited under
Section 131 of the LBCL) issued and outstanding at the Effective Time, promptly
upon the surrender of the certificate or certificates representing such shares
to the Exchange Agent, shall receive in exchange therefor the certificate or
certificates representing the shares of FAB Common Stock into which such shares
of BNR Common Stock have been converted under Section 3.1 of this Agreement,
together with all undelivered dividends and other distributions in respect of
such shares (without interest thereon) pursuant to Section 4.2 of this Agreement
and, to the extent required by Section 3.5 of this Agreement, cash in lieu of
any fractional share of FAB Common Stock to which such holder otherwise would be
entitled (without interest). Until so surrendered, each outstanding certificate
of BNR Common Stock shall be deemed for all purposes, other than as provided
below with respect to the payment of dividends or other distributions payable to
the holders of shares of FAB Common Stock, to represent the number of whole
shares of FAB Common Stock into which the number of shares of BNR Common Stock
represented thereby prior to the Effective Time shall have been converted. FAB
shall not be obligated to deliver the certificate or certificates representing
the shares of FAB Common Stock to which any former holder of BNR Common Stock is
entitled as a result of the Merger, or any dividends or distributions in respect
of those shares, until such holder surrenders his certificate or certificates
representing the shares of BNR Common Stock for exchange as provided in this
Section 4.1 or otherwise complies with the procedures of the Exchange Agent with
respect to lost, stolen, or destroyed certificates.. The certificate or
certificates of BNR Common Stock so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither FAB, BNR, nor the Exchange Agent shall be liable to a
holder of BNR 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 BNR Shareholders. At the Effective Time, the stock
transfer books of BNR shall be closed as to holders of BNR Common Stock
immediately prior to the Effective Time and no transfer of
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<PAGE> 66
BNR 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 BNR
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 the number of shares of FAB Common Stock into which the shares of BNR
Common Stock represented thereby shall have been converted under Section 3.1 of
this Agreement and the cash issuable in lieu of fractional shares under Section
3.5 of this Agreement. To the extent permitted by Law, former shareholders of
record of BNR 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 BNR Common Stock are converted, regardless of whether
such holders have exchanged their certificates representing BNR 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 BNR 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 BNR
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 BNR
BNR hereby represents and warrants to FAB as follows:
5.1 Organization, Standing, and Power. BNR is a corporation duly organized
and validly existing, and in good standing under the Laws of the State of
Louisiana, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its material Assets. BNR 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 BNR.
5.2 Authority; No Breach By Agreement. (a) BNR 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 BNR, subject to the approval of this Agreement by the required vote of
the outstanding BNR Common Stock, which is the only shareholder vote required
for approval of this Agreement and consummation of the Merger by BNR. Subject to
such requisite shareholder approval, this Agreement represents a legal, valid,
and binding obligation of BNR, enforceable against BNR in accordance with its
terms (except in all cases as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and (ii) application
of, and limitations on the application of, equitable principles and remedies,
including limitations on the availability of the equitable remedy of specific
performance or injunctive relief.
(b) Neither the execution and delivery of this Agreement by BNR, nor the
consummation by BNR of the transactions contemplated hereby, nor compliance by
BNR with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of BNR'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 BNR Company under, any
Contract or Permit of any BNR Company, where such
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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 BNR, 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 BNR 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 or both 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 BNR, no
notice to, filing with, or Consent of, any public body or authority is necessary
for the consummation by BNR of the Merger and the other transactions
contemplated in this Agreement.
5.3 Capital Stock. The authorized capital stock of BNR consists of
5,000,000 shares of BNR Common Stock, of which 326,218 shares are issued and
outstanding as of the date of this Agreement and not more than 326,218 shares
will be issued and outstanding at the Effective Time. All of the issued and
outstanding shares of capital stock of BNR are duly and validly issued and
outstanding and are fully paid and nonassessable under the LBCL. To the
Knowledge of BNR, none of the outstanding shares of capital stock of BNR has
been issued in violation of any preemptive rights of the current or past
shareholders of BNR. Except as set forth above or as disclosed in Section 5.3 of
the BNR Disclosure Memorandum, there are no shares of capital stock or other
equity securities of BNR outstanding and no outstanding Rights relating to the
capital stock of BNR.
5.4 BNR Subsidiaries. BNR has disclosed in Section 5.4 of the BNR
Disclosure Memorandum all of the BNR Subsidiaries as of the date of this
Agreement. Except as disclosed in Section 5.4 of the BNR Disclosure Memorandum,
BNR or one of its Subsidiaries owns all of the issued and outstanding shares of
capital stock of each BNR Subsidiary. No equity securities of any BNR Subsidiary
are or may become required to be issued (other than to another BNR Company) by
reason of any Rights, and there are no Contracts by which any BNR Subsidiary is
bound to issue (other than to another BNR Company) additional shares of its
capital stock or Rights or by which any BNR Company is or may be bound to
transfer any shares of the capital stock of any BNR Subsidiary (other than to
another BNR Company). There are no Contracts relating to the rights of any BNR
Company to vote or to dispose of any shares of the capital stock of any BNR
Subsidiary. All of the shares of capital stock of each BNR Subsidiary held by a
BNR 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 BNR Company free and clear of any Lien. Each BNR 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 BNR 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 BNR. Each BNR 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, to the extent provided by applicable law.
5.5 Financial Statements. BNR has included in Section 5.5 of the BNR
Disclosure Memorandum copies of all BNR Financial Statements for periods ended
prior to the date hereof and will deliver to FAB copies of all BNR Financial
Statements prepared subsequent to the date hereof. The BNR Financial Statements
(as of the dates thereof and for the periods covered thereby) present or will
present, as the case may be, fairly the consolidated financial position of the
BNR Companies as of the dates indicated and the consolidated results of
operations, changes in stockholders' equity, and cash flows of the BNR Companies
for
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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 and to the absence from
interim financial statements of any footnote disclosures).
