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REGISTRATION NO. 33-64927
RULE 424 (b)(3)
Dear Metro Financial Corporation Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
Metro Financial Corporation ("Metro") to be held at Metro's main office, 6637
Roswell Road, Atlanta, Georgia, 30328 on January 30, 1996, at 6:00 p.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 an Agreement and Plan of Merger (the "Agreement"), entered
into with Regions Financial Corporation ("Regions") pursuant to which Metro
will merge (the "Merger") with and into Regions, and Metro Bank (the "Bank"), a
wholly owned subsidiary of Metro, will become a wholly owned subsidiary of
Regions. Upon consummation of the Merger, each share of Metro common stock
issued and outstanding (except for certain shares held by Metro or Regions)
will be converted into 0.431 of a share of Regions common stock.
The accompanying 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 unanimously by your Board of Directors and is
recommended by the Board to you for approval. Each member of the Board of
Directors of Metro has agreed to vote those Metro shares beneficially owned by
such member in favor of the Merger. Consummation of the Merger is subject to
certain conditions, including approval of the Agreement by Metro stockholders
and approval of the Merger by various regulatory agencies.
It is important to understand that approval of the Agreement requires the
affirmative vote of a majority of the common stock of Metro entitled to vote at
the Special Meeting, not just a majority of the votes cast. Consequently, a
failure to vote will have the same effect as a vote against the Agreement.
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 Metro, 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 MERGER BY MARKING THE ENCLOSED PROXY CARD "FOR" ITEM ONE.
Sincerely,
Rayburn J. Fisher, Jr.
President and Chief Executive Officer
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METRO FINANCIAL CORPORATION
6637 ROSWELL ROAD, ATLANTA, GEORGIA, 30328
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 30, 1996
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of Metro Financial Corporation ("Metro"), a bank holding company,
will be held at Metro's main office, 6637 Roswell Road, Atlanta, Georgia, 30328
on January 30, 1996, at 6:00 p.m., local time, for the following purposes:
1. Merger. To consider and vote on the Agreement and Plan of Merger, dated
as of August 23, 1995 (the "Agreement"), by and between Metro and Regions
Financial Corporation ("Regions") pursuant to which (i) Regions will acquire
all of the issued and outstanding common stock of Metro through the merger of
Metro with and into Regions (the "Merger"), (ii) each share of Metro common
stock (except for certain shares held by Metro or Regions) will be converted
into 0.431 of a share of Regions common stock, and (iii) each Metro stockholder
will receive cash in lieu of any remaining fractional share interest, all as
described more fully in the accompanying Proxy Statement/Prospectus; and
2. Other Business. To transact such other business as may properly come
before the Special Meeting, including adjourning the Special Meeting to permit,
if necessary, further solicitation of proxies.
Only stockholders of record at the close of business on December 20, 1995,
are entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
THE BOARD OF DIRECTORS OF METRO UNANIMOUSLY RECOMMENDS THAT HOLDERS OF
METRO COMMON STOCK VOTE TO APPROVE THE PROPOSALS LISTED ABOVE.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Special Meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Secretary of
Metro an instrument of revocation or a duly executed proxy bearing a later date
or by electing to vote in person at the Special Meeting.
By Order of the Board of Directors
Richard W. Stephens
Secretary
Atlanta, Georgia
December 27, 1995
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METRO FINANCIAL CORPORATION REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD JANUARY 30, 1996 (PAR VALUE $.625)
</TABLE>
__________________________________
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 the shares of its common stock, par value $.625 per
share ("Regions Common Stock"), which are issuable to the stockholders of Metro
Financial Corporation ("Metro") upon consummation of the proposed merger (the
"Merger") described herein, by which Metro will merge with and into Regions
pursuant to the terms of an Agreement and Plan of Merger, dated as of August
23, 1995, by and between Regions and Metro (the "Agreement").
On the effective date of the Merger (the "Effective Date"), except as
otherwise described herein, (i) Metro will merge with and into Regions, (ii)
each outstanding share of the $1.00 par value common stock of Metro ("Metro
Common Stock") will be converted into 0.431 of a share of Regions Common Stock,
and (iii) each Metro stockholder will receive cash in lieu of any remaining
fractional share interest. A copy of the Agreement is attached to this Proxy
Statement/Prospectus as Appendix A.
As a result of the Merger, the separate existence of Metro will cease, and
Metro Bank, a wholly owned subsidiary of Metro (the "Bank"), will become a
wholly owned subsidiary of Regions. Regions anticipates consolidating all of
its commercial bank subsidiaries in Georgia, including the Bank, into one
commercial bank organized under Georgia law. For a further description of the
terms of the Merger, see "Description of the Transaction."
This Prospectus also constitutes a Proxy Statement of Metro and is being
furnished to the stockholders of Metro in connection with the solicitation of
proxies by the Board of Directors of Metro for use at its special meeting of
stockholders, including any adjournment or postponement thereof (the "Special
Meeting"), to be held on January 30, 1996, to consider and vote on the proposed
Merger and related matters. This Proxy Statement/Prospectus and the
accompanying proxy card are first being mailed to stockholders of Metro on or
about December 27, 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 PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is December 27, 1995.
<PAGE> 4
AVAILABLE INFORMATION
Regions and Metro are subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, file reports, proxy statements, and other information
with the Securities and Exchange Commission (the "SEC"). Copies of such
reports, proxy statements, and other information can be obtained, at prescribed
rates, from the SEC by addressing written requests for such copies to the
Public Reference Section at the SEC at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. In addition, such reports, proxy statements, and other
information can be inspected at the public reference facilities referred to
above and at the regional offices of the SEC at 7 World Trade Center, 13th
Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661.
