<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 22, 1995
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
REGIONS FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
417 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 326-7100
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
SAMUEL E. UPCHURCH, JR.
GENERAL COUNSEL AND CORPORATE SECRETARY
REGIONS FINANCIAL CORPORATION
417 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
(205) 326-7860
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
WITH COPIES TO:
<TABLE>
<S> <C> <C> <C>
T. TREADWELL SYFAN WALTER G. MOELING, IV CHARLES C. PINCKNEY FRANK M. CONNER III
STEWART, MELVIN & FROST POWELL, GOLDSTEIN, FRAZER LANGE, SIMPSON, ROBINSON ALSTON & BIRD
SIXTH FLOOR HUNT TOWER & MURPHY & SOMERVILLE 601 PENNSYLVANIA AVENUE, N.W.
200 MAIN STREET SIXTEENTH FLOOR SUITE 1700 NORTH BUILDING, SUITE 250
GAINESVILLE, GEORGIA 30501 191 PEACHTREE STREET, N.E. 417 NORTH 20TH STREET WASHINGTON, D.C. 20004
(770) 536-0101 ATLANTA, GEORGIA 30303 BIRMINGHAM, ALABAMA 35203 (202) 508-3303
(404) 572-6629 (205) 250-5075
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
As soon as practicable after the merger (the "Merger") described in this
Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.625 par value......... 16,432,099 $38.81578945 $637,824,895 $219,939.62
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) This Registration Statement covers (i) the maximum number of shares of the
common stock of the Registrant which is expected to be issued in connection
with the Merger, and (ii) the maximum number of shares of common stock of
the Registrant reserved for issuance under various option and other plans
of First National Bancorp ("First National"), the obligations under which
will be assumed by the Registrant upon consummation of the Merger but which
may be issued prior to consummation of the Merger.
(2) Estimated solely for purposes of calculating the registration fee and based,
pursuant to Rule 457(c) and (f) under the Securities Act of 1933, as
amended, on the average of the high and low sales prices of First National
common stock as reported on the Nasdaq National Market System on November
20, 1995.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), SHALL
DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
REGIONS FINANCIAL CORPORATION
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
CAPTION OR LOCATION IN
FORM S-4 ITEM JOINT PROXY STATEMENT
- ------------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of registration statement and
outside front cover page of prospectus... Outside Front Cover of Joint Proxy
Statement; Facing Page of Registration
Statement; Cross-Reference Sheet
2. Inside front and outside back cover of
prospectus............................... Available Information; Documents
Incorporated by Reference; Table of
Contents
3. Risk factors, ratio of earnings to fixed
charges and other information............ Summary; Comparative Market Prices and
Dividends
4. Terms of the transaction................... Summary; Description of Transaction; Effect
of the Merger on Rights of Stockholders;
Description of Regions Common Stock
5. Pro forma financial information............ Summary; Pro Forma Financial Information
6. Material contacts with the company being
acquired................................. Summary; Description of Transaction
7. Additional information required for
re-offering by persons and parties deemed
to
be underwriters.......................... Not applicable
8. Interest of named experts and counsel...... Opinions
9. Disclosure of Commission position on
indemnification for Securities Act
liabilities.............................. Not applicable (See Part II, Item 20)
10. Information with respect to S-3
registrants.............................. Available Information; Documents
Incorporated by Reference; Summary;
Business of Regions; Certain Regulatory
Considerations
11. Incorporation of certain information
by reference............................. Documents Incorporated by Reference
12. Information with respect to S-2 or
S-3 registrants.......................... Not Applicable
13. Incorporation of certain information
by reference............................. Not Applicable
14. Information with respect to registrants
other than S-2 or S-3 registrants........ Not Applicable
15. Information with respect to S-3
companies................................ Available Information; Documents
Incorporated by Reference; Summary;
Business of First National; Certain
Regulatory Considerations
16. Information with respect to S-2 or S-3
companies................................ Not Applicable
17. Information with respect to companies other
than S-2 or S-3 companies................ Not Applicable
18. Information if proxies, consents, or
authorizations are to be solicited....... Documents Incorporated by Reference;
Summary; Meetings of Stockholders;
Description of Transaction; Description
of Regions Common Stock
19. Information if proxies, consents, or
authorizations are not to be solicited or
in an
exchange offer........................... Not Applicable
</TABLE>
<PAGE> 3
[LETTERHEAD OF FIRST NATIONAL]
December , 1995
To the Stockholders of First National Bancorp:
You are cordially invited to attend a Special Meeting of the Stockholders
(the "Special Meeting") of First National Bancorp ("First National") to be held
in the Theatre at the Georgia Mountains Center, 301 Main Street, Gainesville,
Georgia, on January 11, 1996, at 10:00 A.M., local time, notice of which is
enclosed. There will also be a reception in Rooms B and C beginning at 9:30 A.M.
at the Georgia Mountains Center.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Reorganization (the "Agreement") by
and between First National and Regions Financial Corporation ("Regions") and a
related Plan of Merger pursuant to which First National will merge (the
"Merger") with and into a newly formed subsidiary of Regions. Upon consummation
of the Merger, each share of First National common stock issued and outstanding
(except for certain shares held by First National or Regions, or their
respective subsidiaries, in each case other than shares held in a fiduciary
capacity or in satisfaction of debts previously contracted) will be exchanged
for 0.76 of a share of Regions common stock (subject to possible adjustment as
described in the accompanying Joint Proxy Statement/Prospectus), with cash being
paid in lieu of issuing fractional shares.
The accompanying Joint Proxy Statement/Prospectus includes a description of
the proposed Merger and provides other 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 by your Board of Directors and is recommended
by the Board to you for approval. Your Board believes that, among other
benefits, the Merger will result in a company with greater financial strength
and increased opportunity and flexibility for profitable expansion and
diversification. Consummation of the Merger is subject to certain conditions,
including approval of the Agreement and the related Plan of Merger by First
National stockholders, approval of the issuance of shares of Regions common
stock pursuant to the Agreement by Regions stockholders, and approval of the
Merger by various regulatory agencies.
It is important to understand that approval of the Agreement and the
related Plan of Merger will require the affirmative vote of a majority of the
votes entitled to be cast at the Special Meeting by the holders of the issued
and outstanding shares of First National common stock. Accordingly, whether or
not you plan to attend the Special Meeting, you are urged to complete, sign, and
return promptly the enclosed proxy card. If you attend the Special Meeting, you
may vote in person if you wish, even if you previously have returned your proxy
card. The proposed Merger with Regions is a significant step for First National
and your vote on this matter is of great importance.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR APPROVAL OF THE
AGREEMENT AND THE RELATED PLAN OF MERGER BY MARKING THE ENCLOSED PROXY CARD
"FOR" ITEM ONE.
We look forward to seeing you at the Special Meeting.
Sincerely,
Peter D. Miller
President, Chief Administrative, and
Chief Financial Officer
<PAGE> 4
[LETTERHEAD OF REGIONS]
December , 1995
To the Stockholders of Regions Financial Corporation:
You are cordially invited to attend a Special Meeting of the Stockholders
(the "Special Meeting") of Regions Financial Corporation ("Regions") to be held
at the Regions Training Center located at 298 West Valley Avenue, Birmingham,
Alabama, on January 11, 1996, at 10:00 A.M., local time, notice of which is
enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve the issuance of shares of Regions common stock in connection
with the proposed combination of First National Bancorp ("First National") with
Regions pursuant to the merger (the "Merger") of First National with and into a
newly formed subsidiary of Regions in accordance with the terms of the Agreement
and Plan of Reorganization (the "Agreement") by and between Regions and First
National. Upon consummation of the Merger, each share of First National common
stock issued and outstanding (except for certain shares held by Regions or First
National, or their respective subsidiaries, in each case other than shares held
in a fiduciary capacity or in satisfaction of debts previously contracted) will
be exchanged for 0.76 of a share of Regions common stock (subject to possible
adjustment as described in the accompanying Joint Proxy Statement/Prospectus),
with cash being paid in lieu of issuing fractional shares.
The accompanying Joint Proxy Statement/Prospectus includes a description of
the proposed Merger and provides other 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 by your Board of Directors and is recommended
by the Board to you for approval. Your Board believes that, among other
benefits, the Merger will result in a company with greater financial strength
and increased opportunity and flexibility for profitable expansion and
diversification. Consummation of the Merger is subject to certain conditions,
including approval of the Agreement and the related Plan of Merger by First
National stockholders, approval of the issuance of shares of Regions common
stock pursuant to the Agreement by Regions stockholders, and approval of the
Merger by various regulatory agencies.
The combination with First National will be an excellent strategic fit with
our Georgia franchise and will allow us to expand into new markets with good
prospects for continued growth. Additionally, this Merger will bring into
Regions a solid organization built on community banking, local relationships,
and sound lending principals.
The proposed Merger with First National is a significant step for Regions
and your vote on this matter is of great importance. It is important to
understand that approval of the Agreement will require the affirmative vote of a
majority of the votes cast in person or by proxy at the Special Meeting,
assuming a quorum is present. Accordingly, whether or not you plan to attend the
Special Meeting, you are urged to complete, sign, and return promptly the
enclosed proxy card. If you attend the Special Meeting, you may vote in person
if you wish, even if you previously have returned your proxy card.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR APPROVAL OF THE
ISSUANCE OF SHARES OF REGIONS COMMON STOCK PURSUANT TO THE AGREEMENT BY MARKING
THE ENCLOSED PROXY CARD "FOR" ITEM ONE.
We look forward to seeing you at the Special Meeting.
Sincerely,
J. Stanley Mackin
Chairman of the Board and
Chief Executive Officer
<PAGE> 5
FIRST NATIONAL BANCORP
303 JESSE JEWEL PARKWAY
SUITE 700
GAINESVILLE, GEORGIA 30501
---------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 11, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of the Stockholders (the
"Special Meeting") of First National Bancorp ("First National") will be held in
the Theatre at the Georgia Mountains Center, 301 Main Street, Gainesville,
Georgia, on January 11, 1996, at 10:00 A.M., local time, for the following
purposes:
1. Merger. To consider and vote upon a proposal to approve an
Agreement and Plan of Reorganization, dated as of October 22, 1995 (the
"Agreement"), by and between First National and Regions Financial
Corporation, a Delaware corporation ("Regions"), and the related Plan of
Merger (the "Plan of Merger"), by and between First National and Regions
Merger Subsidiary, Inc., a wholly owned subsidiary of Regions ("Regions
Merger Subsidiary"), pursuant to which (i) First National will merge (the
"Merger") with and into Regions Merger Subsidiary, (ii) each share of the
$1.00 par value common stock of First National ("First National Common
Stock") issued and outstanding at the effective time of the Merger will be
exchanged for 0.76 of a share of the $0.625 par value common stock of
Regions, subject to possible adjustment, and cash in lieu of any fractional
share, and (iii) Regions will assume the obligations of First National
under various stock plans and programs and adopt substitute plans where
appropriate, all as more fully described in the accompanying Joint Proxy
Statement/Prospectus.
2. Other Business. To transact such other business as may come
properly before the Special Meeting.
Only stockholders of record at the close of business on December 1, 1995,
will be entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof. Approval of the Agreement and the Plan of
Merger requires the affirmative vote of a majority of the votes entitled to be
cast at the Special Meeting by holders of the issued and outstanding shares of
First National Common Stock.
THE BOARD OF DIRECTORS OF FIRST NATIONAL RECOMMENDS THAT STOCKHOLDERS VOTE
FOR APPROVAL OF THE AGREEMENT AND THE PLAN OF MERGER.
BY ORDER OF THE BOARD OF DIRECTORS
C. Talmadge Garrison
Corporate Secretary
Gainesville, Georgia
December , 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PAID RETURN ENVELOPE IN ORDER TO ENSURE THAT YOUR SHARES WILL BE
REPRESENTED AT THE SPECIAL MEETING.
<PAGE> 6
REGIONS FINANCIAL CORPORATION
417 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35203
---------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 11, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of the Stockholders (the
"Special Meeting") of Regions Financial Corporation ("Regions") will be held at
the Regions Training Center located at 298 West Valley Avenue, Birmingham,
Alabama, on January 11, 1996, at 10:00 A.M., local time, for the following
purposes:
1. Merger. To consider and vote upon a proposal to approve the
issuance of shares of the $0.625 par value common stock of Regions
("Regions Common Stock") in connection with the proposed combination of
First National Bancorp, a Georgia corporation ("First National"), with
Regions in accordance with the Agreement and Plan of Reorganization, dated
as of October 22, 1995 (the "Agreement"), by and between Regions and First
National, pursuant to which (i) First National will merge (the "Merger")
with and into Regions Merger Subsidiary, Inc., a wholly owned subsidiary of
Regions, (ii) each share of the $1.00 par value common stock of First
National issued and outstanding at the effective time of the Merger will be
exchanged for 0.76 of a share of Regions Common Stock, subject to possible
adjustment, and cash in lieu of any fractional share, and (iii) Regions
will assume the obligations of First National under various stock plans and
programs and adopt substitute plans where appropriate, all as more fully
described in the accompanying Joint Proxy Statement/Prospectus.
2. Other Business. To transact such other business as may come
properly before the Special Meeting.
Only stockholders of record at the close of business on December 1, 1995,
will be entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof. Approval of the issuance of shares of
Regions Common Stock pursuant to the Agreement requires the affirmative vote of
a majority of the votes cast in person or by proxy by the holders of Regions
Common Stock at the Special Meeting, assuming a quorum is present.
THE BOARD OF DIRECTORS OF REGIONS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE ISSUANCE OF SHARES OF REGIONS COMMON STOCK PURSUANT TO THE
AGREEMENT.
BY ORDER OF THE BOARD OF DIRECTORS
Samuel E. Upchurch, Jr.
Corporate Secretary
Birmingham, Alabama
December , 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PAID RETURN ENVELOPE IN ORDER TO ENSURE THAT YOUR SHARES WILL BE
REPRESENTED AT THE SPECIAL MEETING.
<PAGE> 7
PROSPECTUS
REGIONS FINANCIAL CORPORATION
COMMON STOCK, $0.625 PAR VALUE
---------------------
JOINT PROXY STATEMENT
REGIONS FINANCIAL FIRST NATIONAL BANCORP
CORPORATION 303 Jesse Jewel Parkway
417 North 20th Street Suite 700
Birmingham, Alabama 35203 Gainesville, Georgia 30501
This Prospectus of Regions Financial Corporation, a regional bank holding
company organized and existing under the laws of the state of Delaware
("Regions"), relates to approximately 15,615,454 shares of common stock, par
value $0.625 per share ("Regions Common Stock"), which are issuable to the
stockholders of First National Bancorp, a bank holding company organized and
existing under the laws of the state of Georgia ("First National"), based on the
current number of outstanding First National shares, upon consummation of the
proposed merger (the "Merger") described herein by which First National will
merge with and into Regions Merger Subsidiary, Inc. ("Regions Merger
Subsidiary"), a newly formed corporation organized under the laws of the state
of Georgia and a wholly owned subsidiary of Regions, pursuant to the terms of
the Agreement and Plan of Reorganization, dated as of October 22, 1995 (the
"Agreement"), by and between Regions and First National, and the related Plan of
Merger (the "Plan of Merger"), by and between Regions Merger Subsidiary and
First National.
At the effective time of the Merger (the "Effective Time"), except as
described herein, each issued and outstanding share of common stock, par value
$1.00 per share, of First National ("First National Common Stock") will be
converted into and exchanged for 0.76 of a share of Regions Common Stock.
This Prospectus also serves as a Joint Proxy Statement of First National
and Regions, and is being furnished to the stockholders of First National and
Regions in connection with the solicitation of proxies by the Board of Directors
of First National for use at its special meeting of stockholders (including any
adjournment or postponement thereof, the "First National Special Meeting"), and
by the Board of Directors of Regions for use at its special meeting of
stockholders (including any adjournment or postponement thereof, the "Regions
Special Meeting"), each to be held on January 11, 1996, to consider and vote
upon the Agreement and the Plan of Merger in the case of First National and the
issuance of shares of Regions Common Stock pursuant to the Agreement in the case
of Regions (collectively, the "Special Meetings"). This Joint Proxy
Statement/Prospectus ("Joint Proxy Statement") is being mailed to stockholders
of First National and Regions on or about December 7, 1995.
---------------------
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 JOINT PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement is December , 1995.
<PAGE> 8
AVAILABLE INFORMATION
Regions and First National are subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, are required to file reports, proxy, and information
statements, and other information with the Securities and Exchange Commission
(the "SEC"). Copies of such reports, proxy and information 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 Joint Proxy Statement constitutes part of the Registration Statement
on Form S-4 of Regions (including any exhibits and amendments thereto, the
"Registration Statement") filed with the SEC under the Securities Act of 1933,
as amended (the "Securities Act"), relating to the securities offered hereby.
This Joint Proxy Statement 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. In
addition, Regions Common Stock and First National Common Stock are traded on the
Nasdaq National Market System. Reports, proxy statements, and other information
concerning Regions and First National may be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
Certain financial and other information relating to Regions and First
National is contained in the documents indicated below under "Documents
Incorporated by Reference."
All information contained in this Joint Proxy Statement or incorporated
herein by reference with respect to Regions was supplied by Regions, and all
information contained in this Joint Proxy Statement or incorporated herein by
reference with respect to First National was supplied by First National.
Although neither Regions nor First National has actual knowledge that would
indicate that any statements or information (including financial statements)
relating to the other party contained or incorporated herein are inaccurate or
incomplete, neither Regions nor First National warrants the accuracy or
completeness of such statements or information as they relate to the other
party.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY
STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS JOINT PROXY STATEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS JOINT PROXY STATEMENT IN ANY JURISDICTION TO OR FROM
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT NOR ANY
DISTRIBUTION OF THE SECURITIES BEING OFFERED PURSUANT TO THIS JOINT PROXY
STATEMENT SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF REGIONS OR FIRST NATIONAL SINCE THE DATE OF
THIS JOINT PROXY STATEMENT OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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:
(a) Regions' Annual Report on Form 10-K for the fiscal year ended
December 31, 1994;
(b) Regions' Quarterly Reports on Form 10-Q for the three months ended
March 31, June 30, and September 30, 1995;
(c) Regions' Current Reports on Form 8-K dated October 24 and November
22, 1995; and
(d) 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.
i
<PAGE> 9
Regions' Annual Report on Form 10-K for the year ended December 31, 1994,
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 those portions of the Regions Annual Report to Stockholders
captioned "Financial Summary & Review 1994," "Financial Statements and Notes,"
and "Historical Financial Summary" are incorporated herein. Other portions of
the Regions Annual Report to Stockholders are NOT incorporated herein and are
not a part of the Registration Statement.
The following documents previously filed with the SEC by First National
pursuant to the Exchange Act are hereby incorporated by reference herein:
(a) First National's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (prior to restatement to give effect to the
acquisition of FF Bancorp, Inc.);
(b) First National's Quarterly Reports on Form 10-Q for the three
months ended March 31, June 30, and September 30, 1995; and
(c) First National's Current Reports on Form 8-K dated April 11, July
5, July 19, July 25, August 28, August 16, October 25, 1995, and November
21, 1995 (which includes restated historical financial statements and the
related management's discussions and analysis of financial condition and
results of operations of First National, giving effect to the acquisition
of FF Bancorp, Inc. accounted for as a pooling of interests).
First National's Annual Report on Form 10-K for the year ended December 31,
1994, incorporates by reference specific portions of First National's annual
report to stockholders for that year (the "First National Annual Report to
Stockholders"), but does not incorporate other portions of the First National
Annual Report to Stockholders. Only those portions of the First National Annual
Report to Stockholders captioned "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements included on pages 37 through 56 of the First National Annual Report
to Stockholders are incorporated herein. Other portions of the First National
Annual Report to Stockholders are NOT incorporated herein and are not a part of
the Registration Statement.
All documents filed by Regions and First National pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this Joint
Proxy Statement and prior to the date of the Special Meetings shall be deemed to
be incorporated by reference in this Joint Proxy Statement 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.
In particular, reference is made to the First National Current Report on Form
8-K dated November 21, 1995, which includes restated historical financial
statements and the related management's discussion and analysis of financial
condition and results of operations of First National in light of the
acquisition of FF Bancorp, Inc. effected July 3, 1995, and accounted for by
First National as a pooling of interests. See "Summary" and "Business of First
National -- Recent Developments."
Regions will provide without charge, upon the written or oral request of
any person, including any beneficial owner, to whom this Joint Proxy Statement
is delivered, a copy of any and all information (excluding certain exhibits)
relating to Regions that has been incorporated by reference in the Registration
Statement. Such requests should be directed to Ronald C. Jackson, Stockholder
Assistance, Regions Financial Corporation, P.O. Box 1448, Montgomery, Alabama
36102 (telephone (334) 832-8401). First National will provide without charge,
upon the written or oral request of any person, including any beneficial owner,
to whom this Joint Proxy Statement is delivered, a copy of any and all
information (excluding certain exhibits) relating to First National that has
been incorporated by reference in the Registration Statement of which this Joint
Proxy Statement is a part. Such requests should be directed to C. Talmadge
Garrison, First National Bancorp, 303 Jesse Jewel Parkway, Suite 700, P. O.
Drawer 937, Gainesville, Georgia 30503 (telephone (770) 503-2000). In order to
ensure timely delivery of the documents, any request should be made by January
5, 1996.
ii
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Summary............................................................................... 1
The Parties......................................................................... 1
Meetings of Stockholders............................................................ 2
The Merger.......................................................................... 3
Comparative Per Share Data.......................................................... 7
Selected Financial Data............................................................. 8
Summary Pro Forma Financial Data.................................................... 11
Meetings of Stockholders.............................................................. 13
Date, Place, Time, and Purpose...................................................... 13
Record Dates, Voting Rights, Required Votes, and Revocability of Proxies............ 13
Description of Transaction............................................................ 16
General............................................................................. 16
Possible Adjustment of Exchange Ratio............................................... 17
Effect of the Merger on Stock Rights................................................ 18
Background of and Reasons for the Merger............................................ 19
Opinion of First National's Financial Advisor....................................... 22
Opinion of Regions' Financial Advisor............................................... 26
Effective Time of the Merger........................................................ 30
Distribution of Regions Stock Certificates.......................................... 30
Conditions to Consummation of the Merger............................................ 31
Regulatory Approvals................................................................ 31
Waiver, Amendment, and Termination.................................................. 32
Dissenters' Rights.................................................................. 33
Conduct of Business Pending the Merger.............................................. 33
Management and Operations After the Merger.......................................... 35
Interests of Certain Persons in the Merger.......................................... 35
Certain Federal Income Tax Consequences............................................. 38
Accounting Treatment................................................................ 38
Expenses and Fees................................................................... 39
Resales of Regions Common Stock..................................................... 39
Option Agreement.................................................................... 40
Effect of the Merger on Rights of Stockholders........................................ 42
Antitakeover Provisions Generally................................................... 42
Authorized Capital Stock............................................................ 42
Amendment of Certificate of Incorporation and Bylaws................................ 43
Classified Board of Directors and Absence of Cumulative Voting...................... 43
Removal of Directors................................................................ 44
Limitations on Director Liability................................................... 44
Indemnification..................................................................... 44
Special Meetings of Stockholders.................................................... 45
Actions by Stockholders Without a Meeting........................................... 45
Stockholder Nominations and Proposals............................................... 45
Business Combinations with Certain Persons.......................................... 46
Mergers, Consolidations, and Sales of Assets Generally.............................. 46
Dissenters' Rights of Appraisal..................................................... 47
Stockholders' Rights to Examine Books and Records................................... 48
Dividends........................................................................... 48
</TABLE>
iii
<PAGE> 11
<TABLE>
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PAGE
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<S> <C>
Comparative Market Prices and Dividends............................................... 49
Business of First National............................................................ 50
General............................................................................. 50
Recent Developments................................................................. 50
Business of Regions................................................................... 51
General............................................................................. 51
Recent Developments................................................................. 52
Pro Forma Financial Information....................................................... 53
Pro Forma Combined Condensed Statement of Condition................................. 53
Pro Forma Combined Condensed Statements of Income for Regions and First National.... 55
Pro Forma Combined Condensed Statements of Income for Regions, First National, and
Other Pending Acquisitions....................................................... 56
Certain Regulatory Considerations..................................................... 57
General............................................................................. 57
Payment of Dividends................................................................ 58
Capital Adequacy.................................................................... 59
Support of Subsidiary Banks......................................................... 60
Prompt Corrective Action............................................................ 60
FDIC Insurance Assessments.......................................................... 62
Safety and Soundness Standards...................................................... 63
Depositor Preference................................................................ 63
Description of Regions Common Stock................................................... 63
Stockholder Proposals................................................................. 64
Experts............................................................................... 64
Opinions.............................................................................. 65
</TABLE>
Appendices:
<TABLE>
<S> <C>
Appendix I -- Agreement and Plan of Reorganization, dated as of October 22, 1995, by and
between Regions Financial Corporation and First National Bancorp
Appendix II -- Plan of Merger between Regions Merger Subsidiary, Inc. and First National
Bancorp
Appendix III -- Opinion of Morgan Stanley & Co. Incorporated
Appendix IV -- Opinion of Bear, Stearns & Co. Inc.
</TABLE>
iv
<PAGE> 12
SUMMARY
The following is a summary of certain information contained in this Joint
Proxy Statement and the documents incorporated herein by reference. This summary
is not intended to be a complete description of the matters covered in this
Joint Proxy Statement and is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this Joint Proxy
Statement. Stockholders are urged to read carefully the entire Joint Proxy
Statement, including the Appendices. As used in this Joint Proxy Statement, the
terms "Regions" and "First National" refer to those entities, respectively, and,
where the context requires, to those entities and their respective subsidiaries.
THE PARTIES
First National. First National is a bank holding company headquartered in
Gainesville, Georgia, with approximately 64 banking offices in Georgia and
Florida. As of September 30, 1995, First National had total consolidated assets
of approximately $3.1 billion, total consolidated deposits of approximately $2.6
billion, and total consolidated stockholders' equity of approximately $304
million. First National is the second-largest bank holding company headquartered
in Georgia outside of the Atlanta metropolitan area in terms of assets, based on
September 30, 1995 information. First National operates 20 banking and savings
bank subsidiaries in Georgia and Florida. Through its subsidiaries, First
National offers a broad range of banking and banking-related services.
During the 1995 fiscal year, First National completed the acquisition of FF
Bancorp, Inc. ("FF Bancorp"), the holding company for two federal savings banks
and one state bank located in Florida, with combined assets of approximately
$631 million as of June 30, 1995. In connection with the acquisition of FF
Bancorp (the "FF Bancorp Acquisition"), First National issued approximately
3,884,587 shares of First National Common Stock. As the transaction was
accounted for as a pooling of interests, the historical financial statements and
related management's discussion and analysis of financial condition and results
of operations of First National were required to be restated to reflect the FF
Bancorp Acquisition. Information with respect to the FF Bancorp Acquisition is
included under "Business of First National -- Recent Developments" and in
certain of the documents incorporated by reference in this Joint Proxy
Statement, including the Current Report on Form 8-K dated November 21, 1995 of
First National, which includes the restated historical financial statements and
related management's discussion and analysis of financial condition and results
of operations of First National reflecting the FF Bancorp Acquisition. See
"Documents Incorporated by Reference." In addition, First National has entered
into a definitive agreement to acquire a state bank located in Georgia, with
total assets of approximately $40 million.
First National was organized under the laws of the state of Georgia and
commenced operations in 1981 as a registered bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). First National's
principal executive office is located at 303 Jesse Jewel Parkway, Suite 700,
Gainesville, Georgia 30501, and its telephone number at such address is (770)
503-2000.
Additional information with respect to First National and its subsidiaries
is included in documents incorporated by reference in this Joint Proxy
Statement. See "Available Information," "Documents Incorporated by Reference,"
"Business of First National," and "Certain Regulatory Considerations."
Regions. Regions is a regional bank holding company headquartered in
Birmingham, Alabama, with approximately 288 banking offices in Alabama, Florida,
Georgia, Louisiana, and Tennessee. As of September 30, 1995, Regions had total
consolidated assets of approximately $13.8 billion, total consolidated deposits
of approximately $10.7 billion, and total consolidated stockholders' equity of
approximately $1.1 billion. Regions is the third largest bank holding company
headquartered in Alabama in terms of assets, based on September 30, 1995
information. Regions operates banking subsidiaries in Alabama, Florida, Georgia,
Louisiana, and Tennessee and 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.
<PAGE> 13
During the 1995 fiscal year, Regions has completed the acquisition of two
financial institutions, one in Georgia and a second in Louisiana, the
acquisition of an accounts receivable factoring company in Alabama, and the
acquisition of a branch banking operation in Georgia (the "Recently Completed
Acquisitions") and, in addition to First National, has entered into definitive
agreements or letters of intent to acquire five financial institutions, four of
which are located in Georgia and one of which is located in Louisiana (the
"Other Pending Acquisitions"). Information with respect to the Recently
Completed Acquisitions and the Other Pending Acquisitions is included under
"-- Summary Pro Forma Financial Data," "Business of Regions -- Recent
Developments," "Pro Forma Financial Information," and in certain of the
documents incorporated by reference in this Joint Proxy Statement. See
"Documents Incorporated by Reference."
Regions was organized under the laws of the state of Delaware and commenced
operations in 1971 as a registered bank holding company under the BHC Act.
Regions' principal executive office is 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 Joint Proxy Statement.
See "Available Information," "Documents Incorporated by Reference," "Business of
Regions," and "Certain Regulatory Considerations."
MEETINGS OF STOCKHOLDERS
First National. This Joint Proxy Statement is being furnished to the
holders of First National Common Stock in connection with the solicitation by
the First National Board of Directors of proxies for use at the First National
Special Meeting at which First National stockholders will be asked to vote upon
a proposal to approve the Agreement and the Plan of Merger. The First National
Special Meeting will be held in the Theatre in the Georgia Mountains Center, 301
Main Street, Gainesville, Georgia, on January 11, 1996, at 10:00 A.M. local
time. See "Meetings of Stockholders -- Date, Place, Time, and Purpose."
First National's Board of Directors has fixed the close of business on
December 1, 1995, as the record date (the "First National Record Date") for
determination of the stockholders entitled to notice of and to vote at the First
National Special Meeting. Only holders of record of shares of First National
Common Stock on the First National Record Date will be entitled to notice of and
to vote at the First National Special Meeting. Each share of First National
Common Stock is entitled to one vote. Stockholders who execute proxies retain
the right to revoke them at any time prior to being voted at the First National
Special Meeting. On the First National Record Date, there were shares
of First National Common Stock issued and outstanding. See "Meetings of
Stockholders -- Record Dates, Voting Rights, Required Votes, and Revocability of
Proxies."
Approval of the Agreement and the Plan of Merger requires the affirmative
vote of a majority of the votes entitled to be cast at the First National
Special Meeting by the holders of the issued and outstanding shares of First
National Common Stock. See "Meetings of Stockholders -- Record Dates, Voting
Rights, Required Votes, and Revocability of Proxies."
Regions. This Joint Proxy Statement is being furnished to the holders of
Regions Common Stock in connection with the solicitation by the Regions Board of
Directors of proxies for use at the Regions Special Meeting at which Regions
stockholders will be asked to vote upon a proposal to approve the issuance of
shares of Regions Common Stock pursuant to the Agreement. The Regions Special
Meeting will be held at the Regions Training Center located at 298 West Valley
Avenue, Birmingham, Alabama, on January 11, 1996, at 10:00 A.M. local time. See
"Meetings of Stockholders -- Date, Place, Time, and Purpose."
Regions' Board of Directors has fixed the close of business on December 1,
1995, as the record date (the "Regions Record Date") for determination of the
stockholders entitled to notice of and to vote at the Regions Special Meeting.
Only holders of record of shares of Regions Common Stock on the Regions Record
Date will be entitled to notice of and to vote at the Regions Special Meeting.
Each share of Regions Common Stock is entitled to one vote. Stockholders who
execute proxies retain the right to revoke them at any time prior to being voted
at the Regions Special Meeting. On the Regions Record Date, there were
shares of Regions
2
<PAGE> 14
Common Stock issued and outstanding. See "Meetings of Stockholders -- Record
Dates, Voting Rights, Required Votes, and Revocability of Proxies."
Approval of issuance of shares of Regions Common Stock pursuant to the
Agreement requires the affirmative vote of a majority of the votes cast at the
Regions Special Meeting by the holders of the issued and outstanding shares of
Regions Common Stock. See "Meetings of Stockholders -- Record Dates, Voting
Rights, Required Votes, and Revocability of Proxies."
THE MERGER
General. The Agreement provides for the acquisition of First National by
Regions pursuant to the merger of First National with and into Regions Merger
Subsidiary, a newly formed corporation organized under the laws of the state of
Georgia and a wholly owned subsidiary of Regions. At the Effective Time, each
share of First National Common Stock then issued and outstanding (excluding
shares held by First National, Regions, or their respective subsidiaries, in
each case other than shares held in a fiduciary capacity or in satisfaction of
debts previously contracted) will be converted into and exchanged for 0.76 of a
share of Regions Common Stock (subject to possible adjustment as described
below) (the "Exchange Ratio").
In the event (i) the "Average Closing Price" (defined in the Agreement as
the average of the daily last sale prices of Regions Common Stock on the Nasdaq
National Market System (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source as selected by Regions) for the
ten consecutive full trading days on which such shares are traded on the Nasdaq
National Market System ending at the close of trading on the date on which the
consent of the Board of Governors of the Federal Reserve System ("Federal
Reserve") to the Merger shall be received (the "Determination Date")) is less
than $33.20 and (ii) (1) the quotient obtained by dividing the Average Closing
Price by $41.50 (the "Regions Ratio") is less than (2) the quotient obtained by
dividing the weighted average of the closing prices (the "Index Price") of 20
bank holding companies designated in the Agreement (the "Index Group") on the
Determination Date by the Index Price on October 20, 1995, less 20% (the "Index
Ratio"), then First National will have the right to terminate the Agreement
unless Regions elects to adjust the Exchange Ratio in the manner described under
"Description of Transaction -- Possible Adjustment of Exchange Ratio."
No fractional shares of Regions Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any First National stockholder would be entitled upon consummation of the
Merger, in an amount equal to such fractional part of a share of Regions Common
Stock multiplied by the market value of one share of Regions Common Stock at the
Effective Time. The market value of one share of Regions Common Stock at the
Effective Time shall be the last sale price of such common stock on the Nasdaq
National Market System (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source as selected by Regions) on the
last trading day preceding the Effective Time. See "Description of
Transaction -- General."
The Agreement also contemplates that at the Effective Time, each award,
option, or other right to purchase or acquire shares of First National Common
Stock pursuant to stock options, stock appreciation rights, or stock awards
("First National Rights") granted by First National under the First National
Stock Plans, as that term is defined in the Agreement, which are outstanding at
the Effective Time, whether or not exercisable, will be converted into and
become rights with respect to Regions Common Stock on a basis adjusted to
reflect the Exchange Ratio. See "Description of Transaction -- Effect of the
Merger on Stock Rights."
In connection with announcing the Merger, the parties announced that they
may purchase in the open market up to approximately 1.9 million shares of First
National Common Stock or 1.4 million shares of Regions Common Stock or a
combination of the two as part of the Merger or the Other Pending Acquisitions.
The timing and amount of such possible purchases will be determined based on the
prices of the respective common stocks, capital needs, and other factors. It is
anticipated that the shares of Regions Common Stock which may be purchased will
be reissued in connection with the Other Pending Acquisitions. As of the date of
this Joint Proxy Statement, Regions has purchased, in the open market,
approximately shares of Regions Common Stock in connection with the Merger
and First National has purchased no shares of First National
3
<PAGE> 15
Common Stock. Under rules promulgated by the SEC under the Exchange Act, the
parties will not be permitted to purchase shares of First National Common Stock
or Regions Common Stock in the open market during the period commencing two
business days prior to the mailing of this Joint Proxy Statement and ending
immediately following the Special Meetings. This limitation also applies
beginning two business days before and ending after any period in which the
Average Closing Price (as defined under "-- The Merger -- General") is
determined or during corresponding periods relating to the solicitation of
proxies and determination of exchange ratios for the Other Pending Acquisitions.
As of the First National Record Date, First National had shares of
First National Common Stock issued and outstanding and additional shares of
First National Common Stock subject to First National Rights. Taking into the
account the Exchange Ratio of 0.76 of a share of Regions Common Stock for each
share of First National Common Stock and the anticipated repurchase of
approximately 1.9 million shares of First National Common Stock or 1.4 million
shares of Regions Common Stock or a combination of the two as part of the Merger
or the Other Pending Acquisitions, it is anticipated that upon consummation of
the Merger, Regions would issue approximately shares of Regions Common
Stock excluding shares subject to assumed options or grants. Accordingly,
Regions would then have issued and outstanding approximately shares of
Regions Common Stock based on the number of shares of Regions Common Stock
issued and outstanding on the Regions Record Date and without taking into
account any additional shares of Regions Common Stock issuable in connection
with consummating the Other Pending Acquisitions.
Reasons for the Merger, Recommendations of the Boards of Directors of First
National and Regions. The Board of Directors of First National believes that the
Agreement, the Plan of Merger, and the Merger are in the best interests of First
National and its stockholders, and the Board of Directors of Regions believes
that the Agreement, the Merger, and the issuance of shares of Regions Common
Stock pursuant to the Agreement are in the best interests of Regions and its
stockholders. Each Board has approved the matters to be approved by their
respective stockholders. THE FIRST NATIONAL DIRECTORS RECOMMEND THAT FIRST
NATIONAL STOCKHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT AND THE PLAN OF MERGER.
THE REGIONS DIRECTORS RECOMMEND THAT REGIONS STOCKHOLDERS VOTE FOR THE ISSUANCE
OF SHARES OF REGIONS COMMON STOCK PURSUANT TO THE AGREEMENT. The Boards of
Directors of First National and Regions believe that the Merger will result in a
company with expanded opportunities for profitable growth and that the combined
resources and capital of First National and Regions will provide an enhanced
ability to compete in the changing and competitive financial services industry.
See "Description of Transaction -- Background of and Reasons for the Merger."
In approving the Agreement and the Plan of Merger and the issuance of
Regions Common Stock pursuant to the Agreement, respectively, First National's
directors and Regions' directors considered, among other things, First
National's and Regions' financial condition, respectively, 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, the views of Morgan Stanley & Co.
Incorporated ("Morgan Stanley") and Bear, Stearns & Co. Inc. ("Bear Stearns"),
respectively, as to the fairness of the Exchange Ratio, from a financial point
of view, to the stockholders of First National and the stockholders of Regions,
respectively, and in general the fairness of the terms of the Merger to First
National stockholders and Regions stockholders, respectively. See "Description
of Transaction -- Background of and Reasons for the Merger."
Opinion of Financial Advisors. Morgan Stanley has rendered an opinion to
First National that, based on and subject to the procedures, matters, and
limitations described in its opinion and such other matters as it considered
relevant, as of the date of its opinion, the Exchange Ratio is fair, from a
financial point of view, to the stockholders of First National. The opinion of
Morgan Stanley is attached as Appendix III to this Joint Proxy Statement. First
National 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
Transaction -- Opinion of First National's Financial Advisor."
Similarly, Bear Stearns has rendered an opinion to Regions that, based on
and subject to the procedures, matters, and limitations described in its opinion
and such other matters as it considered relevant, as of the date of its opinion,
the Exchange Ratio is fair, from a financial point of view, to the stockholders
of Regions. The
4
<PAGE> 16
opinion of Bear Stearns is attached as Appendix IV to this Joint Proxy
Statement. Regions 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 Transaction -- Opinion of Regions' Financial Advisor."
Effective Time. Subject to the conditions to the obligations of the
parties to effect the Merger, the Effective Time will occur on the date and at
the time that the Certificate of Merger becomes effective with the Georgia
Secretary of State. Unless otherwise agreed upon by First National and Regions,
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
Time to occur on or before the tenth business day (as designated by Regions)
following the last to occur of (i) the effective date (including the expiration
of any applicable waiting period) of the last consent of any regulatory
authority required for the Merger and (ii) the date on which the stockholders of
First National and Regions approve the matters relating to the Agreement and the
Plan of Merger required to be approved by such stockholders by applicable law.
See "Description of Transaction -- Effective Time of the Merger," "-- Conditions
to Consummation of the Merger," and "-- Waiver, Amendment, and Termination."
Notwithstanding the foregoing, the parties have agreed to cooperate in
selecting the Effective Time to ensure that, with respect to the quarterly
period in which the Effective Time occurs, the holders of First National Common
Stock do not receive both a dividend in respect of their First National Common
Stock and a dividend in respect of Regions Common Stock or fail to receive any
dividend. See "Description of Transaction -- Conduct of Business Pending the
Merger."
NO ASSURANCE CAN BE PROVIDED THAT THE NECESSARY STOCKHOLDER AND REGULATORY
APPROVALS CAN BE OBTAINED OR THAT THE OTHER CONDITIONS PRECEDENT TO THE MERGER
CAN OR WILL BE SATISFIED. FIRST NATIONAL AND REGIONS ANTICIPATE THAT ALL
CONDITIONS TO THE CONSUMMATION OF THE MERGER WILL BE SATISFIED SO THAT THE
MERGER CAN BE CONSUMMATED DURING THE FIRST HALF OF 1996. HOWEVER, DELAYS IN THE
CONSUMMATION OF THE MERGER COULD OCCUR.
Exchange of Stock Certificates. Promptly after the Effective Time, Regions
will cause First Chicago Trust Company of New York, acting in its capacity as
exchange agent for Regions (the "Exchange Agent"), to mail to each holder of
record of a certificate or certificates (collectively, the "Certificates")
which, immediately prior to the Effective Time, represented outstanding shares
of First National Common Stock, a letter of transmittal and instructions for use
in effecting the surrender and cancellation of the Certificates in exchange for
certificates representing shares of Regions Common Stock. Cash will be paid to
the holders of First National Common Stock in lieu of the issuance of any
fractional shares of Regions Common Stock. In no event will the holder of any
surrendered Certificate(s) be entitled to receive interest on any cash to be
issued to such holder, and in no event will First National, Regions, or the
Exchange Agent be liable to any holder of First National Common Stock for any
Regions Common Stock or dividends thereon or cash delivered in good faith to a
public official pursuant to any applicable abandoned property, escheat, or
similar law.
Regulatory Approvals And Other Conditions. The Merger is subject to
approval by the Federal Reserve, the Office of Thrift Supervision ("OTS"), the
Commissioner of Banking and Finance of the State of Georgia ("Georgia
Commissioner"), and the Department of Banking and Finance of the State of
Florida ("Florida Department"). Applications have been filed with each of these
agencies for the requisite approvals. THERE CAN BE NO ASSURANCE THAT SUCH
REGULATORY APPROVALS WILL BE OBTAINED OR AS TO THE TIMING OF ANY SUCH APPROVALS.
THERE ALSO CAN BE NO ASSURANCE THAT ANY SUCH APPROVALS WILL NOT IMPOSE
CONDITIONS THAT ARE DEEMED MATERIALLY BURDENSOME BY REGIONS (AS DEFINED IN THE
AGREEMENT).
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of First National stockholders,
receipt of the required approval of Regions stockholders, receipt of an opinion
of counsel as to the tax-free nature of certain aspects of the Merger, receipt
of a letter from the independent accountants of Regions that the Merger will
qualify for pooling-of-interests accounting treatment, and certain other
conditions. See "Description of Transaction -- Conditions to Consummation of the
Merger."