5.6 Absence of Undisclosed Liabilities. Except as disclosed in Section 5.6
of the BNR Disclosure Memorandum, no BNR Company has any Liabilities that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on BNR, except Liabilities which are accrued or reserved against in the
consolidated balance sheets of BNR as of December 31, 1993 included in the BNR
Financial Statements or reflected in the notes thereto. Except as disclosed in
Section 5.6 of the BNR Disclosure Memorandum, no BNR 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 BNR.
5.7 Absence of Certain Changes or Events. Since December 31, 1993, except
as disclosed in Section 5.7 of the BNR Disclosure Memorandum, or in the BNR
Financial Statements delivered prior to the date of this Agreement, to the
Knowledge of BNR,(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 BNR, and (ii) the BNR 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 BNR 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 BNR 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, except to the extent that all
such failures to file or untimely filings, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on BNR and all returns
filed are complete and accurate in all material respects to the Knowledge of
BNR. All Taxes shown on filed returns have been paid. There is no audit
examination, deficiency, refund Litigation, or penalties due or owed with
respect to any Taxes that is reasonably and likely to result in a determination
that would have a Material Adverse Effect on BNR, except as reserved against in
the BNR Financial Statements delivered prior to the date of this Agreement or as
disclosed in Section 5.8 of the BNR 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 BNR 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) To the Knowledge of BNR, adequate provision for any Taxes due or to
become due for any of the BNR Companies for the period or periods through and
including the date of the respective BNR Financial Statements has been made and
is reflected on such BNR Financial Statements.
(d) Effective for the fiscal year ended December 31, 1993, BNR adopted
Financial Accounting Standards Board Statement 109, "Accounting for Income
Taxes."
(e) Each of the BNR Companies is in compliance with, and its records
contain the information and documents (including properly completed IRS Forms
W-9) necessary to comply with, in all material respects, applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify the accounts subject to backup withholding under
Section 3406 of the Internal Revenue Code.
5.9 Environmental Matters. (a) To the Knowledge of BNR, each BNR 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 BNR.
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(b) To the Knowledge of BNR, there is no Litigation pending or threatened
before any court, governmental agency, or authority or other forum in which any
BNR 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 BNR 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 BNR, and to the Knowledge of BNR, there
is no reasonable basis for any such Litigation.
(c) To the Knowledge of BNR, there have been no releases in violation of
Environmental Laws 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
BNR.
5.10 Compliance With Laws. BNR is duly registered as a bank holding
company under the BHC Act. Each BNR 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 BNR. Except as disclosed in
Section 5.10 of the BNR Disclosure Memorandum, none of the BNR 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 BNR; 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 BNR 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 BNR, (ii) threatening to revoke any Permits, or (iii) requiring any BNR
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) BNR has disclosed in Section 5.11 of the
BNR Disclosure Memorandum, and has delivered or made available to FAB prior to
the execution of this Agreement copies in each case of, all written 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 written health plans, all life insurance plans, and all other
written employee benefit plans or fringe benefit plans, including written
"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 BNR 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 "BNR Benefit Plans"). Any of the BNR 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 "BNR ERISA Plan." Each BNR
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 "BNR Pension Plan." No
BNR Pension Plan is or has been a multiemployer plan within the meaning of
Section 3(37) of ERISA.
(b) To the Knowledge of BNR, all BNR 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 BNR. Except as
disclosed in Section 5.11(b) of the BNR Disclosure Memorandum, each BNR ERISA
Plan which is intended to be qualified under Section 401(a) of the Internal
Revenue Code has received a favorable
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determination letter from the Internal Revenue Service, and BNR is not aware of
any circumstances likely to result in revocation of any such favorable
determination letter. To the Knowledge of BNR, no BNR Company has engaged in a
transaction with respect to any BNR Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject any BNR
Company to a tax or penalty imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA that, individually or in the aggregate,
is reasonably likely to have a Material Adverse Effect on BNR.
(c) No BNR 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 equals or 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 BNR Pension Plan, (ii) no change in the actuarial assumptions with respect
to any BNR Pension Plan, and (iii) no increase in benefits under any BNR 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 BNR or materially adversely affect the funding status of any such
plan. Neither any BNR Pension Plan nor any "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
BNR Company, or the single-employer plan of any entity which is considered one
employer with BNR 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 BNR Company
has provided, or is required to provide, security to a BNR 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 BNR Company with respect to any ongoing, frozen,
or terminated single-employer plan or the single-employer plan of any ERISA
Affiliate. No BNR 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 BNR 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 BNR Disclosure Memorandum,
no BNR Company has any Liability for retiree health and life benefits under any
of the BNR Benefit Plans and, to the Knowledge of BNR, there are no restrictions
on the rights of such BNR Company to amend or terminate any such Plan without
incurring any Liability thereunder.
(f) Except as disclosed in Section 5.11 of the BNR 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 BNR Company from any BNR Company
under any BNR Benefit Plan or otherwise, (ii) increase any benefits otherwise
payable under any BNR 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 BNR 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 BNR 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 BNR
Disclosure Memorandum or otherwise reflected in the BNR Financial Statements,
none of the BNR 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
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of money by any BNR Company or the guarantee by any BNR 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 BNR 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 BNR with the SEC as of the date of this Agreement that has not
been filed as an exhibit to BNR's Form 10-K filed for the fiscal year ended
December 31, 1993 (together with all Contracts referred to in Section 5.11(a) of
this Agreement, the "BNR Contracts"). None of the BNR Companies is in Default
under any BNR Contract where such Default, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on BNR. All of the
indebtedness of any BNR Company for money borrowed is prepayable at any time by
such BNR Company without penalty or premium.
5.13 Legal Proceedings. Except as disclosed in Section 5.13 of the BNR
Disclosure Memorandum, there is no Litigation instituted or pending, or, to the
Knowledge of BNR, 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 BNR 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 BNR, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any BNR Company that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BNR. Section 5.13
of the BNR Disclosure Memorandum includes a summary report of all Litigation as
of the date of this Agreement to which any BNR Company is a party and which
names a BNR Company as a defendant or cross-defendant.