This Proxy Statement/Prospectus constitutes part of 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 Proxy Statement/Prospectus does not include all of the
information in the Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the SEC. For further
information about Regions and the securities offered hereby, reference is made
to the Registration Statement. The Registration Statement may be inspected and
copied, at prescribed rates, at the SEC's public reference facilities at the
addresses set forth above. Regions Common Stock is traded in the Nasdaq
National Market. Reports, proxy statements, and other information concerning
Regions may be inspected at the offices of the National Association of
Securities Dealers, Inc. (the "NASD"), 1735 K Street, N.W., Washington, D.C.
20006.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE INCLUDED IN THIS PROXY STATEMENT/PROSPECTUS,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY REGIONS OR METRO. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO OR FROM
ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF REGIONS OR METRO
SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
All information included or incorporated by reference in this Proxy
Statement/Prospectus with respect to Regions was supplied by Regions, and all
information included or incorporated by reference herein with respect to Metro
was supplied by Metro.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by Regions pursuant
to the Exchange Act are hereby incorporated by reference herein:
1. Regions' Annual Report on Form 10-K for the fiscal year ended
December 31, 1994;
2. Regions' Quarterly Reports on Form 10-Q for the three months ended
March 31, June 30, and September 30, 1995;
3. Regions' Current Reports on Form 8-K filed with the SEC and dated
October 24 and November 22, 1995; and
4. The description of Regions Common Stock under the heading "Item 1.
Capital Stock to be Registered" in the registration statement on Form 8-A
of Regions relating to Regions Common Stock and in any amendment or report
filed for the purpose of updating such description.
2
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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 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 Metro pursuant to
the Exchange Act are hereby incorporated by reference herein:
1. Metro's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1994;
2. Metro's Quarterly Reports on Form 10-QSB for the three months ended
March 31, June 30, and September 30, 1995; and
3. Metro's Current Report on Form 8-K filed with the SEC and dated
September 26, 1995.
All documents filed by Regions pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus and
prior to the date of the Special Meeting shall be deemed to be incorporated by
reference in this Proxy Statement/Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed to constitute a part hereof, except as so modified or superseded.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS ARE AVAILABLE
UPON REQUEST, WITHOUT CHARGE (EXCEPT FOR THE EXHIBITS THERETO), IF FILED BY
REGIONS, FROM RONALD C. JACKSON, STOCKHOLDER ASSISTANCE, REGIONS FINANCIAL
CORPORATION, P.O. BOX 1448, MONTGOMERY, ALABAMA 36102 (TELEPHONE (334)
832-8401), AND IF FILED BY METRO, FROM STEPHEN A. BICKELHAUP, SENIOR VICE
PRESIDENT, 6637 ROSWELL ROAD, ATLANTA, GEORGIA, 30328 (TELEPHONE (770)
392-6560). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY JANUARY 23, 1996.
3
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TABLE OF CONTENTS
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AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Special Meeting of Metro Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Merger; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Absence of Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reasons for the Merger; Recommendation of Metro's Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Opinion of Metro's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Regulatory Approvals and Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Certain Differences in Stockholders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Comparative Market Prices of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Summary Pro Forma Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
DESCRIPTION OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Treatment of Metro Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Background of and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Opinion of Metro's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Distribution of Regions Stock Certificates and
Payment for Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Management Following the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Absence of Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Resales of Regions Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Antitakeover Provisions Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<TABLE>
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Amendment of Certificate or Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . 30
Classified Board of Directors and Absence of Cumulative Voting . . . . . . . . . . . . . . . . . . . . . . . . . 30
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Limitations on Director Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Special Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Actions by Stockholders Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Stockholder Nominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Business Combinations with Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Mergers, Consolidations, and Sales of Assets Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Stockholders' Rights to Examine Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
COMPARATIVE MARKET PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
BUSINESS OF METRO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF METRO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
BUSINESS OF REGIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Support of Subsidiary Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Prompt Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Safety and Soundness Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Depositor Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
DESCRIPTION OF REGIONS COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
APPENDIX A--Agreement and Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B--Opinion of Sterne, Agee & Leach, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
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SUMMARY
The following is a summary of certain information relating to the Special
Meeting, the proposed Merger, and the offering of shares of Regions Common
Stock to be issued upon consummation thereof. This summary does not purport to
be complete and is qualified in its entirety by the more detailed information
appearing elsewhere or incorporated by reference in this Proxy
Statement/Prospectus. Stockholders are urged to read carefully the entire Proxy
Statement/Prospectus, including the Appendices. As used in this Proxy
Statement/Prospectus, the terms "Regions" and "Metro" refer to those entities,
respectively, and, where the context requires, to those entities and their
respective subsidiaries.
THE PARTIES
Metro. Metro is a bank holding company organized and existing under the
laws of the state of Georgia, with its principal executive offices located in
Atlanta, Georgia. Metro operates principally through the Bank, which is a
wholly owned subsidiary of Metro and a state-chartered commercial bank and
which provides a range of retail banking services through three offices in
Atlanta, Georgia. At September 30, 1995, Metro had total consolidated assets of
approximately $197 million, total consolidated deposits of approximately $178
million, and total consolidated stockholders' equity of approximately $13
million. Metro's principal executive office is located at 6637 Roswell Road,
Atlanta, Georgia, 30328, and its telephone number at such address is (404)
255-8550.
Regions. Regions is a regional bank holding company organized and existing
under the laws of the state of Delaware and headquartered in Birmingham,
Alabama, with approximately 288 banking offices located 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.
During the 1995 fiscal year, Regions has completed the acquisitions of two
financial institutions, one in Georgia and a second in Louisiana, the
acquisition of an accounts receivable factoring operation in Alabama, and the
acquisition of a branch banking operation in Georgia (referred to as the
"Recently Completed Acquisitions"). Regions also has entered into definitive
agreements or letters of intent to acquire, in addition to Metro, six
additional financial institutions, four of which are located in Georgia and one
of which is located in Louisiana (the "Other Pending Acquisitions"), and one of
which is located in Tennessee. For information with respect to the Recently
Completed Acquisitions and the Other Pending Acquisitions, see "Documents
Incorporated by Reference," "--Summary Pro Forma Financial Data," "Business of
Regions--Recent Developments," and "Pro Forma Financial Information."