5
<PAGE> 17
Waiver, Amendment, and Termination. The Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time by mutual action of
the Boards of Directors of First National and Regions, or by the action of the
Board of Directors of either company under certain circumstances, including if
the Merger is not consummated by September 30, 1996, unless the failure to
consummate by such time is due to a breach of the Agreement by the party seeking
to terminate. If for any reason the Merger is not consummated, First National
will continue to operate as a bank holding company under its present management.
See "Description of Transaction -- Waiver, Amendment, and Termination."
Dissenters' Rights. Pursuant to Georgia Business Corporation Code
("Georgia BCC") Section 14-2-1302(c), the holders of First National Common Stock
are not entitled to dissent from the Merger. Pursuant to Delaware General
Corporation Law ("Delaware GCL") Section 262, the holders of Regions Common
Stock are not entitled to dissent from the issuance of shares of Regions Common
Stock pursuant to the Agreement. See "Description of Transaction -- Dissenters'
Rights."
Interests of Certain Persons in the Merger. Certain members of First
National's management and Board of Directors have interests in the Merger in
addition to their interests as stockholders of First National generally. Those
interests relate to, among other things, change in control agreements and
provisions in the Agreement regarding indemnification and eligibility for
certain Regions employee benefits. See "Description of Transaction -- Interests
of Certain Persons in the Merger."
Certain Federal Income Tax Consequences of the Merger. It is intended that
the Merger will be treated as a reorganization within the meaning of Section 368
of the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, no
gain or loss will be recognized by a First National stockholder upon the
exchange of such stockholder's First National Common Stock for shares of Regions
Common Stock. Subject to the provisions and limitations of Section 302(a) of the
Code, gain or loss will be recognized with respect to cash received in lieu of
fractional shares. Gain recognition, if any, will not be in excess of the amount
of cash received. See "Description of Transaction -- Certain Federal Income Tax
Consequences." Consummation of the Merger is conditioned upon receipt by First
National and Regions of an opinion of Alston & Bird substantially to this
effect. DUE TO THE INDIVIDUAL NATURE OF THE TAX CONSEQUENCES OF THE MERGER,
FIRST NATIONAL STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE EFFECT OF THE MERGER ON THEM UNDER FEDERAL, STATE, LOCAL, AND
FOREIGN TAX LAWS. For a further discussion of the federal income tax
consequences of the Merger, see "Description of Transaction -- Certain Federal
Income Tax Consequences."
Accounting Treatment. It is intended that the Merger will be accounted for
as a pooling of interests for accounting and financial reporting purposes. See
"Description of Transaction -- Accounting Treatment."
Certain Differences in Stockholders' Rights. At the Effective Time, First
National stockholders, whose rights are governed by First National's Articles of
Incorporation and Bylaws and by the Georgia BCC, will automatically become
Regions stockholders, and their rights as Regions stockholders will be
determined by Regions' Certificate of Incorporation and Bylaws and by the
Delaware GCL.
The rights of Regions stockholders differ from the rights of First National
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."
Option Agreement. First National, as issuer, and Regions, as grantee,
entered into a stock option agreement (the "Option Agreement") pursuant to which
First National granted Regions an option to purchase, under certain
circumstances and subject to certain adjustments and limitations, up to
4,089,234 shares of First National Common Stock at a price of $27.00 per share.
The Option Agreement is exercisable upon the occurrence of certain events that
create the potential for another party to acquire control of First National. To
the best knowledge of First National, no such event which would permit exercise
of the Option Agreement has occurred as of the date of this Joint Proxy
Statement. The Option Agreement was granted by First National as a condition of
and in consideration for Regions' entering into the Agreement and is intended to
increase the likelihood that the Merger will be effected by making it more
difficult and more expensive for a third party to acquire control of First
National. See "Description of Transaction -- Option Agreement."
6
<PAGE> 18
Comparative Market Prices Of Common Stock. First National Common Stock and
Regions Common Stock are traded in the over-the-counter market and quoted on the
Nasdaq National Market System. The following table sets forth the reported
closing sale prices per share for Regions Common Stock and First National Common
Stock and the equivalent per share prices (as explained below) for First
National Common Stock on October 20, 1995, the last full business day preceding
the public announcement of the execution of the Agreement, and on December ,
1995, the latest practicable date prior to the mailing of this Joint Proxy
Statement.
<TABLE>
<CAPTION>
FIRST
MARKET PRICE REGIONS NATIONAL EQUIVALENT PER
PER SHARE AT: COMMON STOCK COMMON STOCK SHARE PRICE
- ------------------------------------------------------ ------------ ------------ --------------
<S> <C> <C> <C>
October 20, 1995...................................... $41.50 $28.75 $31.54
December , 1995.....................................
</TABLE>
The equivalent per share price of a share of First National Common Stock at
each specified date represents the closing sale price of a share of Regions
Common Stock on such date multiplied by the Exchange Ratio. See "-- Comparative
Market Prices and Dividends."
There can be no assurance as to what the market price of the Regions Common
Stock will be if and when the Merger is consummated.
COMPARATIVE PER SHARE DATA
The following table sets forth certain comparative per share data relating
to income, cash dividends, and book value on (i) an historical basis for Regions
and First National; (ii) a pro forma combined basis per share of Regions Common
Stock, giving effect to the Merger; (iii) an equivalent pro forma basis per
share of First National 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 Pending Acquisitions (as defined under "Business of
Regions -- Recent Developments"); and (v) an equivalent pro forma basis per
share of First National Common Stock, giving effect to the Merger and the Other
Pending Acquisitions. The First National and Regions pro forma combined
information and the First National pro forma Merger equivalent information give
effect to the Merger on a pooling-of-interests accounting basis and reflect the
Exchange Ratio of 0.76 of a share of Regions Common Stock for each share of
First National Common Stock. See "Description of Transaction -- Accounting
Treatment." The Regions, First National, and Other Pending Acquisitions pro
forma combined information and the First National pro forma Merger and Other
Pending Acquisitions equivalent information give effect to (i) the Merger as
described in the preceding sentence and (ii) the Other Pending Acquisitions as
described under "-- Summary Pro Forma Financial Data -- Selected Pro Forma
Combined Data for Regions, First National, and Other Pending Acquisitions." The
pro forma data are presented for information 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 Pending
Acquisitions been consummated at the dates or during the periods indicated, nor
are they necessarily indicative of future results of operations or combined
financial position.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of Regions and
the restated historical financial statements of First National, including the
respective notes thereto, and the pro forma financial information incorporated
by reference herein. See "Documents Incorporated by Reference," "-- Selected
Financial Data," "-- Summary Pro Forma Financial Data," "Business of
Regions -- Recent Developments," and "Pro Forma Financial Information."
7
<PAGE> 19
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
------------------- ------------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED EXCEPT REGIONS AND
FIRST NATIONAL HISTORICAL)
<S> <C> <C> <C> <C> <C>
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE AND EXTRAORDINARY ITEM PER COMMON SHARE
Regions historical..................................... $ 2.77 $ 2.52 $ 3.40 $ 3.01 $ 2.60
First National historical.............................. 1.26 1.37 1.72 1.70 1.50
Regions and First National pro forma combined(1)....... 2.49 2.34 3.10 2.79 2.42
First National pro forma Merger equivalent(2).......... 1.89 1.78 2.36 2.12 1.84
Regions, First National, and Other Pending Acquisitions
pro forma combined(3)................................ 2.49 3.08
First National pro forma Merger and Other Pending
Acquisitions equivalent(2)........................... 1.89 2.34
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical..................................... $ 0.99 $ 0.90 $ 1.20 $ 1.04 $ 0.91
First National historical.............................. 0.625 0.5775 0.7775 0.705 0.64
First National pro forma Merger equivalent(4).......... 0.75 0.68 0.91 0.79 0.69
BOOK VALUE PER COMMON SHARE
(PERIOD END)
Regions historical..................................... $ 24.19 $ 21.46 $ 22.53 $ 20.73 $ 17.62
First National historical.............................. 14.82 13.44 13.35 13.48 12.06
Regions and First National pro forma combined(1)....... 22.91 20.28 21.25 19.89 17.01
First National pro forma Merger equivalent(2).......... 17.41 15.41 16.15 15.12 12.93
Regions, First National, and Other Pending Acquisitions
pro forma combined(3)................................ 22.89
First National pro forma Merger and Other Pending
Acquisitions equivalent(2)........................... 17.40
</TABLE>
- ---------------
(1) Represents the pro forma combined information of Regions and First National
as if the Merger were consummated on January 1, 1992, and were accounted
for as a pooling of interests.
(2) Represents the pro forma combined information multiplied by the Exchange
Ratio of 0.76 of a share of Regions Common Stock for each share of First
National Common Stock.
(3) Represents the pro forma combined information of Regions, First National,
and the Other Pending Acquisitions as if the Merger were consummated at the
time and pursuant to the accounting basis described in note (1) and the
Other Pending Acquisitions were consummated at the time and pursuant to the
accounting bases described under "-- Summary Pro Forma Financial
Data -- Selected Pro Forma Combined Data for Regions, First National, and
Other Pending Acquisitions."
(4) Represents historical dividends declared per share by Regions multiplied by
the Exchange Ratio of 0.76 of a share of Regions Common Stock for each
share of First National Common Stock.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and First National and are based on the consolidated
financial statements of Regions and the restated historical consolidated
financial statements of First National, including the respective notes thereto,
which are incorporated by reference in this Joint Proxy Statement. The data
should be read in conjunction with such historical financial statements,
including the respective notes thereto, and other financial information
concerning Regions and First National incorporated by reference or included
herein. The financial information for First National reflects the restatement of
the historical financial statements of First National required as a result of
the FF Bancorp Acquisition, which are included in the Current Report on Form 8-K
dated November 21, 1995, of First National. Interim unaudited data for the nine
months ended September 30, 1995 and 1994 of Regions and First National reflect,
in the opinion of the respective managements of Regions and First National, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such data. Results for the nine months ended September 30,
1995, are not necessarily indicative of results which may be expected for any
other interim period or for the year as a whole. See "Documents Incorporated by
Reference."
8
<PAGE> 20
SELECTED HISTORICAL FINANCIAL DATA OF REGIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------- ----------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ---------- ---------- ----------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income.......... $ 757,460 $ 568,358 $ 785,779 $ 555,667 $ 536,747 $ 556,821 $ 519,753
Total interest expense......... 387,112 246,294 350,139 213,614 224,068 292,017 297,613
Net interest income............ 370,348 322,064 435,640 342,053 312,679 264,804 222,140
Provision for loan losses...... 15,312 13,804 19,003 21,533 27,072 24,005 24,208
Net interest income after loan
loss provision............... 355,036 308,260 416,637 320,520 285,607 240,799 197,932
Total noninterest income
excluding security gains
(losses)..................... 117,419 108,552 142,781 131,949 119,130 101,964 94,730
Security gains (losses)........ 16 444 627 78 (53) (507) (982)
Total noninterest expense...... 278,363 254,376 343,067 287,026 264,659 230,340 195,611
Income tax expense............. 66,007 54,243 71,094 53,476 44,977 33,660 27,175
Net income..................... 128,101 108,637 145,884 112,045 95,048 78,256 68,894
PER SHARE DATA:
Net income..................... $ 2.77 $ 2.52 $ 3.40 $ 3.01 $ 2.60 $ 2.16 $ 1.91
Cash dividends................. 0.99 0.90 1.20 1.04 0.91 0.87 0.84
Book value..................... 24.19 21.46 22.53 20.73 17.62 15.76 14.54
OTHER INFORMATION:
Average number of shares
outstanding.................. 46,212 43,029 42,906 37,205 36,532 36,191 36,097
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets................... $13,847,910 $11,669,957 $12,839,320 $10,476,348 $7,881,026 $6,745,053 $6,344,406
Securities..................... 3,033,200 2,484,835 2,609,188 2,368,445 1,670,170 1,575,725 1,489,200
Loans, net of unearned income.. 9,596,673 8,037,888 9,017,802 6,833,246 5,142,531 4,274,958 4,092,262
Total deposits................. 10,742,187 9,269,856 10,093,135 8,770,694 6,701,142 5,917,028 5,353,211
Long-term borrowings........... 573,790 612,198 519,238 462,862 136,990 18,782 19,707
Stockholders' equity........... 1,113,790 901,533 1,013,870 850,965 656,655 572,971 524,132
PERFORMANCE RATIOS:
Return on average assets(1).... 1.29% 1.31% 1.29% 1.40% 1.34% 1.23% 1.23%
Return on average stockholders'
equity(1).................... 15.87 15.99 15.97 16.14 15.64 14.27 13.64
Net interest margin(1)......... 4.11 4.30 4.26 4.82 4.98 4.78 4.67
Efficiency(2).................. 56.17 57.99 58.24 59.24 59.87 60.77 59.22
Dividend payout................ 35.74 35.71 35.29 34.55 35.00 40.28 43.98
ASSET QUALITY RATIOS:
Net charge-offs to average
loans, net of unearned
income(1).................... 0.08% 0.11% 0.17% 0.19% 0.28% 0.35% 0.44%
Problem assets to net loans and
other real estate(3)......... 0.48 0.60 0.52 0.84 0.70 0.89 0.98
Nonperforming assets to net
loans and other real estate(4) 0.55 0.67 0.58 1.03 0.81 1.01 1.12
Allowance for loan losses to
loans, net of unearned
income....................... 1.37 1.40 1.30 1.47 1.43 1.28 1.10
Allowance for loan losses to
nonperforming assets(4)...... 250.72 209.18 221.81 143.05 175.92 126.32 98.18
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets............... 8.14% 8.21% 8.09% 8.70% 8.59% 8.63% 9.03%
Average loans to average
deposits..................... 89.82 80.17 82.30 78.14 72.46 73.40 76.67
Tier 1 risk-based capital(5)... 10.82 10.93 10.69 11.13 11.68 11.85 11.31
Total risk-based capital(5).... 14.28 14.79 14.29 13.48 14.44 13.19 12.51
Tier 1 leverage(5)............. 7.25 7.71 8.21 10.11 8.44 8.40 7.65
</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%, depending on the risk profile of the
institution and other factors.
9
<PAGE> 21
SELECTED HISTORICAL FINANCIAL DATA OF FIRST NATIONAL
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income.............. $ 179,720 $ 151,089 $ 205,914 $ 190,877 $ 200,347 $ 222,027 $ 230,415
Total interest expense............. 84,994 62,462 86,018 82,581 100,352 136,066 149,703
Net interest income................ 94,726 88,627 119,896 108,296 99,995 85,961 80,712
Provision for loan losses.......... 1,963 (136) 1,577 3,162 12,295 10,874 15,051
Net interest income after loan loss
provision........................ 92,763 88,763 118,319 105,134 87,700 75,087 65,661
Total noninterest income excluding
security gains (losses).......... 21,500 22,399 28,395 32,286 28,813 27,285 23,204
Security gains (losses)............ 291 166 (283) 753 2,470 401 115
Total noninterest expense.......... 77,371 72,776 98,780 91,021 78,620 72,455 62,740
Income tax expense................. 11,332 11,108 13,015 12,693 11,428 7,842 6,750
Net income......................... $ 25,851 $ 27,444 $ 34,636 $ 34,459 $ 28,935 $ 22,476 $ 19,490
PER SHARE DATA:
Net income......................... $ 1.26 $ 1.37 $ 1.72 $ 1.75 $ 1.50 $ 1.22 $ 1.06
Cash dividends..................... 0.625 0.5775 0.7775 0.705 0.64 0.55 0.46
Book value......................... 14.82 13.44 13.35 13.48 12.06 11.18 9.68
OTHER INFORMATION:
Average number of shares
outstanding...................... 20,465 20,053 20,132 19,668 19,305 18,391 18,412
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets....................... $3,111,875 $2,911,849 $2,970,756 $2,686,813 $2,576,650 $2,442,995 $2,347,164
Securities......................... 815,418 741,925 737,103 624,972 595,368 580,465 444,820
Loans, net of unearned income...... 1,970,654 1,825,127 1,850,912 1,663,046 1,593,230 1,560,574 1,512,317
Allowance for possible loan
losses........................... 26,016 26,979 26,476 24,265 26,629 21,973 21,547
Deposits........................... 2,587,123 2,437,894 2,482,458 2,254,682 2,222,659 2,130,703 2,136,727
Short-term debt.................... 95,082 75,425 105,129 77,186 89,798 87,479 57,567
Long-term debt..................... 79,641 90,592 80,238 62,958 14,470 5,679 6,645
Stockholders' equity............... 304,266 273,441 272,452 260,336 229,461 206,031 180,805
PERFORMANCE RATIOS:
Return on average assets(1)........ 1.14% 1.29% 1.21% 1.32% 1.16% 0.94% 0.85%
Return on average stockholders'
equity(1)........................ 12.06 13.54 12.84 14.66 13.38 11.62 11.10
Net interest margin(1)............. 4.73 4.73 4.77 4.67 4.50 4.11 4.03
Efficiency(2)...................... 63.90 66.82 63.85 62.13 58.83 61.40 57.47
Dividend payout(3)................. 49.60 42.15 45.20 40.29 42.67 45.08 43.40
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1)........ 0.17% 0.22% 0.30% 0.34% 0.57% 0.68% 0.68%
Problem assets to net loans and
other real estate(4)............. 1.48 2.28 1.98 2.22 3.12 3.48 2.47
Nonperforming assets to net loans
and other real estate(5)......... 1.50 2.29 1.99 2.23 3.16 3.58 2.67
Allowance for loan losses to loans,
net of unearned income........... 1.32 1.48 1.43 1.46 1.67 1.40 1.42
Allowance for loan losses to
nonperforming assets(5).......... 87.49 63.88 71.16 64.77 52.22 38.81 52.86
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets................... 9.65% 9.44% 9.43% 8.97% 8.64% 8.12% 7.66%
Average loans to average deposits.... 75.52 75.29 74.58 74.16 73.41 73.60 72.40
Tier 1 risk-based capital(6)......... 14.37 14.11 13.93 15.09 12.82 13.94 12.32
Total risk-based capital(6).......... 15.62 15.36 15.18 16.34 14.08 15.21 13.58
Tier 1 leverage(6)................... 9.78 9.77 9.17 10.18 9.61 9.64 9.10
</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) Dividend payout ratio is computed based on dividends declared rather than
dividends paid.
(4) Problem assets include loans on a nonaccrual basis, restructured loans, and
foreclosed properties.
(5) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(6) 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%, depending on the risk profile of the
institution and other factors. The capital ratios presented reflect the
reported historical capital ratios and do not, for periods prior to
September 30, 1995, reflect acquisitions accounted for as poolings of
interests.
10
<PAGE> 22
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect, as
appropriate, to the Merger 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 appearing
elsewhere in this Joint Proxy Statement and included in Regions' Current Report
on Form 8-K dated November 22, 1995. See "-- Comparative Per Share Data" and
"Pro Forma Financial Information." For additional information relating to
specific transactions within the scope of the Other Pending Acquisitions, see
"Business of Regions -- Recent Developments" and "Pro Forma Financial
Information."
SELECTED PRO FORMA COMBINED DATA FOR REGIONS AND FIRST NATIONAL
The following unaudited pro forma combined data give effect to the
acquisition of First National 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 SEPTEMBER 30, 1995
-------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
-------------------------------------
<S> <C>
STATEMENT OF CONDITION DATA:
Total assets.................................................. $16,959,785
Securities.................................................... 3,848,618
Loans, net of unearned income................................. 11,567,327
Total deposits................................................ 13,329,310
Other borrowed funds.......................................... 715,054
Stockholders' equity.......................................... 1,412,456
Book value per common share................................... 22.91
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------
1995 1994 1993 1992
-------------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income............................ $937,180 $991,693 $746,544 $737,094
Total interest expense........................... 472,106 436,157 296,195 324,420
-------------- -------- -------- --------
Net interest income.............................. 465,074 555,536 450,349 412,674
Provision for loan losses........................ 17,275 20,580 24,695 39,367
-------------- -------- -------- --------
Net interest income after loan loss
provision................................... 447,799 534,956 425,654 373,307
Total noninterest income......................... 139,226 171,520 165,066 150,360
Total noninterest expense........................ 355,734 441,847 378,047 343,279
Income tax expense............................... 77,339 84,109 67,153 56,405
-------------- -------- -------- --------
Income before cumulative effect of change in
accounting principle.......................... $153,952 $180,520 $145,520 $123,983
========== ======== ======== ========
Income before cumulative effect of change in
accounting principle per share................ $ 2.49 $ 3.10 $ 2.79 $ 2.42
========== ======== ======== ========
Average common shares outstanding................ 61,765 58,206 52,153 51,204
</TABLE>
11
<PAGE> 23
SELECTED PRO FORMA COMBINED DATA FOR REGIONS, FIRST NATIONAL,
AND OTHER PENDING ACQUISITIONS
The following unaudited pro forma combined data as of September 30, 1995,
and for the nine months ended September 30, 1995, and the years ended December
31, 1994, 1993, and 1992, give effect to (i) the acquisition of First National
by Regions, assuming such acquisition is accounted for as a pooling of
interests, and (ii) the Other Pending Acquisitions, assuming four of such
acquisitions are treated as purchases for accounting purposes and one such
acquisition is treated as a pooling of interests for accounting purposes, as if
all such transactions had been consummated on September 30, 1995, in the case of
the data included under "Statement of Condition Data," and on January 1, 1992,
in the case of the data included under "Income Statement Data."
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1995
-------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C>
STATEMENT OF CONDITION DATA:
Total assets.................................................. $17,581,247
Securities.................................................... 3,959,874
Loans, net of unearned income................................. 11,950,292
Total deposits................................................ 13,914,550
Other borrowed funds.......................................... 724,095
Stockholders' equity.......................................... 1,430,325
Book value per common share................................... 22.89
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
1995 1994 1993 1992
-------------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income..................... $968,527 $1,027,388 $760,157 $748,414
Total interest expense.................... 488,041 451,868 300,143 328,421
-------------- ---------- -------- --------
Net interest income....................... 480,486 575,520 460,014 419,993
Provision for loan losses................. 17,670 21,349 25,315 39,937
-------------- ---------- -------- --------
Net interest income after loan loss
provision............................ 462,816 554,171 434,699 380,056
Total noninterest income.................. 143,483 176,061 167,164 151,843
Total noninterest expense................. 372,044 463,570 387,234 349,006
Income tax expense........................ 78,446 84,922 67,690 57,116
-------------- ---------- -------- --------
Income before cumulative effect of change
in accounting principle and
extraordinary item..................... $155,809 $ 181,740 $146,939 $125,777
========== ========= ======== ========
Income before cumulative effect of change
in accounting principle and
extraordinary item per share........... $ 2.49 $ 3.08 $ 2.77 $ 2.42
========== ========= ======== ========
Average common shares outstanding......... 62,610 59,051 52,998 52,049
</TABLE>
12
<PAGE> 24
MEETINGS OF STOCKHOLDERS
DATE, PLACE, TIME, AND PURPOSE
First National. This Joint Proxy Statement is being furnished to the
holders of First National Common Stock in connection with the solicitation by
the First National Board of Directors of proxies for use at the First National
Special Meeting at which First National stockholders will be asked to vote upon
a proposal to approve the Agreement and the Plan of Merger. The First National
Special Meeting will be held in the Theatre at the Georgia Mountains Center, 301
Main Street, on January 11, 1996, at 10:00 A.M. local time. See "Description of
Transaction."
Regions. This Joint Proxy Statement is being furnished to the holders of
Regions Common Stock in connection with the solicitation by the Regions Board of
Directors of proxies for use at the Regions Special Meeting at which Regions
stockholders will be asked to vote upon a proposal to approve the issuance of
shares of Regions Common Stock pursuant to the Agreement. The Regions Special
Meeting will be held at the Regions Training Center located at 298 West Valley
Avenue, Birmingham, Alabama, on January 11, 1996, at 10:00 A.M. local time. See
"Description of Transaction."
RECORD DATES, VOTING RIGHTS, REQUIRED VOTES, AND REVOCABILITY OF PROXIES
First National. The close of business on December 1, 1995, has been fixed
as the First National Record Date for determining holders of outstanding shares
of First National Common Stock entitled to notice of and to vote at the First
National Special Meeting. Only holders of First National Common Stock of record
on the books of First National at the close of business on the First National
Record Date are entitled to notice of and to vote at the First National Special
Meeting. As of the First National Record Date, there were shares of First
National Common Stock issued and outstanding and held by holders of
record.
Holders of First National Common Stock are entitled to one vote on each
matter considered and voted upon at the First National Special Meeting for each
share of First National Common Stock held of record as of the First National
Record Date. To hold a vote on any proposal, a quorum must be assembled, which
is a majority of the shares of First National Common Stock issued and
outstanding and entitled to vote, present in person or represented by proxy. In
determining whether a quorum exists at the First National Special Meeting for
purposes of all matters to be voted on, all votes "for" or "against," as well as
all abstentions, with respect to the proposal receiving the most such votes,
will be counted. The vote required for the approval of the Agreement and the
Plan of Merger is a majority of the shares of First National Common Stock
entitled to be cast at the First National Special Meeting by holders of the
issued and outstanding shares of First National Common Stock. Consequently, with
respect to the proposal to approve the Agreement and the Plan of Merger,
abstentions and broker non-votes will be counted as part of the base number of
votes to be used in determining if the proposal has received the requisite
number of base votes for approval. Thus, an abstention and a broker non-vote
will have the same effect as a vote "against" such proposal.
Shares of First National Common Stock represented by properly executed
proxies, if such proxies are received in time and not revoked, will be voted in
accordance with the instructions indicated on the proxies. IF NO INSTRUCTIONS
ARE INDICATED, SUCH PROXIES WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND THE
PLAN OF MERGER AND, IN THE DISCRETION OF THE PROXY HOLDER, AS TO ANY OTHER
MATTER WHICH MAY COME PROPERLY BEFORE THE FIRST NATIONAL SPECIAL MEETING. IF
NECESSARY, THE PROXY HOLDER MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE FIRST
NATIONAL SPECIAL MEETING IN ORDER TO PERMIT FURTHER SOLICITATION OF PROXIES IN
THE EVENT THERE ARE NOT SUFFICIENT VOTES TO APPROVE THE FOREGOING PROPOSAL AT
THE TIME OF THE FIRST NATIONAL SPECIAL MEETING.
FAILURE BOTH TO RETURN THE PROXY CARD AND TO VOTE IN PERSON AT THE FIRST
NATIONAL SPECIAL MEETING WILL HAVE THE EFFECT OF A VOTE CAST AGAINST APPROVAL OF
THE AGREEMENT AND THE PLAN OF MERGER.
A First National stockholder who has given a proxy may revoke it at any
time prior to its exercise at the First National Special Meeting by (i) giving
written notice of revocation to the Secretary of First National, (ii) properly
submitting to First National a duly executed proxy bearing a later date, or
(iii) attending the First National Special Meeting and voting in person. All
written notices of revocation and other communica-
13
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tions with respect to revocation of proxies should be addressed as follows:
First National Bancorp, 303 Jesse Jewel Parkway, Suite 700, P.O. Drawer 937,
Gainesville, Georgia 30503; Attention: C. Talmadge Garrison, Corporate
Secretary.
The directors and executive officers of First National and their affiliates
beneficially owned, as of the First National Record Date, shares (or
approximately % of the issued and outstanding shares) of First National
Common Stock. Each member of the Board of Directors of First National has
indicated such director's intention to vote those First National shares over
which such member has voting authority (other than in a fiduciary capacity) in
favor of the Agreement and the Plan of Merger. The directors and executive
officers of Regions and their affiliates beneficially owned, as of the First
National Record Date, shares of First National Common Stock. Each member
of the Board of Directors of Regions has indicated such director's intention to
vote those First National shares over which such member has voting authority
(other than in a fiduciary capacity) in favor of the Agreement and the Plan of
Merger.
In addition, as of the First National Record Date, various subsidiaries of
First National, as fiduciaries, custodians, and agents, had sole or shared
voting power over shares, or %, of the issued and outstanding shares
of First National Common Stock, under trust agreements and other instruments and
agreements, including shares held as trustee or agent of various First National
employee benefit and stock purchase plans. Such subsidiaries also held
shares, or %, of the issued and outstanding shares of Regions Common Stock
as of the Regions Record Date. It is the policy of these subsidiaries not to
vote such shares in the absence of instructions from other appropriate parties
having an interest in such stock, such as co-fiduciaries and participants in
such plans, unless the subsidiary has sole authority with respect to shares
thereto.
Regions. The close of business on December 1, 1995, has been fixed as the
Regions Record Date for determining holders of outstanding shares of Regions
Common Stock entitled to notice of and to vote at the Regions Special Meeting.
Only holders of Regions Common Stock of record on the books of Regions at the
close of business on the Regions Record Date are entitled to notice of and to
vote at the Regions Special Meeting. As of the Regions Record Date, there were
shares of Regions Common Stock issued and outstanding and held by
holders of record of Regions Common Stock
Holders of Regions Common Stock are entitled to one vote on each matter
considered and voted upon at the Regions Special Meeting for each share of
Regions Common Stock held of record as of the Regions Record Date. To hold a
vote on any proposal, a quorum must be assembled, which is a majority of the
shares of Regions Common Stock issued and outstanding, present in person or
represented by proxy. In determining whether a quorum exists at the Regions
Special Meeting for purposes of all matters to be voted on, all votes "for" or
"against," as well as all abstentions, with respect to the proposal receiving
the most such votes, will be counted. The vote required for approval of the
issuance of shares of Regions Common Stock pursuant to the Agreement is a
majority of the votes cast at the Regions Special Meeting by the holders of
shares of Regions Common Stock. Consequently, with respect to the proposal to
approve the issuance of shares of Regions Common Stock pursuant to the
Agreement, abstentions and broker non-votes will not be counted as part of the
base number of votes to be used in determining if the proposal has received the
requisite number of base votes for approval. Thus, an abstention and a broker
non-vote will have no effect on the vote with respect to the proposal.
Shares of Regions Common Stock represented by properly executed proxies, if
such proxies are received in time and not revoked, will be voted in accordance
with the instructions indicated on the proxies. IF NO INSTRUCTIONS ARE
INDICATED, SUCH PROXIES WILL BE VOTED FOR APPROVAL OF THE ISSUANCE OF SHARES OF
REGIONS COMMON STOCK PURSUANT TO THE AGREEMENT AND, IN THE DISCRETION OF THE
PROXY HOLDER, AS TO ANY OTHER MATTER WHICH MAY COME PROPERLY BEFORE THE REGIONS
SPECIAL MEETING. IF NECESSARY, THE PROXY HOLDER MAY VOTE IN FAVOR OF A PROPOSAL
TO ADJOURN THE REGIONS SPECIAL MEETING IN ORDER TO PERMIT FURTHER SOLICITATION
OF PROXIES IN THE EVENT THERE ARE NOT SUFFICIENT VOTES TO APPROVE THE FOREGOING
PROPOSALS AT THE TIME OF THE REGIONS SPECIAL MEETING.
A Regions stockholder who has given a proxy may revoke it at any time prior
to its exercise at the Regions Special Meeting by (i) giving written notice of
revocation to the Secretary of Regions, (ii) properly
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<PAGE> 26
submitting to Regions a duly executed proxy bearing a later date, or (iii)
attending the Regions Special Meeting and voting in person. All written notices
of revocation and other communications with respect to revocation of proxies
should be addressed as follows: Regions Financial Corporation, 417 North 20th
Street, Birmingham, Alabama 35203; Attention: Samuel E. Upchurch, Jr., Corporate
Secretary.
The directors and executive officers of Regions and their affiliates
beneficially owned, as of the Regions Record Date, shares (or
approximately % of the issued and outstanding shares) of Regions Common
Stock. Each member of the Board of Directors of Regions has indicated such
director's intention to vote those Regions shares over which such member has
voting authority (other than in a fiduciary capacity) in favor of the issuance
of shares of Regions Common Stock pursuant to the Agreement. The directors and
executive officers of First National and their affiliates beneficially owned, as
of the Regions Record Date, shares (or approximately % of the issued
and outstanding shares) of Regions Common Stock. Each member of the Board of
Directors of First National has indicated such director's intention to vote
those Regions shares over which such member has voting authority (other than in
a fiduciary capacity) in favor of the issuance of shares of Regions Common Stock
pursuant to the Agreement.
In addition, as of the Regions Record Date, various subsidiaries of
Regions, as fiduciaries, custodians, and agents, had sole or shared voting power
over shares, or %, of the issued and outstanding shares of Regions
Common Stock, under trust agreements and other instruments and agreements,
including shares held as trustee or agent of various Regions employee benefit
and stock purchase plans. Such subsidiaries also held shares, or %,
of the issued and outstanding shares of First National Common Stock as of the
First National Record Date. It is the policy of these subsidiaries not to vote
such shares in the absence of instructions from other appropriate parties having
an interest in such stock, such as co-fiduciaries and participants in such
plans, unless the subsidiary has sole authority with respect to shares thereto.
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DESCRIPTION OF TRANSACTION
The following information describes certain aspects of the Merger. This
description does not purport to be complete and is qualified in its entirety by
reference to the Appendices hereto, including the Agreement and the Plan of
Merger, which are attached as Appendices I and II, respectively, to this Joint
Proxy Statement and incorporated herein by reference. All stockholders are urged
to read the Appendices in their entirety.
GENERAL
The Agreement provides for the acquisition of First National by Regions
pursuant to the merger of First National with and into Regions Merger
Subsidiary, a newly formed corporation organized under the laws of the state of
Georgia and a wholly owned subsidiary of Regions. At the Effective Time, each
share of First National Common Stock then issued and outstanding (excluding
shares held by First National, Regions, or their respective subsidiaries, in
each case other than shares held in a fiduciary capacity or in satisfaction of
debts previously contracted) will be converted into and exchanged for 0.76 of a
share of Regions Common Stock (subject to possible adjustment as described
below) (the "Exchange Ratio").
No fractional shares of Regions Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any First National stockholder would be entitled upon consummation of the
Merger, in an amount equal to such fractional part of a share of Regions Common
Stock multiplied by the market value of one share of Regions Common Stock at the
Effective Time. The market value of one share of Regions Common Stock at the
Effective Time shall be the last sale price of such common stock on the Nasdaq
National Market System (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source as selected by Regions) on the
last trading day preceding the Effective Time.
In connection with announcing the Merger, the parties announced that they
may purchase in the open market up to approximately 1.9 million shares of First
National Common Stock or 1.4 million shares of Regions Common Stock or a
combination of the two as part of the Merger and the Other Pending Acquisitions.
The timing and amount of such possible purchases will be determined based on the
prices of the respective common stocks, capital needs, and other factors. As of
the date of this Joint Proxy Statement, First National has purchased, in the
open market, approximately shares of First National Common Stock and
Regions has purchased, in the open market, approximately shares of
Regions Common Stock in connection with the Merger. Under rules promulgated by
the SEC under the Exchange Act, the parties will not be permitted to purchase
shares of First National Common Stock or Regions Common Stock in the open market
during the period commencing two business days prior to the mailing of this
Joint Proxy Statement and ending immediately following the Special Meetings.
This limitation also applies beginning two business days before and ending after
any period in which the Average Closing Price (as defined under "-- Possible
Adjustment of Exchange Ratio") is determined or during corresponding periods
relating to the solicitation of proxies and determination of exchange ratios for
the Other Pending Acquisitions.
As of the First National Record Date, First National had shares
of First National Common Stock issued and outstanding and additional
shares of First National Common Stock subject to First National Rights. Taking
into the account the Exchange Ratio of 0.76 of a share of Regions Common Stock
for each share of First National Common Stock and the anticipated repurchase of
approximately 1.9 million shares of First National Common Stock or 1.4 million
shares of Regions Common Stock or a combination of the two as part of the Merger
and the Other Pending Acquisitions, it is anticipated that upon consummation of
the Merger Regions would issue approximately shares of Regions Common
Stock excluding shares subject to assumed options or grants. Regions
would then have issued and outstanding approximately shares of Regions
Common Stock based on the number of shares of Regions Common Stock issued and
outstanding on the Regions Record Date and without taking into account any
additional shares of Regions Common Stock issuable in connection with
consummating the Other Pending Acquisitions.
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<PAGE> 28
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
First National is not obligated to consummate the Merger with Regions if
both:
(a) the Average Closing Price (defined in the Agreement as the average
of the daily last sale prices of Regions Common Stock on the Nasdaq
National Market System, as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source as selected by Regions) for
the ten consecutive full trading days on which such shares are traded on
the Nasdaq National Market System ending at the close of trading on the
date on which the consent of the Federal Reserve to the Merger shall be
received (the "Determination Date")) is less than $33.20;
and
(b) (i) the quotient obtained by dividing the Average Closing Price by
$41.50 (the "Regions Ratio") is less than (ii) the quotient obtained by
dividing the weighted average of the closing prices (the "Index Price") of
20 designated bank holding companies (the "Index Group") on the
Determination Date by the Index Price on October 20, 1995, less 20% (the
"Index Ratio").
In such case, First National has the right to terminate the Agreement
during the ten-day period commencing two days after the Determination Date by
giving Regions prompt notice of that decision. First National may withdraw its
termination notice at any time during that ten-day period. During the five-day
period after receipt of such notice, Regions has the option to increase the
consideration payable to First National stockholders by increasing the Exchange
Ratio to equal the lesser of (i) the quotient obtained by dividing (1) the
product of $33.20 and the Exchange Ratio (as then in effect) by (2) the Average
Closing Price, and (ii) the quotient obtained by dividing (1) the product of the
Index Ratio and the Exchange Ratio (as then in effect) by (2) the Regions Ratio.
REGIONS IS UNDER NO OBLIGATION TO ADJUST THE EXCHANGE RATIO. If Regions elects
to adjust the Exchange Ratio, it must give First National prompt notice of that
election and of the adjusted Exchange Ratio, in which case First National must
proceed with the Merger.
These conditions reflect the parties' agreement that First National's
stockholders will assume the risk of declines in the value of Regions Common
Stock of up to 20% from the closing price of Regions Common Stock on October 20,
1995 (i.e., $8.30 -- Regions Common Stock would have to decline to $33.20 based
on Regions' closing stock price of $41.50 on October 20, 1995). If the value of
Regions Common Stock were to decline more than 20% from the closing price of
Regions Common Stock on October 20, 1995 but the price of Regions Common Stock
did not decline more than 20% in comparison to the stock prices of the group of
comparable bank holding company stocks (the Index Group referenced above), then
First National's stockholders would continue to assume the risk of decline in
the value of Regions Common Stock. First National has the right to terminate the
Agreement only when the price of Regions Common Stock declines more than 20% and
such decline exceeds by more than 20% the decline in value for the group of
comparable bank holding companies over the same period.
The operation of the adjustment mechanism can be illustrated by three
scenarios. (For purposes of the numerical examples, the Exchange Ratio is 0.76
and the Index Price is, as of October 20, 1995, $100.)
(a) The first scenario occurs if the Average Closing Price is not less than
$33.20. Under this scenario, regardless of any comparison between the Regions
Ratio and the Index Ratio, there would be no right on the part of First National
to terminate the Agreement and therefore no potential adjustment to the Exchange
Ratio, even though the consideration to be received by First National
stockholders would have fallen from a pro forma $31.54 per share to as little as
pro forma $25.232 per share.
(b) The second scenario occurs if the Average Closing Price is less than
$33.20, but does not decline by significantly more (i.e., by more than 20%) than
the decline in the Index Group. Under this scenario, there again would be no
right on the part of First National to terminate the Agreement and therefore no
potential adjustment to the Exchange Ratio, even though the consideration
received by First National stockholders would have fallen from a pro forma
$31.54 per share to something less than pro forma $25.232 per share.
(c) The third scenario arises where the Average Closing Price is below
$33.20 and the Regions Ratio is below the Index Ratio (i.e., Regions' stock
price has declined by more than 20% relative to the price of shares
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<PAGE> 29
of the Index Group). Under this scenario, First National would have the right to
terminate the Agreement and Regions would have the right, but not the
obligation, to remove such termination right by adjusting the Exchange Ratio. In
this case, the potential adjustment in the Exchange Ratio is designed to ensure
that the First National stockholders receive shares of Regions Common Stock
having a value (based upon the Average Closing Price) that corresponds to not
more than either a 20% decline in the Regions Common Stock price or a 20%
decline from the stock performance reflected by the Index Group.
For example, if the Average Closing Price were $30.00, and the Index Price
on the Determination Date were $93, the Regions Ratio would be 0.72 and would be
below the Index Ratio (0.73, or 0.93 - 0.20). In such a case, First National
could terminate the Agreement unless Regions elected within five days to
increase the Exchange Ratio to equal 0.771, which represents the lesser of (a)
.841 [the result of dividing $25.232 (the product of $33.20 and the 0.76
Exchange Ratio) by the Average Closing Price ($30.00), rounded to the nearest
thousandth] and (b) 0.771 [the result of dividing the Index Ratio (0.73) times
0.76 by the Regions Ratio (0.72), rounded to the nearest thousandth]. Based upon
the assumed $30.00 Average Closing Price, the new Exchange Ratio would represent
a value to the First National stockholders of pro forma $23.12 per share.
If the Average Closing Price were $30.00, and the ending Index Price were
$105, the Regions Ratio would be 0.72 and would be below the Index Ratio (0.85,
or 1.05 - 0.20). In such a case, First National could terminate the Agreement
unless Regions elected within five days to increase the Exchange Ratio to equal
.841, which represents the lesser of (a) 0.841 [the result of dividing $25.232
(the product of $33.20 and the 0.76 Exchange Ratio) by the Average Closing Price
($30.00), rounded to the nearest thousandth] and (b) 0.897 [the result of
dividing the Index Ratio (0.85) times 0.76 by the Regions Ratio (0.72), rounded
to the nearest thousandth]. Based upon the assumed $30.00 Average Closing Price,
the new Exchange Ratio would represent a value to the First National
stockholders of pro forma $25.23 per share.
First National stockholders should be aware that the actual market value of
a share of Regions Common Stock at the Effective Time and at the time
certificates for those shares are delivered following surrender and exchange of
certificates for shares of First National Common Stock may be more or less than
the Average Closing Price. First National stockholders are urged to obtain
information on the trading value of Regions Common Stock that is more recent
than that provided in this Joint Proxy Statement. See "Comparative Market Prices
and Dividends."