5.14 Statements True and Correct. As of their respective dates, each
report and other document, including financial statements, exhibits, and
schedules thereto, filed by a BNR 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. No
statement, certificate, instrument, or other writing furnished or to be
furnished by any BNR 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. None of the
information supplied or to be supplied by any BNR Company or any Affiliate
thereof for inclusion in the Registration Statement to be filed by FAB with the
SEC will, when the Registration Statement becomes effective, be false or
misleading with respect to any material fact, or contain any untrue statement of
a material fact, or omit to state any material fact required to be stated
thereunder or necessary to make the statements therein not misleading. None of
the information supplied or to be supplied by any BNR Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to BNR shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by a BNR Company or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of BNR, be false or misleading
with respect to any material fact, or contain any misstatement of material fact,
or omit to state any material fact required to be stated thereunder or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting, be false or misleading with respect to any material fact, or omit to
state any material fact required to be stated thereunder or necessary to correct
any material statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meeting. All documents that any
BNR 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 BNR 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
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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 BNR Company has
taken all necessary action to exempt the transactions contemplated by this
Agreement from Sections 132 et. seq. and 135 et. seq. of the LBCL and any
comparable provisions of the Articles of Incorporation of BNR.
5.17 Directors' Agreements. Each of the directors of BNR 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 BNR 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 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, or both, 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.
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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 BNR
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 BNR 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 FAB Subsidiaries. FAB has disclosed in Exhibit 21 of its Annual Report
on Form 10-K for the fiscal year ended December 31, 1993, all of the material
FAB Subsidiaries as of the date of such report. Except as disclosed in such
report, FAB or one of its Subsidiaries, owns all of the issued and outstanding
shares of capital stock of each material FAB Subsidiary. All of the shares of
capital stock of each material FAB Subsidiary held by a FAB 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 FAB Company free and clear of any Lien. Each material FAB 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 material FAB 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 FAB. Each material FAB 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, to the extent provided by applicable
law.
6.5 Financial Statements. FAB has included in Section 6.53 of the FAB
Disclosure Memorandum all FAB Financial Statements for periods ended prior to
the date hereof and will deliver to BNR 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) 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 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 and to the absence from interim financial
statements of complete footnote disclosures).
6.6 Absence of Undisclosed Liabilities. No FAB Company has any Liabilities
(including Liabilities relating to matters contemplated by Sections 5.8, 5.9,
and 5.11 of this Agreement assuming for purposes of this Section 6.6 that such
Sections apply to FAB 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.
6.7 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
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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.
6.8 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.
6.9 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.
6.10 Statements True and Correct. 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 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. No
statement, certificate, instrument, or other writing furnished or to be
furnished by any FAB Company or any Affiliate thereof to BNR 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. None of the
information supplied or to be supplied by any FAB Company or any Affiliate
thereof for inclusion in the Registration Statement to be filed by FAB with the
SEC, will, when the Registration Statement becomes effective, be false or
misleading with respect to any material fact, or contain any untrue statement of
a material fact, or omit to state any material fact required to be stated
thereunder or necessary to make the statements therein not misleading. None of
the information supplied or to be supplied by any FAB Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to BNR shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by any FAB Company or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of BNR, be false or misleading
with respect to any material fact, or contain any misstatement of a material
fact or, omit to state any material fact required to be stated thereunder or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case
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of the Proxy Statement, or any amendment thereof or supplement thereto, at the
time of the Shareholders' Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact required to be stated
thereunder or necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Shareholders' Meeting. All
documents that any FAB Company or any Affiliate thereof is responsible for
filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable Law.
6.11 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 BNR. Unless the prior written consent of the
chief executive officer, appropriate regional president, or chief financial
officer of FAB shall have been obtained, and except as otherwise expressly
contemplated herein or disclosed in Section 7.1 of the BNR Disclosure
Memorandum, BNR 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 in all material respects its business organization and Assets
and maintain its rights and franchises, and (iii) take no action which would (x)
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 (y) materially adversely affect
the ability of any Party to perform its covenants and agreements under this
Agreement.
7.2 Negative Covenants of BNR. Except as disclosed in Section 7.2 of the
BNR Disclosure Memorandum for the applicable paragraphs indicated below, from
the date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, BNR 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, appropriate regional 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 BNR Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a BNR Company to another BNR
Company) in excess of an aggregate amount outstanding at any time of
$150,000 (for the BNR Companies on a consolidated basis) except in the
ordinary course of the business of BNR Subsidiaries consistent with past
practices (which shall include, for BNR Subsidiaries that are depository
institutions, creation of deposit liabilities, purchases of federal funds,
advances from the Federal Reserve Bank or Federal Home Loan Bank, whether
or not such BNR Subsidiaries have previously received any such advances,
overnight borrowings to meet temporary liquidity needs, 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 BNR
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, Liens to secure debt obligations or other obligations for borrowed
money permitted under this paragraph (b), and Liens in effect as of the
date hereof that are disclosed in the BNR Disclosure Memorandum); it being
understood that Bank of New
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Roads has not previously but may in the future, borrow funds from the
Federal Home Loan Bank to be secured by Liens and such borrowings and Liens
are expressly permitted under this paragraph (b); 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 BNR Company, or declare or pay any dividend or
make any other distribution in respect of BNR's capital stock, provided
that BNR may (to the extent legally and contractually permitted to do so),
but shall not be obligated to, declare and pay a cash dividend on each
issued and outstanding share of BNR Common Stock for each fiscal year (or
portion thereof) occurring prior to the Effective Time at a rate not in
excess of an amount equal to the product of (i) a cash dividend amount paid
per share on BNR Common Stock during the 1993 fiscal year and (ii) the
quotient obtained by dividing (x) the number of complete calendar months
elapsed during the fiscal year for which the dividend is being paid prior
to the Effective Time and (y) 12; 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