Regions commenced operations in 1971 as a registered bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHC Act").
Regions' principal executive offices are located at 417 North 20th Street,
Birmingham, Alabama 35203, and its telephone number at such address is (205)
326-7100.
Additional information with respect to Regions and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Documents Incorporated by
Reference," and "Business of Regions."
6
<PAGE> 9
SPECIAL MEETING OF METRO STOCKHOLDERS
The Special Meeting will be held at 6:00 p.m., local time, on January 30,
1996, at Metro's main office, 6637 Roswell Road, Atlanta, Georgia, 30328, for
the purpose of considering and voting on approval of the Agreement. See "The
Special Meeting."
RECORD DATE; VOTE REQUIRED
Only holders of record of Metro Common Stock at the close of business on
December 20, 1995 (the "Record Date"), will be entitled to vote at the Special
Meeting. The affirmative vote of a majority of the Metro Common Stock entitled
to vote at the Special Meeting will be required to approve the Agreement. As of
the Record Date, there were 1,659,095 shares of Metro Common Stock outstanding
and entitled to be voted.
The directors and executive officers of Metro and their affiliates
beneficially owned, as of the Record Date, 438,795 shares (or approximately
26.4% of the outstanding shares) of Metro Common Stock. Each member of the
Board of Directors of Metro has agreed to vote those Metro shares beneficially
owned by such member in favor of the Merger. The directors and executive
officers of Regions and their affiliates beneficially owned, as of the Record
Date, no shares of Metro Common Stock. As of that date, neither Metro nor
Regions held any shares of Metro Common Stock in a fiduciary capacity for
others. See "The Special Meeting--Record Date; Vote Required."
THE MERGER; EXCHANGE RATIO
The Agreement provides for the acquisition of Metro by Regions pursuant to
the Merger of Metro with and into Regions. On the Effective Date, each share of
Metro Common Stock then issued and outstanding (excluding any shares held by
Metro, Regions, or their respective subsidiaries, other than shares held in a
fiduciary capacity or in satisfaction of debts previously contracted) will be
converted into 0.431 of a share of Regions Common Stock, subject to possible
adjustment in the event of any stock dividend, stock split, or similar stock
reclassification (the "Exchange Ratio"). No fractional shares of Regions Common
Stock will be issued. Rather, cash will be paid in lieu of any fractional share
interest to which any Metro stockholder would be entitled upon consummation of
the Merger, based on the closing price of Regions Common Stock on the Nasdaq
National Market (as reported by The Wall Street Journal, or, if not reported
thereby, by another authoritative source selected by Regions) on the last full
trading day immediately preceding the Effective Date. See "Description of the
Transaction--General."
ABSENCE OF DISSENTERS' RIGHTS
In accordance with the applicable provisions of the Georgia Business
Corporation Code (the "Georgia Act"), the holders of shares of Metro Common
Stock are not afforded the right to dissent from the Merger and to receive an
appraised value of such shares in cash.
REASONS FOR THE MERGER; RECOMMENDATION OF METRO'S BOARD OF DIRECTORS
Metro's Board of Directors has unanimously approved the Merger and the
Agreement and has determined that the Merger is fair to, and in the best
interests of, Metro and its stockholders. ACCORDINGLY, METRO'S BOARD
UNANIMOUSLY RECOMMENDS THAT METRO'S STOCKHOLDERS VOTE FOR APPROVAL OF THE
AGREEMENT. EACH MEMBER OF THE BOARD OF DIRECTORS OF METRO HAS AGREED TO VOTE
SUCH MEMBER'S SHARES OF METRO COMMON STOCK IN FAVOR OF THE AGREEMENT. In
approving the Merger, Metro's directors considered Metro's financial condition,
the financial terms and the income tax consequences of the Merger, the
likelihood of the Merger being approved by regulatory authorities without undue
conditions or delay, legal advice concerning the proposed Merger, and the
opinion of Sterne, Agee & Leach, Inc. ("Sterne, Agee") that, as of the date of
its opinion, the consideration to be received in the Merger was fair, from a
financial point of view, to the stockholders of Metro. See "Description of the
Transaction--Background of and Reasons for the Merger."
7
<PAGE> 10
OPINION OF METRO'S FINANCIAL ADVISOR
Sterne, Agee has rendered an opinion to Metro 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
consideration to be received in the Merger was fair, from a financial point of
view, to the stockholders of Metro. The opinion of Sterne, Agee is attached as
Appendix B to this Proxy Statement/Prospectus. Metro stockholders are urged to
read the opinion in its entirety for a description of the procedures followed,
matters considered, and limitations on the reviews undertaken in connection
therewith. See "Description of the Transaction--Opinion of Metro's Financial
Advisor."
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Georgia Certificate of Merger are filed
and become effective with, respectively, the Delaware Secretary of State and
the Georgia Secretary of State. Unless otherwise agreed upon by Regions and
Metro, and subject to the conditions to the obligations of the parties to
effect the Merger, the parties will use their reasonable efforts to cause the
Effective Date to occur by the last business day of the month in which the last
of the following events occurs: (i) the effective date (including the
expiration of any applicable waiting period) of the last federal or state
regulatory approval required for the Merger and (ii) the date on which the
Agreement is approved by the requisite vote of Metro stockholders; or such
later date within 30 days thereof as specified by Regions. The parties expect
that all conditions to consummation of the Merger will be satisfied so that the
Merger can be consummated during the first quarter of 1996, although there can
be no assurance as to whether or when the Merger will occur. See "Description
of the Transaction--Effective Date of the Merger, --Conditions to Consummation
of the Merger, and --Waiver, Amendment, and Termination of the Agreement."