EFFECT OF THE MERGER ON STOCK RIGHTS
The Agreement contemplates that at the Effective Time, each First National
Right granted by First National under the First National Stock Plans, as that
term is defined in the Agreement, which are outstanding at the Effective Time,
whether or not exercisable, will be converted into and become rights with
respect to Regions Common Stock, and Regions will assume each First National
Right, in accordance with the terms of the First National Stock Plan and stock
option agreement by which it is evidenced, except that from and after the
Effective Time, (i) Regions and its Compensation Committee will be substituted
for First National and the Committee of First National's Board of Directors
(including, if applicable, the entire Board of Directors of First National)
administering such First National Stock Plan, (ii) each First National Right
assumed by Regions may be exercised solely for shares of Regions Common Stock,
(iii) the number of shares of Regions Common Stock subject to such First
National Right will be equal to the number of shares of First National Common
Stock subject to such First National Right immediately prior to the Effective
Time multiplied by the Exchange Ratio, and (iv) the per share exercise price (or
similar threshold price, in the case of stock awards) under each such First
National Right will be adjusted by dividing the per share exercise (or
threshold) price under each such First National Right by the Exchange Ratio and
rounding up to the nearest cent. Notwithstanding the provisions of clause (iii)
of the preceding sentence, Regions will not be obligated to issue any fraction
of a share of Regions Common Stock upon exercise of First National Rights and
any fraction of a share of Regions Common Stock that otherwise would be subject
to a converted First National Right will represent the right to receive a cash
payment equal to the product of such fraction and the difference between the
market value of one share of Regions Common Stock and the per share exercise
price of such Right. The market value of one share of Regions Common Stock will
be the last sale price of such common stock on the Nasdaq National Market System
(as reported by The Wall Street Journal or, if not
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<PAGE> 30
reported thereby, any other authoritative source selected by Regions) on the
last trading day preceding the Effective Time. In addition, notwithstanding any
other term in the Agreement, each First National Right which is an "incentive
stock option" will be adjusted as required by Section 424 of the Code, and the
regulations promulgated thereunder, so as not to constitute a modification,
extension, or renewal of the option, within the meaning of Section 424(h) of the
Code.
Significantly, all restrictions or limitations on transfer with respect to
First National Common Stock awarded under the First National Stock Plans or any
other plan, program, or arrangement of any First National company, to the extent
that such restrictions or limitations will not have already lapsed, and except
as otherwise expressly provided in such plan, program, or arrangement, will
remain in full force and effect with respect to shares of Regions Common Stock
into which such restricted stock is converted pursuant to the Agreement.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. On April 10, 1995, Richard A. McNeece, Chairman and
Chief Executive Officer of First National, resigned from his positions with
First National and its subsidiaries effective June 30, 1995. Peter D. Miller,
President and Chief Administrative and Financial Officer of First National,
assumed responsibility for day-to-day operations until a successor to Mr.
McNeece could be elected by the First National Board of Directors. After Mr.
McNeece's resignation, the creation of an executive committee (the "Executive
Committee") of the Board of Directors was approved by the Board at its meeting
on April 10, 1995. The following directors were appointed to serve on the
Executive Committee: J. Kenneth Nix (Chairman of the Committee), Jane Wood
Banks, John A. Ferguson, Jr., Peter D. Miller, W. Woodrow Stewart, Bobby M.
Thomas, J. Michael Womble, and Joe Wood, Jr.
After the effective date of Mr. McNeece's resignation, several directors,
including Mr. Miller, were contacted by various regional banking organizations
which expressed an interest in discussing a merger with First National if the
Board determined that First National should no longer remain independent. These
contacts were reported to the Executive Committee and to the Board at its
meeting on July 19, 1995.
Due to the level of interest exhibited in First National, Mr. Miller, with
the approval of the Executive Committee and the Board, retained Morgan Stanley
to help it assess management's five-year business plan and the intrinsic value
of First National Common Stock based on such business plan. At the Executive
Committee meeting on August 16, 1995, Morgan Stanley made a presentation to the
Executive Committee regarding its preliminary findings in connection with the
business plan and its valuation of First National. The Executive Committee
decided that Morgan Stanley should make its presentation to the Board at a
meeting to be held later in August. The Executive Committee also asked
management to review with the Board the basic strategic alternatives designed to
enhance stockholder value and the feasibility of pursuing such alternatives.
At the August 21, 1995 Board meeting, management reviewed various strategic
alternatives. These included primarily (i) continued growth in earnings by First
National on an independent basis, including acquisitions of smaller institutions
from time-to-time and various other assumptions, and (ii) a merger with or sale
to a larger banking organization. Morgan Stanley discussed and delivered a
presentation on management's five-year business plan and the intrinsic value of
First National Common Stock based on such business plan. Based on management's
five-year business plan, the Board was generally of the view that projected
earnings growth supported a continued independent position for at least some
period of time, although it was recognized that there was a possibility that, at
some point, any of several institutions that had capacity might offer a price
that would warrant serious consideration and potentially result in an agreement
to merge or be otherwise acquired.
After the August 21 Board meeting, Mr. Miller continued to receive strong
expressions of interest in a possible merger with First National from Regions.
Due to the level of interest expressed by Regions, Mr. Miller called a special
Board meeting on September 15, 1995. At the meeting, Mr. Miller reported on
conversations with William E. Jordan, a Regional President of Regions, and also
reviewed strategic alternatives for the Board to consider. Special counsel to
First National reviewed the fiduciary duties of directors in determining whether
First National should remain independent or merge with or sell to another
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<PAGE> 31
institution. The Board decided that it was in the best interest of First
National and its stockholders to determine the current value of First National
in a merger exchange transaction. If this could be determined, it could be
compared to the intrinsic value of First National Common Stock based on the
five-year business plan. With that information, the Board felt it could make a
better decision whether it was in the best interest of the stockholders for
First National to remain independent. The Executive Committee was charged with
the task of such determination based on discreet inquiry of a select number of
banking organizations which had previously expressed an interest in acquiring
First National. The Board authorized the Executive Committee to retain an
investment advisor, and the Executive Committee subsequently retained Morgan
Stanley as investment advisor to assist in this task. The Board understood that
if the exchange value proposed by one or more such organizations was
significantly higher than the intrinsic value of First National based on the
business plan, the Board might have the duty to negotiate a merger with one of
the organizations. As part of these considerations, the Board was also aware
that certain stockholders of First National desired that First National consider
a sale transaction and had communicated their strategic desire for First
National to the Board.
On October 16, 1995, the Executive Committee met by telephone conference
call, and Mr. Miller reported that he had met with representatives of four
regional banking organizations, one of which was Regions, and that Morgan
Stanley had contacted three other organizations. These four organizations
indicated a strong interest in acquiring First National through merger and
intended to provide Mr. Miller or Morgan Stanley with a possible exchange value
for First National Common Stock which the respective organizations would be
willing to offer in a merger transaction.
At the regular Board meeting on October 18, 1995, Mr. Miller reported to
the Board that the process of making inquiry of interested banking organizations
was almost complete and that he anticipated having responses from the various
interested banking organizations for the Executive Committee to review by the
end of the week. He stated that after the Executive Committee reviewed the
responses and a presentation from Morgan Stanley, the Executive Committee would
make a recommendation to the Board.
On October 18, 1995, the Executive Committee met following the regular
meeting of the Board, and Mr. Miller reported briefly on the responses of the
four organizations with which he had met. He stated that he would like to hold
an Executive Committee meeting on October 20, 1995 to present a full report to
the Committee, including a presentation from Morgan Stanley.
On October 20, 1995, the Executive Committee met and received a
presentation from Morgan Stanley regarding the possible merger partners. The
report provided certain financial information about the banking organizations
which had expressed the highest level of interest in acquiring First National,
the past financial performance of each of these regional banking organizations,
and the preliminary value each organization placed on First National Common
Stock. Regions had placed the highest preliminary value of those contacted on
First National Common Stock and was determined by the Executive Committee to be
the most compatible banking organization for a merger with First National. The
Executive Committee determined that the Regions valuation was within a range
that the Executive Committee felt would make it in the best interests of the
First National stockholders for First National to merge with Regions. As a
result, the Executive Committee determined that actual merger negotiations
should proceed with Regions, pending a meeting of the First National Board of
Directors to be called.
On the afternoon of October 20, 1995, Mr. Miller, with the assistance of
Morgan Stanley, negotiated with management of Regions, and Regions made a
revised proposal of 0.76 of a share of Regions Common Stock for each share of
First National Common Stock (which based on the then current market price of
Regions Common Stock represented approximately $31.54 per share of First
National Common Stock). This was reported to each member of the Executive
Committee and they directed Mr. Miller to proceed to call a Board Meeting.
On October 22, 1995, the Executive Committee met and reviewed a proposed
merger agreement and the details of the merger. The Executive Committee voted to
recommend to the Board that the agreement be approved.
Immediately after the Executive Committee meeting, the First National Board
of Directors met and Mr. Miller reviewed the events leading up to the meeting,
including the deliberations of the Executive
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<PAGE> 32
Committee regarding whether independence or merger with Regions was in the best
interest of the First National stockholders. He also summarized the level of
interest from other regional banking organizations. Special counsel to the Board
reviewed generally the fiduciary obligations of directors in considering
strategic alternatives, mergers, and sales, and reviewed the merger agreement
negotiated with Regions. Morgan Stanley made a presentation describing the
results of various financial analyses in connection with the transaction on the
basis proposed by Regions, a comparison of First National as an independent
enterprise, and review of the Regions Common Stock to be received in the Merger.
Morgan Stanley reported its preliminary view that, subject to completion of due
diligence and certain other factors, the Exchange Ratio was fair, from a
financial point of view, to the stockholders of First National. Special counsel
to the Board also reported that Regions was firm on a customary stock option
arrangement as a condition of the transaction and reviewed the Stock Option
Agreement with the Board. After further discussion and consideration of the
factors described below, the First National Board approved and authorized
execution of the Agreement and the Stock Option Agreement.
First National's Reasons for the Merger. In approving the Agreement, the
Plan of Merger, and the Merger, the directors of First National considered a
number of factors. Without assigning any relative or specific weights to the
factors, the First National Board of Directors considered the following material
factors:
(a) the financial terms of the Merger, including the Exchange Ratio,
the projected current value of First National in a freely negotiated
transaction, an estimate of the future value of First National as an
independent entity, and the relationship of the market value of Regions
Common Stock to the market value, tangible book value, and earnings per
share of First National Common Stock;
(b) the public financial information presented to the directors by
Morgan Stanley concerning Regions;
(c) the treatment of the Merger as a tax-free exchange of First
National Common Stock for Regions Common Stock for federal income tax
purposes;
(d) the compatibility of the community bank orientation of the
operations of Regions to that of First National, and the impact of the
Merger on the employees of First National and the communities and customers
served by First National's subsidiary banks;
(e) the advice rendered by Morgan Stanley as to the fairness, from a
financial point of view, of the Exchange Ratio to the holders of First
National Common Stock; and
(f) the report of Morgan Stanley reviewing a comparison of Regions to
selected peer banking organizations and of premiums paid in other merger
transactions;
The terms of the Merger were the result of arm's-length negotiations
between representatives of First National and representatives of Regions. Based
upon its consideration of the foregoing factors, the Board of Directors of First
National approved the Agreement, the Plan of Merger, and the Merger as being in
the best interests of First National and its stockholders.
First National's Board of Directors recommends that First National
stockholders vote FOR approval of the Agreement and the Plan of Merger.
Regions' Reasons for the Merger. In approving the Agreement and the
Merger, the Regions Board considered a number of factors concerning the benefits
of the Merger. Without assigning any relative or specific weights to the
factors, the Regions Board of Directors considered the following material
factors:
(a) the information presented to the directors by the management of
Regions concerning the business, operations, earnings, asset quality, and
financial condition of First National, including the composition of the
earning assets portfolio of First National;
(b) the financial terms of the Merger, including the relationship of
the value of the consideration issuable in the Merger to the market value,
tangible book value, and earnings per share of First National Common Stock;
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(c) the nonfinancial terms of the Merger, including the treatment of
the Merger as a tax-free exchange of First National Common Stock for
Regions Common Stock for federal income tax purposes;
(d) the likelihood of the Merger being approved by applicable
regulatory authorities without undue conditions or delay;
(e) the opportunity for reducing the noninterest expense of the
operations of First National and the ability of the operations of First
National after the Effective Time to contribute to the earnings of Regions;
(f) the attractiveness of the First National franchise, the market
position of First National in each of the markets in which it operates, and
the compatibility of the franchise of First National with the operations of
Regions in the state of Georgia;
(g) the compatibility of the community bank orientation of the
operations of First National to that of Regions;
(h) the report of Bear Stearns reviewing a comparison of First
National to selected peer banks and of premiums paid in other merger
transactions; and
(i) the advice rendered by Bear Stearns as to the fairness, from a
financial point of view, of the Exchange Ratio to the holders of Regions
Common Stock.
Regions' Board of Directors recommends that Regions stockholders vote FOR
approval of the issuance of shares of Regions Common Stock pursuant to the
Agreement.
OPINION OF FIRST NATIONAL'S FINANCIAL ADVISOR
First National retained Morgan Stanley to act as its financial advisor in
connection with the Merger. Morgan Stanley was selected by the Executive
Committee of First National to act as First National's financial advisor based
on Morgan Stanley's qualifications, expertise; and reputation. On October 31,
1995, Morgan Stanley rendered its opinion to the First National Board that,
based upon and subject to the various considerations set forth in the opinion,
on the date thereof the Exchange Ratio was fair, from a financial point of view,
to the holders of First National Common Stock (other than Regions and its
affiliates). Morgan Stanley subsequently confirmed its opinion by delivering a
written opinion dated the date of this Joint Proxy Statement.
THE FULL TEXT OF THE OPINION DATED THE DATE OF THIS JOINT PROXY STATEMENT
WHICH SETS FORTH, AMONG OTHER THINGS, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED,
MATTERS CONSIDERED, AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
APPENDIX III TO THIS JOINT PROXY STATEMENT AND IS INCORPORATED HEREIN BY
REFERENCE. FIRST NATIONAL STOCKHOLDERS ARE URGED TO READ THIS OPINION CAREFULLY
AND IN ITS ENTIRETY IN CONJUNCTION WITH THIS JOINT PROXY STATEMENT. MORGAN
STANLEY'S OPINION ADDRESSES ONLY THE FAIRNESS OF THE EXCHANGE RATIO FROM A
FINANCIAL POINT OF VIEW AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
STOCKHOLDER OF FIRST NATIONAL AS TO HOW SUCH STOCKHOLDER SHOULD VOTE WITH
RESPECT TO THE MERGER. THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET FORTH IN
THIS JOINT PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF SUCH OPINION.
In connection with rendering its written opinion dated the date of the
Joint Proxy Statement, Morgan Stanley, among other things: (i) analyzed certain
publicly available financial statements and other information of First National
and Regions, respectively; (ii) analyzed certain internal financial statements
and other financial and operating data concerning First National prepared by the
management of First National; (iii) reviewed certain internal financial
statements concerning Regions prepared by the management of Regions; (iv)
analyzed certain financial projections prepared by the management of First
National and Regions, respectively; (v) discussed the past and current
operations and financial condition and the prospects of Regions and First
National with senior executives of Regions and First National, respectively;
(vi) reviewed the reported prices and trading activity for the First National
Common Stock and the Regions Common Stock; (vii) compared the financial
performance of First National and Regions and the prices and trading activity of
the First National Common Stock and the Regions Common Stock with that of
certain other
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comparable publicly-traded companies and their securities; (viii) discussed the
results of certain regulatory examinations of First National and Regions with
the senior managements of the respective companies; (ix) reviewed and discussed
with the senior managements of First National and Regions the strategic
objectives of the Merger and the synergies and certain other benefits of the
Merger; (x) reviewed and discussed with the senior managements of First National
and Regions certain estimates of the cost savings expected to result from the
Merger; (xi) reviewed the financial terms, to the extent publicly available, of
certain comparable merger transactions; (xii) participated in discussions and
negotiations among representatives of First National and Regions and their
financial and legal advisors; (xiii) reviewed the Agreement, the Stock Option
Agreement, and certain related documents; and (xiv) performed such other
analyses as it deemed appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed by Morgan Stanley for the purposes of its opinion. With respect to the
financial projections, including the estimates of synergies, cost savings, and
other benefits expected to result from the Merger, Morgan Stanley assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of First
National and Regions, respectively. Morgan Stanley has not made any independent
valuation or appraisal of the assets or liabilities of First National and
Regions, nor has Morgan Stanley been furnished with any such appraisals and
Morgan Stanley has not examined any loan files of First National or Regions.
Morgan Stanley's opinion is necessarily based on economic, market, and other
conditions as in effect on, and the information made available to Morgan Stanley
as of, the date of the opinion.
The following is a brief summary of the analyses performed by Morgan
Stanley in preparation for its presentation to the Board of Directors of First
National on October 22, 1995 with respect to the Merger, and in connection with
rendering its opinion to the First National Board on October 31, 1995 and the
date of this Joint Proxy Statement.
Exchange Ratio and Stock Price Performance Analysis. Morgan Stanley
reviewed the performance, over the three- and five-year periods ending October
18, 1995, of the closing price of First National Common Stock and Regions Common
Stock relative to the closing price of the Morgan Stanley Bank Index. Morgan
Stanley also analyzed the ratio of closing prices per share of First National
Common Stock and Regions Common Stock during the period from October 18, 1990
through October 18, 1995. Morgan Stanley observed that such Exchange Ratio had
averaged approximately 0.609 during such period (with a high of approximately
0.825 and a low of approximately 0.5000) and had averaged 0.676 over the
one-month period prior to October 18, 1995 and 0.679 over the one-week period
prior to October 18, 1995.
Comparable Company Analysis. Comparable company analysis analyzes a
company's operating performance relative to a group of publicly traded peers.
Based on relative performance and outlook for a company versus its peers, this
analysis enables an implied unaffected market trading value to be determined.
Morgan Stanley analyzed the operating performance of First National relative to
a group of 11 Southeastern bank holding companies (the "Southeastern
Comparables") and 35 regional bank holding companies (the "Morgan Stanley Bank
Index") (together, the "Comparables").
Morgan Stanley analyzed the relative performance and value of First
National by comparing certain market trading statistics for First National with
the Comparables. Market information used in ratios provided below is as of
October 20, 1995. The market trading information used in the valuation analysis
was market price to book value (which was 1.9x for First National; 1.7x for the
Southeastern Comparables; and 1.9x for the Morgan Stanley Bank Index), market
price to earnings per share estimates for 1995 (which was 17.0x for First
National; 11.9x for the Southeastern Comparables; and 12.0x for the Morgan
Stanley Bank Index), and market price to earnings per share estimates for 1996
(which was 14.3x for First National; 10.8x for the Southeastern Comparables; and
10.9x for the Morgan Stanley Bank Index). Earnings per share estimates for First
National, the Southeastern Comparables, and the Morgan Stanley Bank Index were
based on Institutional Brokers Estimate System ("IBES") estimates as of
September 14, 1995. IBES is a data service that monitors and publishes
compilations of earning estimates produced by selected research analysts
regarding companies of interest to institutional investors.
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In determining the implied range of values for the First National Common
Stock derived from the analysis of the Comparables' market price to 1995 and
1996 earnings per share estimates, Morgan Stanley used earnings estimates from
two sources : (i) IBES estimates as of September 14, 1995 (the "IBES Case"); and
(ii) First National (the "Company Case"). The implied range of values for the
First National Common Stock were: approximately $20 per share to approximately
$22 per share in the IBES Case; and approximately $21 per share to approximately
$24 per share in the Company Case. The implied range of values for the First
National Common Stock derived from the analysis of the Comparables market price
to book value ranged from $26 per share to $29 per share.
No company or transaction used in the comparable company and comparable
transaction analyses is identical to First National or the Merger. Accordingly,
an analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of First National and other factors that could affect the public
trading value of the companies to which they are being compared. Mathematical
analysis (such as determining the average or median) is not in itself a
meaningful method of using comparable transaction data or comparable company
data.
Dividend Discount Analysis. Morgan Stanley performed dividend discount
analyses to determine a range of present values per share of First National
Common Stock assuming First National continued to operate as a stand-alone
entity. This range was determined by adding (i) the present value of the
estimated future dividend stream that First National could generate over the
period beginning in October 1995 and ending in December 2000 and (ii) the
present value of the "terminal value" of First National Common Stock at the end
of the year 2000. To determine a projected dividend stream, Morgan Stanley
assumed a dividend payout ratio equal to 45% of First National's projected net
income. Morgan Stanley used earnings estimates from two sources in determining
First National's projected net income: (i) IBES estimates as of September 14,
1995 for 1995 and 1996 and an IBES growth rate for 1997 through 2000 (the "IBES
Case"); and, (ii) First National's estimates for 1995 through 2000 (the "Company
Case"). The "terminal value" of First National Common Stock at the end of the
five-year period was determined by applying two price-to-earnings multiples
(10.0x and 12.0x) to year 2000 projected net income for First National. The
dividend stream and terminal values were discounted to present values using
discount rates of 12.5%, 13.5%, and 14.5%. Applying the above multiples and
discount rates, the fully diluted stand-alone value of First National Common
Stock ranged from: approximately $17 per share to approximately $21 per share in
the IBES Case; and, approximately $23 per share to approximately $27 per share
in the Company Case.
Value of Potential Cost Savings. In order to estimate an implied value of
the First National Common Stock to an acquiror, the value of potential future
cost savings was estimated by Morgan Stanley using a present value calculation
similar to the dividend discount analysis. Based on discussions with First
National management regarding their estimates of the cost savings expected to
result from the Merger, Morgan Stanley determined the net theoretical present
value of the cost savings that could result if First National were acquired. The
managements' estimates for such cost savings ranged from 15%-25% of First
National's core non-interest expense (i.e., excluding OREO expenses and any
non-recurring charges). Based on discount rates of 12.5% to 14.5%, a realization
of cost savings over two years (50% in the first year, 100% thereafter), a
restructuring charge incurred in the first year following the Merger equal to
the full cost savings, and applying a terminal multiples of 10.0x and 12.0x to
year 2000 projected cost savings, the present values of the cost savings ranged
from approximately $3.00 per share to approximately $5.00 per share. This
analysis did not consider any loss in value that could result if divestitures of
deposits or assets were required upon an acquisition of First National.
Comparable Transaction Analysis. Using publicly available information,
Morgan Stanley performed an analysis of certain merger and acquisition
transactions involving selected holding companies of commercial banks in order
to obtain a valuation range for the First National Common Stock based upon
certain comparable transactions that, in Morgan Stanley's judgment, were deemed
comparable for purposes of this analysis, although Morgan Stanley noted that no
transaction was identical to the Merger. Multiples of book value and earnings
implied by the consideration to be received by stockholders of First National in
the Merger were compared with multiples paid in ceratin other comparable merger
transactions. The comparison included a total of seven transactions. The
transactions examined were (acquiree/acquiror): Intercontinental Bank/
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<PAGE> 36
NationsBank Corporation, TCBankshares, Inc./Mercantile Bancorporation, Security
Capital Bancorp/CCB Financial Corporation, NBSC Corporation/Synovus Financial
Corporation, Worthen Banking Corporation/ Boatmen's Bancshares, Inc., Grenada
Sunburst System Corp./Union Planters Corporation, and Commerce Bank/BB&T
Financial Corporation. In terms of price to book multiple, the mean for the
comparable transactions was 2.1x compared to approximately 2.1x for the Merger.
In terms of price to last twelve months earnings, the adjusted mean for the
comparable transactions was 16.3x compared to approximately 19.5x for the
Merger. For the comparable transactions, multiples of book value ranged from
1.9x to 2.4x and the price to last twelve month earnings ranged from 10.2x to
34.3x.
In connection with its opinion dated as of the date of the Joint Proxy
Statement, Morgan Stanley confirmed the appropriateness of its reliance on the
analyses used to render its October 31, 1995 opinion by performing certain
procedures to update certain of such analyses and by reviewing the assumptions
upon which such analyses were based and the factors considered in connection
therewith.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. Morgan
Stanley believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering the analyses taken as a
whole, would create an incomplete view of the process underlying the analyses
set forth in its opinions. In addition, Morgan Stanley considered the results of
all such analyses and did not assign relative weights to any of the analyses, so
that the ranges of valuations resulting from any particular analysis described
above should not be taken to be Morgan Stanley's view of the actual value of
First National. In performing its analyses, Morgan Stanley made numerous
assumptions with respect to industry performance, general business and economic
conditions, and other matters, many of which are beyond the control of First
National or Regions. The analyses performed by Morgan Stanley are not
necessarily indicative of actual values, which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely as
a part of Morgan Stanley's October 31, 1995 opinion. The analyses do not purport
to be appraisals or to reflect the prices at which a company might actually be
sold. In addition, as described above, Morgan Stanley's opinion and the
information provided by it to the First National Board were one of many factors
taken into consideration by the First National Board in making its determination
to approve the Merger. Consequently, the Morgan Stanley analysis described above
should not be viewed as determinative of the First National Board's or
management's opinion with respect to the value of First National or of whether
the First National Board or First National management would have been willing to
agree to different Exchange Ratios.
First National's Board of Directors retained Morgan Stanley based upon its
experience and expertise. Morgan Stanley is an internationally recognized
investment banking and advisory firm. Morgan Stanley, as part of its investment
banking business, is continuously engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements, and valuations for corporate and other
purposes. In the course of its market making and other trading activities,
Morgan Stanley may, from time to time, have a long or short position in, and may
buy and sell, securities of First National and Regions. In the past, Morgan
Stanley and its affiliates have provided financial advisory and financing
services to First National and have received fees for the rendering of these
services.
Pursuant to a letter agreement dated as of September 26, 1995, First
National has agreed to pay Morgan Stanley an advisory fee estimated to be
$75,000 (not to exceed $100,000 without First National's prior approval) if the
Merger is not consummated, an opinion fee of $1.0 million which is currently
payable, and if the Merger is consummated, a transaction fee equal to $3.3
million (against which any advisory fee paid will be credited). In addition to
the foregoing compensation, First National has agreed to reimburse Morgan
Stanley for its expenses and to indemnify Morgan Stanley and its affiliates,
their respective directors, officers, agents, and employees, and each person, if
any, controlling Morgan Stanley or any of its affiliates against certain
liabilities and expenses, including certain liabilities under the federal
securities laws, related to Morgan Stanley's engagement.
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OPINION OF REGIONS' FINANCIAL ADVISOR
Regions retained Bear Stearns by letter agreement dated October 27, 1995,
to act as financial advisor and to render a fairness opinion in connection with
Regions' intended acquisition of First National. Bear Stearns was selected
because of its reputation as an internationally recognized investment banking
firm with substantial experience in mergers and acquisitions. No limitations
were imposed by Regions upon Bear Stearns with respect to the investigations
made or procedures followed by it in rendering its opinions. On October 31,
1995, Bear Stearns advised Regions' Board of Directors that the Exchange Ratio
was fair, from a financial point of view, to the stockholders of Regions. Bear
Stearns confirmed its opinion in writing as of the date of this Joint Proxy
Statement (such opinion, as updated on the date hereof, being referred to herein
as the "Bear Stearns' Fairness Opinion").
THE FULL TEXT OF THE WRITTEN BEAR STEARNS' FAIRNESS OPINION DATED THE DATE
HEREOF, WHICH SETS FORTH CERTAIN ASSUMPTIONS MADE, MATTERS CONSIDERED, AND
LIMITATIONS ON THE REVIEWS UNDERTAKEN, IS ATTACHED HERETO AS APPENDIX IV AND IS
INCORPORATED HEREIN BY REFERENCE, AND SHOULD BE READ IN ITS ENTIRETY IN
CONNECTION WITH THIS JOINT PROXY STATEMENT. THE SUMMARY OF THE BEAR STEARNS'
FAIRNESS OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE OPINION. THE BEAR STEARNS' FAIRNESS OPINION DISCUSSED HEREIN IS NOT A
CONDITION TO CONSUMMATION OF THE MERGER.
Bear Stearns' Fairness Opinion is directed only to the fairness of the
Exchange Ratio, from a financial point of view, to Regions' stockholders and
does not constitute a recommendation to any Regions stockholder as to how such
stockholder should vote at the Regions Meeting.
The consideration to be paid by Regions in the Merger was determined by the
respective Boards of Directors of First National and Regions after negotiations
between the respective managements of First National and Regions. Each holder of
First National Common Stock will receive 0.76 of a share of Regions Common Stock
for each share of First National Common Stock. Based upon Regions' closing stock
price of $41.50 on October 20, 1995, the last trading day prior to announcement
of the transaction, Bear Stearns calculated an acquisition price per share of
First National Common Stock of $31.54 (the "Per Share Consideration") or in
aggregate terms, approximately $648 million (the "Aggregate Consideration"). For
purposes of rendering the Bear Stearns' Fairness Opinion, Bear Stearns:
(i) reviewed the Joint Proxy Statement in substantially the form to be sent to
stockholders, including a copy of the Agreement; (ii) reviewed Regions' Annual
Report to Stockholders and Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and its Quarterly Reports on Form 10-Q for the periods ended
March 31, June 30, and September 30, 1995; (iii) reviewed First National's
Annual Report to Stockholders and Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, its Quarterly Reports on Form 10-Q for the periods
ended March 31, June 30, and September 30, 1995, and the Proxy
Statement/Prospectus dated May 1, 1995 of First National used in connection with
the FF Bancorp Acquisition; (iv) reviewed certain operating and financial
information provided to it by Regions' management relating to its business and
prospects and reviewed certain operating and financial information, including
projections, provided to it by First National's management relating to its
business and prospects; (v) met with certain members of Regions and First
National's senior management to discuss their operations, historical financial
statements, and future prospects; (vi) reviewed the historical prices and
trading volumes of the shares of Regions Common Stock and First National Common
Stock; (vii) reviewed publicly available financial data and stock market
performance data of companies which it deemed generally comparable to Regions
and First National; (viii) reviewed the terms of recent acquisitions of
companies which it deemed generally comparable to the Merger; and (ix) conducted
such other studies, analyses, inquiries, and investigations as it deemed
appropriate.
In conducting its review and arriving at and updating Bear Stearns'
Fairness Opinion, Bear Stearns relied upon and assumed the accuracy and
completeness of the financial and other information regarding Regions and First
National provided to Bear Stearns by Regions and First National or publicly
available, and Bear Stearns did not independently verify such information. With
respect to Regions' and First National's projected financial results, Bear
Stearns assumed that such results have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
managements of Regions and First National as to the
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expected future performance of Regions and First National, respectively. Bear
Stearns did not assume any responsibility for the information or projections
provided to Bear Stearns and further relied upon the assurances of the
managements of Regions and First National that they were unaware of any facts
that would make the information or projections provided to Bear Stearns
incomplete or misleading. In arriving at its opinion, Bear Stearns did not
perform or obtain any independent appraisal of the assets of Regions or First
National.
The following is a summary of the analyses performed by Bear Stearns in
connection with its opinion rendered on October 31, 1995 (which are
substantially the same types of analyses performed by Bear Stearns in connection
with the updated Bear Stearns' Fairness Opinion):
Financial Statement Review of First National: Bear Stearns reviewed First
National's Annual Report to Stockholders and Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 and Quarterly Reports on Form 10-Q for the
periods ended March 31, June 30, and September 30, 1995, and calculated growth
rates for various balance sheet and income statement line items. Net interest
income increased at a 9.5% compound annual growth rate from December 31, 1992 to
December 31, 1994 while net income increased at a 9.4% compound annual growth
rate for the same time period. Nonperforming assets decreased by approximately
33% from June 30, 1993 to June 30, 1995.
Review of Companies Comparable to First National: Bear Stearns performed an
analysis of First National's financial performance and stock market trading data
by comparing the stock price to book value, stock price to tangible book value,
stock price to latest twelve months earnings per share ("LTM EPS"), and stock
price to estimated 1996 earnings per share ("EPS") (based on projections from
First National management) of First National to seven publicly traded commercial
banks located in the Southeast with total assets of $2.0 billion to $4.0 billion
(the "Southeastern Institutions"). The Southeastern Institutions included:
United Carolina Bancshares; One Valley Bancorp of WV, Inc.; Colonial BancGroup,
Inc.; National Commerce Bancorp.; BancorpSouth, Inc.; Hancock Holding Company,
and Jefferson Bankshares, Inc.
Bear Stearns compared the multiples of stock price to book value, tangible
book value, LTM EPS, and estimated 1996 EPS of First National to the respective
harmonic means of these multiples for the Southeastern Institutions. Using
closing stock prices from October 20, 1995, Bear Stearns calculated (i) a stock
price to book value multiple for First National of 1.94 times, as compared to a
harmonic mean of 1.76 times for the Southeastern Institutions, (ii) a stock
price to tangible book value multiple for First National of 2.00 times, as
compared to a harmonic mean of 1.95 times for the Southeastern Institutions,
(iii) a stock price to LTM EPS multiple for First National of 17.7 times, as
compared to a harmonic mean of 13.1 times for the Southeastern Institutions, and
(iv) a price to estimated 1996 EPS for First National of 13.1 times (based on
projections from First National management), as compared to a harmonic mean of
11.5 times for the Southeastern Institutions.
Review of Companies Comparable to Regions: Bear Stearns performed an
analysis of Regions financial performance and stock market trading data by
comparing the stock price to book value, stock price to tangible book value,
stock price to LTM EPS, and stock price to estimated 1996 EPS (based on
projections from Regions management) of Regions to six publicly traded
commercial banks located in the Southeast with total assets of $10 billion to
$20 billion (the "Regions Peer Group"). The Regions Peer Group included:
Southern National Corporation; SouthTrust Corporation; AmSouth Bancorporation;
First Tennessee National Corp.; Compass Bancshares, Inc.; and Union Planters
Corporation.
Bear Stearns compared the multiples of stock price to book value, tangible
book value, LTM EPS, and estimated 1996 EPS of Regions to the respective
harmonic means of these multiples for the Regions Peer Group. Using closing
stock prices from October 20, 1995, Bear Stearns calculated (i) a stock price to
book value multiple for Regions of 1.72 times, as compared to a harmonic mean of
1.80 times for the Regions Peer Group, (ii) a stock price to tangible book value
multiple for Regions of 1.89 times, as compared to a harmonic mean of 2.10 times
for the Regions Peer Group, (iii) a stock price to LTM EPS multiple for Regions
of 11.4 times, as compared to a harmonic mean of 14.3 times for the Regions Peer
Group, and (iv) a price to estimated 1996 EPS for Regions of 10.4 times (based
on projections from Regions management), as compared to a harmonic mean of 10
times for the Regions Peer Group.
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Review of Mergers Comparable to the Merger: Bear Stearns performed an
analysis of the Per Share Consideration offered to the First National
stockholders in the Merger by comparing the multiples represented by such
consideration to the book value, tangible book value, LTM EPS, and premium over
tangible book value to core deposits for First National to the respective
multiples of the per share consideration received by stockholders in the
following two subsets of publicly announced commercial bank acquisitions: (i) 25
transactions (excluding merger of equals transactions) valued at over $25
million since January 1, 1994 where the seller was located in the Southeast (the
"Southeast Mergers"), and (ii) 13 transactions (excluding mergers-of-equals
transactions) valued at over $400 million since January 1, 1995 (the "Nationwide
Mergers"). The Southeastern Mergers included (acquiror/acquiree): First Charter
Corporation/Bank of Union; NationsBank Corporation/Bank South Corporation;
Regions Financial Corporation/Metro Financial Corporation; First American
Corporation/First City Bancorp, Inc.; NationsBank Corporation/Intercontinental
Bank; BancorpSouth, Inc./Wes-Tenn Bancorp Inc.; First Commercial Corporation/FDH
Bancshares, Inc.; Union Planters Corporation/Eastern National Bank; Deposit
Guaranty Corp./First Merchants Financial Corp.; City Holding Company/First
Merchants Bancorporation; First Tennessee National Corp./Financial Investment
Corp; Mercantile Bancorporation/TCBankshares Inc.; CCB Financial
Corporation/Security Capital Bancorp; Synovus Financial Corp./NBSC Corporation;
First Tennessee National Corp./Community Bancshares Inc.; NationsBank
Corporation/Consolidated Bank, N.A.; Boatmen's Bancshares, Inc./Worthen Banking
Corp.; Huntington Bancshares Inc./Security National Corp; Regions Financial
Corporation/Union Bank and Trust Company; Union Planters Corporation/Grenada
Sunburst System Corp.; BB&T Financial Corporation/Commerce Bank; NationsBank
Corporation/RHNB Corporation; Mercantile Bankshares Corp./Fredericksburg
National Bancorp; Trustmark Corporation/First National Financial Corp.; and
AmSouth Bancorporation/Tampa Banking Co. The Nationwide Mergers included
(acquiror/acquiree): CoreStates Financial Corp/Meridian Bancorp, Inc.; UJB
Financial Corp./Summit Bancorporation; NationsBank Corporation/Bank South
Corporation; National City Corporation/Integra Financial Corp.; Boatmen's
Bancshares, Inc./Fourth Financial Corporation; First Bank System, Inc./FirsTier
Financial; Banc One Corporation/Premier Bancorp, Inc.; PNC Bank Corp./Midlantic
Corporation; First Union Corporation/ First Fidelity Bancorporation; U.S.
Bancorp/West One Bancorp; PNC Bank Corp./Chemical NJ Holdings; Fleet Financial
Group/Shawmut National Corporation; and National Australia Bank/Michigan
National Corporation.
Bear Stearns compared the multiples of the Per Share Consideration to First
National's book value, tangible book value, and LTM EPS to the respective
harmonic means of these multiples for the Southeast Mergers and the Nationwide
Mergers. Bear Stearns calculated (i) an acquisition price to book value multiple
for the Merger of 2.13 times, as compared to harmonic means of 2.05 times and
1.94 times for the Southeast Mergers and the Nationwide Mergers, respectively,
(ii) an acquisition price to tangible book value multiple for the Merger of 2.19
times, as compared to harmonic means of 2.16 times and 2.15 times for the
Southeast Mergers and the Nationwide Mergers, respectively, (iii) an acquisition
price to LTM EPS multiple for the Merger of 19.5 times, as compared to harmonic
means of 17.8 times and 14.1 times for the Southeast Mergers and the Nationwide
Mergers, respectively. Bear Stearns also compared the premium represented by the
Per Share Consideration over First National's tangible book value to core
deposits of 16.3% to the median values for the Southeast Mergers (12.0%) and the
Nationwide Mergers (14.3%) and the mean values for the Southeast Mergers (12.9%)
and the Nationwide Mergers (14.0%).
Stock Price Review: Bear Stearns reviewed the trading prices of First
National Common Stock and Regions Common Stock from January 1, 1991 to October
25, 1995, and in particular, noted that Regions' closing stock price of $41.50
on October 20, 1995, was its all time high. Bear Stearns also compared the
trading prices of Regions Common Stock and First National Common Stock versus
the S&P Regional Bank Index from January 3, 1994 to October 25, 1995.
Discounted Cash Flow Analysis of First National: Bear Stearns performed a
discounted cash flow analysis of First National. Bear Stearns reviewed First
National's strategic plan which included forecasts of net income for the years
1996 to 1999 and assessed the likelihood of First National achieving such
forecasts. First National provided estimates of synergies which could be
achieved as a result of the Merger, which were
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reviewed by Regions and Bear Stearns and included in the discounted cash flow
analysis. Bear Stearns then determined a range of net present values for the
shares of First National Common Stock which could result based upon assumed
multiples of projected earnings and assumed discount rates. Bear Stearns
calculated the range of net present values for the common equity of First
National based upon terminal value multiples ranging from 10.0 times to 12.0
times (a range based upon Regions' historical price to earnings ratios)
projected earnings available for common stock in 1999, and discount rates
ranging from 11.0% to 15.0%. Bear Stearns determined that the transaction value
was within the range of net present values which resulted.
Review of Relative Contribution: Bear Stearns determined the relative
contribution of First National to Regions after giving pro forma effect to the
Merger. Bear Stearns determined that First National stockholders would receive
approximately 24% of the pro forma ownership of the combined company, while
First National would contribute to the combined company approximately 18% of the
assets, approximately 24% of the tangible equity, approximately 17% of net
loans, approximately 19% of deposits, and approximately 23% of 1995 annualized
net income after giving First National credit for the synergies anticipated from
the Merger.
Bear Stearns determined potential accretion or dilution to Regions'
earnings per share for the years 1996 through 2000 as a result of the Merger. In
connection with the announcement of the Merger, Regions announced that Regions
and First National intend to repurchase up to approximately 1.9 million shares
of First National Common Stock or up to approximately 1.4 million shares of
Regions Common Stock, or a combination of the two. Bear Stearns took account for
a planned repurchase by Regions of 9.0% of its outstanding stock. Bear Stearns
estimated the accretion to Regions' earnings per share including synergies of
approximately 2.0% to 5.0% for the years 1997 (the first full year of the
combination) to 2000.
Bear Stearns' opinion on October 31, 1995, and the updated Bear Stearns'
Fairness Opinion were based solely upon the information available to it and
economic, market, and other conditions as they existed as of the dates of such
opinions; events occurring thereafter could materially affect the assumptions
used in preparing the opinions.
In connection with rendering its opinion on October 31, 1995, and the
updated Bear Stearns' Fairness Opinion, Bear Stearns performed a variety of
financial analyses. The evaluation of the fairness, from a financial point of
view, is a subjective one based on the experience and judgment of Bear Stearns,
and not merely the result of mathematical analysis of financial data.
Accordingly, Bear Stearns believes that its analyses must be considered as a
whole and that considering portions of such analyses or certain of the factors
considered by Bear Stearns without considering all such analyses and factors
could create an incomplete view of the process underlying the opinion. In its
analyses, Bear Stearns made numerous assumptions with respect to business,
market, monetary and economic conditions, industry performance, business and
economic conditions, and other matters, many of which are beyond Bear Stearns',
First National's, and Regions' control. Any estimates contained in Bear Stearns'
analyses are not necessarily indicative of future results or actual values,
which may be significantly more or less favorable than such estimates. No
company or transaction used in the above analyses as a comparison is identical
to First National, Regions, or the Merger. Accordingly, an analysis of the
results of the foregoing is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of the companies to which they are being compared. The analyses
performed by Bear Stearns are not necessarily indicative of actual values or
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of Bear
Stearns' analysis of the fairness, from a financial point of view, of the
Exchange Ratio to Regions stockholders. The analyses do not purport to be
appraisals or to reflect the prices at which a company might actually be sold or
the prices at which any securities may trade at the present time or at any time
in the future.
Based upon these analyses, Bear Stearns has delivered its opinion that the
Exchange Ratio is fair, from a financial point of view, to the stockholders of
Regions.
Fees. In a letter agreement dated October 27, 1995, Regions retained Bear
Stearns to act as financial advisor concerning its contemplated acquisition of
First National. Bear Stearns will receive a total of $800,000 for its role in
this Merger. Pursuant to such letter agreement, Regions paid Bear Stearns an
initial fee of $300,000 at the time Bear Stearns informed Regions that Bear
Stearns was prepared to render the opinion. An
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additional $300,000 is payable upon mailing of this Joint Proxy Statement, and
an additional $200,000 will be paid to Bear Stearns upon the consummation of the
Merger. In addition, Regions has agreed to reimburse Bear Stearns for its
reasonable out-of-pocket costs and expenses incurred in connection with the
services rendered to Regions pursuant to the letter agreement, including the
fees and expenses of its legal counsel. Pursuant to the letter agreement,
Regions has agreed to indemnify Bear Stearns, its affiliates, and their
respective partners, directors, officers, agents, consultants, and employees and
controlling persons against certain expenses and liabilities, including
liabilities under the federal securities laws.
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Time will occur on the date and at the time that the
Certificate of Merger relating to the Merger is declared effective with the
Georgia Secretary of State. Unless otherwise agreed upon by Regions and First
National, and subject to the conditions to the obligations of the parties to
effect the Merger, the parties have agreed to use their reasonable efforts to
cause the Effective Time to occur on or before the tenth business day (as
designated by Regions) following the last to occur of (i) the effective date
(including the expiration of any applicable waiting period) of the last consent
of any regulatory authority required for the Merger and (ii) the date on which
the stockholders of First National and Regions approve the matters relating to
this Agreement and the Plan of Merger required to be approved by such
stockholders by applicable law.