BNR 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 BNR Common Stock or any other capital stock of any BNR
Company, or any Rights to acquire such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any BNR
Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of BNR Common Stock, or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares
of capital stock of any BNR Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another BNR 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 and other than
dispositions in the ordinary course of business of (i) investment
securities, (ii) loans, including dispositions thereof through loan
participation agreements, and (iii) other real estate owned by any BNR
Company; or
(f) except for purchases of U.S. Treasury securities, U.S. Government
agency securities and mortgage backed balloon loans, which in each case
have maturities of five years or less, and except for collateralized
mortgage obligations/planned amortization class (CMO/PAC), 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 BNR 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 BNR Company, except in accordance with past practice or
previously approved by the Board of Directors of BNR, in each case as
disclosed in Section 7.2(g) of the BNR Disclosure Memorandum or as required
by Law; except as disclosed in Section 7.2(g) of the BNR Disclosure
Memorandum, 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 BNR Disclosure
Memorandum; and enter into or amend any severance agreements with officers
of any BNR Company; grant any increase in fees or other increases in
compensation or other benefits to directors of any BNR Company except in
accordance with past practice disclosed in Section 7.2(g) of the BNR
Disclosure Memorandum; or voluntarily accelerate the vesting of any stock
options or other stock-based compensation or employee benefits; or
(h) enter into or amend any employment Contract between any BNR
Company and any Person (unless such amendment is required by Law) that the
BNR Company does not have the unconditional right to terminate without
Liability (other than Liability for severance payments under the existing
severance policies of BNR disclosed in Section 7.2(h) of the BNR Disclosure
Memorandum), at any time on or after the Effective Time; or
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(i) adopt any new employee benefit plan of any BNR Company or make any
material change in or to any existing employee benefit plans of any BNR
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 material Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of any BNR
Company for money damages in excess of $100,000 or imposing material
restrictions upon the operations of any BNR Company; or
(l) modify, amend, or terminate any material Contract (other than any
loan Contract, the modification, amendment, or termination of which does
not result in the BNR Companies recognizing a loss that exceeds $50,000) or
waive, release, compromise, or assign any material rights or claims, other
than in connection with the modification, amendment, or termination of a
loan Contract permitted under the preceding clause of this paragraph (1).
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 and shall cause each of its Subsidiaries to (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, (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 and
such discontinuance or disposition would not represent a material portion of the
Assets of the FAB Companies, and (z) amend the Certificate of Incorporation or
Bylaws of FAB, in each case, in any manner which is adverse to, and
discriminates against, the holders of BNR Common Stock. FAB further agrees that
it shall not, directly or indirectly, acquire or enter into any agreement in
principle or definitive agreement to acquire, any bank or savings and loan
holding company, or any federal or state chartered bank, savings bank, thrift
homestead association, savings association, savings and loan association,
cooperative bank, or other similar financial institution that has its principal
business location in the Parish of Pointe Coupee, Louisiana, whether by merger,
consolidation, purchase, or otherwise, or entering into discussions or
negotiations with any such financial institution with respect thereto.
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. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flow for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material and
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to the absence from interim financial statements of any (in the case of BNR) or
complete (in the case of FAB) footnote disclosures). As of the respective dates,
such reports filed with the SEC will comply in all material respects with the
Securities Laws and will not contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval. (a) FAB
shall promptly prepare and file the Registration Statement with the SEC, and
shall use its reasonable efforts to cause the Registration Statement to become
and remain 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. BNR
shall furnish all information concerning it and the holders of its capital stock
as FAB may reasonably request in connection with such action. BNR shall call a
Shareholders' Meeting for the purpose of voting upon approval of this Agreement
and such other related matters as it deems appropriate. FAB and BNR agree to use
their reasonable efforts to cause the Shareholders' Meeting to be held on a date
so as to minimize, to the extent reasonably practicable, the period of time
between the Shareholders' Meeting and the Effective Time. In connection with the
Shareholders' Meeting, (i) BNR 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 BNR 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 BNR shall (subject to compliance with their fiduciary duties as
advised by counsel) use their reasonable efforts to obtain such shareholders'
approval.
(b) FAB shall indemnify and hold harmless BNR, each of its directors and
officers, and each Person, if any, who controls BNR within the meaning of the
1933 Act against any losses, claims, damages, or Liabilities, joint, several, or
solidary, to which they or any of them may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages, or Liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of material fact contained in the Registration
Statement or the Proxy Statement, or arising out of or based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each such Person for any legal or other expenses reasonably incurred
by such person in connection with investigating or defending any such action or
claim; provided, however, that FAB shall not be liable in any such case to the
extent that any such loss, claim, damage, or Liability (or action in respect
thereof) arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement or
the Proxy Statement in reliance upon and in conformity with information
furnished to FAB by any indemnified Person. Promptly after receipt by an
indemnified Person of notice of the commencement of any action, such indemnified
Person shall, if a claim in respect thereof is to be made against FAB under this
Section 8.1(b), notify FAB in writing of the commencement thereof. In case any
such action shall be brought against any indemnified Person and it shall notify
FAB of the commencement thereof, FAB shall be entitled to participate therein,
and to the extent that it shall wish, to assume the defense thereof, with
counsel satisfactory to such indemnified Person, and, after notice from FAB to
such indemnified Person of its election to so assume the defense thereof, FAB
shall not be liable to such indemnified party under this Section 8.1(b) for any
legal expenses of other counsel or any other expenses subsequently incurred by
such indemnified Person, except that if FAB elects not to assume such defense or
counsel for an indemnified Person or Persons advises in writing that there are
material substantive issues which raise conflicts of interests between FAB and
one or more indemnified Persons, such indemnified Person or Persons may retain
counsel satisfactory to them, and FAB shall pay all reasonable fees and expenses
of such counsel for the indemnified Persons, promptly as statements therefor are
received; provided that (i) FAB shall be obligated pursuant to
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this Section 8.1 (b) to pay for only one firm of counsel for all indemnified
Persons in any jurisdiction and (ii) FAB shall not be liable for any settlement
effected without its prior written consent.
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 BNR Common Stock pursuant to the Merger.
8.3 Applications. FAB shall promptly prepare and file, and BNR shall
cooperate in the preparation and, where appropriate, filing of, applications
with all Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement. FAB shall permit BNR
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 Louisiana
Certificate of Merger with the Secretary of State of the State of Louisiana 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. BNR 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 BNR. No
investigation by a Party shall affect the representations and warranties of the
other Party.