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Date, Regions will cause First Chicago Trust
Company of New York, acting in its capacity as exchange agent for Regions (the
"Exchange Agent"), to mail to the former stockholders of Metro a form letter of
transmittal, together with instructions for the exchange of such stockholders'
certificates representing shares of Metro Common Stock for certificates
representing shares of Regions Common Stock. METRO STOCKHOLDERS SHOULD NOT SEND
IN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE THE FORM LETTER OF TRANSMITTAL
AND INSTRUCTIONS. See "Description of the Transaction--Distribution of Regions
Stock Certificates and Payment for Fractional Shares."
REGULATORY APPROVALS AND OTHER CONDITIONS
The Merger is subject to approval by the Board of Governors of the Federal
Reserve System (the "Federal Reserve") and the Department of Banking and
Finance of the State of Georgia (the "Georgia Department"). Applications for
the requisite approvals have been filed with these agencies. The Federal
Reserve has issued its approval, but the Georgia Department has yet to issue
its approval of the Merger. There can be no assurance that the approval of the
Georgia Department will be given or as to the timing or conditions of such
approval.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of Metro stockholders, receipt of an
opinion of counsel or a ruling from the Internal Revenue Service as to the
tax-free nature of certain aspects of the Merger, and certain other customary
conditions. See "Description of the Transaction--Conditions to Consummation of
the Merger."
8
<PAGE> 11
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date by mutual action of the Boards of Directors of both
Metro and Regions, or by action of the Board of Directors of either company
under certain circumstances, including if the Merger is not consummated by June
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, Metro will continue to operate as a bank holding company
under its present management. See "Description of the Transaction--Waiver,
Amendment, and Termination of the Agreement."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Metro's management and Board of Directors have interests
in the Merger in addition to their interests as stockholders of Metro
generally. Those interests relate to, among other things, provisions in the
Agreement regarding indemnification and eligibility for certain Regions
employee benefits, and treatment of outstanding options to acquire Metro Common
Stock. See "Description of the Transaction-- Interests of Certain Persons in
the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Consummation of the Merger is conditioned on the receipt of an opinion of
counsel to the effect that, among other things, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the exchange in the Merger of Metro
Common Stock for Regions Common Stock will not give rise to gain or loss to
Metro stockholders, except to the extent of any cash received in lieu of
fractional share interests. Gain recognition, if any, will not be in excess of
the amount of cash received. Subject to the provisions and limitations of
Section 302(a) of the Code, gain or loss will be recognized upon the receipt of
cash in lieu of fractional share interests. See "Description of the
Transaction--Certain Federal Income Tax Consequences of the Merger."
DUE TO THE INDIVIDUAL NATURE OF THE TAX CONSEQUENCES OF THE MERGER, METRO
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
SPECIFIC EFFECT OF THE MERGER ON THEM UNDER FEDERAL, STATE, LOCAL, AND FOREIGN
TAX LAWS.
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS
On the Effective Date, Metro stockholders, whose rights are governed by the
Georgia Act and by Metro's Articles of Incorporation and Bylaws, will
automatically become Regions stockholders, and their rights as Regions
stockholders will be determined by the Delaware General Corporation Law (the
"Delaware GCL") and by Regions' Certificate of Incorporation and Bylaws.
The rights of Regions stockholders differ from the rights of Metro
stockholders in certain important respects, some of which constitute additional
antitakeover provisions provided for in Regions' governing documents. See
"Effect of the Merger on Rights of Stockholders."
COMPARATIVE MARKET PRICES OF COMMON STOCK
Regions Common Stock and Metro Common Stock are traded in the
over-the-counter market and are quoted in the Nasdaq National Market. The
following table sets forth the last sale price of Regions Common Stock, the
last sale price of Metro Common Stock, and the equivalent per share price (as
explained below) of Metro Common Stock at the close of trading on August 23,
1995, the last trading day immediately preceding public announcement of the
Merger, and December 21, 1995, the latest practicable date prior to the mailing
of this Proxy Statement/Prospectus:
9
<PAGE> 12
<TABLE>
<CAPTION>
EQUIVALENT
PER
SHARE PRICE
REGIONS METRO OF METRO
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
August 23, 1995 $ 38.75 $ 11.00 $ 16.70
December 21, 1995 42.88 18.13 18.48
</TABLE>
The equivalent per share price of Metro Common Stock at each specified date
represents the last sale price of a share of Regions Common Stock on such date
multiplied by the Exchange Ratio of 0.431. Stockholders are advised to obtain
current market quotations for Regions Common Stock and Metro Common Stock. No
assurance can be given as to the market price of Regions Common Stock at or
after the Effective Date.
COMPARATIVE PER SHARE DATA
The following table sets forth certain comparative per share data relating
to net income, cash dividends, and book value on (i) an historical basis for
Regions and Metro, (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 Metro 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, and (v) an equivalent pro forma basis per
share of Metro Common Stock, giving effect to the Merger and the Other Pending
Acquisitions. The Regions and Metro pro forma combined information and the
Metro pro forma Merger equivalent information give effect to the Merger on a
purchase accounting basis and assume an Exchange Ratio of 0.431. The Regions,
Metro, and Other Pending Acquisitions pro forma combined information and the
Metro 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, Metro, and Other
Pending Acquisitions." See "Description of the Transaction--Accounting
Treatment." 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 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 Metro, 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."