Notwithstanding the foregoing, the parties have agreed to cooperate in
selecting the Effective Time to ensure that, with respect to the quarterly
period in which the Effective Time occurs, the holders of First National Common
Stock do not receive both a dividend in respect of their First National Common
Stock and a dividend in respect of Regions Common Stock or fail to receive any
dividend. See "-- Conduct of Business Pending the Merger."
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. First National and Regions anticipate that all conditions
to consummation of the Merger will be satisfied so that the Merger can be
consummated during the first half of 1996. However, delays in the consummation
of the Merger could occur.
The Board of Directors of either First National or Regions generally may
terminate the Agreement if the Merger is not consummated by September 30, 1996,
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."
DISTRIBUTION OF REGIONS STOCK CERTIFICATES
Promptly after the Effective Time, Regions will cause First Chicago Trust
Company of New York, acting in its capacity as Exchange Agent, to mail a letter
of transmittal, together with instructions for the exchange of the Certificates
representing shares of First National Common Stock for certificates representing
shares of Regions Common Stock, to the former stockholders of First National.
FIRST NATIONAL STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE LETTER OF TRANSMITTAL AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of Certificates for First National
Common Stock, together with a properly completed letter of transmittal, there
will be issued and mailed to each holder of First National 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 (without
interest), together with all undelivered dividends or distributions in respect
of such shares (without interest thereon). After the Effective Time, to the
extent permitted by law, First National stockholders of record as of the
Effective Time will be entitled to vote at any meeting of Regions stockholders
the number of whole shares of Regions Common Stock into which their shares of
First National Common Stock have been converted, regardless of whether such
stockholders have surrendered their First National Common Stock Certificates.
Whenever a dividend or other distribution is declared by Regions on Regions
Common Stock, the record date for which is at or after the Effective Time, the
declaration will
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include dividends or other distributions on all shares issuable pursuant to the
Agreement, but, beginning 30 days after the Effective Time, no dividend or other
distribution payable after the Effective Time with respect to Regions Common
Stock will be paid to the holder of any unsurrendered First National Common
Stock Certificate until the holder duly surrenders such certificate. Upon
surrender of such First National Common Stock Certificate, however, both the
Regions Common Stock certificate, together with all undelivered dividends or
other distributions (without interest) and any undelivered cash payments to be
paid in lieu of fractional shares (without interest), will be delivered and paid
with respect to each share represented by such certificate.
After the Effective Time, there will be no transfers of shares of First
National Common Stock on First National's stock transfer books. If Certificates
representing shares of First National Common Stock are presented for transfer
after the Effective Time, 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 various conditions, including (i)
receipt of the approval of the Agreement and the Plan of Merger by the
stockholders of First National as required by the Georgia BCC, (ii) receipt of
the approval of the issuance of shares of Regions Common Stock pursuant to the
Agreement by the stockholders of Regions as required by rules of the NASD, (iii)
receipt of certain regulatory approvals required for consummation of the Merger,
(iv) receipt of a favorable opinion of Alston & Bird as to the tax-free nature
(except for cash received in lieu of fractional shares) of the Merger, (v)
receipt of approval of the shares of Regions Common Stock issuable pursuant to
the Merger for listing on the Nasdaq National Market System, subject to official
notice of issuance, (vi) the Registration Statement being declared effective and
all necessary SEC and state approvals relating to the issuance or trading of the
shares of Regions Common Stock issuable pursuant to the Merger shall have been
received, (vii) the accuracy, as of the date of the Agreement and as of the
Effective Time, of the representations and warranties of First National and
Regions as set forth in the Agreement, (viii) the performance of all agreements
and the compliance with all covenants of First National and Regions as set forth
in the Agreement, (ix) receipt by Regions of a letter from Ernst & Young LLP,
dated as of the Effective Time, to the effect the Merger will qualify for
pooling-of-interests accounting treatment; (x) receipt of all consents required
for consummation of the Merger or for the preventing of any default under any
contract or permit which, if not obtained or made, is reasonably likely to have,
individually or in the aggregate, a material adverse effect; (xi) the absence of
any law or order or any action taken by any court, governmental, or regulatory
authority prohibiting, restricting, or making illegal the consummation of the
transaction; and (xii) satisfaction of certain other conditions, including the
receipt of agreements of affiliates of First National and various certificates
from the officers of First National and Regions. See "-- Regulatory Approvals"
and "-- Waiver, Amendment, and Termination."
No assurance can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the party
permitted to do so. In the event the Merger is not effected on or before
September 30, 1996, the Agreement may be terminated and the Merger abandoned by
a vote of a majority of the Board of Directors of either First National or
Regions. See "-- Waiver, Amendment, and Termination."
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. THERE CAN BE NO ASSURANCE THAT
SUCH REGULATORY APPROVALS WILL BE OBTAINED OR AS TO THE TIMING OF ANY SUCH
APPROVALS. There also can be no assurance that any such approvals will not
impose conditions or be restricted in a manner (including requirements relating
to the raising of additional capital or the disposition of assets) which in the
reasonable judgment of the Board of Directors of Regions would so materially
adversely impact the economic or business benefits of the transactions
contemplated by the Agreement that, had such condition or requirement been
known, Regions would not, in its reasonable judgment, have entered into the
Agreement.
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First National and Regions 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 will require the prior approval of the Federal Reserve, pursuant
to Section 3 of the BHC Act, and the prior approval of the OTS pursuant to
Section 10(e) of the Home Owners' Loan Act of 1933, as amended ("HOLA"). The
Federal Reserve and the OTS will use similar standards when considering whether
or not to approve the Merger.
In evaluating the Merger, both the Federal Reserve and the OTS must
consider, among other factors, the financial and managerial resources and future
prospects of the institutions, the convenience and needs of the communities to
be served, and in the case of the OTS, the risk presented to the Savings
Association Insurance Fund ("SAIF"). The relevant statutes prohibit the Federal
Reserve or the OTS from approving the Merger if (i) 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) its effect in any section of the country may be to substantially lessen
competition or to tend to create a monopoly, or if it would be a restraint of
trade in any other manner, unless the Federal Reserve or the OTS, as the case
may be, 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. The Merger may not be
consummated until the 30th day (which the Federal Reserve may reduce to 15 days)
following the date of the 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
approval of the agencies, unless a court of competent jurisdiction specifically
orders otherwise.
The Merger also is subject to the approval of the Georgia Commissioner and
the Florida Department. In their evaluations, these two state agencies will take
into account considerations similar to those applied by the Federal Reserve and
the OTS.
WAIVER, AMENDMENT, AND TERMINATION
To the extent permitted by applicable law, First National and Regions, with
the approval of their respective Boards of Directors, may amend the Agreement by
written agreement at any time before or after approval of the Agreement by the
First National and Regions stockholders; provided that after the Special
Meetings, no amendment may alter the manner or basis in which shares of First
National Common Stock will be exchanged for Regions Common Stock without the
requisite approval of the holders of the issued and outstanding shares of First
National Common Stock and Regions Common Stock entitled to vote thereon. In
addition, prior to or at the Effective Time, either First National or Regions,
or both, acting through their respective Boards of Directors or chief executive
officers or other authorized officers may waive any default in the performance
of any term of the Agreement by the other party, may waive or extend the time
for the compliance or fulfillment by the other party of any and all of its
obligations under the Agreement, and may waive any of the conditions precedent
to the obligations of such party under the Agreement, except any condition that,
if not satisfied, would result in the violation of any applicable law or
governmental regulation. No such waiver will be effective unless written and
unless executed by a duly authorized officer of First National or Regions, as
the case may be.
The Agreement and the Plan of Merger may be terminated and the Merger
abandoned at any time prior to the Effective Time (i) by the mutual consent of
the Boards of Directors of First National and Regions; (ii) by the Board of
Directors of First National or Regions (a) in the event of any inaccuracy of any
representation or warranty of the other party contained in the Agreement which
cannot be or has not been cured within 30 days after giving written notice to
the breaching party of such inaccuracy and which inaccuracy would provide the
terminating party the ability to refuse to consummate the Merger under the
applicable standards set forth in the Agreement (provided that the terminating
party is not then in breach of any representation or warranty contained in the
Agreement under the applicable standards set forth in the Agreement or in
material breach of any covenant or other agreement contained in the Agreement),
(b) in the event of a material breach by the other party of any covenant or
agreement contained in the Agreement which
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cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party of such breach, (c) if the Merger is not
consummated by September 30, 1996, provided that the failure to consummate is
not due to the breach by the party electing to terminate, (d) if (1) any
approval of any regulatory authority required for consummation of the Merger and
the other transactions contemplated by the Agreement has been denied by final
nonappealable action, or if any action taken by such authority is not appealed
within the time limit for appeal or (2) the stockholders of First National or
Regions fail to vote their approval of the matters submitted for the approval by
such stockholders at the Special Meetings, or (e) if any of the conditions
precedent to the obligations of such party to consummate the Merger have not
been satisfied, fulfilled, or waived by the appropriate party by the Effective
Time (provided that the terminating party is not then in breach of any
representation or warranty contained in the Agreement under the applicable
standards set forth in the Agreement or in material breach of any covenant or
other agreement contained in the Agreement); or (iii) by the Board of Directors
of First National pursuant to the provisions of the Agreement described in
"-- Possible Adjustment of Exchange Ratio."
If the Merger is terminated as described above, the Agreement and the Plan
of Merger will become void and have no effect, except that certain provisions of
the Agreement, including those relating to the obligations to share certain
expenses, maintain the confidentiality of certain information obtained, and
return all documents obtained from the other party under the Agreement, will
survive. In addition, termination of the Agreement will not relieve any
breaching party from liability for any uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination. Finally, the Option Agreement will be governed by its own terms as
to its termination. See "-- Expenses and Fees" and "-- Option Agreement."
DISSENTERS' RIGHTS
Pursuant to Georgia BCC Section 14-2-1302(c), the holders of First National
Common Stock are not entitled to dissent from the Merger. Pursuant to Delaware
GCL Section 262, the holders of Regions Common Stock are not entitled to dissent
from the issuance of shares of Regions Common Stock pursuant to the Agreement.
See "Description of Regions Common Stock" and "Effect of the Merger on Rights of
Stockholders -- Dissenters' Rights of Appraisal."
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Agreement, First National has agreed that unless the prior
written consent of Regions has been obtained, and except as otherwise expressly
contemplated in the Agreement, First National will (i) operate its business only
in the usual, regular, and ordinary course, (ii) preserve intact its business
organization and assets and maintain its rights and franchises, (iii) use its
reasonable efforts to maintain its current employee relationships, and (iv) take
no action which would (a) adversely affect the ability of any party to obtain
any consents required for the transactions contemplated by the Agreement without
imposition of a condition or restriction of the type referred to in the
Agreement or (b) adversely affect the ability of any party to perform its
covenants and agreements under the Agreement.
In addition, First National has agreed that, prior to the earlier of the
Effective Time or termination of the Agreement, First National will not, except
with the prior written consent of the chief executive officer or chief financial
officer of Regions or as expressly contemplated or permitted by the Agreement,
agree or commit to do, any of the following: (i) amend the Articles of
Incorporation, Bylaws, or other governing instruments of any First National
company; (ii) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a First National company to another
First National company) in excess of an aggregate of $250,000 (for the First
National companies on a consolidated basis) except in the ordinary course of
business of the First National subsidiaries consistent with past practices
(which shall include, for First National subsidiaries that are depository
institutions, the creation of deposit liabilities, purchases of federal funds,
advances from the Federal Home Loan Bank or the Federal Reserve Bank, and entry
into repurchase agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition, on any asset of any First
National company any lien or permit any such lien to exist (other than in
connection with deposits, repurchase agreements, bankers acceptances, "treasury
tax and loan" accounts established in the ordinary course of business, the
satisfaction of legal requirements in the exercise of trust powers, and liens in
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effect as of the date of the Agreement that were previously disclosed to Regions
by First National); (iii) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans or in
their capacity as transfer agent), directly or indirectly, any shares, or any
securities convertible into any shares, of the capital stock of any First
National company, or declare or pay any dividend or make any other distribution
in respect of any First National capital stock; provided that First National may
(to the extent legally and contractually permitted to do so), but shall not be
obligated to, declare and pay regular quarterly cash dividends on the shares of
First National Common Stock at a rate not in excess of $.2150 per share with
such increases and usual and regular record and payment dates in accordance with
past practice as previously disclosed to Regions by First National and such
dates may not be changed without the prior written consent of Regions; however,
the parties shall cooperate in selecting the Effective Time to ensure that, with
respect to the quarterly period in which the Effective Time occurs, the holders
of First National Common Stock do not receive both a dividend in respect of
their First National Common Stock and a dividend in respect of Regions Common
Stock or fail to receive any dividend; (iv) except pursuant to the Agreement, or
pursuant to the Option Agreement or pursuant to the exercise of stock options
outstanding as of the date of the Agreement and pursuant to the terms thereof in
existence on the date of the Agreement, issue, sell, pledge, encumber, authorize
the issuance of, enter into any contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of First National Common Stock, or any other capital stock of
any First National company, or any stock appreciation rights, or any option,
warrant, conversion, or other right to acquire any such stock, or any security
convertible into any such stock; (v) adjust, split, combine, or reclassify any
capital stock of any First National company or issue or authorize the issuance
of any other securities in respect of or in substitution for shares of First
National Common Stock or sell, lease, mortgage, or otherwise dispose of or
otherwise encumber any shares of capital stock of any First National subsidiary
(unless any such shares of stock are sold or otherwise transferred to another
First National company) or any assets other than in the ordinary course of
business for reasonable and adequate consideration; (vi) except for purchases of
U.S. Treasury securities or U.S. Government agency securities, which in either
case have maturities of three years or less, purchase any securities or make any
material investment, either by purchase of stock or securities, contributions to
capital, asset transfers, or purchase of any assets, in any person other than a
wholly owned First National subsidiary, or otherwise acquire direct or indirect
control over any person, other than in connection with (a) foreclosures in the
ordinary course of business, (b) acquisitions of control by a depository
institution subsidiary in its fiduciary capacity, or (c) the creation of new
wholly owned subsidiaries organized to conduct or continue activities otherwise
permitted by the Agreement; (vii) grant any increase in compensation or benefits
to the employees or officers of any First National company except in the
ordinary course of business or as previously disclosed to Regions by First
National or as required by law; pay any bonus except in the ordinary course of
business or pursuant to the provisions of any applicable program or plan adopted
by its Board of Directors prior to the date of the Agreement and as previously
disclosed to Regions by First National; enter into or amend any severance
agreements with officers of any First National company; or grant any increase in
fees or other increases in compensation or other benefits to directors of any
First National company except as previously disclosed to Regions by First
National; (viii) voluntarily accelerate the vesting of any stock options or
other stock-based compensation or employee benefits; (ix) enter into or amend
any employment contract between any First National company and any person
(unless such amendment is required by law) that the First National company does
not have the unconditional right to terminate without liability (other than
liability for services already rendered), at any time on or after the Effective
Time; (x) adopt any new employee benefit plan or program of any First National
company or make any material change in or to any existing employee benefit plans
or programs of any First National 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; (xi) make any significant
change in any tax or accounting methods, principles, or practices or systems of
internal accounting controls, except as may be necessary to conform to changes
in tax laws or regulatory accounting requirements or generally accepted
accounting principles; (xii) commence or settle any litigation other than in
accordance with past practice or settle any litigation involving any liability
of any First National company for material money damages or restrictions upon
the operations of any First National company; or (xiii) except in the ordinary
course of business, enter into or terminate any material contract or make any
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change in any material lease or contract, other than renewals of leases and
contracts without material adverse changes of terms.
The Agreement also provides that from the date of the Agreement until the
earlier of the Effective Time or the termination of the Agreement, Regions
covenants and agrees that it will (i) 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 Regions Common Stock and the business
prospects of the Regions companies, and (ii) take no action which would (a)
materially adversely affect the ability of any party to obtain any consents
required for the transactions contemplated by the Agreement without imposition
of a condition or restriction of the type referred to in the Agreement, or (b)
materially adversely affect the ability of any party to perform its covenants
and agreements under the Agreement; provided, that any Regions company may
discontinue or dispose of any of its assets or business if such action is, in
the judgment of Regions, desirable in the conduct of the business of Regions and
its subsidiaries.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Consummation of the Merger will not alter the present management team or
Board of Directors of Regions. Information concerning the management of Regions
is included in the documents incorporated herein by reference. See "Documents
Incorporated by Reference." For additional information regarding the interests
of certain persons in the Merger, see "-- Interests of Certain Persons in the
Merger."
Upon consummation of the Merger, First National and Regions will continue
to operate their businesses and serve the communities and customers of their
respective market areas, although Regions intends to consolidate the banking
subsidiaries of First National located in Georgia and Florida with the banking
subsidiaries of Regions operating in those states. For a description of the
provisions of the Agreement affecting the operations of First National and
Regions prior to the Effective Time, see "-- Conduct of Business Pending the
Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General. Certain members of First National management and of the First
National Board of Directors have interests in the Merger that are in addition to
any interests they may have as stockholders of First National generally. These
interests include, among other things, provisions in the Agreement relating to
indemnification of First National directors and officers, and certain severance
and other employee benefits, as described below.
Indemnification and Advancement of Expenses. The Agreement provides that
Regions will indemnify the present and former directors, officers, employees,
and agents of the First National companies against all liabilities arising out
of actions or omissions occurring at or prior to the Effective Time to the full
extent permitted under Georgia law and by First National's Articles of
Incorporation or Bylaws, as currently in effect, including provisions relating
to advances of expenses incurred in the defense of any litigation. In any case
in which approval by Regions is required to effectuate any indemnification, at
the election of the indemnified party, the determination of any such approval
will be made by independent counsel mutually agreed upon between Regions and the
indemnified party.
First National Change in Control Agreements. First National has entered
into change in control agreements with Bryan F. Bell, Senior Vice President of
First National, C. Talmadge Garrison, Senior Vice President of First National,
Peter D. Miller, President, Chief Administrative and Chief Operating Officer of
First National, Stephen M. Rownd, Senior Vice President of First National and
Richard D. White, President of First National Bank of Gainesville (collectively,
the "Named Officers") and 27 other officers of the First National companies.
Pursuant to the Agreement, Regions has agreed to honor each of the change in
control agreements.
The change in control agreements for each of the Named Officers and 27
additional officers provide that if the officer's employment is terminated by
the employer other than for cause or by the employee for reasons amounting to
"involuntary termination" (as defined in the respective change in control
agreement) at any
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time within a specified period (either one or two years) following the
occurrence of a change in control (as defined in the respective change in
control agreement), such officer will receive: (i) a lump sum equal to his base
annual salary (i.e., his annual salary excluding bonuses and special incentive
payments on the date of the earliest change in control to occur during the
covered period or the termination date, whichever is higher), except for Messrs.
Miller, Garrison, and White, who will receive lump sums equal to 200%, 114.5%,
and 114.5%, respectively, of their respective base annual salaries; (ii) a lump
sum equal to the average amounts the officer was awarded during the preceding
three years under First National's Senior Management Incentive Compensation
Plan, except for Messrs. Miller, Garrison, and White, who will not receive such
lump sums; (iii) continued coverage providing benefits substantially similar to
First National's health, long term disability and life insurance plans for two
years following the officer's termination; (iv) a lump sum equal to the
officer's unvested account balance under First National's 401(k) plan or any
other profit-sharing plans in effect immediately prior to the officer's
termination (with certain exceptions relating to the termination of such plans);
(v) an amount equal to two years' employer contributions to the 401(k) plan had
the officer not been terminated; (vi) a lump sum equal to the officer's entire
account, including any nonvested portion, under First National's Supplemental
Executive Retirement Plan ("SERP"), or any other deferred compensation plan
designed to supplement the 401(k) plan, if the officer anticipates and has an
account under such plan; (vii) an amount equal to two years' credits to the
officer's SERP account had the officer not been terminated; (viii) full vesting
and the lapse of all restrictions under any First National stock plans; and (ix)
the election to exercise any outstanding stock options or to receive a cash
payment equal to the spread amount of such options. The change in control
agreements also provide, however, that any benefits payable to an officer shall
be increased, if necessary, so that the total payment to an officer shall not be
reduced in the event that First National is determined to have paid an "excess
parachute payment" as defined in Section 280G(b)(1) of the Code. The
consummation of the Merger will constitute a "change in control" for purposes of
the change in control agreements. If, pursuant to the provisions described
above, payments were required to be made to the Named Officers, and assuming the
Effective Time occurs on , 1996, the estimated amount of such payments
(excluding the cost of health, disability and life insurance coverages,
excluding the value of stock options, which is included in the discussion of
stock options below, and excluding the present value of the SERP accounts, which
is included in the discussion of supplemental retirement benefits below) would
be $165,597, $223,181, $643,032, $177,777, and $281,339, for Messrs. Bell,
Garrison, Miller, Rownd and White, respectively, and $5,054,589 in the aggregate
for the Named Officers and the 27 additional officers. Calculation of the
foregoing benefit amounts is as if the employment of the Named Officers and 27
additional officers were terminated on the date on which the Effective Time
occurs.
Director and Officer Stock Options. First National has granted stock
options to the Named Officers and certain other officers under the First
National Bancorp 1990 Employee Stock Option Plan, the First National Bancorp
1993 Employee Stock Option Plan, the First National Bancorp Carrollton Stock
Option Plan, and the First National Bancorp FF Bancorp, Inc. Stock Option Plan,
(collectively, the "First National Option Plans"). Options granted include
incentive stock options and non-qualified stock options which vest immediately
upon grant or in not more than five years from the date of grant unless
accelerated in accordance with the applicable First National Option Plan or
individual option agreement, including upon a change in control (as defined in
the respective First National Option Plan). The consummation of the Merger will
constitute a change in control for purposes of the First National Option Plans.
Accordingly, the foregoing options issued pursuant to the First National Option
Plans, to the extent not already exercisable, will become exercisable upon
consummation of the Merger. First National intends, with the approval of
Regions, to grant additional options to purchase shares of First National Common
Stock in January 1996 consistent with past practices.
The following table sets forth with respect to the Named Officers and all
executive officers as a group (collectively, including the Named Officers and
Richard A. McNeece, who ceased to be an executive officer in June 1995, the
"Executive Officer Group") (i) the number of shares covered by options held by
such persons, (ii) the number of shares covered by currently-exercisable options
held by such persons, (iii) the number of shares covered by options held by such
persons which will become exercisable upon consummation of the Merger, (iv) the
weighted average exercise price of all such options held by such persons, and
(v) the
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<PAGE> 48
aggregate value (i.e., stock price less option exercise price) of all such
options based upon the per share value of First National Common Stock on the
First National Record Date.
<TABLE>
<CAPTION>
OPTIONS
OPTIONS EXERCISABLE WEIGHTED AVERAGE AGGREGATE
OPTIONS CURRENTLY UPON CONSUMMATION EXERCISE PRICE VALUE
HELD EXERCISABLE OF THE MERGER PER OPTION OF OPTIONS
------- ----------- ----------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Peter D. Miller.................. 36,400 13,010 36,400 $18.6333 $
C. Talmadge Garrison............. 22,050 10,000 22,050 18.2592
Bryan F. Bell.................... 14,300 6,630 14,300 18.2204
Stephen M. Rownd................. 6,610 -0- 6,610 19.3154
Richard D. White................. 30,500 15,510 30,500 17.0534
Executive Officer Group (7
persons in all)................ 165,652 96,602 165,652 18.4927
</TABLE>
Stock Incentive Awards. First National has granted incentive awards to
Messrs. Miller and White under the First National Bancorp Performance-Based
Restricted Stock Plan (the "Incentive Stock Plan"). Under the Incentive Stock
Plan Messrs. Miller and White are eligible to receive a defined number of
restricted shares of First National Common Stock when the market price of the
common stock reaches certain threshold levels ($29, $33, and $37) and averages
such levels over a 60-day period (the "Award Threshold"). Mr. Miller is eligible
to receive 10,000 shares and Mr. White, 6,666 shares of First National Common
Stock upon attainment of each Award Threshold. The shares are to be granted to
Messrs. Miller and White upon attainment of each Award Threshold and are to be
granted subject to a restriction that each remain in the active employment of
First National until the earlier of eight years after grant or age 65. If the
restriction is violated by the employee, such employee is divested of the shares
granted to him. The restriction lapses upon (i) death, (ii) disability, (iii)
change in control, or (iv) termination without cause. The consummation of the
Merger will constitute a change in control for purposes of the Incentive Stock
Plan. Accordingly, if any Award Threshold is reached prior to the Effective
Time, the foregoing shares issuable pursuant to the Incentive Plan, if any, will
be granted, without the restriction as to employment, immediately prior to the
Effective Time.
Supplemental Retirement Benefits. The Named Officers and certain
additional executive officers and certain other First National officers
participate in the First National Bancorp Supplemental Executive Retirement Plan
("SERP"), which provides certain supplemental benefits for covered officers.
Assuming the Effective Time occurs during the first half of 1996, supplemental
benefits (excluding additional SERP credits payable in accordance with their
change in control agreements) related to First National's 401(k) plan are
estimated to be $11,700, $59,100, and $159,300, for Messrs. Bell, Garrison, and
Miller, respectively, and $445,400 in the aggregate for the Executive Officer
Group. The amounts set forth above generally represent a portion of the
respective officers' salaries, receipt of which they elected to defer. Messrs.
Rownd and White do not have SERP accounts.
Other Matters Relating to First National Employee Benefit Plans. The
Agreement also provides that, after the Effective Time, but in no event earlier
than the consolidation of First National's banking subsidiaries with Regions'
banking subsidiaries located in the same states, Regions will provide generally
to officers and employees of the First National companies who, at or after the
Effective Time, become officers or employees of a Regions company, employee
benefits under employee benefit plans (other than stock option or other plans
involving the potential issuance of Regions Common Stock, except as set forth in
the Agreement) on terms and conditions which, when taken as a whole, are
substantially similar to those currently provided by the Regions companies to
their similarly situated officers and employees. For purposes of participation
and vesting (but not accrual of benefits) under such employee benefit plans (i)
service under any qualified defined benefit plans of First National shall be
treated as service under Regions' qualified defined benefit plans, (ii) service
under any qualified defined contribution plans of First National shall be
treated as service under Regions' qualified defined contribution plans, and
(iii) service under any other employee benefit plans of First National shall be
treated as service under any similar employee benefits plans maintained by
Regions. The Agreement further provides that Regions will cause the First
National companies to honor, on terms reasonably agreed upon by Regions and
First National, all employment, severance, consulting, and other compensation
contracts disclosed to Regions between any First National company and any
current or former director, officer, or
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<PAGE> 49
employee thereof, and all provisions for vested benefits or other vested amounts
earned or accrued through the Effective Time under the First National benefit
plans.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
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
AS 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. IN PARTICULAR, AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY
DOES NOT ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO
STOCKHOLDERS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE,
AS FOREIGN PERSONS, TAX-EXEMPT ENTITIES, DEALERS IN SECURITIES, INSURANCE
COMPANIES, AND CORPORATIONS, AMONG OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY
CONSEQUENCES OF THE MERGER UNDER ANY STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS.
STOCKHOLDERS, THEREFORE, ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING
REQUIREMENTS, THE APPLICATION AND EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND
OTHER TAX LAWS, AND THE IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
A federal income tax ruling with respect to this transaction has not been
requested from the Internal Revenue Service. Instead, Alston & Bird, counsel to
Regions, has rendered an opinion to First National and Regions concerning
certain federal income tax consequences of the proposed Merger under federal
income tax law. It is such firm's opinion that, based upon the assumption the
Merger is consummated in accordance with Georgia law and in conformity with the
representations made by the management of First National and Regions, the
transaction will have the following federal income tax consequences:
(a) The Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code.
(b) No gain or loss will be recognized to the First National
stockholders upon the receipt of Regions Common Stock solely in exchange
for their shares of First National Common Stock.
(c) The basis of the Regions Common Stock to be received by First
National stockholders will be the same as the basis of the First National
Common Stock surrendered in the exchange.
(d) The holding period of the Regions Common Stock to be received by
First National stockholders will include the holding period of the First
National Common Stock surrendered in exchange therefor, provided that the
First National Common Stock was held as a capital asset on the date of the
exchange.
(e) The payment of cash to a First National stockholder in lieu of
issuing a fractional share interest in Regions will be treated for federal
income tax purposes as if the fractional share was distributed as part of
the exchange and then was redeemed by Regions. This cash payment will be
treated as having been received as a distribution in full payment in
exchange for the stock redeemed as provided in Section 302(a) of the Code.
The tax opinion does not address any state, local, or other tax
consequences of the Merger.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a pooling of
interests. Under the pooling-of-interests method of accounting, the recorded
amounts of the assets and liabilities of First National will be carried forward
and recorded on the financial statements of Regions at their previously recorded
amounts.
In order for the Merger to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding First National
Common Stock must be exchanged for Regions Common Stock with substantially
similar terms. There are certain other criteria that must be satisfied in order
for the Merger to qualify as a pooling of interests, some of which criteria
cannot be satisfied until after the Effective Time.
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<PAGE> 50
For information concerning certain conditions to be imposed on the exchange
of First National Common Stock for Regions Common Stock in the Merger by
affiliates of First National and certain restrictions to be imposed on the
transferability of the Regions Common Stock received by those affiliates in the
Merger in order, among other things, to ensure the availability of
pooling-of-interests accounting treatment, see "-- Resales of Regions Common
Stock."
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 each of
Regions and First National will bear and pay one-half of the printing costs in
connection with the Registration Statement and this Joint Proxy Statement.
RESALES OF REGIONS COMMON STOCK
Regions Common Stock to be issued to stockholders of First National in
connection with the Merger will be registered under the Securities Act. All
shares of Regions Common Stock received by holders of First National Common
Stock, and all shares of Regions Common Stock issued and outstanding immediately
prior to the Effective Time, upon consummation of the Merger will be freely
transferable by those stockholders of First National and Regions not deemed to
be "Affiliates" of First National or Regions. "Affiliates" generally are defined
as persons or entities who control, are controlled by, or are under common
control with First National or Regions at the time of the Meetings (generally,
executive officers, directors and 10% or greater stockholders).
Rules 144 and 145 promulgated under the Securities Act restrict the sale of
Regions Common Stock received in the Merger by Affiliates and certain of their
family members and related interests. Generally speaking, during the two years
following the Effective Time, Affiliates of First National or Regions may resell
publicly the Regions Common Stock received by them in the Merger within certain
limitations as to the amount of Regions Common Stock sold in any three-month
period and as to the manner of sale. After the two-year period, such Affiliates
of First National who are not Affiliates of Regions may resell their shares
without restriction. The ability of Affiliates to resell shares of Regions
Common Stock received in the Merger under Rule 144 or 145 as summarized herein
generally will be subject to Regions' having satisfied its Exchange Act
reporting requirements for specified periods prior to the time of sale.
Affiliates will receive additional information regarding the effect of Rules 144
and 145 on their ability to resell Regions Common Stock received in the Merger.
Affiliates also would be permitted to resell Regions Common Stock received in
the Merger pursuant to an effective registration statement under the Securities
Act or an available exemption from the Securities Act registration requirements.
This Joint Proxy Statement does not cover any resales of Regions Common Stock
received by persons who may be deemed to be Affiliates of First National or
Regions.
First National has agreed to use its reasonable efforts to cause each
person who may be deemed to be an Affiliate of First National to execute and
deliver to Regions not later than 30 days prior to the Effective Time, an
agreement (each, an "Affiliate Agreement") providing that such Affiliate will
not sell, pledge, transfer, or otherwise dispose of any Regions Common Stock
obtained as a result of the Merger (i) except in compliance with the Securities
Act and the rules and regulations of the SEC thereunder and (ii) in any case,
until after results covering 30 days of post-Merger operations of Regions have
been published. Certificates representing shares of First National Common Stock
surrendered for exchange by any person who is an Affiliate of First National for
purposes of Rule 145(c) under the Securities Act shall not be exchanged for
certificates representing shares of Regions Common Stock until Regions has
received such a written agreement from such person. Prior to publication of such
results, Regions will not transfer on its books any shares of Regions Common
Stock received by an Affiliate pursuant to the Merger. The stock certificates
representing Regions Common Stock issued to Affiliates in the Merger may bear a
legend summarizing the foregoing restrictions. See "-- Conditions to
Consummation of the Merger."
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<PAGE> 51
OPTION AGREEMENT
As an inducement and a condition to Regions entering into the Agreement,
First National and Regions entered into the Option Agreement, pursuant to which
First National granted Regions an option (the "Option") entitling it to purchase
up to 4,089,234 shares (representing 19.9% of the shares issued and outstanding
before giving effect to the exercise of such Option) of First National Common
Stock under the circumstances described below, at a cash price per share equal
to $27.00, subject to adjustment in certain circumstances. THIS DESCRIPTION OF
THE OPTION AGREEMENT AND THE OPTION DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OPTION AGREEMENT, WHICH IS FILED
AS AN EXHIBIT TO THIS REGISTRATION STATEMENT AND INCORPORATED HEREIN BY
REFERENCE.
Subject to applicable law and regulatory restrictions, Regions may exercise
the Option, in whole or in part, if, but only if, a Purchase Event (as defined
below) occurs prior to the Option's termination; provided that Regions, at the
time, is not in material breach of the Option Agreement or the Agreement. As
defined in the Option Agreement, "Purchase Event" means either of the following
events:
(a) without Regions' written consent, First National authorizing,
recommending, publicly proposing, or publicly announcing an intention to
authorize, recommend, or propose or entering into an agreement with any
third party to effect (i) a merger, consolidation, or similar transaction
involving First National or any of its subsidiaries (other than
transactions solely between First National' subsidiaries), (ii) except as
permitted by the Agreement, the disposition, by sale, lease, exchange, or
otherwise, of 20% or more of the consolidated assets of First National and
its subsidiaries, or (iii) the issuance, sale, or other disposition of
(including by way of merger, consolidation, share exchange, or any similar
transaction) securities representing 20% or more of the voting power of
First National or any of its subsidiaries; or
(b) any third party acquiring beneficial ownership, or the right to
acquire beneficial ownership, of 20% or more of the outstanding shares of
First National Common Stock.
The Option will terminate upon the earliest of the following:
(a) the Effective Time;
(b) termination of the Agreement in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
(other than a termination of the Agreement under certain circumstances
involving a willful breach by First National) (a "Default Termination");
(c) 15 months after a Default Termination and;
(d) 15 months after termination of the Agreement (other than pursuant
to a Default Termination) following the occurrence of a Purchase Event or a
Preliminary Purchase Event.
As defined in the Option Agreement, "Preliminary Purchase Event" includes
either of the following events:
(a) commencement or filing of a registration statement under the
Securities Act by any third party of a tender offer or exchange offer to
purchase any shares of First National Common Stock such that, upon
consummation of such offer, such person would own or control 15% or more of
the then outstanding shares of First National Common Stock (a "Tender
Offer" or an "Exchange Offer," respectively); or
(b) failure of the stockholders of First National to approve the
Agreement at the meeting of such stockholders held for the purpose of
voting on the Agreement, the failure to have such meeting prior to
termination of the Agreement, or the withdrawal or modification by First
National's Board of Directors in a manner adverse to Regions of the
recommendation of the Board of Directors with respect to the Agreement
after public announcement that a third party (i) made, or disclosed an
intention to make, a proposal to engage in an acquisition transaction, (ii)
commenced a Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer, or (iii) filed an
application under certain federal statutes for approval to engage in an
acquisition transaction.
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<PAGE> 52
In the event of any change in First National Common Stock by reason of a
stock dividend, split-up, recapitalization, exchange of shares, or similar
transaction, the type and number of securities subject to the Option, and the
purchase price per share, as the case may be, will be adjusted appropriately. In
the event that any additional shares of First National Common Stock are issued
after October 22, 1995 (other than pursuant to an event described in the
preceding sentence), the number of shares of First National Common Stock subject
to the Option will be adjusted so that, after such issuance, it, together with
any shares of First National Common Stock previously issued pursuant to the
Option Agreement, equals 19.9% of the number of shares then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option.
Upon the occurrence of a Repurchase Event (as defined below) that occurs
prior to the exercise or termination of the Option, at the request of Regions,
delivered within 12 months of the Repurchase Event, First National will, subject
to regulatory restrictions, be obligated to repurchase the Option and any shares
of First National Common Stock therefor purchased pursuant to the Option
Agreement at a specified price.
As defined in the Option Agreement, "Repurchase Event" shall occur if (i)
any person (other than Regions or any Regions subsidiary) shall have acquired
beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act), or the right to acquire beneficial ownership, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of 50% or
more of the then-outstanding shares of First National Common Stock, or (ii) any
of the following transactions is consummated: (a) First National consolidates
with or merges into any person, other than Regions or one of Regions'
subsidiaries, and is not the continuing or surviving corporation of such
consolidation or merger; (b) First National permits any person, other than
Regions or one of Regions' subsidiaries, to merge into First National and First
National shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of First National Common Stock
shall be changed into or exchanged for stock or other securities of First
National or any other person or cash or any other property or the outstanding
shares of First National Common Stock immediately prior to such merger shall
after such merger represent less than 50% of the outstanding shares and share
equivalents of the merged company; or (c) First National sells or otherwise
transfers all or substantially all of its assets to any person, other than
Regions or one of Regions' subsidiaries.
In the event that prior to the exercise or termination of the Option, First
National enters into an agreement to engage in any of the transactions described
in clause (ii) of the definition of Repurchase Event above, the agreement
governing such transaction must make proper provision so that the Option will,
upon consummation of such transaction, be converted into, or exchanged for, an
option with terms similar to the Option, at the election of Regions, of either
the acquiring person or any person that controls the acquiring person.
After the occurrence of a Purchase Event, Regions may assign the Option
Agreement and its rights thereunder in whole or in part.
Upon the occurrence of certain events, First National has agreed to file
with the SEC and to cause to become effective certain registration statements
under the Securities Act with respect to dispositions by Regions and its assigns
of all or part of the Option and/or any shares of First National Common Stock
into which the Option is exercisable.
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<PAGE> 53
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of First National Common Stock will be
exchanging their shares of a Georgia corporation governed by the Georgia BCC and
First National'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, as amended (the "Certificate"),
and Bylaws. Certain significant differences exist between the rights of First
National stockholders and those of Regions stockholders. The differences deemed
material by First National and Regions are summarized below. In particular,
Regions' Certificate and Bylaws contain several provisions that may be deemed to
have an antitakeover effect in that they could impede or prevent an acquisition
of Regions unless the potential acquirer has obtained the approval of Regions'
Board of Directors. The following discussion is necessarily general; it is not
intended to be a complete statement of all differences affecting the rights of
stockholders and their respective entities, and it is qualified in its entirety
by reference to the Georgia BCC and the Delaware GCL as well as to Regions'
Certificate and Bylaws and First National'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 if any group or person
attempts to acquire control of Regions, so that the Board can further protect
the interests of Regions and its stockholders as appropriate under the
circumstances, including, if the Board determines that a sale of control is in
their best interests, by enhancing the Board's ability to maximize the value to
be received by the stockholders upon such a sale.
Although Regions' management believes the Protective Provisions are,
therefore, beneficial to Regions' stockholders, the Protective Provisions also
may tend to discourage some takeover bids. As a result, Regions' stockholders
may be deprived of opportunities to sell some or all of their shares at prices
that represent a premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent that the Protective Provisions discourage
undesirable proposals, Regions may be able to avoid those expenditures of time
and money.
The Protective Provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of Regions
Common Stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the Protective
Provisions may decrease the market price of Regions Common Stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The Protective Provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the Board of Directors and
management. Furthermore, the Protective Provisions may make it more difficult
for Regions' stockholders to replace the Board of Directors or management, even
if a majority of the stockholders believe 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 shares were issued,
including treasury shares, as of the Regions Record Date.
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
42
<PAGE> 54
may be listed. Regions' stockholders do not have the preemptive right to
purchase or subscribe to any unissued authorized shares of Regions Common Stock
or any option or warrant for the purchase thereof.
The authority to issue additional shares of Regions Common Stock provides
Regions with the flexibility necessary to meet its future needs without the
delay resulting from seeking stockholder approval. The authorized but unissued
shares of Regions Common Stock will be issuable from time to time for any
corporate purpose, including, without limitation, stock splits, stock dividends,
employee benefit and compensation plans, acquisitions, and public or private
sales for cash as a means of raising capital. Such shares could be used to
dilute the stock ownership of persons seeking to obtain control of Regions. In
addition, the sale of a substantial number of shares of Regions Common Stock to
persons who have an understanding with Regions concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Regions
Common Stock (or the right to receive Regions Common Stock) to Regions
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Regions.
First National. First National's authorized capital stock consists of
30,000,000 shares of First National Common Stock, of which shares were
issued and outstanding as of the First National Record Date. First National's
stockholders do not have the preemptive right to purchase or subscribe to any
unissued authorized shares of First National Common Stock or any option or
warrant for the purchase thereof. In addition, shares of First National Common
Stock can be issued by authorization of the Board of Directors of First National
without the approval of the stockholders, except in certain instances prescribed
by the Georgia BCC.
AMENDMENT OF CERTIFICATE 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 Bylaw may be taken only upon the
affirmative vote of the holders of at least 75% of the voting power of Regions'
voting stock.
First National. The Georgia BCC generally provides that, unless a
corporation's articles of incorporation specify a greater voting requirement,
the corporation's articles of incorporation may not be amended unless (i) the
Board of Directors recommends the amendment to the stockholders (unless the
Board elects to make no recommendation and communicates the basis for its
election to the stockholders) and (ii) the amendment is adopted by a majority of
the votes entitled to be cast on the amendment by each voting group entitled to
vote thereon. In general, First National's Bylaws may be amended by its
stockholders or by a majority of the full Board of Directors at a regular Board
meeting.
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 are 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 Bylaws, each stockholder generally is entitled to one vote
for each share of Regions Common Stock held and is not entitled to cumulative
voting rights in the election of directors. With
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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 distribute all of his
votes in any manner among any number of candidates or to accumulate such shares
in favor of one candidate. 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 thus 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.
First National. First National's Bylaws generally provide that the number
of directors constituting the First National Board shall not be less than five
nor more than 25 persons, the exact number within such limits to be determined
by resolution of a majority of the full Board or by resolution of the
stockholders at any meeting thereof. First National stockholders have cumulative
voting rights in the election of directors.
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% of Regions' voting stock.
First National. Pursuant to the Georgia BCC, the First National
stockholders may remove one or more directors with or without cause; provided,
that a director may not be removed if the number of votes sufficient to elect
him under cumulative voting is voted against his removal.
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 liability for (i) any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) acts
or omissions that are not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) the payment of certain unlawful dividends
and the making of certain unlawful stock purchases or redemptions, or (iv) any
transaction from which the director derived an improper personal benefit.
Although this provision does not affect the availability of injunctive or
other equitable relief as a remedy for a breach of duty by a director, it does
limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of his 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 benefited
Regions and its stockholders. The SEC has taken the position that similar
provisions added to other corporations' certificates of incorporation would not
protect those corporations' directors from liability for violations of the
federal securities laws.
First National. First National's Articles contain a provision limiting the
liability of directors and officers of First National in a manner similar to
Regions' Certificate.
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
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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 indemnity 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, whether
civil, criminal, administrative, or investigative, such person must be
indemnified against reasonable expenses incurred by him in connection therewith.