(b) Each Party shall, and shall cause its Representatives to, maintain the
confidentiality of all written, oral, and other confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions ("Confidential Information") and
shall not use such information for any purpose except in furtherance of the
transactions contemplated by this Agreement. Each Party shall maintain the
confidentiality of all Confidential Information obtained in connection with this
Agreement or the transactions contemplated hereby unless (i) such information
becomes publicly available through no fault of such Party, or was, is, or
becomes available to that Party from a source other than the other Party or its
Representatives, which source was itself not bound by a confidentiality
agreement with, or other contractual, legal, or fiduciary obligation of
confidentiality with respect to that information, or (ii) the furnishing or use
of such information is required by proper judicial, administrative, or other
legal proceeding, provided that the other Party is promptly notified in writing
of such request, unless such notification is not, in the opinion of counsel,
permitted by Law. Each Party and its Representatives will hold and maintain all
Confidential Information in confidence and will not disclose to any third party
or permit any third party access to any Confidential Information or the
substance thereof; provided that a Party may disclose Confidential Information
to such of its Representatives who need to know such information in connection
with the transactions contemplated hereby. 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.
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(c) The terms of this Section 8.6 shall supersede that certain
Confidentiality Agreement, dated February 22, 1994 (the "Confidentiality
Agreement"), by and between FAB and BNR. BNR shall use its reasonable efforts to
exercise its rights under paragraph 6 of the form of confidentiality agreement
on which the Confidentiality Agreement was based that was entered into with
various third parties which were considering an acquisition transaction with BNR
to preserve the confidentiality of the information relating to BNR provided to
such parties.
8.7 Press Releases. Prior to the Effective Time, BNR 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 BNR Company nor any Affiliate thereof nor
any Representative retained by any BNR Company shall directly or indirectly
solicit any Acquisition Proposal by any Person. Except to the extent necessary
to comply with the fiduciary duties as advised by counsel of BNR's Board of
Directors, no BNR 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 BNR may communicate information about such an
Acquisition Proposal to its shareholders if and to the extent that it or its
directors are required to do so in order to comply with its or their fiduciary
duties as advised by counsel. BNR shall promptly notify FAB orally and in
writing in the event that it receives any inquiry or proposal relating to any
such transaction. BNR shall (i) immediately cease and cause to be terminated any
existing 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. BNR has disclosed in Section 8.10 of the BNR
Disclosure Memorandum each Person whom it reasonably believes is an "affiliate"
of BNR for purposes of Rule 145 under the 1933 Act. BNR 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 BNR 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 BNR Companies employee
benefits under employee benefit plans (other than stock option plans), 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
BNR 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 BNR
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 BNR Disclosure Memorandum to FAB between any BNR 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 BNR Benefit Plans.
8.12 Indemnification. (a) For a period of ten years after the Effective
Time, FAB shall, and shall cause Bank of New Roads to, indemnify, defend, and
hold harmless the present and former directors, officers,
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employees, and agents of the BNR 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 Louisiana Law and by BNR's
Articles of Incorporation and Bylaws as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of any
Litigation, provided, however, that the indemnification provided by this Section
8.12(a) shall not apply to any claim against an Indemnified Party if such
Indemnified Party knew of the existence of the claim and failed to make a good
faith effort to require BNR to notify its director and officer liability
insurance carrier of the existence of such claim prior to the Effective Time.
Without limiting the foregoing, in any case in which approval is required to
effectuate any indemnification, the determination of any such approval shall be
made, at the election of the Indemnified Party, by independent counsel mutually
agreed upon between FAB and the Indemnified Party.
(b) FAB shall use its reasonable efforts to maintain BNR's existing
directors' and officers' liability insurance policy (or a policy, including
FAB's existing policy, providing at least comparable coverage) covering persons
who are currently covered by such insurance for a period of one (1) year after
the Effective Time on terms generally no less favorable than those in effect on
the date of this Agreement; provided, however, that FAB may substitute therefor
policies providing at least comparable coverage containing terms and conditions
no less favorable than those in effect on the date of this Agreement; and
provided, further, that FAB shall not be obligated to make premium payments for
such one-year period which exceed 150% of the aggregate premiums paid for such
policy during the most recent fiscal year.
(c) 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 Bank of New Roads 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 Bank of New Roads elects not to
assume such defense or counsel for the Indemnified Parties advises in writing
that there are material substantive issues which raise conflicts of interest
between FAB or BNR and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and FAB or Bank of New Roads shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided; that (i) FAB shall be
obligated pursuant to this paragraph (c) to pay for only one firm of counsel for
all Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will
cooperate (to the extent reasonably appropriate under the circumstances) 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
BNR 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 BNR 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
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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 BNR after the Effective Time in a manner which in the
reasonable judgment of the Board of Directors of BNR 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 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
the Parties (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of BNR Common Stock
for FAB Common Stock will not give rise to gain or loss to the shareholders
of BNR with respect to such exchange (except to the extent of any cash
received), and (iii) neither BNR 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 BNR 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 BNR 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
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which relate to matters that are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BNR.
(B) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of BNR 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. BNR 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 BNR'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 Stone,
Pigman, Walther, Wittmann & Hutchinson, counsel to BNR, dated as of the
Effective Time, in form reasonably satisfactory to FAB, as to the matters
set forth in Exhibit 3.
(E) Affiliates Agreements. FAB shall have received from each
affiliate of BNR the affiliates letter referred to in Section 8.10 of this
Agreement.
(F) Claims Letters. Each of the directors and officers of BNR shall
have executed and delivered to FAB letters in substantially the form of
Exhibit 4.
9.3 Conditions to Obligations of BNR. The obligations of BNR 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 BNR 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 BNR (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 BNR and its counsel
shall request.
(D) Opinion of Counsel. BNR shall have received an opinion of Lange,
Simpson, Robinson & Somerville, counsel to FAB, dated as of the Effective
Time, in form reasonably acceptable to BNR, as to the matters set forth in
Exhibit 5.