10
<PAGE> 13
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- -----------------------------------
1995 1994 1994 1993 1992
---- ---- ---- ---- ----
(Unaudited) (Unaudited except Regions 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
Metro historical . . . . . . . . . . . . 0.81 0.47 0.67 0.87 0.64
Regions and Metro pro forma combined(1) . 2.77 3.38
Metro pro forma Merger equivalent(2) . . 1.19 1.46
Regions, Metro, and Other Pending
Acquisitions pro forma combined(3) . 2.49 3.08
Metro pro forma Merger and Other Pending
Acquisitions equivalent(2) . . . . . 1.07 1.33
DIVIDENDS DECLARED PER COMMON
SHARE
Regions historical . . . . . . . . . . . $ 0.99 $ 0.90 $ 1.20 $ 1.04 $ 0.91
Metro historical . . . . . . . . . . . . 0.15 0.12 0.18 0.13 0.05
Metro pro forma Merger equivalent(4) . . 0.43 0.39 0.52 0.45 0.39
BOOK VALUE PER COMMON SHARE
(PERIOD END)
Regions historical . . . . . . . . . . . $ 24.19 $ 21.46 $ 22.53 $ 20.73 $ 17.62
Metro historical. . . . . . . . . . . . . 7.95 6.95 7.01 7.00 6.19
Regions and Metro pro forma combined(1) . 24.19
Metro pro forma Merger equivalent(2) . . 10.43
Regions, Metro, and Other Pending
Acquisitions pro forma combined(3) . 22.89
Metro pro forma Merger and Other Pending
Acquisitions equivalent(2) . . . . . 9.87
- ---------------------
</TABLE>
(1) Represents the combined results of Regions and Metro as if the Merger were
consummated on January 1, 1994, and were accounted for as a purchase.
(2) Represents pro forma combined information multiplied by the Exchange
Ratio of 0.431 of a share of Regions Common Stock for each share of
Metro Common Stock.
(3) Represents the combined results of Regions, Metro, 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, Metro, and Other Pending Aquisitions."
(4) Represents historical dividends declared per share by Regions multiplied by
the Exchange Ratio of 0.431 of a share of Regions Common Stock for each
share of Metro Common Stock.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and Metro. The data should be read in conjunction with
the historical financial statements, related notes, and other financial
information concerning Regions and Metro incorporated by reference or included
herein. Interim unaudited data for the nine months ended September 30, 1995 and
1994 of Regions and Metro reflect, in the opinion of the respective managements
of Regions and Metro, 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."
11
<PAGE> 14
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 debt . . . . . . . . . . . 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% .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.
12
<PAGE> 15
Selected Historical Financial Data of Metro (Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- -----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income . . . . $ 11,783 $ 9,331 $ 12,768 $ 11,181 $ 10,978 $ 11,795 $ 12,604
Total interest expense . . . 6,529 4,373 6,087 5,630 5,841 7,720 8,690
Net interest income . . . . . 5,254 4,958 6,681 5,551 5,137 4,075 3,914
Provision for loan losses . . 125 255 315 607 814 667 892
Net interest income after
loan loss provision . . 5,129 4,703 6,366 4,945 4,323 3,408 3,022
Total noninterest income
excluding security
gains (losses) . . . . 1,943 1,036 1,483 2,282 1,579 832 533
Security gains (losses) . . . -- -- -- 242 30 93 19
Total noninterest expense . . 4,789 4,478 6,047 5,188 4,369 3,493 2,643
Income tax expense . . . . . 850 446 627 827 537 269 321
Net income . . . . . . . . . $ 1,433 $ 815 $ 1,175 $ 1,454 $ 1,026 $ 571 $ 610
PER SHARE DATA:
Net income . . . . . . . . . $ 0.81 $ 0.47 $ 0.67 $ 0.87 $ 0.64 $ 0.36 $ 0.38
Cash dividends . . . . . . . 0.15 0.12 0.18 0.13 0.05 0.04 --
Book value . . . . . . . . . 7.95 6.95 7.01 7.00 6.19 5.60 5.28
OTHER INFORMATION:
Average number of shares
outstanding 1,771 1,746 1,745 1,676 1,591 1,591 1,597
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets . . . . . . . . $ 197,363 $169,091 $167,284 $ 158,077 $ 140,221 $ 120,998 $123,134
Securities held to maturity . 23,843 21,109 21,425 7,333 27,822 27,458 22,030
Securities available for sale 17,540 14,408 12,996 28,224 -- -- --
Loans, net of unearned income 134,703 118,707 117,662 94,878 85,256 83,033 87,286
Total deposits . . . . . . . 177,618 152,214 150,313 136,418 128,238 111,318 113,689
Long-term debt . . . . . . . 700 700 700 700 700 -- --
Stockholders' equity . . . . 13,179 11,222 11,320 11,132 9,853 8,910 8,399
PERFORMANCE RATIOS:
Return on average assets (1). 1.08% 0.70% 0.75% 1.02% 0.84% 0.50% 0.54%
Return on average stockholders'
equity (1) . . . . . . . 15.70 9.80 10.47 13.89 11.03 6.54 7.49
Net interest margin (1) . . . 3.92 4.23 4.29 3.90 4.19 3.54 3.47
Efficiency (2) . . . . . . . 66.54 74.71 74.07 66.23 65.05 71.18 59.43
Dividend payout . . . . . . . 18.52 25.53 26.87 14.94 7.81 11.11 --
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned
income (1) . . . . . . 0.03% 0.32% 0.21% 0.68% 0.97% 0.97% 0.34%
Nonperforming assets to net loans
and other real estate (3) 0.97 1.51 2.18 1.24 1.65 5.34 4.42
Allowance for loan losses to loans,
net of unearned income . 1.22 1.23 1.31 1.53 1.70 1.75 1.85
Allowance for loan losses to
nonperforming assets (3) 126.00 76.21 59.58 122.56 102.26 32.06 41.53
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . 6.55% 6.88% 6.83% 7.10% 7.23% 7.16% 6.98%
Average loans to average deposits 75.73 70.47 73.81 66.20 71.34 74.92 78.31
Tier 1 risk-based capital (4) 9.67 9.04 9.57 9.74 10.03 10.13 9.12
Total risk-based capital (4) 10.84 10.18 10.79 10.99 11.50 11.63 10.62
Tier 1 leverage (4) . . . . . 6.73 7.10 7.15 7.26 7.15 7.36 6.82
</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) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(4) 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.