First National. First National's Bylaws provide that First National will
indemnify its officers and directors and may indemnify its employees and agents
under the indemnification provisions of the Georgia BCC, which is generally
similar to Section 145 of the Delaware GCL, with certain procedural differences.
First National's Bylaws also provide, however, that no person shall be
indemnified or reimbursed in relation to any matter in an action, suit, or
proceeding as to which he is finally adjudged to have been guilty of or liable
for gross negligence, willful misconduct, or criminal acts. In addition, First
National will not indemnify or reimburse any person in relation to any matter in
any action, suit, or proceeding which has been made the subject of a compromise
settlement except with the approval of a court of competent jurisdiction, or the
holders of record of a majority of the outstanding shares of First National, or
the Board of Directors, acting by vote of Directors not parties to the same or
substantially the same action, suit, or proceeding, constituting a majority of
the full Board.
SPECIAL MEETINGS OF STOCKHOLDERS
Regions. Regions' Certificate and Bylaws provide that such meetings may be
called at any time, but only by the Chief Executive Officer, the Secretary, or
the Board of Directors of Regions. Regions stockholders do not have the right to
call a special meeting or to require that Regions' Board of Directors call such
a meeting. This provision, combined with other provisions of the Certificate and
the restriction on the removal of directors, would prevent a substantial
stockholder from compelling stockholder consideration of any proposal (such as a
proposal for a business combination) over the opposition of Regions' Board of
Directors by calling a special meeting of stockholders at which such stockholder
could replace the entire Board with nominees who were in favor of such proposal.
First National. Under First National's Bylaws, special meetings of the
stockholders of First National may be called at any time by the Board of
Directors or by any three or more stockholders owning, in the aggregate, at
least 25% of the stock of First National.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
Regions. The Certificate provides that any action required or permitted to
be taken by Regions stockholders must be effected at a duly called meeting of
stockholders and may not be effected by any written consent by the stockholders.
These provisions would prevent stockholders from taking action, including action
on a business combination, except at an annual or special meeting called by the
Board of Directors, even if a majority of the stockholders were in favor of such
action.
First National. The Georgia BCC provides that action required or permitted
to be taken at a meeting of stockholders may be taken by unanimous consent of
all stockholders required 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
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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.
First National. First National's Bylaws set forth procedures for
stockholder nominations and proposals that are substantially similar to Regions'
procedures, except that any First National notifying stockholder must include in
the nomination notice the name, address, and number of First National shares
owned by both the nominee and the notifying stockholder, and the principal
occupation of the nominee.
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, generally
including mergers, sales and leases of assets, issuances of securities, and
similar transactions) by Delaware corporations with an "interested stockholder"
(as defined in Section 203, generally the beneficial owner of 15% or more of the
corporation's outstanding voting stock). Section 203 generally applies to
Delaware corporations, such as Regions, that have a class of voting stock listed
on a national securities exchange, authorized for quotation on an interdealer
quotation system of a registered national securities association, or held of
record by more than 2,000 stockholders, unless the corporation expressly elects
in its certificate of incorporation or bylaws not to be governed by Section 203.
Regions has not specifically elected to avoid the application of Section
203. As a result, Section 203 generally would prohibit a business combination by
Regions or a subsidiary with an interested stockholder within three years after
the person or entity becomes an interested stockholder, unless (i) prior to the
time when the person or entity becomes an interested stockholder, Regions' Board
of Directors approved either the business combination or the transaction
pursuant to which such person or entity became an interested stockholder, (ii)
upon consummation of the transaction in which the person or entity became an
interested stockholder, the interested stockholder held at least 85% of the
outstanding Regions voting stock (excluding shares held by persons who are both
officers and directors and shares held by certain employee benefit plans), or
(iii) once the person or entity becomes an interested stockholder, the business
combination is approved by Regions' Board of Directors and by the holders of at
least two-thirds of the outstanding Regions voting stock, excluding shares owned
by the interested stockholder.
First National. The Georgia BCC contains two anti-takeover provisions: (i)
the Fair Price provisions set forth in Part 2 of Article 11 of the Georgia BCC
and (ii) the Business Combination provisions set forth in Part 3 of Article 11
of the Georgia BCC. Because First National has not "opted in" to either of these
provisions, such provisions will 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% 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. This provision
does not apply to the Merger because First National is being merged with and
into a wholly owned subsidiary of Regions, not merged with and into Regions
directly. In addition, the Delaware GCL generally requires the approval of a
majority of the outstanding voting stock of Regions to effect (i) any merger or
consolidation with or into any other corporation, (ii) any sale, lease, or
exchange of all or substantially all of Regions property and assets, or (iii)
the dissolution of Regions. However, pursuant to the Delaware GCL, Regions may
enter into a merger transaction without stockholder approval if (i) Regions is
the surviving corporation, (ii) the agreement of merger does not amend in any
respect Regions' Certificate, (iii) each share of Regions stock outstanding
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immediately prior to the effective date of the merger is to be an identical
outstanding or treasury share of Regions after the effective date of the merger,
and (iv) either no shares of Regions Common Stock and no shares, securities, or
obligations convertible into such stock are to be issued or delivered under the
plan of merger, or the authorized unissued shares or the treasury shares of
Regions Common Stock to be issued or delivered under the plan of merger plus
those initially issuable upon conversion of any other shares, securities, or
obligations to be issued or delivered under such plan do not exceed 20% of the
shares of Regions Common Stock outstanding immediately prior to the effective
date of the merger. Such provisions under the Certificate and the Delaware GCL
do not apply to the Merger because First National is being merged with and into
a wholly owned subsidiary of Regions, and not into Regions directly.
First National. In general, (i) a merger or share exchange required to be
approved by the stockholders of First National must be approved by a majority of
all votes entitled to be cast by all shares entitled to vote thereon, voting as
a single voting group, and by each voting group entitled to vote separately
thereon by a majority of the votes entitled to be cast by that voting group, and
(ii) the dissolution of First National, or the sale of all or substantially all
of the property of First National, other than in the usual and regular course of
business, must be approved by a majority of all votes entitled to be cast
thereon. However, pursuant to Section 14-2-1103 of the Georgia BCC, First
National may enter into a merger transaction without stockholder approval if (i)
First National is the surviving corporation, (ii) the merger will not effect any
change in or amendment to First National's Articles, (iii) First National's
shareholders will hold the same number of shares, with identical designations,
preferences, limitations, and relative rights, immediately after the merger as
they held before the merger, and (iv) the number and kind of shares outstanding
immediately after the merger, plus the number and kind of shares issuable as a
result of the merger will not exceed the total number and kind of shares of the
surviving corporation authorized immediately before the merger.
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 System, 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
time of the merger on a national securities exchange, quoted on the Nasdaq
National Market System, 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
System and is held of record by more than 2,000 stockholders, unless the
exception described immediately above applies, holders of Regions Common Stock
are not entitled to dissenters' rights of appraisal.
First National. Article 13 of the Georgia BCC generally does not grant
dissenters' rights to holders of a class of stock either listed on a national
securities exchange (or as a national market security on a securities quotation
system) or held of record by more than 2,000 stockholders, unless the holders of
such stock are required by a plan of merger or share exchange to accept for
their stock anything except shares of the surviving corporation or another
publicly held corporation which at the effective date of the merger or share
exchange are either listed on a national securities exchange (or as a national
market security on a securities quotation system) or held of record by more than
2,000 stockholders, except for scrip or cash payments in lieu of fractional
shares. Because First National Common Stock is quoted on the Nasdaq National
Market System and is held of record by more than 2,000 stockholders, unless the
exception described immediately above applies, holders of First National Common
Stock do not have dissenters' rights of appraisal.
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STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
Regions. The Delaware GCL provides that a stockholder may inspect books
and records upon written demand under oath stating the purpose of the
inspection, if such purpose is reasonably related to such person's interest as a
stockholder.
First National. Pursuant to the Georgia BCC, First National's stockholders
have the right to inspect and copy certain of First National's corporate
documents, upon written demand to First National. Stockholders may also inspect
and copy First National's accounting records and First National's record of
stockholders if: (i) the stockholder's written demand is made in good faith and
for a proper purpose relevant to a legitimate interest as a stockholder; (ii)
such demand describes with reasonable particularity the purpose and records the
stockholder desires to inspect; (iii) the records are directly connected with
such purpose; and (iv) the records are only to be used for such purpose. The
right of inspection extends not only to stockholders of record but also
beneficial owners whose shares are held in a voting trust or by a nominee on the
stockholder's behalf. In addition, First National is required to prepare a
stockholder list at the time and place of the stockholders' meeting.
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 "Certain Regulatory Considerations -- Payment of Dividends."
First National. The holders of First National Common Stock are entitled to
receive such dividends or distributions as the First National Board of Directors
may declare out of funds legally available for such payments. The payment of
distributions by First National is subject to the restrictions of the Georgia
BCC applicable to the declaration of distributions by a business corporation. A
corporation generally may not authorize and make distributions if, after giving
effect thereto, it would be unable to meet its debts as they become due in the
usual course of business or if the corporation's total assets would be less than
the sum of its total liabilities plus the amount that would be needed, if it
were to be dissolved at the time of the distribution, to satisfy claims upon
dissolution of stockholders who have preferential rights superior to the rights
of the holders of its common stock. Share dividends, if any are declared, may be
paid from First National's authorized but unissued shares. Substantially all of
the funds available for the payment of dividends by First National are derived
from its subsidiary depository institutions. There are various statutory
limitations on the ability of First National's subsidiary depository
institutions to pay dividends to First National. See "Supervision and
Regulation -- Payment of Dividends."
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COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock is quoted on the Nasdaq National Market System under
the symbol "RGBK." First National Common Stock is quoted on the Nasdaq National
Market System under the symbol "FBAC." The following table sets forth, for the
indicated periods, the high and low last sale prices for Regions Common Stock
and First National Common Stock as reported on the Nasdaq National Market System
and the cash dividends declared per share of Regions Common Stock and First
National 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.
<TABLE>
<CAPTION>
REGIONS FIRST NATIONAL
--------------------------- ---------------------------
CASH CASH
PRICE RANGE DIVIDENDS PRICE RANGE 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.. $0.26 $21.50 $17.50 $0.1725
Second Quarter............................ 38.25 30.25 0.26 22.25 20.00 0.1750
Third Quarter............................. 35.25 31.25 0.26 22.50 19.75 0.1775
Fourth Quarter............................ 35.00 29.63 0.26 21.25 19.50 0.1800
1994
First Quarter............................. 33.50 30.13 0.30 22.25 20.25 0.1900
Second Quarter............................ 36.13 30.50 0.30 21.50 19.75 0.1925
Third Quarter............................. 36.75 34.63 0.30 22.25 20.00 0.1950
Fourth Quarter............................ 35.00 29.75 0.30 20.75 16.62 0.2000
1995
First Quarter............................. 36.50 31.63 0.33 20.75 18.00 0.2050
Second Quarter............................ 37.44 34.50 0.33 22.00 19.75 0.2075
Third Quarter............................. 41.25 37.00 0.33 28.00 21.00 0.2125
Fourth Quarter (through December )... 0.33 0.2150
</TABLE>
On December , 1995, the last sale prices of Regions Common Stock and
First National Common Stock as reported on the Nasdaq National Market System
were $ and $ , respectively. On October 20, 1995, the last business day
prior to public announcement of the proposed Merger, the last sale prices of
Regions Common Stock and First National Common Stock as reported on the Nasdaq
National Market System were $41.50 and $28.75, respectively.
The holders of Regions Common Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Regions has paid regular quarterly cash dividends since 1971. Although
Regions currently intends to continue to pay quarterly cash dividends on the
Regions Common Stock, there can be no assurance that Regions' dividend policy
will remain unchanged after completion of the Merger. The declaration and
payment of dividends thereafter will depend upon business conditions, operating
results, capital and reserve requirements, and the Board of Directors'
consideration of other relevant factors. For information with respect to
provisions of the Agreement limiting First National's ability to pay dividends
on First National Common Stock during the pendency of the Merger, see
"Description of Transaction -- Conduct of the Business Pending the Merger."
Regions and First National are legal entities separate and distinct from
their respective subsidiaries and their respective revenues depend in
significant part on the payment of dividends from their respective subsidiary
depository institutions. Such subsidiary depository institutions are subject to
certain legal restrictions on the amount of dividends they are permitted to pay.
See "Certain Regulatory Considerations -- Payment of Dividends."
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BUSINESS OF FIRST NATIONAL
GENERAL
First National is a bank holding company headquartered in Gainesville,
Georgia, with approximately 64 banking offices of subsidiary banks and savings
banks in Georgia and Florida. As of September 30, 1995, First National had total
consolidated assets of approximately $3.1 billion, total consolidated deposits
of approximately $2.6 billion, and total consolidated stockholders' equity of
approximately $304 million. First National is the second largest bank holding
company headquartered in Georgia outside of the Atlanta metropolitan area in
terms of assets, based on September 30, 1995 information. First National
operates 20 banking and savings bank subsidiaries in Georgia and Florida.
Through its subsidiaries, First National offers a broad range of banking and
banking-related services.
In Georgia, First National operates through The First National Bank of
Gainesville ("FNBG") and 16 other state and national bank subsidiaries, which,
at September 30, 1995, had total consolidated assets of approximately $2.5
billion, total consolidated deposits of approximately $2.0 billion, and total
consolidated stockholders' equity of approximately $208 million. FNBG and the 16
other state and national bank subsidiaries operate 55 banking offices in North
Georgia.
In Florida, First National operates through (i) First Federal Savings Bank
of New Smyrna, (ii) First Federal Savings Bank of Citrus County, and (iii) The
Key Bank of Florida, which, at September 30, 1995, had total combined assets of
approximately $686 million, total combined deposits of approximately $578
million, and total combined stockholders' equity of approximately $96 million.
First Federal Savings Bank of New Smyrna operates three banking offices in
Volusia County, Florida, First Federal Savings Bank of Citrus County operates
four banking offices in Citrus County, Florida, and The Key Bank of Florida
operates two banking offices in Tampa, Florida.
First National was organized under the laws of the state of Georgia and
commenced operations in 1981 with the acquisition of FNBG. Additional
information with respect to First National and its subsidiaries is included in
documents incorporated by reference in this Joint Proxy Statement. See
"Available Information" and "Documents Incorporated by Reference."
RECENT DEVELOPMENTS
Recently Completed Acquisition. During the first nine months of 1995,
First National acquired FF Bancorp, located in New Smyrna Beach, Florida, and
its two federal savings bank and one state bank subsidiaries, First Federal
Savings Bank of New Smyrna, First Federal Savings Bank of Citrus County, and The
Key Bank of Florida, contributing an aggregate of approximately $686 million in
assets, $455 million in loans, and $578 million in deposits to First National's
consolidated balance sheet. In connection with the FF Bancorp Acquisition, First
National issued approximately 3,884,587 shares of First National Common Stock.
As the transaction was accounted for as a pooling of interests, the historical
financial statements and related management's discussion and analysis of
financial condition and results of operations of First National were required to
be restated to reflect the FF Bancorp Acquisition. For additional information
with respect to the FF Bancorp Acquisition, see First National's Quarterly
Reports on Form 10-Q for the quarters ended June 30 and September 30, 1995, and
First National's Current Report on Form 8-K dated November 21, 1995,
incorporated herein by reference. See "Documents Incorporated by Reference."
Other Pending Acquisition. As of the date of this Joint Proxy Statement,
First National has one pending acquisition, The Bank of Heard County, a state
bank located in Franklin, Georgia. In connection with this acquisition, First
National will issue approximately 325,580 shares of First National Common Stock.
Consummation of such acquisition is subject to approval of certain regulatory
agencies and of the stockholders of The Bank of Heard County. Moreover, the
closing of such transaction is subject to various contractual conditions
precedent. No assurance can be given that the conditions precedent to
consummating the transaction will be satisfied in a manner that will result in
its consummation.
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BUSINESS OF REGIONS
GENERAL
Regions is a regional bank holding company headquartered in Birmingham,
Alabama with approximately 288 banking offices in Alabama, Florida, Georgia,
Louisiana, and Tennessee. As of September 30, 1995, Regions had total
consolidated assets of approximately $13.8 billion, total consolidated deposits
of approximately $10.7 billion, and total consolidated stockholders' equity of
approximately $1.1 billion. Regions operates commercial bank subsidiaries in
Alabama, Florida, Georgia, Louisiana, and Tennessee, a federal stock savings
bank subsidiary in Georgia, and 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 September
30, 1995, had total consolidated assets of approximately $10.4 billion, total
consolidated deposits of approximately $7.8 billion, and total consolidated
stockholders' equity of approximately $837 million. First Alabama Bank operates
183 banking offices throughout Alabama.
In Florida, Regions operates through Regions Bank of Florida, which at
September 30, 1995, had total consolidated assets of approximately $553 million,
total consolidated deposits of approximately $491 million, and total
consolidated stockholders' equity of approximately $58 million. Regions Bank of
Florida operates 28 banking offices in the panhandle region of Florida.
In Georgia, Regions operates through (i) Regions Bank of Georgia, (ii)
Regions Bank of Rome, and (iii) Regions Bank, FSB, which at September 30, 1995,
had total combined assets of approximately $624 million, total combined deposits
of approximately $560 million, and total combined stockholders' equity of
approximately $49 million. Regions Bank of Georgia operates three banking
offices in Columbus, Georgia, Regions Bank of Rome operates two banking offices
in Rome, Georgia, and Regions Bank, FSB operates five banking offices in Dalton
and Cartersville, Georgia.
In Louisiana, Regions operates through Regions Bank of Louisiana. At
September 30, 1995, Regions Bank of Louisiana had total consolidated assets of
approximately $2.2 billion, total consolidated deposits of approximately $1.6
billion, and total consolidated stockholders' equity of approximately $208
million. Regions Bank of Louisiana operates 43 banking offices in Louisiana.
In Tennessee, Regions operates through Regions Bank of Tennessee, which at
September 30, 1995, had total consolidated assets of approximately $491 million,
total consolidated deposits of approximately $427 million, and total
consolidated stockholders' equity of approximately $44 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' principal executive offices are located at 417 North 20th
Street, Birmingham, Alabama 35203, and its telephone number at such address is
(205) 326-7100.
Regions continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with possible
business combinations. As a result, business combination discussions and, in
some cases, negotiations frequently take place, and future business combinations
involving cash, debt, or equity securities can be expected. Any future business
combination or series of business combinations that Regions might undertake may
be material, in terms of assets acquired or liabilities assumed, to Regions'
financial condition. Recent business combinations in the banking industry have
typically involved the payment of a premium over book and market values. This
practice could result in dilution of book value and net income per share for the
acquirer.
Additional information about Regions and its subsidiaries is included in
documents incorporated by reference in this Joint Proxy Statement. See
"Available Information" and "Documents Incorporated by Reference."
51
<PAGE> 63
RECENT DEVELOPMENTS
Recently Completed Acquisitions. During the first nine months of 1995,
Regions acquired (i) Fidelity Federal Savings Bank, located in Dalton, Georgia,
and (ii) First Commercial Bancshares, Inc., located in Chalmette, Louisiana,
contributing an aggregate of approximately $479 million in assets, $392 million
in loans, and $427 million in deposits to Regions' consolidated balance sheet.
During such period, Regions also acquired Interstate Billing Service, Inc., an
accounts receivable factoring company in Decatur, Alabama, with total assets as
of the acquisition date of approximately $30 million. For additional information
with respect to these acquisitions, see Regions' Quarterly Reports on Form 10-Q
for the quarters ended March 31, June 30, and September 30, 1995, incorporated
herein by reference. See "Documents Incorporated by Reference."
Since September 30, 1995, Regions acquired from The Prudential Savings Bank
a branch banking operation in Cartersville, Georgia (the "Cartersville
Acquisition"), in which Regions assumed approximately $57 million in deposits.
Other Pending Acquisitions. As of the date of this Joint Proxy Statement,
Regions has pending five acquisitions in addition to First National, 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>
Metro Financial Corporation and its subsidiary, $197 $28 Regions Purchase
Metro Bank, located in Atlanta, Georgia (the Common
"Metro Acquisition") Stock
Enterprise National Bank, located in Atlanta, 54 8 Cash Purchase
Georgia (the "Enterprise Acquisition")
First Federal Bank of Northwest Georgia, Federal 90 16 Regions Purchase
Savings Bank, located in Cedartown, Georgia Common
(the "First Federal Acquisition") Stock
First Gwinnett Bankshares, Inc. and its 63 13 Regions Purchase
subsidiary, First Gwinnett Bank, located in Common
Atlanta, Georgia (the "First Gwinnett Stock
Acquisition")
Delta Bank and Trust Company, located in Belle 198 34 Regions Pooling
Chase, Louisiana (the "Delta Acquisition") Common of
Stock Interests
---------- -----
Totals $602 $99
======= ====
</TABLE>
The Metro Acquisition, the Enterprise Acquisition, the First Federal
Acquisition, the First Gwinnett Acquisition, and the Delta Acquisition are
referred to in this Joint Proxy Statement as the "Other Pending Acquisitions."
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, in the case of the Delta Acquisition, to execution of a definitive
acquisition agreement. 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 transactions will be satisfied in a
manner that will result in their consummation.
Registration of Subordinated Debt Securities. Regions has filed with the
SEC a registration statement relating to $200 million of Regions' subordinated
debt securities. Under this registration statement, which became effective in
July 1995, Regions may issue on a delayed or continuous basis its subordinated
debt securities up to such amount, bearing such interest rates, and having such
terms as Regions may determine. The net proceeds from the sale of subordinated
debt securities, if any, may be used for such general corporate purposes as
Regions may determine, including future acquisitions and the repurchase of
outstanding shares of Regions Common Stock in the open market.
52
<PAGE> 64
PRO FORMA FINANCIAL INFORMATION
PRO FORMA COMBINED CONDENSED STATEMENT OF CONDITION
SEPTEMBER 30, 1995
(UNAUDITED)
The following unaudited pro forma combined condensed statement of condition
presents (i) the historical unaudited consolidated statement of conditions of
Regions and First National at September 30, 1995, (ii) the pro forma combined
condensed statement of condition of Regions at September 30, 1995, giving effect
to the Merger, assuming such acquisition is accounted for as a pooling of
interests, and (iii) the pro forma combined condensed statement of condition of
Regions at September 30, 1995, giving effect to the Merger, assuming such
acquisition is accounted for as a pooling of interests, and the Other Pending
Acquisitions, assuming four of such acquisitions are treated as purchases for
accounting purposes and one such acquisition is treated as a pooling of
interests for accounting purposes. The unaudited pro forma combined condensed
statement of condition should be read in conjunction with the historical
consolidated financial statements of Regions and the restated historical
consolidated financial statements of First National, including the respective
notes thereto, which are incorporated by reference in this Joint Proxy
Statement, and the unaudited pro forma financial information appearing elsewhere
in this Joint Proxy Statement and included in Regions' Current Report on Form
8-K dated November 22, 1995. See "Documents Incorporated by Reference,"
"Summary -- Comparative Per Share Data," and "-- Summary Pro Forma Financial
Data." The effect of an anticipated restructuring charge (estimated for purposes
of the pro forma financial statements at $5.6 million net of taxes) to be taken
by First National in connection with the Merger has been reflected in the pro
forma combined condensed statement of condition; however, since the anticipated
restructuring charge is nonrecurring, it has not been reflected in the pro forma
combined condensed statements of income. The pro forma financial data does not
give effect to anticipated reductions in expenses at First National in
connection with the Merger. The pro forma combined condensed statement of
condition is not necessarily indicative of the combined condensed financial
position that actually would have occurred if the Merger or the Other Pending
Acquisitions had been consummated at the date indicated or which may be obtained
in the future.
<TABLE>
<CAPTION>
REGIONS, FIRST
NATIONAL,
AND OTHER
REGIONS AND PENDING
FIRST NATIONAL OTHER ACQUISITIONS
FIRST COMBINING PRO FORMA PENDING COMBINING PRO FORMA
REGIONS NATIONAL ADJUSTMENTS COMBINED ACQUISITIONS ADJUSTMENTS COMBINED
----------- ---------- ----------- -------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from
banks.............. $ 636,158 $ 98,244 $ 734,402 $ 54,063 $ 788,465
Interest-bearing
deposits in other
banks.............. 14,922 10,708 25,630 7,474 $ (8,474)(d) 24,630
Investment
securities......... 2,145,891 152,312 2,298,203 88,143 2,386,346
Securities available
for sale........... 887,309 663,106 1,550,415 80,158 (57,045)(c) 1,573,528
Trading account
assets............. 17,942 17,942 17,942
Mortgage loans held
for sale........... 98,046 98,046 14,177 112,223
Federal fund sold and
securities
purchased under
agreements to
resell............. 1,639 91,652 93,291 7,830 101,121
Loans, net of
unearned income.... 9,596,673 1,970,654 11,567,327 382,965 11,950,292
Allowance for loan
losses............. (131,426) (26,016) (157,442) (4,323) (161,765)
Premises and
equipment, net..... 188,054 67,209 255,263 11,616 266,879
Other real estate.... 5,537 9,138 14,675 1,722 16,397
Excess purchase
price.............. 105,002 9,000 114,002 4,295 27,627(d) 145,924
Due from customers on
acceptances........ 15,561 15,561 15,561
Other assets......... 266,602 65,868 332,470 11,234 343,704
----------- ---------- -------------- ------------ ----------- ---------------
Total
assets..... $13,847,910 $3,111,875 $ 16,959,785 $659,354 $ (37,892) $17,581,247
========== ========= =========== ========= ========== ===========
</TABLE>
53
<PAGE> 65
<TABLE>
<CAPTION>
REGIONS, FIRST
NATIONAL,
AND OTHER
REGIONS AND PENDING
FIRST NATIONAL OTHER ACQUISITIONS
FIRST COMBINING PRO FORMA PENDING COMBINING PRO FORMA
REGIONS NATIONAL ADJUSTMENTS COMBINED ACQUISITIONS ADJUSTMENTS COMBINED
----------- ---------- ----------- -------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interest bearing
deposits........... $ 1,461,775 $ 335,441 $ 1,797,216 $ 85,492 $ 1,882,708
Interest-bearing
deposits........... 9,280,412 2,251,682 11,532,094 499,748 12,031,842
Federal funds
purchased and
securities sold
under agreements to
repurchase......... 1,216,763 83,909 1,300,672 1,990 1,302,662
Other borrowed
funds.............. 624,240 90,814 715,054 9,041 724,095
Bank acceptances
outstanding........ 15,561 15,561 15,561
Other liabilities.... 135,369 45,763 $ 5,600 (b) 186,732 7,322 194,054
----------- ---------- ----------- -------------- ------------ ----------- ---------------
Total liabilities.... 12,734,120 2,807,609 5,600 15,547,329 603,593 16,150,922
Common stock......... 29,704 20,529 39,455 7,274 $ (5,386)(d) 39,999
(10,778)(a) (1,344)(e)
Surplus.............. 418,453 86,468 515,699 28,274 (23,179)(d) 522,138
10,778 (a)
1,344 (e)
Undivided Profits.... 676,285 194,731 865,416 20,618 (9,736)(d) 876,298
(5,600)(b)
Less: Treasury and
unearned restricted
stock.............. (14,239) (14,239) (36) (57,045)(c) (14,239)
57,081 (d)
Unrealized gain
(loss) on
securities
available for sale,
net of tax......... 3,587 2,538 6,125 (369) 373 (d) 6,129
----------- ---------- -------------- ------------ ----------- ---------------
Total stockholders'
equity............. 1,113,790 304,266 (5,600) 1,412,456 55,761 (37,892) 1,430,325
----------- ---------- ----------- -------------- ------------ ----------- ---------------
Total liabilities and
stockholders'
equity............. $13,847,910 $3,111,875 $ 16,959,785 $659,354 $ (37,892) $17,581,247
========== ========= =========== ========= ========== ===========
</TABLE>
- ---------------
(a) To reflect the issuance of 15,602,040 shares of Regions Common Stock to
effect the Merger. The Merger will be accounted for as a pooling of
interests, therefore the effect upon stockholders' equity will be to
increase Regions stockholders' equity by the total equity of First
National. The unaudited pro forma financial statements have been prepared
assuming Regions will issue 15,602,040 shares of Regions Common Stock in
exchange for all the outstanding shares of First National Common Stock. A
reclassification from common stock to surplus results from the issuance of
the shares.
(b) In connection with its merger with Regions, it is anticipated that First
National will take a one-time restructuring charge estimated for purposes
of the pro forma financial statements of approximately $6.6 million ($5.6
million net of taxes), prior to or at the time of consummation of the
Merger. The restructuring charge results from data processing contract
termination costs, reductions in the carrying value of unnecessary
equipment, severance costs for anticipated staff reductions, additional
income taxes related to the recapture of savings and loan bad debt
reserves, and other one-time costs directly related to the Merger. The
effect of the anticipated restructuring charge has been reflected in the
pro forma combined condensed statement of condition; however, since the
anticipated restructuring charge is nonrecurring, it has not been reflected
in the pro forma combined condensed statements of income
(c) To reflect the purchase, in the open market, of 1,404,180 shares of Regions
Common Stock, at $40.625 per share, to be reissued in the Metro
Acquisition, the First Federal Acquisition, and the First Gwinnett
Acquisition.
(d) To reflect the elimination of the capital accounts of Enterprise, Metro,
First Federal and First Gwinnett in accordance with purchase accounting,
and corresponding exchange of 1,429,951 shares of Regions Common Stock and
$8,474,000 for all the outstanding shares of Enterprise, Metro, First
Federal and First Gwinnett common stock, assuming a market price of $40.625
per share for Regions Common Stock.
54
<PAGE> 66
The Regions Common Stock exchanged is reflected as being issued from
treasury stock. Approximately $27.6 million of excess purchase price will
be added as a result of these transactions and is expected to be amortized
over 18 years.
(e) To reflect the issuance of 844,991 shares of Regions Common Stock to effect
the Delta Acquisition. The Delta Acquisition will be accounted for as a
pooling of interests, therefore the effect upon stockholders' equity will
be to increase Regions stockholders' equity by the total equity of Delta.
The unaudited pro forma financial statements have been prepared assuming
Regions will issue 844,991 shares of Regions Common Stock in exchange for
all the outstanding shares of Delta common stock. A reclassification from
common stock to surplus results from the issuance of the shares.
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR REGIONS AND FIRST NATIONAL
(UNAUDITED)
The following unaudited pro forma combined condensed statements of income
have been prepared for the nine months ended September 30, 1995, and for each of
the three years in the period ended December 31, 1994, and give effect to the
Merger, assuming such acquisition is accounted for as a pooling of interests.
The unaudited pro forma combined condensed statements of income should be read
in conjunction with the historical consolidated financial statements of Regions
and the restated historical consolidated financial statements of First National,
including the respective notes thereto, which are incorporated by reference in
this Joint Proxy Statement, and the unaudited consolidated historical and other
pro forma financial information, including the notes thereto, appearing
elsewhere in this Joint Proxy Statement and included in Regions' Current Report
on Form 8-K dated November 22, 1995. See "Documents Incorporated by Reference,"
"Summary -- Comparative Per Share Data," and "-- Summary Pro Forma Financial
Data." The effect of an anticipated restructuring charge (estimated for purposes
of the pro forma financial statements at $5.6 million net of taxes) to be taken
by First National in connection with the Merger has been reflected in the pro
forma combined condensed statement of condition; however, since the anticipated
restructuring charge is nonrecurring, it has not been reflected in the pro forma
combined condensed statements of income. The pro forma financial data does not
give effect to anticipated reductions in expenses at First National in
connection with the Merger. The pro forma combined condensed statements of
income are not necessarily indicative of the results that actually would have
occurred if the Merger been consummated at the dates indicated or which may be
obtained in the future.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
1995 1994 1993 1992
-------------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income..................... $937,180 $ 991,693 $746,544 $737,094
Total interest expense.................... 472,106 436,157 296,195 324,420
-------------- ---------- -------- --------
Net interest income....................... 465,074 555,536 450,349 412,674
Provision for loan losses................. 17,275 20,580 24,695 39,367
-------------- ---------- -------- --------
Net interest income after loan loss
provision............................ 447,799 534,956 425,654 373,307
Total noninterest income.................. 139,226 171,520 165,066 150,360
Total noninterest expense................. 355,734 441,847 378,047 343,279
Income tax expense........................ 77,339 84,109 67,153 56,405
-------------- ---------- -------- --------
Income before cumulative effect of change
in accounting principle................ $153,952 $ 180,520 $145,520 $123,983
========== ========= ======== ========
Income before cumulative effect of change
in accounting principle per share...... $ 2.49 $ 3.10 $ 2.79 $ 2.42
========== ========= ======== ========
Average common shares outstanding......... 61,765 58,206 52,153 51,204
</TABLE>
55
<PAGE> 67
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR REGIONS, FIRST NATIONAL,
AND OTHER PENDING ACQUISITIONS
(UNAUDITED)
The following unaudited pro forma combined condensed statements of income
have been prepared for the nine months ended September 30, 1995, and for each of
the three years in the period ended December 31, 1994, and give effect to the
Merger, assuming such acquisition is accounted for as a pooling of interests,
and the Other Pending Acquisitions, assuming such acquisitions are treated as
purchases for accounting purposes. The unaudited pro forma combined condensed
statements of income should be read in conjunction with the historical
consolidated financial statements of Regions and the restated historical
consolidated financial statements of First National, including the respective
notes thereto, which are incorporated by reference in this Joint Proxy
Statement, and the unaudited consolidated historical and other pro forma
financial information, including the notes thereto, appearing elsewhere in this
Joint Proxy Statement and included in Regions' current Report on Form 8-K dated
November 22, 1995. See "Documents Incorporated by Reference,"
"Summary -- Comparative Per Share Data," and "-- Summary Pro Forma Financial
Data." The effect of an anticipated restructuring charge (estimated for purposes
of the pro forma financial statements at $5.6 million net of taxes) to be taken
by First National in connection with the Merger has been reflected in the pro
forma combined condensed statement of income; however, since the anticipated
restructuring charge is nonrecurring, it has not been reflected in the pro forma
combined condensed statements of income. The pro forma financial data does not
give effect to anticipated reductions in expenses at First National in
connection with the Merger. The pro forma combined condensed statements of
income are not necessarily indicative of the results that actually would have
occurred if the Merger been consummated at the dates indicated or which may be
obtained in the future.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------------------
1995 1994 1993 1992
-------------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income..................... $968,527 $1,027,388 $760,157 $748,414
Total interest expense.................... 488,041 451,868 300,143 328,421
-------------- ---------- -------- --------
Net interest income....................... 480,486 575,520 460,014 419,993
Provision for loan losses................. 17,670 21,349 25,315 39,937
-------------- ---------- -------- --------
Net interest income after loan loss
provision............................ 462,816 554,171 434,699 380,056
Total noninterest income.................. 143,483 176,061 167,164 151,843
Total noninterest expense................. 372,044 463,570 387,234 349,006
Income tax expense........................ 78,446 84,922 67,690 57,116
-------------- ---------- -------- --------
Income before cumulative effect of change
in accounting principle and
extraordinary item..................... $155,809 $ 181,740 $146,939 $125,777
========== ========= ======== ========
Income before cumulative effect of change
in accounting principle and
extraordinary item per share........... $ 2.49 $ 3.08 $ 2.77 $ 2.42
========== ========= ======== ========
Average common shares outstanding......... 62,610 59,051 52,998 52,049
</TABLE>
56
<PAGE> 68
CERTAIN REGULATORY CONSIDERATIONS
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 and First National. Additional
information is available in the respective Annual Reports on Form 10-K for the
fiscal year ended December 31, 1994 of Regions and First National. See
"Documents Incorporated by Reference."
GENERAL
Regions and First National are both bank holding companies registered with
the Federal Reserve under the BHC Act. As such, Regions and First National and
their non-bank subsidiaries are subject to the supervision, examination, and
reporting requirements of the BHC Act and the regulations of the Federal
Reserve. In addition, as savings and loan holding companies, Regions and First
National are also registered with the OTS and are subject to regulation,
supervision, examination, and reporting requirements of the OTS.
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 any bank; or (iii) it may merge or consolidate with any other bank
holding company. Similar federal statutes require savings and loan holding
companies and other companies to obtain the prior approval of the OTS before
acquiring direct or indirect ownership or control of a savings association.
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, which is discussed below.
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"), which became effective on September 29, 1995,
repealed the prior statutory restrictions on interstate acquisitions of banks by
bank holding companies, such that Regions, First National, and any other bank
holding company located in either Alabama or Georgia may now acquire a bank
located in any other state, and any bank holding company located outside Alabama
or Georgia may lawfully acquire any Alabama- or Georgia-based bank, regardless
of state law to the contrary, in either case subject to certain
deposit-percentage, aging requirements, and other restrictions. The Interstate
Banking Act also generally provides that, after June 1, 1997, national and
state-chartered banks may branch interstate through acquisitions of banks in
other states. By adopting legislation prior to that date, a state has the
ability either to "opt in" and accelerate the date after which interstate
branching is permissible or "opt out" and prohibit interstate branching
altogether. As of the date of this Joint Proxy Statement, neither Alabama,
Georgia, nor any other state in which the banking subsidiaries of Regions or
First National are located have "opted in" or "opted out." Assuming no state
action prior to June 1, 1997, Regions would be able to consolidate all of its
bank subsidiaries into a single bank with interstate branches following that
date.
The BHC Act generally prohibits Regions and First National 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
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<PAGE> 69
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 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 banking and thrift subsidiaries of Regions and First National
is a member of the Federal Deposit Insurance Corporation (the "FDIC"), and as
such, its deposits are insured by the FDIC to the maximum extent provided by
law. Each such subsidiary 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.
All of Regions' bank subsidiaries, as well as those banking subsidiaries of
First National that are also state-chartered banks that are not members of the
Federal Reserve System, are subject to regulation, supervision, and examination
by the FDIC and the state banking authorities of the states in which they are
located. The state-chartered banking subsidiaries of First National that are
members of the Federal Reserve System are subject to regulation, supervision,
and examination by the Federal Reserve, the FDIC, and the state banking
authorities of the states in which they are located. The banking subsidiaries of
First National that are national banking associations are subject to regulation,
supervision, and examination by the Office of the Comptroller of the Currency
("OCC") and the FDIC. The thrift subsidiaries of Regions and First National are
subject to regulation, supervision, and examination by the OTS and the FDIC. The
federal banking regulator for each of the banking and thrift subsidiaries of
Regions and First National, as well as the appropriate state banking authorities
in the case of those depository institution subsidiaries that are state-
chartered, regularly examine the operations of each of the banking and thrift
subsidiaries of Regions and First National and are given authority to approve or
disapprove mergers, consolidations, the establishment of branches, and similar
corporate actions. The federal and state banking regulators also have the power
to prevent the continuance or development of unsafe or unsound banking practices
or other violations of law.
PAYMENT OF DIVIDENDS
Regions and First National are legal entities separate and distinct from
their banking, thrift, and other subsidiaries. The principal sources of cash
flow of both Regions and First National, including cash flow to pay dividends to
their respective stockholders, are dividends from their banking and thrift
subsidiaries. There are statutory and regulatory limitations on the payment of
dividends by these depository institution subsidiaries to Regions and First
National, as well as by Regions and First National to their stockholders.
All of Regions' banking subsidiaries, as well as those banking subsidiaries
of First National that are also state-chartered banks, are subject to the
respective laws and regulations of the states of Alabama, Florida, Georgia,
Louisiana, and Tennessee as to the payment of dividends. Each national banking
association subsidiary of First National is required by federal law to obtain
the prior approval of the OCC for the payment of dividends if the total of all
dividends declared by the bank in any year would exceed the total of (i) such
bank's net profits (as defined and interpreted by regulation) for that year,
plus (ii) the retained net profits (as defined and interpreted by regulation)
for the proceeding two years, less any required transfers to surplus. In
addition, national banks may only pay dividends to the extent that their
retained net profits (including the portion transferred to surplus) exceed
statutory bad debts (as defined by regulation).
If, in the opinion of the federal banking regulator, a bank or thrift 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 depository
institution, could include the payment of dividends), such authority may
require, after notice and
58
<PAGE> 70
hearing, that such institution cease and desist from such practice. The federal
banking agencies have indicated that paying dividends that deplete a depository
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"), a depository institution may not pay any dividend if
payment would cause it to become undercapitalized or if it already is
undercapitalized. See "-- Prompt Corrective Action." Moreover, the federal
agencies have issued policy statements that provide that bank holding companies
and insured banks should generally only pay dividends out of current operating
earnings.
At September 30, 1995, under dividend restrictions imposed under federal
and state laws, the banking and thrift subsidiaries of Regions and First
National, without obtaining governmental approvals, could declare aggregate
dividends to Regions and First National of approximately $264 million and $25.6
million, respectively.
The payment of dividends by Regions and First National and their banking
and thrift Subsidiaries may also be affected or limited by other factors, such
as the requirement to maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Regions, First National, and their respective banking and thrift
subsidiaries are required to comply with the capital adequacy standards
established by the Federal Reserve in the case of Regions and First National and
the appropriate federal banking regulator in the case of each of their banking
and thrift subsidiaries. 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 (the "Risk-Based Capital 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 Total Capital must comprise 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 ("Tier 2 Capital"). At September 30, 1995, Regions'
consolidated Risk-Based Capital Ratio and its Tier 1 Risk-Based Capital Ratio
(i.e., the ratio of Tier 1 Capital to risk-weighted assets) were 14.28% and
10.82%, respectively, and First National's consolidated Risk-Based Capital and
Tier 1 Risk-Based Capital Ratios were 15.62% and 14.37%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, 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' and First National's respective Leverage Ratios at September 30, 1995,
were 7.25% and 9.78%. 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.
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Each of Regions' and First National's banking and thrift subsidiaries is
subject to risk-based and leverage capital requirements adopted by its federal
banking regulator, which are substantially similar to those adopted by the
Federal Reserve for bank holding companies. Each of the banking and thrift
subsidiaries was in compliance with applicable minimum capital requirements as
of September 30, 1995. Neither Regions, First National, nor any of their banking
and thrift subsidiaries 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 (or thrift) to a
variety of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As described
below, substantial additional restrictions can be imposed upon FDIC-insured
depository institutions that fail to meet applicable capital requirements. See
"-- Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the OCC, and the FDIC have,
pursuant to FDICIA, proposed an amendment to the risk-based capital standards
that would calculate the change in an institution's net economic value
attributable to increases and decreases in market interest rates and would
require banks with excessive interest rate risk exposure to hold additional
amounts of capital against such exposures. The OTS has already included an
interest-rate risk component in its risk-based capital guidelines for savings
associations that it regulates.
SUPPORT OF SUBSIDIARY BANKS
Under Federal Reserve policy, Regions and First National are expected to
act as sources of financial strength for, and to commit resources to support,
each of their respective banking subsidiaries. This support may be required at
times when, absent such Federal Reserve policy, Regions or First National may
not be inclined to provide it. In addition, any capital loans by a bank holding
company to any of its banking subsidiaries are subordinate in right of payment
to deposits and to certain other indebtedness of such banks. 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 banking subsidiary
will be assumed by the bankruptcy trustee and entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("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. The FDIC's
claim for damages is superior to claims of stockholders of the insured
depository institution or its holding company, but is subordinate to claims of
depositors, secured creditors, and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institution. The
banking and thrift subsidiaries of Regions and First National are subject to
these cross-guarantee provisions. As a result, any loss suffered by the FDIC in
respect of any of these subsidiaries would likely result in assertion of the
cross-guarantee provisions, the assessment of such estimated losses against the
banks' or the thrifts' depository institution affiliates, and a potential loss
of Regions' or First National's respective investments in such other banking and
thrift subsidiaries.