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(E) Fairness Opinion. BNR shall have received a letter from Chaffe
and Associates, Inc. or another financial adviser selected by BNR dated not
more than five days subsequent to the date of this Agreement and to be
updated to a date not more than five days prior to the date of the Proxy
Statement, to the effect that in the opinion of such firm, the
consideration to be received in the Merger by the shareholders of BNR is
fair to the shareholders of BNR from a financial point of view.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of BNR,
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 BNR; 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 BNR; or
(c) By the Board of Directors of either Party in the event of a
material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching Party of such breach;
or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
shareholders of BNR fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the LBCL at the
Shareholders' Meeting or any adjournment or postponement thereof 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.
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, and neither Party shall have any
claim or legal right to redress, whether for breach of contract or otherwise, as
a result of a breach of any representation, warranty, covenant, or condition of
this Agreement, except that (i) the provisions of this Section 10.2 and Article
11 and Section 8.6(b) and (c) 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 and knowing breach of a representation,
warranty, material covenant, or material 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 and Sections 8.1(b), 8.11, and 8.12
of this Agreement.
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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, 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.
"Average Closing Price" shall mean the average of the daily closing
sale prices of FAB Common Stock on the Nasdaq/NMS (as reported by The Wall
Street Journal or, if not reported thereby, another authoritative source
chosen by FAB) for the 20 consecutive full trading days on which such
shares are traded on the Nasdaq NMS ending at the close of trading on the
fifth trading day preceding the Effective Time.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"BNR Benefit Plans" shall have the meaning set forth in Section 5.11
of this Agreement.
"BNR Common Stock" shall mean the $10.00 par value common stock of
BNR.
"BNR Companies" shall mean, collectively, BNR and all BNR
Subsidiaries.
"BNR Disclosure Memorandum" shall mean the written information
entitled "BNR 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.
"BNR Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of BNR as of
December 31, 1993 and 1992, and the related consolidated statements of
income, changes in stockholders' 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 BNR in SEC Documents, and
(ii) the consolidated balance sheets of BNR (including related notes and
schedules, if any) and related statements of income, changes in
stockholders' 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.
"BNR Subsidiaries" shall mean the Subsidiaries of BNR, which shall
include the BNR Subsidiaries described in Section 5.4 of this Agreement and
any corporation, bank, savings association, or other organization acquired
as a Subsidiary of BNR in the future and owned by BNR at the Effective
Time.
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"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 BNR 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.
"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
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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.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"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 actual
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.
"LBCL" shall mean the Louisiana Business Corporation Law.
"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, (ii) such imperfections of title and
encumbrances, if any, as do not materially detract from the value or
interfere with the present use of any of such Party's Assets, and (iii) 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.
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"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.
"Louisiana Certificate of Merger" shall mean the Louisiana Certificate
of Merger to be executed by FAB and filed with the Secretary of State of
the State of Louisiana relating to the Merger as contemplated by Section
1.1 of this Agreement.
"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 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 BNR 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 BNR or FAB, and "Parties" shall mean both
BNR 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 BNR 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 BNR 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
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shareholders of BNR 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.
"Representatives" means with respect to any Party its directors,
officers, employees, agents, advisors, attorneys, accountants, and other
representatives.
"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.
"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
BNR 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 and knowing breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
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11.3 Brokers and Finders. Except Chaffe & Associates, Inc. as to BNR, 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 BNR or FAB, each of BNR 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. Except as contemplated by
Articles 3 and 4 of this Agreement and Sections 8.1(b) and 8.12 of this
Agreement, nothing in this Agreement expressed or implied, is intended to confer
upon any Person, other than the Parties or their respective successors, any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement.
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 BNR Common Stock, there shall be made no amendment
that pursuant to the LBCL 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 BNR, to waive or extend the time for the compliance or fulfillment
by BNR 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, BNR, 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 BNR 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 BNR.
(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
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address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
<TABLE>
<S> <C>
BNR: BNR Bancshares, Inc.
107 East Main Street
New Roads, Louisiana 70760
Telecopy Number: (504) 581-3361
Attention: F. J. Greely, Jr.
President and
Chief Executive Officer
Copy to Counsel: Stone, Pigman, Walther, Wittmann &
Hutchinson
546 Carondelet Street
New Orleans, Louisiana 70130-3588
Telecopy Number: (504) 581-3361
Attention: Paul M. Haygood
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
Louisiana 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
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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.
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: BNR BANCSHARES, INC.
/s/ CHARLES RAY SMITH /s/ FRANK J. GREELY, JR.
- -------------------------------------------- --------------------------------------------
Charles Ray Smith F. J. Greely, Jr.
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: FIRST ALABAMA BANCSHARES, INC.
/s/ VIRGINIA L. MARTIN /s/ CARL E. JONES, JR.
- -------------------------------------------- --------------------------------------------
Virginia L. Martin Carl E. Jones, Jr.
Assistant Secretary Regional President
[CORPORATE SEAL]
</TABLE>
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APPENDIX B
CHAFFE & ASSOCIATES, INC.
INVESTMENT BANKERS
July 26, 1994
The Board of Directors
BNR Bancshares, Inc.
107 E. Main Street
P.O. Box 250
New Roads, LA 70760
Gentlemen:
You have requested our opinion as to the fairness, from a financial point
of view, to BNR Bancshares, Inc. ("BNR") and its stockholders, of the proposed
acquisition of its common stock, $10.00 par value per share (the "Common Stock"
or "Shares"), by Regions Financial Corporation ("Regions"), formerly First
Alabama Bancshares, Inc. ("FAB"). The terms of the transaction contemplated are
set forth in an Agreement and Plan of Merger, dated as of April 21, 1994 (the
"Agreement"), and provide that BNR will be merged with and into Regions, and
that Regions will be the surviving corporation of the merger. As a result, the
stockholders of BNR will become stockholders of Regions, as follows:
Each share of BNR Common Stock (excluding shares held by BNR, Regions, or
their respective subsidiaries, other than shares held in a fiduciary capacity or
as a result of debts previously contracted, and shares held by stockholders who
perfect their dissenters' rights of appraisal) issued and outstanding after the
date and time at which the merger becomes effective (the "Effective Date"),
shall be converted into and exchanged for that number of shares of Regions
Common Stock (the "Exchange Ratio") equal to the quotient obtained by dividing
(i) $79.70 by (ii) the Average Closing Price (the average of the daily closing
sale prices of Regions common Stock on the NASDAQ National Market (as reported
by The Wall Street Journal or, if not reported thereby, another authoritative
source chosen by Regions) for the 20 consecutive full trading days on which such
shares are traded on the NASDAQ National Market ending at the close of trading
on the fifth trading day preceding the Effective Date), subject to minimum and
maximum exchange ratios of 2.214 and 3.065 shares of Regions Common Stock,
respectively, for each share of BNR Common Stock.