13
<PAGE> 16
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect, as
appropriate, to the acquisitions of Metro, the Recently Completed Acquisitions,
and the Other Pending Acquisitions as of the dates and for the periods
indicated and pursuant to the accounting bases described below. The unaudited
pro forma financial data are presented for informational purposes only and are
not necessarily indicative of the combined financial position or results of
operation which actually would have occurred if the transactions had been
consummated at the date and for the periods indicated or which may be obtained
in the future. The information should be read in conjunction with the unaudited
pro forma financial information included in Regions' Current Report on Form 8-K
dated November 22, 1995. For additional information relating to specific
transactions within the scope of the Other Pending Acquisitions, see "Business
of Regions--Recent Developments."
Selected Pro Forma Combined Data for Regions and Metro
The following unaudited pro forma combined data give effect to the
acquisition of Metro as of the date or at the beginning of the periods
indicated, assuming such acquisition is treated as a purchase.
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1995
----
(In thousands
except per
share data)
<S> <C>
Statement of Condition Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,032,094
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,045,564
Loans, net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,731,376
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,919,806
Other borrowed funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627,940
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,113,790
Book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.19
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1995 1994
---- ----
(In thousands except per share data)
<S> <C> <C>
Income Statement Data:
Total interest income . . . . . . . . . . . . . $ 767,804 $ 796,679
Total interest expense . . . . . . . . . . . . . 393,641 356,226
--------- ---------
Net interest income . . . . . . . . . . . . . . 374,163 440,453
Provision for loan losses . . . . . . . . . . . 15,437 19,318
--------- ---------
Net interest income after loan loss
provision . . . . . . . . . . . . . . . . . . . 358,726 421,135
Total noninterest income . . . . . . . . . . . 119,378 144,892
Total noninterest expense . . . . . . . . . . . 283,810 349,994
Income tax expense . . . . . . . . . . . . . . . 66,368 71,110
--------- ---------
Net income . . . . . . . . . . . . . . . . . . . $ 127,926 $ 144,923
========= =========
Net income per share . . . . . . . . . . . . . . $ 2.77 $ 3.38
========= =========
Average common shares outstanding . . . . . . . . 46,212 42,906
</TABLE>
14
<PAGE> 17
Selected Pro Forma Combined Data for Regions, Metro, 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 year ended December
31, 1994, give effect to (i) the acquisition of Metro by Regions, assuming such
acquisition is accounted for as a purchase, and (ii) the Other Pending
Acquisitions, assuming three of such acquisitions are treated as purchases for
accounting purposes and two of such acquisitions are treated as poolings 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, 1994, in the case of the data
included under "Income Statement Data." The following unaudited pro forma
financial data for the years ended December 31, 1993, and 1992, give effect to
the acquisitions of First National Bancorp and Delta Bank and Trust Company by
Regions, assuming such acquisitions are accounted for as poolings of interests
and had been consummated on January 1, 1992.
<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>
15
<PAGE> 18
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of Metro
Common Stock in connection with the solicitation by the Metro Board of
Directors of proxies for use at the Special Meeting, at which Metro
stockholders will be asked to vote upon a proposal to approve the Agreement.
The Special Meeting will be held at 6:00 p.m., local time, on January 30, 1996,
at the main offices of Metro, located at 6637 Roswell Road, Atlanta, Georgia,
30328.
Metro stockholders are requested promptly to sign, date, and return the
accompanying proxy card to Metro in the enclosed postage-paid, addressed
envelope. A stockholder's failure to return a properly executed proxy card or
to vote at the Special Meeting will have the same effect as a vote against the
Agreement.
Any Metro stockholder who has delivered a proxy may revoke it at any time
before it is voted by giving notice of revocation in writing or submitting to
Metro a signed proxy card bearing a later date, provided that such notice or
proxy card is actually received by Metro before the vote of stockholders or in
open meeting prior to the taking of the stockholder vote at the Special
Meeting. Any notice of revocation should be sent to Metro Financial
Corporation, 6637 Roswell Road, Atlanta, Georgia, 30328, Attention: Richard W.
Stephens, Corporate Secretary. A proxy will not be revoked by death or
supervening incapacity of the stockholder executing the proxy unless, before
the vote, notice of such death or incapacity is filed with the Secretary. The
shares of Metro Common Stock represented by properly executed proxies received
at or prior to the Special Meeting and not subsequently revoked will be voted
as directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES REPRESENTED
BY PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND IN THE
DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTERS THAT PROPERLY MAY COME
BEFORE THE SPECIAL MEETING. IF NECESSARY, AND UNLESS CONTRARY INSTRUCTIONS ARE
GIVEN, THE PROXY HOLDER ALSO MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE
SPECIAL MEETING TO PERMIT FURTHER SOLICITATION OF PROXIES IN ORDER TO OBTAIN
SUFFICIENT VOTES TO APPROVE THE AGREEMENT. As of the date of this Proxy
Statement/Prospectus, Metro is unaware of any other matter to be presented at
the Special Meeting.
Solicitation of proxies will be made by mail but also may be made by
telephone or telegram or in person by the directors, officers, and employees of
Metro, who will receive no additional compensation for such solicitation but
may be reimbursed for out-of-pocket expenses. Brokerage houses, nominees,
fiduciaries, and other custodians will be requested to forward solicitation
materials to beneficial owners and will be reimbursed for their reasonable
out-of-pocket expenses.
Metro stockholders should not forward any stock certificates with their
proxy cards.