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
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institution is placed. Generally, subject to a narrow exception, 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 Risk-Based Capital Ratio of 10% or
greater, a Tier 1 Risk-Based 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 Risk-Based Capital Ratio of 8.0% or greater, a Tier 1
Risk-Based 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 Risk-Based Capital Ratio of less than 8.0%, a Tier 1 Risk-Based
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
Risk-Based Capital Ratio of less than 6.0%, a Tier 1 Risk-Based 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.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized 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 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 significantly undercapitalized or
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
non-bank 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.
At September 30, 1995, all of the banking and thrift subsidiaries of
Regions and First National had the requisite capital levels to qualify as well
capitalized.
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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 replaced 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 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 members of both the Bank
Insurance Fund ("BIF") and the SAIF for the first half of 1995, as they had been
during 1994, ranged from 23 basis points (0.23% of deposits) for an institution
in the highest category (i.e., "well capitalized" and "healthy") to 31 basis
points (0.31% of deposits) for an institution in the lowest category (i.e.,
"undercapitalized" and "substantial supervisory concern"). These rates were
established for both funds to achieve a designated ratio of reserves to insured
deposits (i.e., 1.25%) within a specified period of time.
Once the designated ratio for the BIF was reached, which appears to have
occurred some time during May 1995, the FDIC was authorized to reduce the
minimum assessment rate below 23 basis points and to set future assessment rates
at such levels that would maintain a fund's reserve ratio at the designated
level. In August 1995, the FDIC adopted final regulations reducing the
assessment rates for BIF-member banks. Under the revised schedule, BIF-member
banks, starting with the second half of 1995, will now pay assessments ranging
from 4.0 basis points to 31 basis points, with an average assessment rate of 4.5
basis points. Refunds, with interest, will be paid for assessments for the
month(s) after the month in which the designated reserve ratio for the BIF was
reached, as well as for the quarterly payment made on September 30, 1995,
assuming that the designated reserve ratio was achieved prior to June 30, 1995.
At the same time, the FDIC elected to retain the existing assessment rate of 23
to 31 basis points for SAIF members for the foreseeable future given the
undercapitalized nature of that insurance fund. More recently, on November 14,
1995, the FDIC announced that, beginning in 1996, it would further reduce the
deposit insurance premiums for 92% of all BIF members that are in the highest
capital and supervisory categories to $2,000 per year, regardless of deposit
size.
On July 28, 1995, the FDIC, the Treasury Department, and the OTS released
statements outlining a proposed plan to recapitalize the SAIF certain features
of which were subsequently agreed upon by members of the Banking Committees of
the U.S. House of Representatives and the Senate on November 7, 1995 in
negotiations to reconcile differences in bills on the issue that had been
introduced or partially adopted by each body. Under the agreement, all
SAIF-member institutions will pay a special assessment to the SAIF of
approximately 80 basis points, the amount that would enable the SAIF to attain
its designated reserve ratio of 1.25%. The special assessment would be payable
on January 1, 1996, based on the amount of deposits held as of March 31, 1995.
BIF-insured institutions holding SAIF-assessed deposits would receive a 20%
reduction in the assessment rate and would pay a one-time assessment of 64 basis
points. The agreement also provides that the assessment base for the bonds
issued in the late 1980s by the Financing Corporation to recapitalize the now
defunct Federal Savings and Loan Insurance Corporation would be expanded to
include deposits of both BIF- and SAIF-insured institutions, with BIF members
paying approximately 75% of the interest on such obligations. The committee
members further agreed that the BIF and SAIF should be merged on January 1,
1998, with such merger being conditioned upon the prior elimination of the
thrift charter. At this time, neither Regions nor First National is able to
predict the timing or exact amount of any SAIF special assessment that might be
required. However, if an 80 basis point assessment were levied against the
existing SAIF deposits of
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Regions and First National, the aggregate SAIF assessments of Regions and First
National (on a pre-tax basis) would be approximately $24 million and $
million, respectively.
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.
SAFETY AND SOUNDNESS STANDARDS
The FDIA, as amended by FDICIA and the Riegle Community Development and
Regulatory Improvement Act of 1994, requires the federal bank regulatory
agencies to prescribe standards, by regulations or guidelines, relating to
internal controls, information systems and internal audit systems, loan
documentation, credit underwriting, interest rate risk exposure, asset growth,
asset quality, earnings, stock valuation and compensation, fees and benefits,
and such other operational and managerial standards as the agencies deem
appropriate. The federal bank regulatory agencies have adopted, effective August
9, 1995, a set of guidelines prescribing safety and soundness standards pursuant
to FDICIA, as amended. The guidelines establish general standards relating to
internal controls and information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth and
compensation, fees, and benefits. In general, the guidelines require, among
other things, appropriate systems and practices to identify and manage the risks
and exposures specified in the guidelines. The guidelines prohibit excessive
compensation as an unsafe and unsound practice and describe compensation as
excessive when the amounts paid are unreasonable or disproportionate to the
services performed by an executive officer, employee, director, or principal
stockholders. The federal banking agencies determined that stock valuation
standards were not appropriate. In addition, the agencies adopted regulations
that authorize, but do not require, an agency to order an institution that has
been given notice by an agency that it is not satisfying any of such safety and
soundness standards to submit a compliance plan. If, after being so notified, an
institution fails to submit an acceptable compliance plan or fails in any
material respect to implement an accepted compliance plan or fails in any
material respect to implement an accepted compliance plan, the agency must issue
an order directing action to correct the deficiency and may issue an order
directing other actions of the types to which an undercapitalized association is
subject under the "prompt correction action" provisions of FDICIA. See
"-- Prompt Corrective Act." If an institution fails to comply with such an
order, the agency may seek to enforce such order in judicial proceedings and to
impose civil money penalties. The federal bank regulatory agencies also proposed
guidelines for asset quality and earnings standards.
DEPOSITOR PREFERENCE
The Omnibus Budget Reconciliation Act of 1993 provides that deposits and
certain claims for administrative expenses and employee compensation against an
insured depository institution would be afforded a priority over other general
unsecured claims against such an institution in the "liquidation or other
resolution" of such an institution by any receiver.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 120,000,000 shares of Regions Common Stock,
of which shares were issued, including treasury shares, as
of the Regions Record Date. 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. The ability of Regions to pay dividends is affected
by the ability of its subsidiary depository institutions to pay dividends, which
is limited by applicable regulatory requirements and capital guidelines. At
September 30, 1995, under such requirements and guidelines, Regions subsidiary
depository institutions had $264 million of undivided profits legally available
for the payment of dividends. See "Certain Regulatory Considerations -- Payment
of Dividends."
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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 1997. 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 the date specified in Regions' 1996
annual meeting proxy statement.
EXPERTS
The consolidated financial statements of First National as of December 31,
1994 and 1993, and for each of the years in the three-year period ended December
31, 1994, incorporated by reference herein and in the Registration Statement by
reference to First National's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, have been incorporated by reference herein in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
covering the December 31, 1994 consolidated financial statements refers to a
change in the accounting for investment securities at December 31, 1993 to adopt
the provisions of Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," refers to a
change in the accounting for income taxes in 1993 to adopt the provisions of
SFAS No. 109, "Accounting for Income Taxes," and also refers to a change in the
accounting for postretirement benefits other than pensions in 1993 to adopt the
provisions of SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions."
The restated consolidated financial statements of First National as of
December 31, 1994 and 1993, and for each of the years in the three-year period
ended December 31, 1994 (giving effect to the acquisition of FF Bancorp,
accounted for as a pooling of interests), incorporated by reference herein and
in the Registration Statement by reference to First National's Current Report on
Form 8-K dated November 21, 1995, have been incorporated by reference herein in
reliance upon the reports of KPMG Peat Marwick LLP and Hacker, Johnson, Cohen &
Grieb, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firms as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP covering the December 31, 1994
restated consolidated financial statements refers to a change in the accounting
for investment securities at December 31, 1993 to adopt the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," refers to a change in the
accounting for income taxes in 1993 to adopt the provisions of SFAS No. 109,
"Accounting for Income Taxes," and also refers to a change in the accounting for
postretirement benefits other than pensions in 1993 to adopt the provisions of
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions."
The consolidated financial statements of Regions, incorporated by reference
in Regions Annual Report (Form 10-K) for the year ended December 31, 1994, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon incorporated by reference therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm 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, a partner in the law firm of Lange, Simpson, Robinson
& Somerville, is a member of the Board of Directors of Regions. As of November
22, 1995, attorneys in the law firm of Lange, Simpson, Robinson & Somerville
owned an aggregate of 118,595 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 I
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
FIRST NATIONAL BANCORP
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF OCTOBER 22, 1995
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<PAGE> 78
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
Parties................................................................................. I-6
Preamble................................................................................ I-6
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER....................................... I-6
1.1 Merger................................................................. I-6
1.2 Time and Place of Closing.............................................. I-6
1.3 Effective Time......................................................... I-7
1.4 Execution of Stock Option Agreement.................................... I-7
ARTICLE 2 -- TERMS OF MERGER........................................................ I-7
2.1 Charter................................................................ I-7
2.2 Bylaws................................................................. I-7
ARTICLE 3 -- MANNER OF CONVERTING SHARES............................................ I-7
3.1 Conversion of Shares................................................... I-7
3.2 Anti-Dilution Provisions............................................... I-7
3.3 Shares Held by First National or Regions............................... I-7
3.4 Fractional Shares...................................................... I-8
3.5 Conversion of Stock Rights............................................. I-8
ARTICLE 4 -- EXCHANGE OF SHARES..................................................... I-9
4.1 Exchange Procedures.................................................... I-9
4.2 Rights of Former First National Stockholders........................... I-9
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF FIRST NATIONAL....................... I-10
5.1 Organization, Standing, and Power...................................... I-10
5.2 Authority; No Breach By Agreement...................................... I-10
5.3 Capital Stock.......................................................... I-11
5.4 First National Subsidiaries............................................ I-11
5.5 SEC Filings; Financial Statements...................................... I-11
5.6 Absence of Undisclosed Liabilities..................................... I-12
5.7 Absence of Certain Changes or Events................................... I-12
5.8 Tax Matters............................................................ I-12
5.9 Assets................................................................. I-13
5.10 Environmental Matters.................................................. I-13
5.11 Compliance with Laws................................................... I-14
5.12 Labor Relations........................................................ I-14
5.13 Employee Benefit Plans................................................. I-14
5.14 Material Contracts..................................................... I-16
5.15 Legal Proceedings...................................................... I-16
5.16 Reports................................................................ I-16
5.17 Statements True and Correct............................................ I-17
5.18 Accounting, Tax, and Regulatory Matters................................ I-17
5.19 State Takeover Laws.................................................... I-17
5.20 Charter Provisions..................................................... I-17
5.21 Derivatives Contracts.................................................. I-17
</TABLE>
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<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS.............................. I-17
6.1 Organization, Standing, and Power...................................... I-17
6.2 Authority; No Breach By Agreement...................................... I-18
6.3 Capital Stock.......................................................... I-18
6.4 Regions Subsidiaries................................................... I-18
6.5 SEC Filings; Financial Statements...................................... I-19
6.6 Absence of Undisclosed Liabilities..................................... I-19
6.7 Absence of Certain Changes or Events................................... I-19
6.8 Tax Matters............................................................ I-20
6.9 Environmental Matters.................................................. I-20
6.10 Compliance with Laws................................................... I-20
6.11 Legal Proceedings...................................................... I-21
6.12 Reports................................................................ I-21
6.13 Statements True and Correct............................................ I-21
6.14 Accounting, Tax, and Regulatory Matters................................ I-21
ARTICLE 7.. -- CONDUCT OF BUSINESS PENDING CONSUMMATION............................... I-22
7.1 Affirmative Covenants of First National................................ I-22
7.2 Negative Covenants of First National................................... I-22
7.3 Covenants of Regions................................................... I-23
7.4 Adverse Changes in Condition........................................... I-24
7.5 Reports................................................................ I-24
ARTICLE 8.. -- ADDITIONAL AGREEMENTS.................................................. I-24
8.1 Registration Statement; Joint Proxy Statement; Stockholder Approvals... I-24
8.2 Exchange Listing....................................................... I-24
8.3 Applications........................................................... I-25
8.4 Filings with State Offices............................................. I-25
8.5 Agreement as to Efforts to Consummate.................................. I-25
8.6 Investigation and Confidentiality...................................... I-25
8.7 Press Releases......................................................... I-25
8.8 Certain Actions........................................................ I-25
8.9 Accounting and Tax Treatment........................................... I-26
8.10 State Takeover Laws.................................................... I-26
8.11 Charter Provisions..................................................... I-26
8.12 Agreement of Affiliates................................................ I-26
8.13 Employee Benefits and Contracts........................................ I-26
8.14 Indemnification........................................................ I-27
8.15 Certain Modifications.................................................. I-27
8.16 Regions Merger Subsidiary Organization................................. I-27
ARTICLE 9.. -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE...................... I-28
9.1 Conditions to Obligations of Each Party................................ I-28
9.2 Conditions to Obligations of Regions................................... I-29
9.3 Conditions to Obligations of First National............................ I-29
ARTICLE 10 -- TERMINATION............................................................ I-30
10.1 Termination............................................................ I-30
10.2 Effect of Termination.................................................. I-32
10.3 Non-Survival of Representations and Covenants.......................... I-32
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C> <C>
ARTICLE 11 -- MISCELLANEOUS.......................................................... I-33
11.1 Definitions............................................................ I-33
11.2 Expenses............................................................... I-38
11.3 Brokers and Finders.................................................... I-38
11.4 Entire Agreement....................................................... I-39
11.5 Amendments............................................................. I-39
11.6 Waivers................................................................ I-39
11.7 Assignment............................................................. I-39
11.8 Notices................................................................ I-39
11.9 Governing Law.......................................................... I-40
11.10 Counterparts........................................................... I-40
11.11 Captions............................................................... I-40
11.12 Interpretations........................................................ I-40
11.13 Enforcement of Agreement............................................... I-41
11.14 Severability........................................................... I-41
Signatures.............................................................................. I-41
</TABLE>
I-4
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------------------------------------
<C> <S>
1. Form of Stock Option Agreement. (sec. 1.4).
2. Form of Plan of Merger. (sec. 1.1).
3. Form of Affiliate Agreement.
(sec.sec.8.13, 9.2(e))
</TABLE>
I-5
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of October 22, 1995, by and between FIRST NATIONAL BANCORP
("First National"), a corporation organized and existing under the laws of the
State of Georgia, with its principal office located in Gainesville, Georgia; and
REGIONS FINANCIAL CORPORATION ("Regions"), a corporation organized and existing
under the laws of the State of Delaware, with its principal office located in
Birmingham, Alabama.
PREAMBLE
The Boards of Directors of First National and Regions are of the opinion
that the transactions described herein are in the best interests of the parties
to this Agreement and their respective stockholders. This Agreement provides for
the acquisition of First National by Regions pursuant to the merger of First
National with and into a wholly owned subsidiary of Regions to be organized
under the laws of the State of Georgia ("Regions Merger Subsidiary"). At the
effective time of such merger, the outstanding shares of the capital stock of
First National shall be converted into shares of the common stock of Regions
(except as provided herein). As a result, stockholders of First National shall
become stockholders of Regions and Regions Merger Subsidiary shall continue to
conduct the business and operations of First National as a wholly owned
subsidiary of Regions. The transactions described in this Agreement are subject
to the approvals of the stockholders of First National, the stockholders of
Regions, the Board of Governors of the Federal Reserve System, the Office of
Thrift Supervision, the Georgia Department of Banking and Finance, and the
Florida Department of Banking and Finance, 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, and for accounting purposes shall qualify for treatment as a pooling of
interests.
Immediately after the execution and delivery of this Agreement, as a
condition and inducement to Regions' willingness to enter into this Agreement,
First National and Regions are entering into a stock option agreement (the
"Stock Option Agreement"), in substantially the form of Exhibit 1, pursuant to
which First National is granting to Regions an option to purchase shares of
First National common stock.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the Parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, First National shall be merged with and into Regions Merger
Subsidiary in accordance with the provisions of Section 14-2-1101 of the GBCC
and with the effect provided in Section 14-2-1106 of the GBCC (the "Merger").
Regions Merger Subsidiary shall be the Surviving Corporation resulting from the
Merger and shall continue to be governed by the Laws of the State of Georgia.
The Merger shall be consummated pursuant to the terms of this Agreement, which
has been approved and adopted by the respective Boards of Directors of First
National and Regions, and the Plan of Merger, in substantially the form of
Exhibit 2, which has been approved and adopted by the Board of Directors of
First National and will be approved and adopted by the Board of Directors of
Regions Merger Subsidiary upon its organization.
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 such location as
may be mutually agreed upon by the Parties.
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1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by
this Agreement shall become effective on the date and at the time the Georgia
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Georgia (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 or before the tenth business day (as designated by Regions)
following 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 stockholders of Regions and First National approve the
matters relating to this Agreement and the Plan of Merger required to be
approved by such stockholders by applicable Law.
1.4 EXECUTION OF STOCK OPTION AGREEMENT. Immediately after the execution
of this Agreement and as a condition thereto, First National is executing and
delivering to Regions the Stock Option Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Articles of Incorporation of Regions Merger Subsidiary
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Regions Merger Subsidiary in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
until otherwise amended or repealed.
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 Regions or First National, or the stockholders of either of the foregoing,
the shares of the constituent corporations shall be converted as follows:
(a) Each share of Regions 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 Regions Merger Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(c) Each share of First National Common Stock (excluding shares held
by any First National Company or any Regions Company, in each case other
than in a fiduciary capacity or as a result of debts previously contracted)
issued and outstanding at the Effective Time shall cease to be outstanding
and shall be converted into and exchanged for .76 of a share of Regions
Common Stock (subject to adjustment pursuant to Section 10.1(h) of this
Agreement, the "Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event Regions changes the number of
shares of Regions Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, or similar recapitalization
with respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY FIRST NATIONAL OR REGIONS. Each of the shares of First
National Common Stock held by any First National Company or by any Regions
Company, in each case other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
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3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of First National Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of Regions 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
Regions Common Stock multiplied by the market value of one share of Regions
Common Stock at the Effective Time. The market value of one share of Regions
Common Stock at the Effective Time shall be the closing price of such common
stock on the Nasdaq NMS (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Regions) on the
last trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a stockholder in respect of
any fractional shares.
3.5 CONVERSION OF STOCK RIGHTS. (a) At the Effective Time, each award,
option, or other right to purchase or acquire shares of First National Common
Stock pursuant to stock options, stock appreciation rights, or stock awards
("First National Rights") granted by First National under the First National
Stock Plans, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to Regions
Common Stock, and Regions shall assume each First National Right, in accordance
with the terms of the First National Stock Plan and stock option agreement by
which it is evidenced, except that from and after the Effective Time, (i)
Regions and its Compensation Committee shall be substituted for First National
and the Committee of First National's Board of Directors (including, if
applicable, the entire Board of Directors of First National) administering such
First National Stock Plan, (ii) each First National Right assumed by Regions may
be exercised solely for shares of Regions Common Stock (or cash in the case of
stock appreciation rights), (iii) the number of shares of Regions Common Stock
subject to such First National Right shall be equal to the number of shares of
First National Common Stock subject to such First National Right immediately
prior to the Effective Time multiplied by the Exchange Ratio, and (iv) the per
share exercise price (or similar threshold price, in the case of stock awards)
under each such First National Right shall be adjusted by dividing the per share
exercise (or threshold) price under each such First National Right by the
Exchange Ratio and rounding up to the nearest cent. Notwithstanding the
provisions of clause (iii) of the preceding sentence, Regions shall not be
obligated to issue any fraction of a share of Regions Common Stock upon exercise
of First National Rights and any fraction of a share of Regions Common Stock
that otherwise would be subject to a converted First National Right shall
represent the right to receive a cash payment equal to the product of such
fraction and the difference between the market value of one share of Regions
Common Stock and the per share exercise price of such Right. The market value of
one share of Regions Common Stock shall be the closing price of such common
stock on the Nasdaq NMS (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Regions) on the
last trading day preceding the Effective Time. In addition, notwithstanding the
provisions of clauses (iii) and (iv) of the first sentence of this Section 3.5,
each First National Right which is an "incentive stock option" shall be adjusted
as required by Section 424 of the Internal Revenue Code, and the regulations
promulgated thereunder, so as not to constitute a modification, extension, or
renewal of the option, within the meaning of Section 424(h) of the Internal
Revenue Code. Regions agrees to take all necessary steps to effectuate the
foregoing provisions of this Section 3.5.
(b) As soon as reasonably practicable after the Effective Time, Regions
shall deliver to the participants in each First National Stock Plan an
appropriate notice setting forth such participant's rights pursuant thereto and
the grants pursuant to such First National Stock Plan shall continue in effect
on the same terms and conditions (subject to the adjustments required by Section
3.5(a) after giving effect to the Merger), and Regions shall comply with the
terms of each First National Stock Plan to ensure, to the extent required by,
and subject to the provisions of, such First National Stock Plan, that First
National Rights which qualified as incentive stock options prior to the
Effective Time continue to qualify as incentive stock options after the
Effective Time. At or prior to the Effective Time, Regions shall take all
corporate action necessary to reserve for issuance sufficient shares of Regions
Common Stock for delivery upon exercise of First National Rights assumed by it
in accordance with this Section 3.5. As soon as reasonably practicable after the
Effective Time, Regions shall file a registration statement on Form S-3 or Form
S-8, as the case may be (or any successor or other appropriate forms), with
respect to the shares of Regions Common Stock subject to such options and shall
use its reasonable efforts to maintain the effectiveness of such registration
statements (and maintain the
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current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, where applicable, Regions shall administer
the First National Stock Plan assumed pursuant to this Section 3.5 in a manner
that complies with Rule 16b-3 promulgated under the Exchange Act to the extent
the First National Stock Plan complied with such rule prior to the Merger.
(c) All restrictions or limitations on transfer with respect to First
National Common Stock awarded under the First National Stock Plans or any other
plan, program, or arrangement of any First National Company, to the extent that
such restrictions or limitations shall not have already lapsed, and except as
otherwise expressly provided in such plan, program, or arrangement, shall remain
in full force and effect with respect to shares of Regions Common Stock into
which such restricted stock is converted pursuant to Section 3.1 of this
Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Regions and
First National shall cause the exchange agent selected by Regions (the "Exchange
Agent") to mail to the former stockholders of First National appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
First National Common Stock shall pass, only upon proper delivery of such
certificates to the Exchange Agent). After the Effective Time, each holder of
shares of First National Common Stock (other than shares to be canceled pursuant
to Section 3.3 of this Agreement) issued and outstanding at the Effective Time
shall surrender the certificate or certificates representing such shares to the
Exchange Agent and shall promptly upon surrender thereof receive in exchange
therefor the consideration provided in Section 3.1 of this Agreement, together
with all undelivered dividends or distributions in respect of such shares
(without interest thereon) pursuant to Section 4.2 of this Agreement. To the
extent required by Section 3.4 of this Agreement, each holder of shares of First
National Common Stock issued and outstanding at the Effective Time also shall
receive, upon surrender of the certificate or certificates representing such
shares, cash in lieu of any fractional share of Regions Common Stock to which
such holder may be otherwise entitled (without interest). Regions shall not be
obligated to deliver the consideration to which any former holder of First
National Common Stock is entitled as a result of the Merger until such holder
surrenders such holder's certificate or certificates representing the shares of
First National Common Stock for exchange as provided in this Section 4.1. The
certificate or certificates of First National Common Stock so surrendered shall
be duly endorsed as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, neither the Surviving Corporation nor the Exchange
Agent shall be liable to a holder of First National Common Stock for any amounts
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property Law.
4.2 RIGHTS OF FORMER FIRST NATIONAL STOCKHOLDERS. At the Effective Time,
the stock transfer books of First National shall be closed as to holders of
First National Common Stock immediately prior to the Effective Time and no
transfer of First National Common Stock by any such holder shall thereafter be
made or recognized. Until surrendered for exchange in accordance with the
provisions of Section 4.1 of this Agreement, each certificate theretofore
representing shares of First National Common Stock (other than shares to be
canceled pursuant to Section 3.3 of this Agreement) shall from and after the
Effective Time represent for all purposes only the right to receive the
consideration provided in Sections 3.1 and 3.4 of this Agreement in exchange
therefor, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time which have been declared or made by First National in respect of
such shares of First National Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time. To the extent permitted
by Law, former stockholders of record of First National shall be entitled to
vote after the Effective Time at any meeting of Regions stockholders the number
of whole shares of Regions Common Stock into which their respective shares of
First National Common Stock are converted, regardless of whether such holders
have
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exchanged their certificates representing First National Common Stock for
certificates representing Regions Common Stock in accordance with the provisions
of this Agreement. 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 Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Agreement, but beginning
30 days after the Effective Time no dividend or other distribution payable to
the holders of record of Regions Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any certificate representing
shares of First National Common Stock issued and outstanding at the Effective
Time until such holder surrenders such certificate for exchange as provided in
Section 4.1 of this Agreement. However, upon surrender of such First National
Common Stock certificate, both the Regions Common Stock certificate (together
with all such undelivered dividends or other distributions without interest) and
any undelivered dividends and cash payments to be paid for fractional share
interests (without interest) shall be delivered and paid with respect to each
share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FIRST NATIONAL
Except as set forth in the First National Disclosure Memorandum, First
National hereby represents and warrants to Regions as follows:
5.1 ORGANIZATION, STANDING, AND POWER. First National is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Georgia, and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its material Assets.
First National is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First National.
5.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) First National has the
corporate power and authority necessary to execute, deliver, and perform its
obligations under this Agreement and the Plan of Merger and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and
performance of this Agreement and the Plan of Merger, as appropriate, and the
consummation of the transactions contemplated herein and therein, including the
Merger, have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of First National, subject to the approval of
this Agreement and the Plan of Merger by the holders of a majority of the
outstanding shares of First National Common Stock, which is the only stockholder
vote required for approval of this Agreement and the Plan of Merger and
consummation of the Merger by First National. Subject to such requisite
stockholder approval, this Agreement and the Plan of Merger represent legal,
valid, and binding obligations of First National, enforceable against First
National in accordance with their respective 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 or the Plan of
Merger by First National, nor the consummation by First National of the
transactions contemplated hereby or thereby, nor compliance by First National
with any of the provisions hereof or thereof, will (i) conflict with or result
in a breach of any provision of First National's Articles of Incorporation or
Bylaws, or, (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any First
National Company under, any Contract or Permit of any First National Company,
where such Default or Lien, or any failure to obtain such Consent, is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
First National, or, (iii) subject to receipt of the requisite Consents referred
to in
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Section 9.1(b) of this Agreement, violate any Law or Order applicable to any
First National 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 NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on First National, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by First National of the Merger and the other transactions
contemplated in this Agreement and the Plan of Merger.
5.3 CAPITAL STOCK. (a) The authorized capital stock of First National
consists of 30,000,000 shares of First National Common Stock, of which
20,548,917 shares are issued and outstanding as of the date of this Agreement
and not more than 21,001,539 shares will be issued and outstanding at the
Effective Time. All of the issued and outstanding shares of First National
Common Stock are duly and validly issued and outstanding and are fully paid and
nonassessable under the GBCC. None of the outstanding shares of First National
Common Stock has been issued in violation of any preemptive rights of the
current or past stockholders of First National.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as provided
pursuant to the Stock Option Agreement, there are no shares of capital stock or
other equity securities of First National outstanding and no outstanding Rights
relating to the capital stock of First National.
5.4 FIRST NATIONAL SUBSIDIARIES. First National has disclosed in Section
5.4 of the First National Disclosure Memorandum all of the First National
Subsidiaries as of the date of this Agreement. First National or one of its
Subsidiaries owns all of the issued and outstanding shares of capital stock of
each First National Subsidiary. No equity securities of any First National
Subsidiary are or may become required to be issued (other than to another First
National Company) by reason of any Rights, and there are no Contracts by which
any First National Subsidiary is bound to issue (other than to another First
National Company) additional shares of its capital stock or Rights or by which
any First National Company is or may be bound to transfer any shares of the
capital stock of any First National Subsidiary (other than to another First
National Company). There are no Contracts relating to the rights of any First
National Company to vote or to dispose of any shares of the capital stock of any
First National Subsidiary. All of the shares of capital stock of each First
National Subsidiary held by a First National Company are fully paid and
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the First National
Company free and clear of any Lien. Each First National Subsidiary is either a
bank or a corporation, and is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and authority necessary
for it to own, lease, and operate its Assets and to carry on its business as now
conducted. Each First National Subsidiary is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First National. Each First National 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 Savings Association
Insurance Fund.
5.5 SEC FILINGS; FINANCIAL STATEMENTS. (a) First National has filed and
made available to Regions all forms, reports, and documents required to be filed
by First National with the SEC since December 31, 1991 (collectively, the "First
National SEC Reports"). The First National SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated in
such First National SEC Reports or necessary in
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order to make the statements in such First National SEC Reports, in light of the
circumstances under which they were made, not misleading. Except for First
National Subsidiaries that are registered as a broker, dealer, or investment
advisor, none of First National's Subsidiaries is required to file any forms,
reports, or other documents with the SEC.
(b) Each of the First National Financial Statements (including, in each
case, any related notes) contained in the First National SEC Reports, including
any First National SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements,
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC),
and fairly presented the consolidated financial position of First National and
its Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. To the Knowledge of First
National, no First National Company has any Liabilities that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
First National, except Liabilities which are accrued or reserved against in the
consolidated balance sheets of First National as of June 30, 1995 included in
the First National Financial Statements or reflected in the notes thereto. No
First National Company has incurred or paid any Liability since June 30, 1995,
except for such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on First
National.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1995, (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
First National, and (ii) the First National Companies have not taken any action,
or failed to take any action, prior to the date of this Agreement, which action
or failure, if taken after the date of this Agreement, would represent or result
in a material breach or violation of any of the covenants and agreements of
First National provided in Article 7 of this Agreement.
5.8 TAX MATTERS. (a) All Tax Returns required to be filed by or on behalf
of any of the First National 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, 1994, 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, taken together, are not reasonably likely
to have a Material Adverse Effect on First National, and all Tax Returns filed
are complete and accurate in all material respects. All Taxes shown on filed Tax
Returns have been paid. There is no audit examination, deficiency, or refund
Litigation with respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on First National, except as reserved against in the First
National Financial Statements delivered prior to the date of this Agreement. All
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) None of the First National Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect.
(c) Adequate provision for any Taxes due or to become due for any of the
First National Companies for the period or periods through and including the
date of the respective First National Financial Statements has been made and is
reflected on such First National Financial Statements.
(d) Deferred Taxes of the First National Companies have been adequately
provided for in the First National Financial Statements.
(e) Each of the First National Companies is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements under federal, state, and local Tax Laws, and such
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records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First National.
(f) None of the First National Companies has made any payments, is
obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(g) There are no Liens with respect to Taxes upon any of the assets of the
First National Companies.
(h) There has not been an ownership change, as defined in Internal Revenue
Code Section 382(g), of the First National Companies that occurred during or
after any Taxable Period in which the First National Companies incurred a net
operating loss that carries over to any Taxable Period ending after December 31,
1994.
(i) No First National Company has filed any consent under Section 341(f) of
the Internal Revenue Code concerning collapsible corporations.
(j) All material elections with respect to Taxes affecting the First
National Companies as of the date of this Agreement have been or will be timely
made as set forth in Section 5.8 of the First National Disclosure Memorandum.
After the date hereof, no election with respect to Taxes will be made without
the prior written consent of Regions, which consent will not be unreasonably
withheld.
(k) No First National Company has or has had a permanent establishment in
any foreign country, as defined in any applicable tax treaty or convention
between the United States and such foreign country.
5.9 ASSETS. The First National Companies have good and marketable title,
free and clear of all Liens, to all of their respective Assets. All tangible
properties used in the businesses of the First National Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with First National's past practices. All Assets
which are material to First National's business on a consolidated basis, held
under leases or subleases by any of the First National Companies, are held under
valid Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other 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 proceedings may be brought), and each such
Contract is in full force and effect. The First National Companies currently
maintain insurance similar in amounts, scope, and coverage to that maintained by
other peer banking organizations. None of the First National Companies has
received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no claims pending under such policies of
insurance and no notices have been given by any First National Company under
such policies. The Assets of the First National Companies include all Assets
required to operate the business of the First National Companies as presently
conducted.
5.10 ENVIRONMENTAL MATTERS. (a) To the Knowledge of First National, each
First National Company, its Participation Facilities, and its Loan Properties
are, and have been, in compliance with all Environmental Laws, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First National.
(b) There is no Litigation pending, or, to the Knowledge of First National,
threatened before any court, governmental agency, or authority or other forum in
which any First National Company or any of its Loan Properties or Participation
Facilities (or any First National Company in respect of any such Loan Property
or Participation Facility) 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 any of its Loan Properties or
Participation Facilities, except for such
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Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First National.
(c) To the Knowledge of First National, there is no reasonable basis for
any Litigation of a type described in subsections (b) or (c), except such as is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on First National.
(d) To the Knowledge of First National, there have been no releases of
Hazardous Material in, on, under, or affecting any Participation Facility or
Loan Property of a First National Company, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
First National.
5.11 COMPLIANCE WITH LAWS. First National is duly registered as a bank
holding company under the BHC Act and as a savings and loan holding company
under the HOLA. Each First National 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, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First National, 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 First National.
None of the First National Companies:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First National; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any First National
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First National, (ii) threatening to
revoke any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First
National, or (iii) requiring any First National Company to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, 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.
5.12 LABOR RELATIONS. No First National Company is the subject of any
Litigation asserting that it or any other First National Company has committed
an unfair labor practice (within the meaning of the National Labor Relations Act
or comparable state law) or seeking to compel it or any other First National
Company to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving any First
National Company, pending or threatened, or to the Knowledge of First National,
is there any activity involving any First National Company's employees seeking
to certify a collective bargaining unit or engaging in any other organization
activity.
5.13 EMPLOYEE BENEFIT PLANS. (a) First National has disclosed in Section
5.13 of the First National Disclosure Memorandum, and has delivered or made
available to Regions prior to the execution of this Agreement copies in each
case of, all pension, retirement, profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus, or other
incentive plan, all other written employee programs, arrangements, or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including "employee benefit plans" as that term is defined in Section 3(3) of
ERISA, currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any First National Company or ERISA Affiliate (as defined
below) thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "First
National Benefit Plans"). Any of the First National Benefit Plans which is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, is referred to herein as a "First National ERISA Plan." Each First
National ERISA Plan which is also a "defined benefit plan" (as defined in
Section 414(j) of the Internal Revenue Code) is referred to herein
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as a "First National Pension Plan." No First National Pension Plan is or has
been a multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All First National Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on First National, and each First
National ERISA Plan which is intended to be qualified under Section 401(a) of
the Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and First National is not aware of any circumstances
likely to result in revocation of any such favorable determination letter. To
the Knowledge of First National, no First National Company has engaged in a
transaction with respect to any First National Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would subject
any First National Company to a Tax imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA in amounts which are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
First National.
(c) No First National Pension Plan has any "unfunded current liability," as
that term is defined in Section 302(d)(8)(A) of ERISA, and the fair market value
of the assets of any such plan exceeds the plan's "benefit liabilities," as that
term is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements. Since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial position of
any First National Pension Plan, (ii) no change in the actuarial assumptions
with respect to any First National Pension Plan, and (iii) no increase in
benefits under any First National Pension Plan as a result of plan amendments or
changes in applicable Law which is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on First National or materially
adversely affect the funding status of any such plan. Neither any First National
Pension Plan nor any "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any First National
Company, or the single-employer plan of any entity which is considered one
employer with First National 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, which is
reasonably likely to have a Material Adverse Effect on First National. No First
National Company has provided, or is required to provide, security to a First
National Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no Liability
under Subtitle C or D of Title IV of ERISA has been or is expected to be
incurred by any First National Company with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Material Adverse
Effect on First National. No First National 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),
which Liability is reasonably likely to have a Material Adverse Effect on First
National. No notice of a "reportable event," within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been waived, has
been required to be filed for any First National Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof.
(e) No First National Company has any Liability for retiree health and life
benefits under any of the First National Benefit Plans and there are no
restrictions on the rights of such First National Company to amend or terminate
any such Plan without incurring any Liability thereunder, which Liability is
reasonably likely to have a Material Adverse Effect on First National.
(f) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any First National
Company from any First National Company under any First National Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any First National
Benefit Plan, or (iii) result in any acceleration of the time
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of payment or vesting of any such benefit, where such payment, increase, or
acceleration is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First National.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any First National Company and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the First National Financial Statements to
the extent required by and in accordance with GAAP.
5.14 MATERIAL CONTRACTS. None of the First National 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 $100,000, (ii) any Contract
relating to the borrowing of money by any First National Company or the
guarantee by any First National 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), and (iii) any
other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by First National with the SEC as of the date of
this Agreement that has not been filed as an exhibit to First National's Form
10-K filed for the fiscal year ended December 31, 1994, or in another SEC
Document and identified to Regions (together with all Contracts referred to in
Sections 5.8 and 5.13(a) of this Agreement, the "First National Contracts").
With respect to each First National Contract: (i) the Contract is in full force
and effect; (ii) no First National Company is in Default thereunder, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First National; (iii) no First National
Company has repudiated or waived any material provision of any such Contract;
and (iv) no other party to any such Contract is, to the Knowledge of First
National, in Default in any respect, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First National, or has repudiated or waived any material provision
thereunder. Except for Federal Home Loan Bank advances, all of the indebtedness
of any First National Company for money borrowed is prepayable at any time by
such First National Company without penalty or premium.
5.15 LEGAL PROCEEDINGS. (a) There is no Litigation instituted or pending,
or, to the Knowledge of First National, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any First National Company, or
against any Asset, employee benefit plan, interest, or right of any of them,
that is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on First National, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any First National Company, that are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on First National.
(b) Section 5.15(b) of the First National Disclosure Memorandum includes a
summary report of all Litigation as of the date of this Agreement to which any
First National Company is a party and which names a First National Company as a
defendant or cross-defendant and where the maximum exposure is estimated to be
$100,000 or more.
5.16 REPORTS. Since January 1, 1992, or the date of organization if
later, each First National Company has timely filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with any Regulatory Authorities (except, in the case of
state securities authorities, failures to file which are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on First
National). As of their respective dates, each of such reports and documents,
including the financial statements, exhibits, and schedules thereto, complied in
all material respects with all applicable Laws. 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.
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5.17 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
be supplied by any First National Company or any Affiliate thereof for inclusion
in the Registration Statement to be filed by Regions with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any First National Company or any Affiliate thereof for inclusion in
the Joint Proxy Statement to be mailed to Regions' and First National's
stockholders in connection with the Stockholders' Meetings, and any other
documents to be filed by a First National 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 Joint Proxy Statement, when first mailed to the stockholders
of Regions and First National, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Joint Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Stockholders' Meetings, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Stockholders' Meetings.
All documents that any First National 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.
5.18 ACCOUNTING, TAX, AND REGULATORY MATTERS. No First National Company
or any Affiliate thereof has taken or agreed to take 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 for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay 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.
5.19 STATE TAKEOVER LAWS. Each First National Company has taken all
necessary action to exempt the transactions contemplated by this Agreement from
any applicable "moratorium," "control share," "fair price," "business
combination," or other anti-takeover laws and regulations of the State of
Georgia (collectively, "Takeover Laws"), including Sections 14-2-1111 and
14-2-1132 of the GBCC.
5.20 CHARTER PROVISIONS. Each First National Company has taken all action
so that the entering into of this Agreement and the Plan of Merger and the
consummation of the Merger and the other transactions contemplated by this
Agreement and the Plan of Merger do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Bylaws, or other
governing instruments of any First National Company or restrict or impair the
ability of Regions or any of its Subsidiaries to vote, or otherwise to exercise
the rights of a stockholder with respect to, shares of any First National
Company that may be directly or indirectly acquired or controlled by it.
5.21 DERIVATIVES CONTRACTS. Neither First National nor any of its
Subsidiaries is a party to or has agreed to enter into an exchange-traded or
over-the-counter swap, forward, future, option, cap, floor, or collar financial
contract, or any other interest rate or foreign currency protection contract not
included on its balance sheet which is a financial derivative contract
(including various combinations thereof).
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to First National as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Regions 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. Regions is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be
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so qualified or licensed, except for such jurisdictions in which the failure to
be so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Regions.
6.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) Regions 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 Regions, subject to the approval of the issuance of the shares of
Regions Common Stock pursuant to the Merger by a majority of the votes cast at
the Regions Stockholders' Meeting by holders of shares of Regions Common Stock,
which is the only stockholder vote required for the consummation of the Merger
by Regions. Subject to such requisite stockholder approval, this Agreement
represents a legal, valid, and binding obligation of Regions, enforceable
against Regions 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 Regions, nor
the consummation by Regions of the transactions contemplated hereby, nor
compliance by Regions with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of Regions' 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
Regions Company under, any Contract or Permit of any Regions 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 Regions,
or, (iii) subject to receipt of the requisite Consents referred to in Section
9.1(b) of this Agreement, violate any Law or Order applicable to any Regions
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 NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Regions, no notice to, filing with,
or Consent of, any public body or authority is necessary for the consummation by
Regions of the Merger and the other transactions contemplated in this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of Regions consists of
120,000,000 shares of Regions Common Stock, of which 45,397,944 shares were
issued and outstanding and 1,474,579 shares were held as treasury shares as of
June 30, 1995. All of the issued and outstanding shares of Regions Common Stock
are, and all of the shares of Regions Common Stock to be issued in exchange for
shares of First National 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 Regions Common Stock has been, and none of the shares
of Regions Common Stock to be issued in exchange for shares of First National
Common Stock upon consummation of the Merger will be, issued in violation of any
preemptive rights of the current or past stockholders of Regions.
6.4 REGIONS SUBSIDIARIES. Regions has disclosed in Section 6.4 of the
Regions Disclosure Memorandum all of the Regions Subsidiaries as of the date of
this Agreement. Except as disclosed in Section 6.4 of the Regions Disclosure
Memorandum, Regions or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each Regions Subsidiary. No equity
securities of any Regions Subsidiary are or may become required to be issued
(other than to another Regions Company) by reason of any Rights, and there are
no Contracts by which any Regions Subsidiary is bound to issue (other than to
another Regions Company) additional shares of its capital stock or Rights or by
which any Regions Company is or may be bound to transfer any shares of the
capital stock of any Regions Subsidiary (other than to another Regions Company).
There are no Contracts relating to the rights of any Regions Company to vote or
to dispose of any
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shares of the capital stock of any Regions Subsidiary. All of the shares of
capital stock of each Regions Subsidiary held by a Regions Company are fully
paid and nonassessable under the applicable corporation Law of the jurisdiction
in which such Subsidiary is incorporated or organized and are owned by the
Regions Company free and clear of any Lien. Each Regions Subsidiary is either a
bank 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 Regions 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 Regions. Each Regions 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 Savings Association Insurance Fund.