Chaffe & Associates, Inc. ("Chaffe"), through its experience in the
securities industry, in investment analysis and appraisal, and in related
corporate finance and investment banking activities, including mergers and
acquisitions, corporate recapitalization, and valuations for estate, corporate
and other purposes, states that it is competent to provide an opinion as to the
fairness of the transactions contemplated herein. Neither Chaffe nor any of its
officers or employees has an interest in the common stocks of BNR or Regions.
During the past year, Chaffe has provided financial advisory services to BNR,
including assistance in negotiating the proposed transaction ("Advisory
Services"). The fee received for the preparation of this report is not, and fees
received for Advisory Services were not, dependent or contingent upon any
transaction.
In connection with this opinion, we have reviewed materials bearing upon
the transaction and upon the financial and operating condition of BNR and its
wholly-owned subsidiary, Bank of New Roads (the "Bank"), including, among other
information: a) the Agreement; b) BNR's audited financial statements with
examination and opinion by Hannis T. Bourgeois & Co., Certified Public
Accountants, for the years 1988 through 1993; c) BNR's unaudited financial
statements for the periods ended March 31, 1994 and June 30, 1994; d) BNR's
Annual Reports on Form 10-K for the years 1992 and 1993 and Quarterly Reports on
Form 10-Q for the quarters ended March 31, June 30, and September 30, 1993 and
March 31, 1994; e) BNR's Federal Reserve Forms FR-Y6 dated December 31, 1992 and
December 31, 1993; f) BNR's Income Tax Return for 1992 and 1993 prepared by
Hannis T. Bourgeois & Co., Certified Public Accountants; g) the Bank's CALL
Reports for each quarter-end from March 31, 1992 through March 31, 1994; h) the
Bank's Uniform Bank Performance Reports dated December 31, 1992, December 31,
1993 and March 31, 1994;
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i) the Bank's unaudited financial statements for the periods ended March 31,
1994 and June 30, 1994; j) the Bank's 1994 Budget; k) the Bank's Capital Plan
for the years 1993 through 1998, dated January 17, 1994 under two scenarios; l)
Articles of Incorporation and By-Laws of BNR, and the Charter of the Bank; and
m) various BNR and Bank management reports, unaudited financial statements,
information, documents and correspondence.
In addition, we have reviewed materials bearing upon the financial and
operating condition of Regions, including: a) Regions' audited financial
statements for the years 1988 through 1993; b) Regions' Proxy Statements for
Annual Stockholders Meetings held in 1988 through 1994; c) Regions' Annual
Reports on Form 10-K for the years 1987 through 1993 and Quarterly Reports on
Form 10-Q for the quarters ended March 31, June 30, and September 30, 1993, and
March 31, 1994; d) Regions Registration Statement on Form S-3, dated June 21,
1994, Form 8-K dated July 18, 1994, and Prospectus Supplement dated July 18,
1994; e) Regions' Registration Statement on Form S-4 related to the merger of
which the proxy statement/ prospectus is a part; and f) various Regions
unaudited financial statements, information, and correspondence. We have also
reviewed statistical and financial information derived from various statistical
services for BNR, Regions, and comparable companies, as well as certain
publicly-available information and analysis relating to them.
We have reviewed certain historical market information for the common stock
of BNR and note that no independent market exists for the shares. We note that,
at present, BNR has authorized 5,000,000 shares, of which 337,500 shares were
issued, including 11,282 treasury shares. In addition, we have reviewed certain
historical market information for the common stock of Regions. We note that
Regions has authorized 120 million shares of Regions common stock, of which
42,538,946 shares were issued, including 1,475,579 treasury shares as of March
31, 1994.
We have analyzed the historical performance of BNR and Regions and have
considered the current financial condition, operations, and prospects for both
companies. We have held discussions with the management of both companies about
these matters. We analyzed information and data provided by the management of
BNR concerning the loans, other real estate, securities portfolio, fixed assets,
and operations, although we did not perform an independent review of BNR's
assets or liabilities. We have relied solely on BNR and Regions for information
as to the adequacy of their loan loss reserves and the value of their
repossessed assets, respectively.
Also, we compared certain financial and stock market data for peer groups
of bank holding companies whose securities are publicly traded; reviewed the
financial terms of business combinations in the commercial banking industry
specifically and other industries generally; considered a number of valuation
methodologies, including among others, those that incorporate book value,
deposit base premium and capitalization of earnings; and performed such other
studies and analyses as we deemed appropriate to this analysis. This opinion is
necessarily based upon market, economic and other conditions as they exist on,
and can be evaluated as of, the date of this letter.
In our review, we have relied, without independent verification, upon the
accuracy and completeness of the historical and projected financial information
and other information reviewed by us for purposes of this opinion. We express no
opinion on the tax consequences of the proposed transaction or the effect of any
tax consequences on the value received by the holders of BNR Common Stock.
Based upon and subject to the foregoing and based upon such other matters
as we considered relevant, it is our opinion that the proposed Exchange Ratio is
fair to BNR Bancshares, Inc. and its stockholders, from a financial point of
view.
Very truly yours,
CHAFFE & ASSOCIATES, INC.