RECORD DATE; VOTE REQUIRED
Metro's Board of Directors has established the close of business on
December 20, 1995, as the Record Date for determining the Metro stockholders
entitled to notice of and to vote at the Special Meeting. Only Metro
stockholders of record as of the Record Date will be entitled to vote at the
Special Meeting. The affirmative vote of the holders of a majority of the Metro
Common Stock entitled to vote at the Special Meeting is required in order to
approve the Agreement. Therefore, an abstention or failure to return a properly
executed proxy card will have the same effect as a vote against the Agreement,
as will a broker's submitting a proxy card without exercising discretionary
voting authority with respect to the Agreement. As of the Record Date, there
were approximately 900 holders of 1,659,095 shares of Metro Common Stock
outstanding and entitled to vote at the Special Meeting, with each share
entitled to one vote. For information as to persons known by Metro to
beneficially own more than 5.0% of the outstanding shares of Metro Common Stock
as of the Record Date, see "Voting Securities and Principal Stockholders of
Metro."
The presence, in person or by proxy, of a majority of the outstanding
shares of Metro Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting. For these
purposes, shares of Metro Common Stock that are present, or represented by
proxy, at the Special Meeting will be counted for quorum purposes regardless of
whether the holder of the shares or proxy fails to vote on the Agreement or
whether a broker with discretionary authority fails to exercise its
discretionary
16
<PAGE> 19
voting authority with respect to the Agreement. Once a quorum is established,
approval of the Agreement requires the affirmative vote of the holders of a
majority of the Metro Common Stock entitled to vote at the Special Meeting.
The directors and executive officers of Metro and their affiliates
beneficially owned, as of the Record Date, 438,795 shares (or approximately
26.4% of the outstanding shares) of Metro Common Stock. The directors and
executive officers of Regions and their affiliates beneficially owned, as of
the Record Date, no shares of Metro Common Stock. As of that date, neither
Metro nor Regions held any shares of Metro Common Stock in a fiduciary capacity
for others.
DESCRIPTION OF THE TRANSACTION
The following material describes certain aspects of the Merger. This
description does not purport to be complete and is qualified in its entirety by
reference to the Appendices hereto, including the Agreement, which is attached
as Appendix A to this Proxy Statement/Prospectus and incorporated herein by
reference. All stockholders are urged to read the Appendices in their entirety.
GENERAL
Upon consummation of the Merger, Metro will merge with and into Regions and
the separate existence of Metro will cease. The Bank will become a wholly owned
subsidiary of Regions. Regions anticipates consolidating all of its commercial
bank subsidiaries in Georgia, including the Bank, into one commercial bank
organized under Georgia law.
At the Effective Date, each share of Metro Common Stock (excluding any
shares held by Metro, Regions, or their respective subsidiaries, other than
shares held in a fiduciary capacity or in satisfaction of debts previously
contracted) issued and outstanding will be converted into 0.431 of a share of
Regions Common Stock, subject to possible adjustment in the event of a stock
dividend, stock split, or similar stock reclassification. Each share of Regions
Common Stock outstanding immediately prior to the Effective Date will remain
outstanding and unchanged as a result of the Merger.
No fractional shares of Regions Common Stock will be issued in connection
with the Merger. In lieu of issuing fractional shares, Regions will make a cash
payment equal to the fractional interest which a Metro stockholder would
otherwise receive multiplied by the closing price of Regions Common Stock on
the Nasdaq National Market (as reported by The Wall Street Journal, or, if not
reported thereby, by another authoritative source selected by Regions), on the
last full trading day prior to the Effective Date.
TREATMENT OF METRO OPTIONS
The Agreement provides that all rights with respect to Metro Common Stock
pursuant to stock options granted by Metro under its stock option plans which
are outstanding at the Effective Date, whether or not then exercisable, will be
converted into and will become rights with respect to Regions Common Stock, and
Regions will assume each of such options in accordance with the terms of the
plan under which it was issued and the agreement by which it is evidenced.
After the Effective Date, those options will become options to purchase Regions
Common Stock, with the exercise price and number of shares of Regions Common
Stock purchasable thereunder adjusted to reflect the Exchange Ratio. The
executive officers of Metro who as of the date of this Proxy
Statement/Prospectus hold outstanding options are Rayburn J. Fisher, Jr.,
William C. Abraham, Michael M. Allen, Stephen A. Bickelhaup, D. Lynn Center,
and Peter C. Ward, who collectively hold exercisable options to purchase
190,442 shares of Metro Common Stock.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. During the last several years, there have been
significant developments in the banking and financial services industry. These
developments have included an increased emphasis and dependence on automation,
specialization of products and services, increased competition from other
financial
17
<PAGE> 20
institutions, and a trend toward consolidation and geographic expansion, all of
which have been coupled with a relaxation of regulatory restrictions on
interstate conduct of business of financial institutions.
With this as a background, in the fall of 1994, the Metro Board of
Directors began to have general discussions at their regular monthly board
meetings about the strategic options available to them with respect to the
growth of Metro. These options included equity or debt issues, sales,
acquisitions and other possible transactions. The Board authorized Metro's
President, Rayburn J. Fisher, Jr., to begin exploring options with an
investment banking firm. On October 20, 1994, Mr. Fisher met with Sterne, Agee
representatives to discuss in greater detail some of the various strategic
options that might be available to Metro. These discussions were continued the
following month, and, at that time, Sterne, Agee suggested the possibility of
identifying a few financial institutions that might be potential acquirers of
Metro. On December 7, 1994, a meeting was held involving the President, the
Chairman of the Board, two Board members who were also general counsel to
Metro, and Sterne, Agee. At this meeting, it was decided that Metro was not
interested in placing itself on the market, but that it would consider
exploring opportunities with a few select financial institutions who might have
an interest in coming into the Atlanta area. Over the next thirty days,
informal discussions were held by Sterne, Agee with various financial
institutions, and, as a result of these discussions, a meeting was held on
February 2, 1995 in Atlanta between Mr. Fisher of Metro and William E. Jordan
and Richard D. Horsley of Regions. The discussions at this meeting were very
general in nature, and no offers or proposals were made.