6.5 SEC FILINGS; FINANCIAL STATEMENTS. (a) Regions has filed and made
available to First National all forms, reports, and documents required to be
filed by Regions with the SEC since December 31, 1991, other than registration
statements on Forms S-4 and S-8 (collectively, the "Regions SEC Reports"). The
Regions SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Act and the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Regions SEC Reports or necessary in
order to make the statements in such Regions SEC Reports, in light of the
circumstances under which they were made, not misleading.
(b) Each of the Regions Financial Statements (including, in each case, any
related notes) contained in the Regions SEC Reports, including any Regions SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC), and fairly
presented the consolidated financial position of Regions and its Subsidiaries as
at the respective dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in Section
6.6 of the Regions Disclosure Memorandum, and to the Knowledge of Regions, no
Regions Company has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of Regions as of June 30, 1995 included in the Regions Financial
Statements or reflected in the notes thereto. Except as disclosed in Section 6.6
of the Regions Disclosure Memorandum, no Regions Company has incurred or paid
any Liability since June 30, 1995, 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 Regions.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1995, except as
disclosed in the Regions Financial Statements delivered prior to the date of
this Agreement or in Section 6.7 of the Regions Disclosure Memorandum, (i) there
have been no events, changes or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions, and (ii) the Regions 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 Regions
provided in Article 7 of this Agreement.
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6.8 TAX MATTERS. (a) All Tax Returns required to be filed by or on behalf
of any of the Regions 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, 1994, 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, taken together, are not reasonably likely
to have a Material Adverse Effect on Regions, and all Tax Returns filed are
complete and accurate in all material respects. All Taxes shown on filed Tax
Returns have been paid. There is no audit examination, deficiency, or refund
Litigation with respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on Regions, except as reserved against in the Regions Financial
Statements delivered prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) Adequate provision for any Taxes due or to become due for any of the
Regions Companies for the period or periods through and including the date of
the respective Regions Financial Statements has been made and is reflected on
such Regions Financial Statements.
(c) Deferred Taxes of the Regions Companies have been adequately provided
for in the Regions Financial Statements.
6.9 ENVIRONMENTAL MATTERS. (a) To the Knowledge of Regions, each Regions
Company, its Participation Facilities, and its Loan Properties are, and have
been, in compliance with all Environmental Laws, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions.
(b) There is no Litigation pending, or, to the Knowledge of Regions,
threatened before any court, governmental agency, or authority or other forum in
which any Regions Company or any of its Loan Properties or Participation
Facilities (or any Regions Company in respect of any such Loan Property or
Participation Facility) 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 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 Regions.
(c) To the Knowledge of Regions, there is no reasonable basis for any
Litigation of a type described in subsections (b) or (c), except such as is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Regions.
(d) To the Knowledge of Regions, there have been no releases of Hazardous
Material in, on, under, or affecting any Participation Facility or Loan Property
of a Regions Company, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions.
6.10 COMPLIANCE WITH LAWS. Regions is duly registered as a bank holding
company under the BHC Act and as a savings and loan holding company under the
HOLA. Each Regions 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, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions, 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 Regions. No Regions 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 Regions; 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 Regions Company is
not in compliance with any of the Laws or Orders which such governmental
authority or
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Regulatory Authority enforces, where such noncompliance is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on Regions, (ii) threatening to revoke any Permits, the revocation of which
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions, or (iii) requiring any Regions Company to enter
into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding, 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.
6.11 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or,
to the Knowledge of Regions, 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 Regions 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 Regions, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any Regions Company, that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions.
6.12 REPORTS. Since January 1, 1992, or the date of organization if
later, each Regions Company has filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. 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.
6.13 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
be supplied by any Regions Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by Regions with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Regions Company or any Affiliate thereof for inclusion in the
Joint Proxy Statement to be mailed to Regions' and First National's stockholders
in connection with the Stockholders' Meetings, and any other documents to be
filed by any Regions 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
Joint Proxy Statement, when first mailed to the stockholders of Regions and
First National, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Joint Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Stockholders' Meetings, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Stockholders' Meetings. All documents that any
Regions 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.
6.14 ACCOUNTING, TAX, AND REGULATORY MATTERS. No Regions Company or any
Affiliate thereof has taken or agreed to take 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 for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay 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.
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF FIRST NATIONAL. Unless the prior written
consent of Regions shall have been obtained, and except as otherwise expressly
contemplated herein, First National shall and shall cause each of its
Subsidiaries to (i) operate its business only in the usual, regular, and
ordinary course, (ii) preserve intact its business organization and Assets and
maintain its rights and franchises, (iii) use its reasonable efforts to maintain
its current employee relationships, and (iv) take no action which would (a)
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 sentence of Section 9.1(b) of
this Agreement, or (b) adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF FIRST NATIONAL. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
First National 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 or
chief financial officer of Regions:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any First National Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a First National Company to
another First National Company) in excess of an aggregate of $250,000 (for
the First National Companies on a consolidated basis) except in the
ordinary course of the business of First National Subsidiaries consistent
with past practices (which shall include, for First National Subsidiaries
that are depository institutions, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank or
Federal Home Loan Bank, and entry into repurchase agreements fully secured
by U.S. government or agency securities), or impose, or suffer the
imposition, on any Asset of any First National Company of any Lien or
permit any such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan"
accounts established in the ordinary course of business, the satisfaction
of legal requirements in the exercise of trust powers, and Liens in effect
as of the date hereof that are disclosed in the First National Disclosure
Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of any First National Company, or declare or pay any
dividend or make any other distribution in respect of First National's
capital stock, provided that First National may (to the extent legally and
contractually permitted to do so), but shall not be obligated to, declare
and pay regular quarterly cash dividends on the shares of First National
Common Stock at a rate of $.2150 per share with such increases and usual
and regular record and payment dates in accordance with past practice
disclosed in Section 7.2(c) of the First National Disclosure Memorandum and
such dates may not be changed without the prior written consent of Regions;
provided, that, notwithstanding the provisions of Section 1.3 of this
Agreement, the Parties shall cooperate in selecting the Effective Time to
ensure that, with respect to the quarterly period in which the Effective
Time occurs, the holders of First National Common Stock do not receive both
a dividend in respect of their First National Common Stock and a dividend
in respect of Regions Common Stock or fail to receive any dividend; or
(d) except for this Agreement, or pursuant to the Stock Option
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, issue, sell, pledge, encumber, authorize the issuance of, enter
into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional
shares of First National Common Stock or any other capital stock of any
First National Company, or any stock appreciation rights, or any option,
warrant, conversion, or other right to acquire any such stock, or any
security convertible into any such stock; or
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(e) adjust, split, combine, or reclassify any capital stock of any
First National Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of First National
Common Stock, or sell, lease, mortgage, or otherwise dispose of or
otherwise encumber (x) any shares of capital stock of any First National
Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another First National Company) or (y) any Asset other than
in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment,
either by purchase of stock or securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly
owned First National Subsidiary, or otherwise acquire direct or indirect
control over any Person, other than in connection with (i) foreclosures in
the ordinary course of business, (ii) acquisitions of control by a
depository institution Subsidiary in its fiduciary capacity, or (iii) the
creation of new wholly owned Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the employees or
officers of any First National Company, except in accordance with past
practice disclosed in Section 7.2(g) of the First National Disclosure
Memorandum or as required by Law; pay any severance or termination pay or
any bonus other than pursuant to written policies or written Contracts in
effect on the date of this Agreement; enter into or amend any severance
agreements with officers of any First National Company; grant any material
increase in fees or other increases in compensation or other benefits to
directors of any First National Company except in accordance with past
practice disclosed in Section 7.2(g) of the First National 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 First
National Company and any Person (unless such amendment is required by Law)
that the First National Company does not have the unconditional right to
terminate without Liability (other than Liability for services already
rendered), at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any First National Company
or make any material change in or to any existing employee benefit plans of
any First National Company other than any such change that is required by
Law or that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than in accordance with past
practice or settle any Litigation involving any Liability of any First
National Company for material money damages or restrictions upon the
operations of any First National Company; or
(l) except in the ordinary course of business, modify, amend, or
terminate any material Contract or waive, release, compromise, or assign
any material rights or claims.
7.3 COVENANTS OF REGIONS. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Regions
covenants and agrees that it shall (i) 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 Regions Common Stock and the business
prospects of the Regions Companies, and (ii) take no action which would (a)
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 sentence of Section
9.1(b) of this Agreement, or (b) 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 Regions Company from discontinuing or
disposing of any of its Assets or
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business if such action is, in the judgment of Regions, desirable in the conduct
of the business of Regions and its Subsidiaries.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its 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 stockholders' equity, and cash flows 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). As of their
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 a
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; JOINT PROXY STATEMENT; STOCKHOLDER
APPROVALS. As soon as reasonably practicable after execution of this Agreement,
Regions shall file the Registration Statement with the SEC, and shall use its
reasonable efforts to cause the Registration Statement to become effective under
the 1933 Act (provided that the Parties shall cooperate to cause the
Registration Statement to be declared effective and the Joint Proxy Statement to
be mailed to the Parties' respective stockholders at such time as will afford
the Parties the maximum opportunity to purchase shares of Regions Common Stock
or First National Common Stock in the open market) 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 Regions Common Stock upon consummation of the
Merger. First National shall furnish all information concerning it and the
holders of its capital stock as Regions may reasonably request in connection
with such action. First National shall call a Stockholders' Meeting, to be held
as soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon approval of this Agreement
and the Plan of Merger and such other related matters as it deems appropriate.
Regions shall call a Stockholders' Meeting, to be held as soon as reasonably
practicable after the Registration Statement is declared effective by the SEC,
for the purpose of voting upon the issuance of shares of Regions Common Stock
pursuant to the Merger and such other related matters as it deems appropriate.
In connection with the Stockholders' Meetings, (i) Regions and First National
shall prepare and file with the SEC a Joint Proxy Statement and mail such Joint
Proxy Statement to their respective stockholders, (ii) the Parties shall furnish
to each other all information concerning them that they may reasonably request
in connection with such Joint Proxy Statement, (iii) the Boards of Directors of
Regions and First National shall recommend (subject to compliance with their
fiduciary duties as advised by counsel) to their respective stockholders the
approval of the matters submitted for approval, and (iv) the Boards of Directors
and officers of Regions and First National shall (subject to compliance with
their fiduciary duties as advised by counsel) use their reasonable efforts to
obtain such stockholders' approvals.
8.2 EXCHANGE LISTING. Regions shall use its reasonable efforts to list,
prior to the Effective Time, on the Nasdaq NMS, subject to official notice of
issuance, the shares of Regions Common Stock to be issued to the holders of
First National Common Stock pursuant to the Merger.
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8.3 APPLICATIONS. Regions shall promptly prepare and file, and First
National 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.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Regions Merger Subsidiary shall execute and file
the Georgia Certificate of Merger with the Secretary of State of the State of
Georgia 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
reasonably 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. The
Parties shall cooperate and take all reasonable effort to prevent Regions from
becoming an interstate multiple savings and loan holding company as a result of
the Merger. 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, after November 1, 1995, shall not interfere unnecessarily with
normal operations. No investigation by a Party shall affect the representations
and warranties of the other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreements, each Party shall, and shall cause its advisers and
agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the other
Party which it has discovered through the course of its investigation and which
represents, or is reasonably likely to represent, either a material breach of
any representation, warranty, covenant, or agreement of the other Party or which
has had or is reasonably likely to have a Material Adverse Effect on the other
Party.
8.7 PRESS RELEASES. Prior to the Effective Time, Regions and First
National 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 Plan
of Merger and the transactions contemplated hereby or thereby, no First National
Company nor any Affiliate thereof nor any Representatives thereof retained by
any First National Company shall directly or indirectly solicit any Acquisition
Proposal by any Person. Except to the extent necessary to comply with the
fiduciary duties of First National's Board of Directors as advised by counsel,
no First National Company or any Affiliate or Representative thereof shall
furnish any non-public information that it is not legally obligated to furnish,
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negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but First National may communicate information about such
an Acquisition Proposal to its stockholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised by
counsel. First National shall promptly notify Regions orally and in writing in
the event that it receives any inquiry or proposal relating to any such
transaction. First National 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 of all its Representatives not to
engage in any of the foregoing.
8.9 ACCOUNTING AND 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 for treatment as a pooling of
interests for accounting purposes or as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 STATE TAKEOVER LAWS. Each First National Company shall take all
necessary steps to exempt the transactions contemplated by this Agreement from,
or if necessary challenge the validity or applicability of, any applicable
Takeover Laws, including Sections 14-2-1111 and 14-2-1132 of the GBCC.
8.11 CHARTER PROVISIONS. Each First National Company shall take all
necessary action to ensure that the entering into of this Agreement and the Plan
of Merger and the consummation of the Merger and the other transactions
contemplated hereby or thereby do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Bylaws, or other
governing instruments of any First National Company or restrict or impair the
ability of Regions or any of its Subsidiaries to vote, or otherwise to exercise
the rights of a stockholder with respect to, shares of any First National
Company that may be directly or indirectly acquired or controlled by it.
8.12 AGREEMENT OF AFFILIATES. First National has disclosed in Section
8.12 of the First National Disclosure Memorandum each Person whom it reasonably
believes is an "affiliate" of First National for purposes of Rule 145 under the
1933 Act. First National shall use its reasonable efforts to cause each such
Person to deliver to Regions not later than 30 days prior to the Effective Time,
a written agreement, in substantially the form of Exhibit 3, providing that such
Person will not sell, pledge, transfer, or otherwise dispose of the shares of
First National 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 Regions 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 and until such time as
financial results covering at least 30 days of combined operations of Regions
and First National have been published within the meaning of Section 201.01 of
the SEC's Codification of Financial Reporting Policies. Shares of Regions Common
Stock issued to such affiliates of First National in exchange for shares of
First National Common Stock shall not be transferable until such time as
financial results covering at least 30 days of combined operations of Regions
and First National have been published within the meaning of Section 201.01 of
the SEC's Codification of Financial Reporting Policies, regardless of whether
each such affiliate has provided the written agreement referred to in this
Section 8.12 (and Regions shall be entitled to place restrictive legends upon
certificates for shares of Regions Common Stock issued to affiliates of First
National pursuant to this Agreement to enforce the provisions of this Section
8.12). Regions shall not be required to maintain the effectiveness of the
Registration Statement under the 1933 Act for the purposes of resale of Regions
Common Stock by such affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time, but
in no event earlier than the consolidation of First National's banking
Subsidiaries with Regions' banking Subsidiaries located in the same states,
Regions shall provide generally to officers and employees of the First National
Companies, who at or after the Effective Time become employees of a Regions
Company, employee benefits under employee benefit plans (other than stock option
or other plans involving the potential issuance of Regions Common Stock except
as set forth in this Section 8.13), on terms and conditions which when taken as
a whole are substantially similar to those currently provided by the Regions
Companies to their similarly situated officers and employees. For purposes of
participation and vesting (but not accrual of benefits) under such employee
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benefit plans, (i) service under any qualified defined benefit plans of First
National should be treated as service under Regions' qualified defined benefit
plans, (ii) service under any qualified defined contribution plans of First
National shall be treated as service under Regions' qualified defined
contribution plans, and (iii) service under any other employee benefit plans of
First National shall be treated as service under any similar employee benefit
plans maintained by Regions. Regions also shall cause First National and its
Subsidiaries to honor on terms reasonably agreed upon by the Parties all
employment, severance, consulting, and other compensation Contracts disclosed in
Section 8.13 of the First National Disclosure Memorandum to Regions between any
First National Company and any current or former director, officer, or employee
thereof, and all provisions for vested benefits or other vested amounts earned
or accrued through the Effective Time under the First National Benefit Plans.
8.14 INDEMNIFICATION. (a) Regions shall indemnify, defend, and hold
harmless the present and former directors, officers, employees, and agents of
the First National Companies (each, an "Indemnified Party") against all
Liabilities arising out of actions or omissions occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement) to
the full extent permitted under Georgia Law and by First National'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.
Without limiting the foregoing, in any case in which approval by Regions is
required to effectuate any indemnification, Regions shall direct, at the
election of the Indemnified Party, that the determination of any such approval
shall be made by independent counsel mutually agreed upon between Regions and
the Indemnified Party.
(b) If Regions or any of its successors or assigns shall consolidate with
or merge into any other Person and shall not be the continuing or surviving
Person of such consolidation or merger or shall transfer all or substantially
all of its assets to any Person, then and in each case, proper provision shall
be made so that the successors and assigns of Regions shall assume the
obligations set forth in this Section 8.14.
(c) The provisions of this Section 8.14 are intended to be for the benefit
of and shall be enforceable by, each Indemnified Party, his or her heirs and
representatives.
8.15 CERTAIN MODIFICATIONS. Regions and First National shall consult with
respect to their loan, litigation, and real estate valuation policies and
practices (including loan classifications and levels of reserves) and First
National shall make such modifications or changes to its policies and practices,
if any, prior to the Effective Time, as may be mutually agreed upon. Regions and
First National also shall consult with respect to the character, amount, and
timing of restructuring and Merger-related expense charges to be taken by each
of the Parties in connection with the transactions contemplated by this
Agreement and the Plan of Merger and shall take such charges in accordance with
GAAP, prior to the Effective Time, as may be mutually agreed upon by the
Parties. Neither Parties' representations, warranties, and covenants contained
in this Agreement shall be deemed to be inaccurate or breached in any respect as
a consequence of any modifications or charges undertaken solely on account of
this Section 8.15.
8.16 REGIONS MERGER SUBSIDIARY ORGANIZATION. Regions shall organize
Regions Merger Subsidiary under the Laws of the State of Georgia. Prior to the
Effective Time, the outstanding capital stock of Regions Merger Subsidiary shall
consist of 1,000 shares of Regions Merger Subsidiary Common Stock, all of which
shares shall be owned by Regions. Prior to the Effective Time, Regions Merger
Subsidiary shall not (i) conduct any business operations whatsoever or (ii)
enter into any Contract or agreement of any kind, acquire any assets or incur
any Liability, except as may be specifically contemplated by this Agreement or
the Plan of Merger or as the Parties may otherwise agree. Regions, as the sole
stockholder of Regions Merger Subsidiary, shall vote prior to the Effective Time
the shares of Regions Merger Subsidiary Common Stock in favor of the Plan of
Merger.
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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 the Plan of Merger and to consummate
the Merger and the other transactions contemplated hereby and thereby are
subject to the satisfaction of the following conditions, unless waived by both
Parties pursuant to Section 11.6 of this Agreement:
(A) STOCKHOLDER APPROVALS. The stockholders of First National shall
have approved this Agreement and the Plan of Merger, and the consummation
of the transactions contemplated hereby and thereby, including the Merger,
as and to the extent required by Law, by the provisions of any governing
instruments, or by the rules of the NASD. The stockholders of Regions shall
have approved the issuance of shares of Regions Common Stock pursuant to
the Merger, as and to the extent required by Law, by the provisions of any
governing instruments, or by the rules of the NASD.
(B) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to
the raising of additional capital or the disposition of Assets) which in
the reasonable judgment of the Board of Directors of Regions would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement that, had such condition or
requirement been known, Regions would not, in its reasonable judgment, have
entered into this Agreement.
(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.
(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 or the Plan of Merger.
(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 Regions Common Stock issuable
pursuant to the Merger shall have been received.
(F) EXCHANGE LISTING. The shares of Regions Common Stock issuable
pursuant to the Merger shall have been approved for listing on the Nasdaq
NMS, subject to official notice of issuance.
(G) TAX MATTERS. Each Party shall have received a written opinion or
opinions from Alston & Bird in a form reasonably satisfactory to such
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 and (ii) the exchange in the Merger of First National
Common Stock for Regions Common Stock will not give rise to gain or loss to
the stockholders of First National with respect to such exchange (except to
the extent of any cash received). In rendering such Tax Opinion, such
counsel shall be entitled to rely upon representations of officers of First
National and Regions reasonably satisfactory in form and substance to such
counsel.
(H) POOLING LETTER. Each of the Parties shall have received a
letter, dated as of the Effective Time, in form and substance reasonably
acceptable to such Party, from Ernst & Young LLP to the effect that the
Merger will qualify for pooling-of-interests accounting treatment.
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9.2 CONDITIONS TO OBLIGATIONS OF REGIONS. The obligations of Regions 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 Regions pursuant to Section 11.6(a) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of First
National set forth in this Agreement shall be assessed 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). The
representations and warranties of First National set forth in Section 5.3
of this Agreement shall be true and correct (except for inaccuracies which
are de minimus in amount). The representations and warranties of First
National set forth in Sections 5.18, 5.19, and 5.20 of this Agreement shall
be true and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of First National set
forth in this Agreement (including the representations and warranties set
forth in Sections 5.3, 5.18, 5.19, and 5.20) such that the aggregate effect
of such inaccuracies has, or is reasonably likely to have, a Material
Adverse Effect on First National; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or to the "Knowledge"
of First National or to a matter being "known" by First National shall be
deemed not to include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of First National to be performed and complied
with pursuant to this Agreement and the other agreements contemplated
hereby prior to the Effective Time shall have been duly performed and
complied with in all material respects.
(C) CERTIFICATES. First National shall have delivered to Regions (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 Section 9.2(a) and
9.2(b) of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by First National's Board of Directors and
stockholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery, and performance of this Agreement and
the Plan of Merger, and the consummation of the transactions contemplated
hereby and thereby, all in such reasonable detail as Regions and its
counsel shall request.
(D) AFFILIATE AGREEMENTS. Regions shall have received from each
affiliate of First National the affiliates agreement referred to in Section
8.12 of this Agreement, to the extent necessary to assure in the reasonable
judgment of Regions that the transactions contemplated hereby will qualify
for pooling-of-interests accounting treatment.
9.3 CONDITIONS TO OBLIGATIONS OF FIRST NATIONAL. The obligations of First
National to perform this Agreement and the Plan of Merger and consummate the
Merger and the other transactions contemplated hereby and thereby are subject to
the satisfaction of the following conditions, unless waived by First National
pursuant to Section 11.6(b) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of Regions set
forth in this Agreement shall be assessed 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). The representations and
warranties of Regions set forth in Section 6.3 of this Agreement shall be
true and correct (except for inaccuracies which are de minimus in amount).
The representations and warranties of Regions set forth in Section 6.14 of
this Agreement shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of
Regions set forth in this Agreement (including the representations and
warranties set forth in Sections 6.3 and 6.14) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on Regions; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to
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"material" or "Material Adverse Effect" or to the "Knowledge" of Regions or
to a matter being "known" by Regions shall be deemed not to include such
qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Regions 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. Regions shall have delivered to First National (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 Section 9.3(a) and
9.3(b) of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Regions' Board of Directors and stockholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as First National and its counsel shall request.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of First
National or Regions, this Agreement and the Plan of Merger 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 Regions and the
Board of Directors of First National; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of First National and Section
9.3(a) of this Agreement in the case of Regions or in material breach of
any covenant or other agreement contained in this Agreement) in the event
of an inaccuracy of any representation or warranty of the other Party
contained in this Agreement which cannot be or has not been cured within 30
days after the giving of written notice to the breaching Party of such
inaccuracy and which inaccuracy would provide the terminating Party the
ability to refuse to consummate the Merger under the applicable standard
set forth in Section 9.2(a) of this Agreement in the case of First National
and Section 9.3(a) of this Agreement in the case of Regions; 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
stockholders of Regions or First National fail to vote their approval of
the matters submitted for the approval by such stockholders at the
Stockholders' Meetings where the transactions were presented to such
stockholders 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 September 30, 1996, 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 (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of First National and Section
9.3(a) of this
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Agreement in the case of Regions or in material breach of any covenant or
other agreement contained in this Agreement) in the event that any of the
conditions precedent to the obligations of such Party to consummate the
Merger cannot be satisfied or fulfilled by the date specified in Section
10.1(e) of this Agreement; or
(g) By the Board of Directors of Regions, at any time prior to 5:00
p.m. Eastern time, on November 1, 1995, without any Liability if it
determines in its reasonable good faith judgment that the Asset quality of
First National, the status of litigation involving First National (or any
other liability or undisclosed contingency of First National), any
information in the First National Disclosure Memorandum, or the projected
ability of First National to reduce its non-interest expenses are
materially less favorable to Regions than as set forth in materials
previously disclosed or provided to Regions by First National and its
financial advisor; or
(h) By the Board of Directors of First National, if it determines by a
vote of a majority of the members of its entire Board, at any time during
the ten-day period commencing two days after the Determination Date, if
both of the following conditions are satisfied:
(1) the Average Closing Price of shares of Regions Common Stock
shall be less than $33.20; and
(2) (i) the quotient obtained by dividing the Average Closing Price
by $41.50 (such number being referred to herein as the "Regions Ratio")
shall be less than (ii) the quotient obtained by dividing the Index
Price on the Determination Date by the Index Price on the Starting Date
and subtracting 0.20 from the quotient in this clause (2)(ii) (such
number being referred to herein as the "Index Ratio");
subject, however, to the following three sentences. If First National
refuses to consummate the Merger pursuant to this Section 10.1(h), it shall
give prompt written notice thereof to Regions; provided, that such notice
of election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing with
its receipt of such notice, Regions shall have the option to elect to
increase the Exchange Ratio to equal the lesser of (i) the quotient
obtained by dividing (1) the product of $33.20 and the Exchange Ratio (as
then in effect) by (2) the Average Closing Price, and (ii) the quotient
obtained by dividing (1) the product of the Index Ratio and the Exchange
Ratio (as then in effect) by (2) the Regions Ratio. If Regions makes an
election contemplated by the preceding sentence, within such five-day
period, it shall give prompt written notice to First National of such
election and the revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 10.1(h) and this Agreement shall
remain in effect in accordance with its terms (except as the Exchange Ratio
shall have been so modified), and any references in this Agreement to
"Exchange Ratio" shall thereafter be deemed to refer to the Exchange Ratio
as adjusted pursuant to this Section 10.1(h).
For purposes of this Section 10.1(h), the following terms shall have
the meanings indicated:
"Average Closing Price" shall mean the average of the daily last
sales prices of Regions Common Stock as reported on the Nasdaq NMS (as
reported by The Wall Street Journal or, if not reported thereby, another
authoritative source as chosen by Regions) for the ten consecutive full
trading days in which such shares are traded on the Nasdaq NMS ending at
the close of trading on the Determination Date.
"Determination Date" shall mean the date on which the Consent of
the Board of Governors of the Federal Reserve System shall be received.
"Index Group" shall mean the 20 bank holding companies listed
below, the common stocks of all of which shall be publicly traded and as
to which there shall not have been, since the Starting Date and before
the Determination Date, any public announcement of a proposal for such
company to be acquired or for such company to acquire another company or
companies in transactions with a value exceeding 25% of the acquiror's
market capitalization. In the event that any such company or companies
are removed from the Index Group, the weights (which shall be determined
based upon
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the number of outstanding shares of common stock) shall be redistributed
proportionately for purposes of determining the Index Price. The 20 bank
holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
------------------------------------------------------------------- ---------
<S> <C>
AmSouth Bancorporation............................................. 4.73%
Barnett Banks, Inc................................................. 7.80
Central Fidelity Banks, Inc........................................ 3.23
Compass Bancshares, Inc............................................ 3.09
Crestar Financial Corporation...................................... 3.05
Deposit Guaranty Corporation....................................... 1.52
First American Corporation......................................... 2.06
First Commerce Corporation......................................... 2.35
First Maryland Bancorp............................................. 1.37
First Tennessee National Corporation............................... 2.72
First Union Corporation............................................ 13.91
First Virginia Banks, Inc.......................................... 2.75
Hibernia Corporation............................................... 9.65
Mercantile Bankshares Corporation.................................. 3.84
National Commerce Bancorporation................................... 2.00
SouthTrust Corporation............................................. 6.75
SunTrust Banks, Inc................................................ 9.24
Trustmark Corporation.............................................. 2.83
Union Planters Corporation......................................... 3.31
Wachovia Corporation............................................... 13.80
---------
TOTAL.................................................... 100.00%
</TABLE>
"Index Price" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices of the companies composing the Index Group.
"Starting Date" shall mean October 20, 1995.
If any company belonging to the Index Group or Regions declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction between the
Starting Date and the Determination Date, the prices for the common stock
of such company or Regions shall be appropriately adjusted for the purposes
of applying this Section 10.1(h).
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 and the Plan of Merger shall become void and have no effect, except
that (i) the provisions of this Section 10.2 and Article 11 and Section 8.6(b)
of this Agreement shall survive any such termination and abandonment, and (ii) a
termination pursuant to Sections 10.1(b), 10.1(c), or 10.1(f) of this Agreement
shall not relieve the breaching Party from Liability for an uncured willful
breach of a representation, warranty, covenant, or agreement giving rise to such
termination. The Stock Option Agreement shall be governed by its own terms as to
its 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 and Sections 8.12 and 8.14 of this Agreement.
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ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS. (a) 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 Reorganization,
including the Exhibits (other than the Stock Option Agreement) 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.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CONFIDENTIALITY AGREEMENTS" shall mean those certain Confidentiality
Agreements, dated October 21, 1995, between First National and Regions.
"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, plan, practice, restriction, understanding, 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 notice 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, where, in any
such event, such Default is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on a Party.
"DGCL" shall mean the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and which
are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42
U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material, or
otherwise
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relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXHIBITS" 1 through 3, 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.
"FIRST NATIONAL COMMON STOCK" shall mean the $1.00 par value common
stock of First National.
"FIRST NATIONAL COMPANIES" shall mean, collectively, First National
and all First National Subsidiaries.
"FIRST NATIONAL DISCLOSURE MEMORANDUM" shall mean the written
information entitled "First National Bancorp Disclosure Memorandum"
delivered prior to 5:00 p.m., Eastern time, on October 27, 1995, to Regions
describing in reasonable detail the matters contained therein and, with
respect to each disclosure made therein, specifically referencing each
Section or subsection of this Agreement under which such disclosure is
being made. Information disclosed with respect to one Section or subsection
shall not be deemed to be disclosed for purposes of any other Section or
subsection not specifically referenced with respect thereto.
"FIRST NATIONAL FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of First
National as of June 30, 1995, and as of December 31, 1994 and 1993, and the
related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the six months
ended June 30, 1995, and for each of the three fiscal years ended December
31, 1994, 1993, and 1992, as filed by First National in SEC Documents, and
(ii) the consolidated balance sheets of First National (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 June 30, 1995.
"FIRST NATIONAL STOCK PLANS" shall mean the existing stock option and
other stock-based compensation plans of First National disclosed in Section
3.5(b) of the First National Disclosure Memorandum.
"FIRST NATIONAL SUBSIDIARIES" shall mean the Subsidiaries of First
National, which shall include the First National Subsidiaries described in
Section 5.4 of this Agreement and any corporation, bank, savings
association, or other organization acquired as a Subsidiary of First
National in the future and owned by First National at the Effective Time.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"GEORGIA CERTIFICATE OF MERGER" shall mean the Certificate of Merger
to be executed by Regions Merger Subsidiary and filed with the Secretary of
State of the State of Georgia relating to the Merger as contemplated by
Section 1.1 of this Agreement.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as
those terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil
(and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and
any polychlorinated biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
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"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.
"JOINT PROXY STATEMENT" shall mean the joint proxy statement used by
Regions and First National to solicit the approval of their respective
stockholders of the transactions contemplated by this Agreement, which
shall include the prospectus of Regions relating to the issuance of the
Regions Common Stock to holders of First National Common Stock.
"KNOWLEDGE" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean the personal
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 and the knowledge of any such persons obtained or which would have
been obtained from a reasonable investigation.
"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 Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (ii) for depository institution
Subsidiaries of a Party, pledges to secure deposits, and other Liens
incurred in the ordinary course of the banking business.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
Party, its business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates by
Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned, leased, or operated by
the Party in question or by any of its Subsidiaries or in which such Party
or Subsidiary holds a security or other interest (including an interest in
a fiduciary capacity), and, where required by the context, includes the
owner or operator of such property, but only with respect to such property.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
occurrence which, individually or 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 Effect" shall not be deemed to include the impact of (a) changes in
banking and similar Laws of general applicability or interpretations
thereof by courts or governmental authorities, (b) changes in GAAP or
regulatory
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accounting principles generally applicable to banks and their holding
companies, (c) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, (d) circumstances
affecting regional bank holding companies generally, and (e) the Merger and
compliance with the provisions of this Agreement on the operating
performance of the Parties.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ NMS" shall mean the National Market Service of Nasdaq.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasijudicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such
facility or property.
"PARTY" shall mean either First National or Regions, and "PARTIES"
shall mean both First National and Regions.
"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.
"PLAN OF MERGER" shall mean the plan of merger providing for the
Merger, in substantially the form of Exhibit 2.
"REGIONS COMMON STOCK" shall mean the $.625 par value common stock of
Regions.
"REGIONS COMPANIES" shall mean, collectively, Regions and all Regions
Subsidiaries.
"REGIONS DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Regions Financial Corporation Disclosure Memorandum" delivered
prior to the execution of this Agreement to First National describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section or
subsection of this Agreement under which such disclosure is being made.
Information disclosed with respect to one Section or subsection shall not
be deemed to be disclosed for purposes of any other Section or subsection
not specifically referenced with respect thereto.
"REGIONS FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Regions as of June 30, 1995, and as of December 31, 1994 and 1993, and the
related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the six months
ended June 30, 1995, and for each of the three years ended December 31,
1994, 1993, and 1992, as filed by Regions in SEC Documents, and (ii) the
consolidated statements of condition of Regions (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 June 30, 1995.
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"REGIONS MERGER SUBSIDIARY" shall mean the wholly owned subsidiary of
Regions to be organized to effect the Merger under the Laws of the State of
Georgia and with the name of Regions Merger Subsidiary, Inc.
"REGIONS MERGER SUBSIDIARY COMMON STOCK" shall mean the $1.00 par
value common stock of Regions Merger Subsidiary.
"REGIONS SUBSIDIARIES" shall mean the Subsidiaries of Regions, which
shall include the Regions Subsidiaries described in Section 6.4 of this
Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Regions in the future and owned by
Regions at the Effective Time.
"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
Regions under the 1933 Act with respect to the shares of Regions Common
Stock to be issued to the stockholders of First National in connection with
the transactions contemplated by this Agreement.
"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 the Comptroller of
the Currency, the Federal Deposit Insurance Corporation, the Office of
Thrift Supervision, all state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries, the NASD, and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative of a Person.
"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 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.
"STOCK OPTION AGREEMENT" shall mean the stock option agreement by and
between First National and Regions, in substantially the form of Exhibit 1.
"STOCKHOLDERS' MEETINGS" shall mean the respective meetings of the
stockholders of Regions and First National 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 Regions Merger Subsidiary as the
surviving corporation resulting from the Merger.
"TAX" OR "TAXES" shall mean all federal, state, local, and foreign
taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall
profits, environmental, federal highway
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use, commercial rent, customs duties, capital stock, paid-up capital,
profits, withholding, Social Security, single business and unemployment,
disability, real property, personal property, registration, ad valorem,
value added, alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposed or required to be withheld
by the United States or any state, local, foreign government or subdivision
or agency thereof, including any interest, penalties or additions thereto.
"TAXABLE PERIOD" shall mean any period prescribed by any governmental
authority, including the United States or any state, local, foreign
government or subdivision or agency thereof for which a Tax Return is
required to be filed or Tax is required to be paid.
"TAX RETURN" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
<TABLE>
<S> <C>
Average Closing Price.............................................. Section 10.1(h)
Closing............................................................ Section 1.2
Determination Date................................................. Section 10.1(h)
Effective Time..................................................... Section 1.3
ERISA Affiliate.................................................... Section 5.13(c)
Exchange Agent..................................................... Section 4.1
Exchange Ratio..................................................... Section 3.1(c)
First National Benefit Plans....................................... Section 5.13(a)
First National Contracts........................................... Section 5.14
First National ERISA Plan.......................................... Section 5.13(a)
First National Rights.............................................. Section 3.5(a)
First National Pension Plan........................................ Section 5.13(a)
First National SEC Reports......................................... Section 5.5(a)
Indemnified Party.................................................. Section 8.14
Index Group........................................................ Section 10.1(h)
Index Price........................................................ Section 10.1(h)
Index Ratio........................................................ Section 10.1(h)
Merger............................................................. Section 1.1
Regions Ratio...................................................... Section 10.1(h)
Regions SEC Reports................................................ Section 6.5(a)
Starting Date...................................................... Section 10.1(h)
Takeover Laws...................................................... Section 5.19
Tax Opinion........................................................ Section 9.1(g)
</TABLE>
(c) 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 each of the Parties shall bear and pay
one-half of the printing costs incurred in connection with the printing of the
Registration Statement and the Joint Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for Morgan Stanley & Co. Incorporated as
to First National and except for Bear Stearns & Co. Inc. as to Regions, each of
the Parties represents and warrants that neither it
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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, her, or its
representing or being retained by or allegedly representing or being retained by
First National or Regions, each of First National and Regions, 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 for the
Confidentiality Agreements). 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, other than as provided in Sections 8.12 and 8.14 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, whether before or after
stockholder approval of this Agreement has been obtained; provided, that the
provisions of this Agreement or the Plan of Merger relating to the manner or
basis in which shares of First National Common Stock will be exchanged for
Regions Common Stock shall not be amended after the Stockholders' Meetings
without the requisite approval of the holders of the issued and outstanding
shares of Regions Common Stock and First National Common Stock entitled to vote
thereon.
11.6 WAIVERS. (a) Prior to or at the Effective Time, Regions, acting
through its Board of Directors, chief executive officer, chief financial
officer, or other authorized officer, shall have the right to waive any Default
in the performance of any term of this Agreement by First National, to waive or
extend the time for the compliance or fulfillment by First National of any and
all of its obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of Regions 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 Regions.
(b) Prior to or at the Effective Time, First National, acting through its
Board of Directors, chief executive officer, chief financial officer, or other
authorized officer, shall have the right to waive any Default in the performance
of any term of this Agreement by Regions, to waive or extend the time for the
compliance or fulfillment by Regions of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of First National under this Agreement, except any condition which,
if not satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing signed by a duly authorized officer of First
National.
(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 prepaid, 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>
First National: First National Bancorp
303 Jesse Jewell Parkway
Suite 700
Gainesville, Georgia 30501
Telecopy Number: (770) 503-2700
Attention: Peter D. Miller
Financial President, Chief Administrative, and Chief
Officer
Copy to Counsel: Stewart, Melvin & Frost
Hunt Tower
200 Main Street
Gainesville, Georgia 30501
Telecopy Number: (770) 532-5071
Attention: T. Treadwell Syfan
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy Number: (404) 572-5958
Attention: Walter G. Moeling IV
Regions: Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive Financial Officer
Copy to Counsel: Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Samuel E. Upchurch, Jr.
General Counsel
</TABLE>
11.9 GOVERNING LAW. 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, except to the extent that the Laws of the State of
Georgia relate to the consummation of the Merger.
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 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and
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interpreted according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of the Parties.
11.13 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.
11.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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.
ATTEST: FIRST NATIONAL BANCORP
By: /s/ C. Talmadge Garrison By: /s/ Peter D. Miller
------------------------------ ------------------------------
C. Talmadge Garrison Peter D. Miller
Secretary President, Chief
Administrative, and Chief
Financial Officer
[CORPORATE SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
By: /s/ Samuel E. Upchurch, Jr. By: /s/ J. Stanley Mackin
------------------------------ ------------------------------
Samuel E. Upchurch, Jr. J. Stanley Mackin
Corporate Secretary Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
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<PAGE> 118
APPENDIX II
PLAN OF MERGER
OF
FIRST NATIONAL BANCORP
INTO AND WITH
REGIONS MERGER SUBSIDIARY, INC.
Pursuant to this Plan of Merger ("Plan of Merger"), FIRST NATIONAL BANCORP,
a corporation organized and existing under the laws of the State of Georgia
("First National"), shall be merged into and with REGIONS MERGER SUBSIDIARY,
INC., a corporation organized and existing under the laws of the State of
Georgia ("Merger Sub") and a wholly owned subsidiary of REGIONS FINANCIAL
CORPORATION, a corporation organized and existing under the laws of the State of
Delaware ("Regions").
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth below
shall have the following meanings:
1.1 "CERTIFICATE OF MERGER" shall mean the Certificate of Merger to be
executed by Merger Sub and filed with the Secretary of State of the State of
Georgia relating to the merger of First National into and with Merger Sub as
contemplated by Section 2.1 of this Plan of Merger.
1.2 "EFFECTIVE TIME" shall mean the date and time on which the Merger
becomes effective pursuant to the Laws of the State of Georgia as defined in
Section 2.2 of this Plan of Merger.
1.3 "EXCHANGE AGENT" shall mean the exchange agent selected by Regions.
1.4 "FIRST NATIONAL COMMON STOCK" shall mean the $1.00 par value common
stock of First National.
1.5 "FIRST NATIONAL COMPANIES" shall mean, collectively, First National and
all First National Subsidiaries.
1.6 "FIRST NATIONAL STOCK PLANS" shall have the meaning set forth in the
Merger Agreement.
1.7 "GBCC" shall mean the Georgia Business Corporation Code, as in effect
at the Effective Time.
1.8 "INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
1.9 "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 federal or state regulatory agencies having jurisdiction over a person or
its Subsidiaries
1.10 "MERGER" shall mean the merger of First National into and with Merger
Sub as provided in Section 2.1 of this Plan of Merger.
1.11 "MERGER AGREEMENT" shall mean the Agreement and Plan of
Reorganization, dated as of October 22, 1995, by and between First National and
Regions.
1.12 "MERGER SUB COMMON STOCK" shall mean the $1.00 par value common stock
of Merger Sub.
1.13 "REGIONS COMMON STOCK" shall mean the $.625 par value common stock of
Regions.
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1.14 "REGIONS COMPANIES" shall mean, collectively, Regions and all Regions
Subsidiaries.
1.15 "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.
1.16 "SURVIVING CORPORATION" shall refer to Merger Sub as the surviving
corporation resulting from the Merger.
ARTICLE 2
TERMS OF MERGER
2.1 MERGER. Subject to the terms and conditions set forth in this Plan of
Merger, at the Effective Time, First National shall be merged into and with
Merger Sub in accordance with the provisions of Article 11 of the GBCC and with
the effect specified in Section 14-2-1106 of the GBCC. Merger Sub shall be the
Surviving Corporation of the Merger and shall continue to be governed by the
Laws of the State of Georgia.
2.2 EFFECTIVE TIME. The Merger shall become effective on the date and at
the time specified in the Certificate of Merger to be filed with the Secretary
of State of the State of Georgia as provided in Section 14-2-1105 of the GBCC.
2.3 ARTICLES OF INCORPORATION. The Articles of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall remain in full
force and effect following the Effective Time as the Articles of Incorporation
of the Surviving Corporation until otherwise amended or repealed as provided by
Law or by such Articles of Incorporation.
2.4 BYLAWS. The Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall continue in full force and effect as the Bylaws of the
Surviving Corporation until otherwise amended or repealed as provided by Law or
by such Bylaws.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION. 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
Regions, First National, or Merger Sub, or the stockholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of Regions 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 Merger Sub Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(c) Each share of First National Common Stock (excluding shares held
by any First National Company or any Regions Company, in each case other
than in a fiduciary capacity or as a result of debts previously contracted)
issued and outstanding at the Effective Time shall cease to be outstanding
and shall be converted into and exchanged for .76 of a share of Regions
Common Stock (subject to adjustment pursuant to Section 10.1(h) of the
Merger Agreement, the "Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event Regions changes the number of
shares of Regions 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
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date is not established) shall be prior to the Effective Time, the Exchange
Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY FIRST NATIONAL OR REGIONS. Each of the shares of First
National Common Stock held by any First National Company or by any Regions
Company, in each case other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this Plan
of Merger, each holder of shares of First National Common Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of Regions 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
Regions Common Stock multiplied by the market value of one share of Regions
Common Stock at the Effective Time. The market value of one share of Regions
Common Stock at the Effective Time shall be the closing price of such common
stock on the Nasdaq NMS (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Regions) on the
last trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a stockholder in respect of
any fractional shares.