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APPENDIX C
LOUISIANA STATUTES ANNOTATED -- REVISED STATUTES 12:131
SECTION 131. RIGHTS OF A SHAREHOLDER DISSENTING FROM CERTAIN CORPORATE ACTIONS
A. Except as provided in subsection B of this section, if a corporation
has, by vote of its shareholders, authorized a sale, lease or exchange of all of
its assets, or has, by vote of its shareholders, become a party to a merger or
consolidation, then, unless such authorization or action shall have been given
or approved by at least eighty per cent of the total voting power, a shareholder
who voted against such corporate action shall have the right to dissent. If a
corporation has become a party to a merger pursuant to R.S. 12:112(H), the
shareholders of any subsidiaries party to the merger shall have the right to
dissent without regard to the proportion of the voting power which approved the
merger and despite the fact that the merger was not approved by vote of the
shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall not exist in the
case of:
(1) A sale pursuant to an order of a court having jurisdiction in the
premises.
(2) A sale for cash on terms requiring distribution of all or
substantially all of the net proceeds to the shareholders in accordance
with their respective interests within one year after the date of the sale.
(3) Shareholders holding shares of any class of stock which, at the
record date fixed to determine shareholders entitled to receive notice of
and to vote at the meeting of shareholders at which a merger or
consolidation was acted on, were listed on a national securities exchange,
unless the articles of the corporation issuing such stock provide otherwise
or the shares of such shareholders were not converted by the merger or
consolidation solely into shares of the surviving or new corporation.
C. Except as provided in the last sentence of this subsection, any
shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by less than eighty
per cent of the total voting power, and the merger, consolidation or sale, lease
or exchange of assets authorized thereby be effected, the corporation shall
promptly thereafter give written notice thereof, by registered mail, to each
shareholder who filed such written objection to, and voted his shares against,
such action, at such shareholder's last address on the corporation's records.
Each such shareholder may, within twenty days after the mailing of such notice
to him, but not thereafter, file with the corporation a demand in writing for
the fair cash value of his shares as of the day before such vote was taken;
provided that he state in such demand the value demanded, and a post office
address to which the reply of the corporation may be sent, and at the same time
deposit in escrow in a chartered bank or trust company located in the parish of
the registered office of the corporation, the certificates representing his
shares, duly endorsed and transferred to the corporation upon the sole condition
that said certificates shall be delivered to the corporation upon payment of the
value of the shares determined in accordance with the provisions of this
section. With his demand the shareholder shall deliver to the corporation, the
written acknowledgment of such bank or trust company that it so holds his
certificates of stock. Unless the objection, demand and acknowledgment aforesaid
be made and delivered by the shareholder within the period above limited, he
shall conclusively be presumed to have acquiesced in the corporate action
proposed or taken. In the case of a merger pursuant to R.S. 12:112(H), the
dissenting shareholder need not file an objection with the corporation nor vote
against the merger, but need only file with the corporation, within twenty days
after a copy of the merger certificate was mailed to him, a demand in writing
for the cash value of his shares as of the day before the certificate was filed
with the secretary of state, state in such demand the value demanded and a post
office address to which the corporation's reply may be sent, deposit the
certificates representing his shares in escrow as hereinabove provided, and
deliver to the corporation with his demand the acknowledgment of the escrow bank
or trust company as hereinabove prescribed.
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D. If the corporation does not agree to the value so stated and demanded,
or does not agree that a payment is due, it shall, within twenty days after
receipt of such demand and acknowledgment, notify in writing the shareholder, at
the designated post office address, of its disagreement, and shall state in such
notice the value it will agree to pay if any payment should be held to be due;
otherwise it shall be liable for, and shall pay to the dissatisfied shareholder,
the value demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or as to whether any
payment is due, after compliance by the parties with the provisions of
subsections C and D of this section, the dissatisfied shareholder, within sixty
days after receipt of notice in writing of the corporation's disagreement, but
not thereafter, may file suit against the corporation, or the merged or
consolidated corporation, as the case may be, in the district court of the
parish in which the corporation or the merged or consolidated corporation, as
the case may be, has its registered office, praying the court to fix and decree
the fair cash value of the dissatisfied shareholder's shares as of the day
before such corporate action complained of was taken, and the court shall, on
such evidence as may be adduced in relation thereto, determine summarily whether
any payment is due, and, if so, such cash value, and render judgment
accordingly. Any shareholder entitled to file such suit may, within such
sixty-day period but not thereafter, intervene as a plaintiff in such suit filed
by another shareholder, and recover therein judgment against the corporation for
the fair cash value of his shares. No order or decree shall be made by the court
staying the proposed corporate action, and any such corporate action may be
carried to completion notwithstanding any such suit. Failure of the shareholder
to bring suit, or to intervene in such a suit, within sixty days after receipt
of notice of disagreement by the corporation shall conclusively bind the
shareholder (1) by the corporation's statement that no payment is due, or (2) if
the corporation does not contend that no payment is due, to accept the value of
his shares as fixed by the corporation in its notice of disagreement.
F. When the fair value of the shares has been agreed upon between the
shareholder and the corporation, or when the corporation has become liable for
the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation, as the
case may be, shall, in its notice of disagreement, have offered to pay to the
dissatisfied shareholder on demand an amount in cash deemed by it to be the fair
cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as the
case may be; otherwise the costs of the proceeding shall be taxed against such
shareholder.
H. Upon filing a demand for the value of his shares, the shareholder shall
cease to have any of the rights of a shareholder except the rights accorded by
this section. Such a demand may be withdrawn by the shareholder at any time
before the corporation gives notice of disagreement, as provided in subsection D
of this section. After such notice of disagreement is given, withdrawal of a
notice of election shall require the written consent of the corporation. If a
notice of election is withdrawn, or the proposed corporate action is abandoned
or rescinded, or a court shall determine that the shareholder is not entitled to
receive payment for his shares, or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment for his
shares, his share certificates shall be returned to him (and, on his request,
new certificates shall be issued to him in exchange for the old ones endorsed to
the corporation), and he shall be reinstated to all his rights as a shareholder
as of the filing of his demand for value, including any intervening preemptive
rights, and the right to payment of any intervening dividend or other
distribution, or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim.
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