3.5 CONVERSION OF STOCK RIGHTS. At the Effective Time, each award,
option, or other right to purchase or acquire shares of First National Common
Stock pursuant to stock options, stock appreciation rights, or stock awards
("First National Rights") granted by First National under the First National
Stock Plans, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to Regions
Common Stock, and Regions shall assume each First National Right, in accordance
with the terms of the First National Stock Plan and stock option agreement by
which it is evidenced, except that from and after the Effective Time, (i)
Regions and its Compensation Committee shall be substituted for First National
and the Committee of First National's Board of Directors (including, if
applicable, the entire Board of Directors of First National) administering such
First National Stock Plan, (ii) each First National Right assumed by Regions may
be exercised solely for shares of Regions Common Stock (or cash in the case of
stock appreciation rights), (iii) the number of shares of Regions Common Stock
subject to such First National Right shall be equal to the number of shares of
First National Common Stock subject to such First National Right immediately
prior to the Effective Time multiplied by the Exchange Ratio, and (iv) the per
share exercise price (or similar threshold price, in the case of stock awards)
under each such First National Right shall be adjusted by dividing the per share
exercise (or threshold) price under each such First National Right by the
Exchange Ratio and rounding up to the nearest cent. Notwithstanding the
provisions of clause (iii) of the preceding sentence, Regions shall not be
obligated to issue any fraction of a share of Regions Common Stock upon exercise
of First National Rights and any fraction of a share of Regions Common Stock
that otherwise would be subject to a converted First National Right shall
represent the right to receive a cash payment equal to the product of such
fraction and the difference between the market value of one share of Regions
Common Stock and the per share exercise price of such Right. The market value of
one share of Regions Common Stock shall be the closing price of such common
stock on the Nasdaq NMS (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Regions) on the
last trading day preceding the Effective Time. In addition, notwithstanding the
provisions of clauses (iii) and (iv) of the first sentence of this Section 3.5,
each First National Right which is an "incentive stock option" shall be adjusted
as required by Section 424 of the Internal Revenue Code, and the regulations
promulgated thereunder, so as not to constitute a modification, extension, or
renewal of the option, within the meaning of Section 424(h) of the Internal
Revenue Code. Regions agrees to take all necessary steps to effectuate the
foregoing provisions of this Section 3.5.
ARTICLE 4
DELIVERY OF CONSIDERATION
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Regions and
First National shall cause the Exchange Agent to mail to the former stockholders
of First National appropriate transmittal materials
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(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates theretofore representing shares of First National Common
Stock shall pass, only upon proper delivery of such certificates to the Exchange
Agent). After the Effective Time, each holder of shares of First National Common
Stock (other than shares to be canceled pursuant to Section 3.3 of this Plan of
Merger) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Plan of Merger, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Plan of Merger. To the extent
required by Section 3.4 of this Plan of Merger, each holder of shares of First
National Common Stock issued and outstanding at the Effective Time also shall
receive, upon surrender of the certificate or certificates representing such
shares, cash in lieu of any fractional share of Regions Common Stock to which
such holder may be otherwise entitled (without interest). Regions shall not be
obligated to deliver the consideration to which any former holder of First
National Common Stock is entitled as a result of the Merger until such holder
surrenders such holder's certificate or certificates representing the shares of
First National Common Stock for exchange as provided in this Section 4.1. The
certificate or certificates of First National Common Stock so surrendered shall
be duly endorsed as the Exchange Agent may require. Any other provision of this
Plan of Merger notwithstanding, neither the Surviving Corporation nor the
Exchange Agent shall be liable to a holder of First National Common Stock for
any amounts paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property Law.
4.2 RIGHTS OF FORMER FIRST NATIONAL STOCKHOLDERS. At the Effective Time,
the stock transfer books of First National shall be closed as to holders of
First National Common Stock immediately prior to the Effective Time and no
transfer of First National 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 Plan of Merger, each certificate theretofore
representing shares of First National Common Stock (other than shares to be
canceled pursuant to Section 3.3 of this Plan of Merger) shall from and after
the Effective Time represent for all purposes only the right to receive the
consideration provided in Sections 3.1 and 3.4 of this Plan of Merger in
exchange therefor, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which have been declared or made by First National in respect
of such shares of First National Common Stock in accordance with the terms of
this Plan of Merger and which remain unpaid at the Effective Time. To the extent
permitted by Law, former stockholders of record of First National shall be
entitled to vote after the Effective Time at any meeting of Regions stockholders
the number of whole shares of Regions Common Stock into which their respective
shares of First National Common Stock are converted, regardless of whether such
holders have exchanged their certificates representing First National Common
Stock for certificates representing Regions Common Stock in accordance with the
provisions of this Plan of Merger. 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 Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Plan of Merger, but
beginning 30 days after the Effective Time no dividend or other distribution
payable to the holders of record of Regions Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of First National 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 Plan of Merger. However, upon
surrender of such First National Common Stock certificate, both the Regions
Common Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered dividends and 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
MISCELLANEOUS
5.1 CONDITIONS PRECEDENT. Consummation of the Merger by Merger Sub shall
be conditioned on the satisfaction of, or waiver by Regions of, of the
conditions precedent to the Merger set forth in Sections 9.1 and
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<PAGE> 122
9.2 of the Merger Agreement. Consummation of the Merger by First National shall
be conditioned on the satisfaction of, or waiver by First National of, of the
conditions precedent to the Merger set forth in Sections 9.1 and 9.3 of the
Merger Agreement.
5.2 TERMINATION. This Plan of Merger may be terminated at any time prior
to the Effective Time by the parties hereto as provided in Article 10 of the
Merger Agreement.
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<PAGE> 123
APPENDIX IV
MORGAN STANLEY LETTERHEAD
December , 1995
Board of Directors
First National Bancorp
Gainesville, Georgia 30501
Members of the Board:
We understand that First National Bancorp ("First National" or the
"Company") and Regions Financial Corporation ("Regions") have entered into an
Agreement and Plan of Reorganization, dated as of October 22, 1995 (the
"Agreement"), which provides, among other things, for the merger (the "Merger")
of FBAC with and into a wholly owned subsidiary of Regions. Pursuant to the
Merger, First National will become a wholly owned subsidiary of Regions and each
issued and outstanding share of common stock, par value $1.00 per share, of
First National (the "First National Common Stock"), other than shares held by
First National or held by Regions or any of their affiliates (except for shares
held in a fiduciary capacity or shares acquired in respect of debt previously
contracted) shall be converted into 0.76 of a share (the "Exchange Ratio") of
common stock, par value $0.625 per share, of Regions (the "Regions Common
Stock"). The terms and conditions of the Merger are more fully set forth in the
Agreement.
You have asked for our opinion as to whether the Exchange Ratio is fair,
from a financial point of view, to the holders of First National Common Stock
(other than Regions and its affiliates).
For purposes of the opinion set forth herein, we have:
(a) analyzed certain publicly available financial statements and other
information of First National and Regions;
(b) analyzed certain internal financial statements and other financial
and operating data concerning First National prepared by the management of
First National;
(c) reviewed certain internal financial statements concerning Regions
prepared by the management of Regions;
(d) analyzed certain financial projections prepared by the management
of First National and Regions, respectively;
(e) discussed the past and current operations and financial condition
and the prospects of Regions and First National with senior executives of
Regions and First National, respectively;
(f) reviewed the reported prices and trading activity for the First
National Common Stock and the Regions Common Stock;
(g) compared the financial performance of First National and Regions
and the prices and trading activity of the First National Common Stock and
the Regions Common Stock with that of certain other comparable publicly
traded companies and their securities;
(h) discussed the results of certain regulatory examinations of First
National and Regions with the senior managements of the respective
companies;
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First National Bancorp
December , 1995
Page 2
(i) reviewed and discussed with the senior managements of First
National and Regions the strategic objectives of the Merger and the
synergies and certain other benefits of the Merger;
(j) reviewed and discussed with the senior managements of First
National and Regions certain estimates of the cost savings expected to
result from the Merger;
(k) reviewed the financial terms, to the extent publicly available, of
certain comparable merger transactions;
(l) participated in discussions and negotiations among representatives
of First National and Regions and their financial and legal advisors;
(m) reviewed the Agreement, the Stock Option agreement, dated as of
October 22, 1995, by and between First National and Regions, and certain
related documents; and
(n) performed such other analyses as we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for purposes of this
opinion. With respect to the financial projections, including the estimates of
synergies, cost savings, and other benefits expected to result from the Merger,
we have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of the future financial
performance of First National and Regions, respectively. We have not made any
independent valuation or appraisal of the assets or liabilities of First
National and Regions, nor have we been furnished with any such appraisals and we
have not examined any loan files of First National and Regions. Our opinion is
necessarily based on economic, market, and other conditions as in effect on, and
the information made available to us as of, the date hereof.
In the past, Morgan Stanley & Co. Incorporated and its affiliates have
provided financial advisory and financing services to First National and have
received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of First National only and may not be used for any other purpose
without our prior written consent, except that this opinion may be included in
its entirety in any filing by First National with the Securities and Exchange
Commission in connection with the Merger.
Based on and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio is fair, from a financial point of view, to the
holders of First National Common Stock (other than Regions and its affiliates).
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ William M. Weiant
------------------------------
William M. Weiant
Managing Director
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<PAGE> 125
APPENDIX IV
[LETTERHEAD]
December , 1995
The Board of Directors
Regions Financial Corporation
417 North 20th Street
Birmingham, AL 35202-0247
Dear Lady and Gentlemen:
We understand that Regions Financial Corporation ("Regions") and First
National Bancorp ("First National") have entered into an Agreement and Plan of
Reorganization, dated as of October 22, 1995 ("Agreement"), pursuant to which
First National will be merged into a newly created, wholly owned subsidiary of
Regions ("Regions Merger Subsidiary") with the new subsidiary as the surviving
entity resulting from the merger (the "Merger"). Upon consummation of the
Merger, each share of First National common stock will be converted into 0.76 of
a share of Regions common stock. You have provided us with the joint proxy
statement/prospectus, which includes the Agreement, in substantially the form to
be sent to the stockholders of Regions and First National (the "Joint Proxy
Statement").
You have asked us to render our opinion as to whether the Exchange Ratio is
fair, from a financial point of view, to the stockholders of Regions.
In the course of our analyses for rendering this opinion, we have:
(a) reviewed the Joint Proxy Statement;
(b) reviewed Regions' Annual Report to Stockholders and Annual Report
on Form 10-K for the fiscal year ended December 31, 1994, and its Quarterly
Reports on Form 10-Q for the periods ended March 31, June 30, and September
30, 1995;
(c) reviewed First National's Annual Report to Stockholders and Annual
Report on Form 10-K for the fiscal year ended December 31, 1994, its
Quarterly Reports on Form 10-Q for the periods ended March 31, June 30, and
September 30, 1995, and the Proxy Statement/Prospectus dated May 1, 1995 of
First National used in connection with the acquisition of FF Bancorp, Inc.;
(d) reviewed certain operating and financial information provided to
us by Regions' management relating to its business and prospects and
reviewed certain operating and financial information, including
projections, provided to us by First National's management relating to its
business and prospects;
(e) met with certain members of Regions' and First National's senior
management to discuss their operations, historical financial statements,
and future prospects;
(f) reviewed the historical prices and trading volumes of the shares
of Regions Common Stock and First National Common Stock;
(g) reviewed publicly available financial data and stock market
performance data of companies which we deemed generally comparable to
Regions and First National;
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<PAGE> 126
(h) reviewed the terms of recent acquisitions of companies which we
deemed generally comparable to the Merger; and
(i) conducted such other studies, analyses, inquiries, and
investigations as we deemed appropriate.
In the course of our review, we have relied upon and assumed the accuracy
and completeness of the financial and other information provided to us by
Regions and First National. With respect to Regions' and First National's
projected financial results, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the managements of Regions and First National as to the expected
future performance of Regions and First National, respectively. We have not
assumed any responsibility for the information or projections provided to us and
we have further relied upon the assurances of the managements of Regions and
First National that they are unaware of any facts that would make the
information or projections provided to us incomplete or misleading. In arriving
at our opinion, we have not performed or obtained any independent appraisal of
the assets of Regions and First National. Our opinion is necessarily based on
economic, market, and other conditions, and the information made available to
us, as of the date hereof.
Based on the foregoing, it is our opinion that the Exchange Ratio is fair,
from a financial point of view, to the stockholders of Regions.
We have acted as financial advisor to Regions in connection with the Merger
and will receive a fee for such services, payment of a portion of which is
contingent upon the consummation of the Merger.
Very truly yours,
BEAR, STEARNS & CO. INC.
By:
--------------------------------------
Managing Director
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<PAGE> 127
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Tenth of the Certificate of Incorporation of the Registrant
provides:
"(a) The corporation shall indemnify its officers, directors,
employees and agents to the full extent permitted by the General
Corporation Law of Delaware. (b) No director of the corporation shall be
personally liable to the corporation or its stockholders for monetary
damages, for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit."
Section 145 of the Delaware General Corporation law empowers the Registrant
to indemnify its officers and directors under certain circumstances. The
pertinent provisions of that statute read as follows:
"(a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
"(b) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
"(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
"(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such
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determination shall be made (1) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though less than a
quorum, or (2) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
"(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
"(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
"(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
"(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
"(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
"(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
"(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of expenses
or indemnification brought under this section or under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise.
The Court of Chancery may summarily determine a corporation's obligation to
advance expenses (including attorneys' fees)."
The Registrant has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a
director or officer whose actions in his capacity result in liability, or to the
Registrant, in the event it has indemnified the director or officer. Major
exclusions from coverage include
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libel, slander, personal profit based on inside information, illegal payments,
dishonesty, accounting of securities profits in violation of Section 16(b) of
the Securities Exchange Act of 1934 and acts within the scope of the Pension
Reform Act of 1974.
ITEM 21. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- -------------------------------------------------------------------------------------
<C> <S> <C>
2.1 -- Agreement and Plan of Reorganization, dated as of October 22, 1995, by and between
First National Bancorp and Regions Financial Corporation. (Included as Appendix I to
the Joint Proxy Statement included as part of this Registration Statement.)
2.2 -- Plan of Merger between First National Bancorp and Regions Merger Subsidiary, Inc.
(Included as Appendix II to the Joint Proxy Statement included as part of this
Registration Statement.)
2.3 -- Stock Option Agreement, dated as of October 22, 1995 by and between Regions Financial
Corporation and First National Bancorp. (Incorporated herein by reference to Exhibit
2.2 to Registrant's Current Report on Form 8-K dated October 24, 1995.)
4.1 -- Certificate of Incorporation of Regions Financial Corporation. (Incorporated herein
by reference from Exhibit 4.1 to Registrant's S-4 Registration Statement filed with
the Commission and assigned file number 33-54231.)
4.2 -- Bylaws of Regions Financial Corporation. (Incorporated herein by reference from
Exhibit 4.2 to Registrant's S-4 Registration Statement filed with the commission and
assigned file number 33-54231.)
5. -- Opinion of Lange, Simpson, Robinson & Somerville as to the validity of the shares of
Regions Common Stock.
8. -- Opinion of Alston & Bird as to federal income tax consequences.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of KPMG Peat Marwick LLP.
23.3 -- Consent of Hacker, Johnson, Cohen & Grieb.
23.4 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.5 -- Consent of Alston & Bird -- included in Exhibit 8.
23.6 -- Consent of Morgan Stanley & Co. Incorporated.
23.7 -- Consent of Bear, Stearns & Co. Inc.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the
signature page of the original registration statement.
99.1 -- Form of proxy of First National Bancorp.
99.2 -- Form of proxy of Regions Financial Corporation.
</TABLE>
ITEM 22. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b)) if, in the aggregate, the changes in
volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
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(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
D. (1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
E. The undersigned Registrant hereby undertakes to respond to requests for
information that are incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
F. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Birmingham, State of
Alabama on this the 22nd day of November, 1995.
REGISTRANT
REGIONS FINANCIAL CORPORATION
By: /s/ RICHARD D. HORSLEY
------------------------------------
Richard D. Horsley
Vice Chairman Executive Financial
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Horsley and Samuel E. Upchurch, Jr.,
and each of them, his or her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him or her and in his or her
name, place, and stead, in any and all capacities, to sign any or all amendments
to this registration statement, and to file the same with all exhibits thereto,
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ----------------------------- ------------------
<C> <S> <C>
/s/ J. STANLEY MACKIN Chairman of the Board and November 22, 1995
- --------------------------------------------- Chief Executive Officer and
J. Stanley Mackin Director (Principal
Executive Officer)
/s/ RICHARD D. HORSLEY Vice Chairman and Executive November 22, 1995
- --------------------------------------------- Financial Officer and
Richard D. Horsley Director
/s/ ROBERT P. HOUSTON Executive Vice President and November 22, 1995
- --------------------------------------------- Comptroller (Principal
Robert P. Houston Financial Officer)
/s/ SHEILA S. BLAIR Director November 22, 1995
- ---------------------------------------------
Sheila S. Blair
/s/ WILLIAM R. BOLES, SR. Director November 22, 1995
- ---------------------------------------------
William R. Boles, Sr.
/s/ JAMES B. BOONE, JR. Director November 22, 1995
- ---------------------------------------------
James B. Boone, Jr.
</TABLE>
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<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ----------------------------- ------------------
<C> <S> <C>
/s/ ALBERT P. BREWER Director November 22, 1995
- ---------------------------------------------
Albert P. Brewer
/s/ JAMES S.M. FRENCH Director November 22, 1995
- ---------------------------------------------
James S.M. French
/s/ CATESBY AP C. JONES Director November 22, 1995
- ---------------------------------------------
Catesby ap C. Jones
/s/ OLIN B. KING Director November 22, 1995
- ---------------------------------------------
Olin B. King
/s/ HENRY E. SIMPSON Director November 22, 1995
- ---------------------------------------------
Henry E. Simpson
/s/ ROBERT E. STEINER, III Director November 22, 1995
- ---------------------------------------------
Robert E. Steiner, III
/s/ LEE J. STYSLINGER, JR. Director November 22, 1995
- ---------------------------------------------
Lee J. Styslinger, Jr.
</TABLE>
II-6
<PAGE> 1
EXHIBIT 5
LANGE, SIMPSON, ROBINSON & SOMERVILLE
ATTORNEYS AND COUNSELORS
417 20th Street North, Suite 1700
Birmingham, Alabama 35203-3272
Telephone: (205) 250-5000
Facsimile: (205) 250-5034
November 22, 1995
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation--S4 Registration
Statement,
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the merger between First National
Bancorp ("First National") and an interim subsidiary of Regions (the "Merger")
and in connection with the registration of shares of common stock of Regions,
par value $.625 per share ("Regions Common Stock"), on Form S-4 under the
Securities Act of 1933. The Merger provides for issuance of shares of Regions
Common Stock to the stockholders of First National upon consummation of the
Merger. Upon consummation of the Merger, each share of First National common
stock issued and outstanding, with certain exceptions, will be converted into
0.76 of a share of Regions common stock, subject to possible adjustment.
We have examined and are familiar with the registration statement on Form
S-4 filed with the Securities and Exchange Commission. We have examined and
are familiar with the records relating to the organization of Regions and the
documents and records as we have deemed relevant for purposes of rendering this
opinion.
<PAGE> 2
Regions Financial Corporation
November 22, 1995
Page 2
Based on the foregoing it is our opinion that upon satisfaction of the
conditions precedent to consummation of the Merger, or waiver of such conditions
capable of being waived, and upon consummation of the Merger, the shares of
Regions Common Stock issued pursuant to the Merger will be duly authorized,
validly issued and outstanding, fully paid and non-assessable, with no
personal liability attaching to the ownership thereof.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to Lange, Simpson, Robinson &
Somerville under the caption "Opinions" in the joint proxy statement forming a
part of the registration statement.
Very truly yours,
/s/ Lange, Simpson, Robinson & Somerville
<PAGE> 1
EXHIBIT 8
ALSTON & BIRD
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777
Philip C. Cook Direct Dial: 404-881-7491
November 22, 1995
Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
First National Bancorp
First National Bancorp Building, 7th Floor
303 Jesse Jewell Parkway
Gainesville, Georgia 30501
Re: AGREEMENT AND PLAN OF REORGANIZATION INVOLVING FIRST
NATIONAL BANCORP, REGIONS FINANCIAL CORPORATION, AND
REGIONS MERGER SUBSIDIARY, INC.
Ladies and Gentlemen:
We have served as counsel to Regions Financial Corporation
("Regions") in connection with the proposed reorganization of Regions pursuant
to the Agreement and Plan of Reorganization, dated as of October 22, 1995 (the
"Agreement") by and between Regions and First National Bancorp ("First
National") which provides for the merger (the "Merger") of First National with
and into Regions Merger Subsidiary, Inc. ("Regions Merger Subsidiary"), a
wholly-owned subsidiary of Regions. In our capacity as counsel to Regions, our
opinion has been requested with respect to certain of the federal income tax
consequences of the Merger.
In rendering this opinion, we have examined (i) the Internal
Revenue Code of 1986, as amended (the "Code"), and Treasury Regulations, (ii)
the legislative history of applicable sections of the Code, and (iii)
appropriate Internal Revenue Service and court decisional authority. In
addition, we have relied upon certain assumptions as more fully described
below. All terms used herein without definition shall have the respective
meanings specified in the Agreement, and unless otherwise specified, all
section references herein are to the Code.
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004-2601
<PAGE> 2
Regions Financial Corporation
First National Bancorp
November 22, 1995
Page 2
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined
such documents as we have deemed appropriate, including:
(1) The Agreement;
(2) The Registration Statement on Form S-4 to be filed by
Regions with the Securities and Exchange Commission under the Securities Act of
1933, on November 22, 1995, including the Joint Proxy Statement/Prospectus for
Special Meetings of the Stockholders of Regions and First National; and
(3) Such additional documents as we have considered
relevant.
In our examination of the documents, we have assumed with your
consent that all documents submitted to us as photocopies faithfully reproduce
the originals thereof, that such originals are authentic, that all such
documents have been or will be duly executed to the extent required, and that
all statements set forth in such documents are accurate.
We have also obtained such additional information and
representations as we have deemed relevant and necessary through consultation
with various officers and representatives of First National and Regions and
through certificates provided by the management of First National and the
management of Regions.
You have advised us that the proposed transaction will enable
the combined organization to realize certain economies of scale, yield a wider
array of banking and banking-related services to consumers and businesses, and
provide for a stronger market position in each of the markets in which First
National operates. To achieve these goals, the following will occur pursuant
to the Agreement:
(1) At the Effective Time, First National will be merged
with and into Regions Merger Subsidiary in accordance with the provisions of
Section 14-2-1101 of the Georgia Business Corporation Code ("GBCC") and with the
effect provided in Section 14-2-1106 of the GBCC (the "Merger"). Regions Merger
Subsidiary shall be the surviving entity and shall be a wholly-owned, first-tier
subsidiary of Regions and shall continue to be governed by the Laws of the State
of Georgia. The Merger shall be consummated pursuant to the terms of the
Agreement and the related Plan of Merger, which have been approved and adopted
by the Board of Directors of First National and will be approved by the Board
of Directors of Regions Merger Subsidiary upon its organization.
<PAGE> 3
Regions Financial Corporation
First National Bancorp
November 22, 1995
Page 3
(2) 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 Regions 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 Regions Merger Subsidiary Common
Stock issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding from and after the Effective Time.
(c) Each share of First National Common Stock
(excluding shares held by First National, Regions, or their respective
subsidiaries, in each case other than shares held in a fiduciary capacity or as
a result of debts previously contracted) issued and outstanding at the
Effective Time shall cease to be issued and outstanding and shall be converted
into and exchanged for 0.76 of a share of Regions Common Stock (subject to
possible adjustment pursuant to Section 10.1(h) of the Agreement) (the
"Exchange Ratio").
(3) In the event Regions changes the number of shares of
Regions 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 to reflect such stock split, stock dividend, or recapitalization.
(4) Each of the shares of First National Common Stock held
by First National or any of its wholly owned Subsidiaries or by Regions or any
of its wholly owned Subsidiaries, 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.
(5) Notwithstanding any other provision of the Agreement,
each holder of shares of First National Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of Regions Common Stock (after taking into account all certificates
representing shares of First National Common Stock delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Regions Common Stock multiplied by the
market value of one share of Regions Common Stock at the Effective Time. The
market value of one share of Regions Common Stock at the Effective Time shall
be the
<PAGE> 4
Regions Financial Corporation
First National Bancorp
November 22, 1995
Page 4
closing price of such common stock on the Nasdaq National Market System (as
reported by The Wall Street Journal or, if not reported thereby, another
authoritative source as selected by Regions) on the last trading day preceding
the Effective Time.
(6) At the Effective Time, each award, option, or other
right to purchase or acquire shares of First National Common Stock pursuant to
stock options, stock appreciation rights, or stock awards ("First National
Rights") granted by First National under the First National Stock Plans, which
are outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become rights with respect to Regions Common Stock, and
Regions shall assume each First National Right in accordance with the terms of
the First National Stock Plan and stock option agreement by which it is
evidenced on substantially the same terms and conditions.
(7) All restrictions or limitations on transfer with
respect to First National Common Stock awarded under the First National Stock
Plans or any other plan, program, or arrangement of any First National Company,
to the extent that such restrictions or limitations shall not have already
lapsed, and except as otherwise expressly provided in such plan, program, or
arrangement, shall remain in full force and effect with respect to shares of
Regions Common Stock into which such restricted stock is converted.
With your consent, we have also assumed that the following
statements are true on the date hereof and will be true on the date on which
the Merger is consummated:
(1) The fair market value of the Regions stock received
by each stockholder of First National will, in each instance, be approximately
equal to the fair market value of the First National stock surrendered in
exchange therefor.
(2) There is no plan or intention by any of the
stockholders of First National who own five percent (5.0%) or more of the
outstanding First National Common Stock, and to the best of the knowledge of
the management of First National, the remaining First National stockholders
have no plan or intention, to sell, exchange, or otherwise dispose of a number
of shares of Regions Common Stock that they will receive in the Merger that
will reduce on the part of the First National stockholders such stockholders'
ownership of Regions Common Stock to a number of shares having an aggregate
value as of the date of the Merger of less than fifty percent (50%) of the
aggregate value of all of the stock of First National outstanding immediately
prior to the Merger. For purposes of this representation, shares of First
National Common Stock that are disposed of or exchanged for cash in lieu of
fractional shares of Regions Common Stock will be treated as outstanding First
National Common Stock immediately prior to the Merger. Moreover, shares of
First National Common Stock and shares of Regions Common Stock held by
<PAGE> 5
Regions Financial Corporation
First National Bancorp
November 22, 1995
Page 5
First National stockholders and otherwise sold, redeemed, or disposed of prior
or subsequent to the transactions will be considered outstanding immediately
prior to the Merger in making this representation.
(3) In the Merger, Regions Merger Subsidiary will acquire
assets representing at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by First National immediately prior to the Merger. For
this purpose, all redemptions and distributions (except for regular, normal
dividends) made by First National immediately preceding the Merger and all
amounts paid out of the assets of First National as reorganization expenses
will be considered as assets held by First National immediately prior to the
Merger. In addition, assets disposed of in contemplation of the Merger will be
considered as assets held by First National immediately prior to the Merger.
(4) Regions will not (i) liquidate Regions Merger
Subsidiary, (ii) sell or otherwise dispose of its stock in Regions Merger
Subsidiary, or (iii) cause Regions Merger Subsidiary to sell or otherwise
dispose of any of the assets acquired by Regions Merger Subsidiary from First
National, except for dispositions made in the ordinary course of business,
unless either the Internal Revenue Service issues a letter ruling or Alston &
Bird opines that this Merger will continue to qualify as a reorganization under
Section 368(a) of the Code notwithstanding such sale, disposition, transfer, or
liquidation.
(5) From and after the consummation of the Merger,
Regions Merger Subsidiary or its successors will continue the historic business
of First National or use a significant portion of First National's business
assets in a business.
(6) The liabilities of First National to be assumed by
Regions Merger Subsidiary in the Merger (and the liabilities to which the
assets to be transferred are subject) were incurred or will be incurred by
First National in the ordinary course of its business.
(7) There is not now nor will there be at the time of the
Merger any intercorporate indebtedness existing between First National and
Regions or between First National and Regions Merger Subsidiary that was
issued, acquired, or will be settled at a discount.
(8) First National, Regions Merger Subsidiary, and
Regions will each pay their respective expenses incurred in connection with the
Merger, except that each of Regions and First National will bear and pay
one-half of the printing costs in connection
<PAGE> 6
Regions Financial Corporation
First National Bancorp
November 22, 1995
Page 6
with the Registration Statement and this Joint Proxy Statement. Stockholders
of First National will pay their own expenses, if any, incurred in connection
with the Merger.
(9) For each of Regions, Regions Merger Subsidiary, and
First National, not more than twenty-five percent (25%) of the fair market
value of its adjusted total assets consists of stock and securities of any one
issuer, and not more than fifty percent (50%) of the fair market value of its
adjusted total assets consists of stock and securities of five or fewer
issuers. For purposes of the preceding sentence, (a) a corporation's
adjusted total assets exclude cash, cash items (including accounts receivable
and cash equivalents), and United States government securities, (b) a
corporation's adjusted total assets exclude stock and securities issued by any
subsidiary at least fifty percent (50%) of the voting power or fifty percent
(50%) of the total fair market value of the stock of which is owned by the
corporation, but the corporation is treated as owning directly a ratable share
(based on the percentage of the fair market value of the subsidiary's stock
owned by the corporation) of the assets owned by any such subsidiary, and (c)
all corporations that are members of the same "controlled group" within the
meaning of section 1563(a) of the Code are treated as a single issuer.
(10) None of the parties are under the jurisdiction of a
court in a case under Title 11 of the United States Code, a receivership,
foreclosure, or similar proceeding in a federal or state court.
(11) Prior to the Merger, Regions will be in control of
Regions Merger Subsidiary. For purposes of this assumption, as well as
assumption (12), a corporation is considered to control a corporation in which
it holds at least eighty percent (80%) of the total combined voting power of
all classes of stock entitled to vote and at least eighty percent (80%) of the
total number of shares of all other classes of stock.
(12) Following the Merger, Regions Merger Subsidiary will
not issue additional shares of its stock that would result in Regions losing
control of Regions Merger Subsidiary.
(13) The fair market value of the assets to be transferred
from First National to Regions Merger Subsidiary as a result of the Merger
will equal or exceed the sum of the liabilities of First National to be
assumed by Regions Merger Subsidiary (plus the amount of liabilities to which
the assets to be transferred are subject).
(14) The payment of cash to First National stockholders in
lieu of fractional shares of Regions Common Stock will not be a separately
bargained for
<PAGE> 7
Regions Financial Corporation
First National Bancorp
November 22, 1995
Page 7
consideration, but will be undertaken solely for the purpose of avoiding the
expense and inconvenience of issuing and transferring fractional shares. The
total cash consideration that will be paid to First National stockholders in
lieu of fractional shares of Regions Common Stock will represent less than one
percent (1%) of the total consideration issued in the Merger.
(15) Regions has no plan or intention to redeem or
otherwise reacquire its stock that will be issued in the Merger.
(16) None of the compensation received by any
stockholder-employee of First National represents separate consideration for,
or is allocable to, any of his First National Common Stock. None of the
Regions Common Stock that will be received by First National
stockholder-employees in the Merger represents separately bargained for
consideration which is allocable to any employment agreement or arrangement.
(17) First National has no plan or intention to make, and
has not made, any distributions other than regular, normal dividends to
stockholders prior to the Merger.
(18) No stock of Regions Merger Subsidiary will be issued
in the Merger.
(19) First National has not reacquired or redeemed any of
its stock in contemplation of the Merger.
(20) The Agreement represents the entire understanding of
First National, Regions, and Regions Merger Subsidiary with respect to the
Merger.
(21) The Merger is being undertaken for the purposes of
enhancing the business of First National through utilization of the financial
resources of Regions and allowing Regions to expand its banking business into
the markets served by First National and for other business purposes.
(22) First National has not filed, and holds no assets
subject to, a consent under section 341(f) of the Code and the regulations
thereunder.
<PAGE> 8
Regions Financial Corporation
First National Bancorp
November 22, 1995
Page 8
(23) First National is not a party to, and holds no assets
subject to, a "safe harbor lease" under former section 168(f)(8) of the Code
and the regulations thereunder.
(24) Regions does not own, directly or indirectly, nor has
it owned during the past five years, directly or indirectly, any stock of First
National.
OPINIONS
Based on the foregoing assumptions, we are of the opinion that:
(1) Provided the merger of First National with and into
Regions Merger Subsidiary qualifies as a statutory merger under applicable law,
the merger will qualify as a reorganization within the meaning of Section
368(a) of the Code.
(2) No gain or loss will be recognized to the First
National stockholders upon the receipt of Regions Common Stock solely in
exchange for their shares of First National Common Stock.
(3) The basis of the Regions Common Stock to be received
by First National stockholders will be the same as the basis of the First
National Common Stock surrendered in exchange.
(4) The holding period of the Regions Common Stock to be
received by a First National stockholder (including the holding period of any
fractional share interest) will include the holding period of the First
National Common Stock surrendered in exchange therefor, provided the First
National Common Stock was held as a capital asset on the date of the exchange.
(5) The payment of cash in lieu of fractional shares of
Regions Common Stock will be treated as if the fractional shares were issued as
part of the exchange and then redeemed by Regions. These cash payments will be
treated as having been received as distributions in full payment in exchange
for the stock redeemed. Generally, any gain or loss recognized upon such
exchange will be capital gain or loss, provided the fractional share would
constitute a capital asset in the hands of the exchanging stockholder.
The opinions expressed herein are based upon existing
statutory, regulatory, and judicial authority, any of which may be changed at
any time with
<PAGE> 9
Regions Financial Corporation
First National Bancorp
November 22, 1995
Page 9
retroactive effect. In addition, our opinions are based solely on the
documents that we have examined, the additional information that we have
obtained, and the statements set out herein, which we have assumed are true on
the date hereof and will be true on the date on which the Merger is
consummated. Our opinions cannot be relied upon if any of the facts pertinent
to the Federal income tax treatment of the Merger stated in such documents or
in such additional information is, or later becomes, inaccurate, or if any of
the statements set out herein are, or later become, inaccurate. Finally, our
opinions are limited to the tax matters specifically covered thereby, and we
have not been asked to address, nor have we addressed, any other tax
consequences of the Merger, including for example any issues related to
intercompany transactions, accounting methods, or changes in accounting methods
resulting from the Merger.
This opinion is being provided solely for the benefit of
Regions, First National, and their stockholders. No other person or party
shall be entitled to rely on this opinion.
We hereby consent to the use of this opinion and to the
references made to the firm under the captions "Summary -- The Merger,"
"Description of Transaction--Certain Federal Income Tax Consequences," and
"Opinions" in the Joint Proxy Statement/Prospectus constituting part of the
Registration Statement on Form S-4 of the Registrant.
Very truly yours,
ALSTON & BIRD
By: /s/ Philip C. Cook
-------------------------
Philip C. Cook
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Regions Financial
Corporation for the registration of up to 16,432,099 shares of its common stock
and to the incorporation by reference therein of our report dated February 6,
1995, with respect to the consolidated financial statements of Regions Financial
Corporation included in its Annual Report to Stockholders which is incorporated
by reference in its Annual Report (Form 10-K) for the year ended December 31,
1994, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Birmingham, Alabama
November 20, 1995
<PAGE> 1
EXHIBIT 23.2
Independent Accountants' Consent
The Board of Directors
Regions Financial Corporation:
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
Our reports refer to a change in the method of accounting for investment
securities to adopt the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," at December 31, 1993, a change in the method of accounting for
income taxes in 1993 to adopt the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," and a change in
the method of accounting for postretirement benefits other than pensions in
1993 to adopt the provisions of Statement of Financial Accounting Standards No.
106, "Employers' Accounting For Postretirement Benefits Other than Pensions."
/s/KPMG PEAT MARWICK LLP
Atlanta, Georgia
November 22, 1995
<PAGE> 1
EXHIBIT 23.3
Independent Accountants' Consent
The Board of Directors
Regions Financial Corporation:
We consent to the use of our report dated January 27, 1995, with respect to the
consolidated balance sheets of FF Bancorp, Inc. and subsidiaries as of December
31, 1994 and 1993, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1994, which report appears in the Form 8-K of Regions
Financial Corporation dated November 22, 1995 incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the prospectus.
Our report refers to a change in the method of accounting for income taxes in
1993 to adopt the provisions of Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," and a change in the method of accounting
for investment securities to adopt the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," at December 31, 1993.
/s/ Hacker, Johnson, Cohen & Grieb
Tampa, Florida
November 22, 1995
<PAGE> 1
EXHIBIT 23.6
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the use in this Registration Statement on Form S-4 of
Regions Financial Corporation of our letter to the Board of Directors of First
National Bancorp included as Appendix III to the Joint Proxy
Statement/Prospectus that is a part of this Registration Statement, and to the
references to such letter and to our firm in such Joint Proxy
Statement/Prospectus. In giving such consent we do not thereby admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933 or the rules and regulations of the Securities
and Exchange Commission thereunder.
/s/ Morgan Stanley & Co. Incorporated
MORGAN STANLEY & CO. INCORPORATED
New York, New York
November 22, 1995
<PAGE> 1
EXHIBIT 23.7
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the use in this Registration Statement on Form S-4 of
Regions Financial Corporation of our letter to the Board of Directors of
Regions Financial Corporation included as Appendix IV to the Joint Proxy
Statement/Prospectus that is a part of this Registration Statement, and to the
references to such letter and to our firm in such Joint Proxy
Statement/Prospectus. In giving such consent we do not thereby admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933 or the rules and regulations of the Securities
and Exchange Commission thereunder.
/s/ Bear, Stearns & Co. Inc.
BEAR, STEARNS & CO. INC.
New York, New York
November 22, 1995
<PAGE> 1
EXHIBIT 99.1
FIRST NATIONAL BANCORP COMMON STOCK PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF FIRST NATIONAL BANCORP FOR
THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 11, 1996
The undersigned hereby appoints
____________ or ______________, or any
of them, with individual power of
substitution, proxies to vote all shares
of Common Stock of First National
Bancorp ("First National") which the
undersigned may be entitled to vote at
the Special Meeting of Stockholders of
First National to be held at The Theatre
in the Georgia Mountain Center, 301 Main
Street, Gainesville, Georgia, on January
11, 1996 at 10:00 A.M., Local Time, and
any adjournment thereof.
SAID PROXIES WILL VOTE ON THE PROPOSAL SET FORTH IN THE NOTICE OF THE
SPECIAL MEETING AND JOINT PROXY STATEMENT/PROSPECTUS AS SPECIFIED ON THIS CARD
AND ARE AUTHORIZED TO VOTE IN THEIR DISCRETION AS TO ANY OTHER BUSINESS WHICH
MAY PROPERLY COME BEFORE THE MEETING. IF A VOTE IS NOT SPECIFIED, SAID PROXIES
WILL VOTE IN FAVOR OF PROPOSAL 1.
1. FOR [ ], or AGAINST [ ], or ABSTAIN FROM VOTING ON [ ] a proposal to
approve an Agreement and Plan of Reorganization, dated as of October 22,
1995, by and between First National and Regions Financial Corporation,
a Delaware corporation ("Regions"), and the related Plan of Merger, by
and between First National and Regions Merger Subsidiary, Inc., a
wholly owned subsidiary of Regions ("Regions Merger Subsidiary"),
pursuant to which (i) First National will merge (the "Merger") with and
into Regions Merger Subsidiary, (ii) each share of the $1.00 par value
common stock of First National issued and outstanding at the effective
time of the Merger will be exchanged for 0.76 of a share of the $0.625
par value common stock of Regions, subject to possible adjustment, and
cash in lieu of any fractional share, and (iii) Regions will assume the
obligations of First National under various stock plans and programs
and adopt substitute plans where appropriate, all as more fully
described in the Joint Proxy Statement/Prospectus.
PLEASE MARK, SIGN BELOW, DATE, AND RETURN THIS PROXY PROMPTLY
IN THE ENVELOPE FURNISHED.
Please sign exactly as name appears
below. When shares are held by joint
tenants, both should sign. When signing
as attorney, as executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
DATED: __________________, 199__
_______________________________________
Signature
_______________________________________
Signatures if held jointly
<PAGE> 1
EXHIBIT 99.2
REGIONS FINANCIAL CORPORATION COMMON STOCK PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF REGIONS FINANCIAL CORPORATION
FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 11, 1996
The undersigned hereby appoints
___________ or ______________, or any
of them, with individual power of
substitution, proxies to vote all shares
of Common Stock of Regions Financial
Corporation ("Regions") which the
undersigned may be entitled to vote at
the Special Meeting of Stockholders of
Regions to be held at Regions Training
Center, 298 West Valley Avenue,
Birmingham, Alabama, on January 11,
1996, at 10:00 A.M., Local Time, and any
adjournment thereof.
SAID PROXIES WILL VOTE ON THE PROPOSAL SET FORTH IN THE NOTICE OF THE
SPECIAL MEETING AND JOINT PROXY STATEMENT/PROSPECTUS AS SPECIFIED ON THIS CARD
AND ARE AUTHORIZED TO VOTE IN THEIR DISCRETION AS TO ANY OTHER BUSINESS WHICH
MAY PROPERLY COME BEFORE THE MEETING. IF A VOTE IS NOT SPECIFIED, SAID PROXIES
WILL VOTE IN FAVOR OF PROPOSAL 1.
1. FOR [ ], or AGAINST [ ], or ABSTAIN FROM VOTING ON [ ] a proposal to
approve the issuance of shares of $0.625 par value common stock of
Regions ("Regions Common Stock") in connection with the proposed
acquisition of First National Bancorp, a Georgia corporation ("First
National"), by Regions in accordance with the Agreement and Plan of
Reorganization, dated as of October 22, 1995, by and between Regions
and First National, pursuant to which (i) First National will merge
(the "Merger") with and into Regions Merger Subsidiary, Inc., a wholly
owned subsidiary of Regions, (ii) each share of the $1.00 par value
common stock of First National issued and outstanding at the effective
time of the Merger will be exchanged for 0.76 of a share of Regions
Common Stock, subject to possible adjustment, and cash in lieu of any
fractional share, and (iii) Regions will assume the obligations of
First National under various stock plans and programs and adopt
substitute plans where appropriate, all as more fully described in the
Joint Proxy Statement/Prospectus.
PLEASE MARK, SIGN BELOW, DATE, AND RETURN THIS PROXY PROMPTLY
IN THE ENVELOPE FURNISHED.
Please sign exactly as name appears
below. When shares are held by joint
tenants, both should sign. When signing
as attorney, as executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
DATED: __________________, 199__
________________________________________
Signature
________________________________________
Signatures if held jointly