On March 6, Mr. Fisher was invited to visit Regions' office in Birmingham,
and again only general information and business philosophies were traded
between the two institutions. On March 14, in anticipation of further
exploratory discussions, Metro transmitted certain financial information to
Regions. On March 27, Mr. Jordan visited Atlanta and met with Mr. Fisher. At
this meeting, price was discussed for the first time, but no agreement
involving price was reached. On May 17, Mr. Jordan visited Atlanta, and at
that time, a new proposal regarding price was made, but again no agreement was
reached. On June 13, Mr. Fisher was invited to visit Birmingham where he
visited with Regions' Chairman J. Stanley Mackin and Mr. Jordan. Price was
again discussed, with no agreement being reached, but it was decided that the
parties would exchange some additional information.
During the period from January to June of 1995, the Metro directors were
kept informed by Mr. Fisher of the progress of his discussions with Regions at
each monthly Board meeting. The directors at each meeting authorized Mr. Fisher
to continue to pursue the discussions and negotiations with Regions with the
objective of obtaining an agreeable price for the sale of Metro.
Also, beginning on May 16, Mr. Fisher began to have discussions with
another large out-of-state financial institution about the possible sale of
Metro. Mr. Fisher visited the home office of the other institution on June 1,
and information was exchanged between the two parties. Several more discussions
took place between the presidents of the two institutions until August 18, when
the other institution made its final offer, which was turned down by Mr. Fisher
as insufficient.
On July 18, Regions made a new proposal to Metro. A special Metro Board
meeting was called for purposes of analyzing and considering this new proposal.
After some deliberation, the Board determined that the proposal was not
sufficient, but the Board encouraged Mr. Fisher to continue to pursue his
discussions with Regions. On or about August 8, Regions proposed a price of
$16.00 per share. In response to this proposal, Mr. Fisher suggested that he
would like to visit Birmingham to discuss the proposal in greater detail. Prior
to going to Birmingham, Mr. Fisher met with both general counsel to Metro and
special counsel to discuss in some detail the information which needed to be
learned at the meeting. Also, around this time, Regions asked if it could
perform a due diligence review of Metro's construction loan portfolio. Metro
agreed, and three loan officers from Regions visited with Metro's senior vice
president of construction lending to evaluate Metro's loan policies and
procedures in this area.
The meeting in Birmingham was held on August 17, and, at that time, Mr.
Fisher and several officers of Metro who were also in attendance discussed in
detail not only the price proposal but also all of the possible terms of the
acquisition of Metro by Regions. The day following this meeting, a draft of a
definitive agreement prepared by Regions' counsel was submitted to Metro. While
the definitive agreement was being
18
<PAGE> 21
reviewed by Metro's counsel, Mr. Fisher spoke with each director to discuss in
general the terms of the proposal. All of the directors felt positive about the
proposal.
On August 22, at a regularly scheduled Board meeting, all of the terms of
the proposal, as well as the definitive agreement, were reviewed in detail with
the directors by counsel for Metro. Special counsel for Metro also discussed
with the directors their fiduciary duties with regard to the sale of Metro. It
was decided that a special board meeting should be held the following day to
make a final determination with regard to the proposed Merger.
At the special meeting of the Board of Directors held on August 23, the
directors heard from Mr. Jordan of Regions, who gave some history and general
information on Regions. The directors also heard a report from Sterne, Agee
with respect to certain financial aspects of the transaction. The directors
then heard from Metro's special counsel with regard to the definitive
agreement. Following all these presentations, the directors then met in private
and approved the Merger. Thereafter, the definitive agreement was signed by
Metro and Regions, and a press release was issued that afternoon.
Metro's Reasons for the Merger. In approving the Merger, the directors of
Metro considered a number of factors. Without assigning any relative or
specific weights to the factors, the Metro Board of Directors considered the
following material factors:
(a) the information presented to the directors by the management of Metro
concerning the business, operations, earnings, asset quality, and financial
condition of Metro, including compliance with regulatory capital requirements
on an historical and prospective basis;
(b) the financial terms of the Merger, including the relationship of the
merger price to the market value, tangible book value, and earnings per share
of Metro Common Stock, the partial protection against a decline in the market
value of Regions Common Stock, and the participation in any appreciation in
value of Regions Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of the
Merger as a tax-free exchange of Metro Common Stock for Regions Common Stock
for federal and state income tax purposes;
(d) the likelihood that the Merger will be approved by applicable
regulatory authorities without undue conditions or delay;
(e) the report of Metro's financial advisor reviewing a comparison of Metro
to selected peer banks, premiums paid in other merger transactions, a
mark-to-market analysis of Metro, and a discounted cash-flow analysis of Metro;
(f) the opinion rendered by Metro's financial advisor to the effect that
the consideration to be received in the Merger is fair, from a financial point
of view, to the stockholders of Metro; and
(g) the management philosophy of Regions and its compatibility with that of
Metro.
The terms of the Merger were the result of arms-length negotiations between
representatives of Metro and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of Metro
unanimously approved the Merger as being in the best interests of Metro and its
stockholders. Each member of the Board of Directors of Metro has agreed to vote
such member's shares in favor of the Merger.
METRO'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT METRO STOCKHOLDERS
VOTE FOR APPROVAL OF THE AGREEMENT.
Regions' Reasons for the Merger. The Regions Board of Directors has
approved the Agreement and determined that the Merger is in the best interests
of Regions and its stockholders. In approving the Agreement, the Regions Board
considered a number of factors. Without assigning any relative or specific
weights to the factors, the Regions Board of Directors considered the following
material factors:
(a) a review, based in part on a presentation by Regions management, of (i)
the business, operations, earnings, and financial condition, including the
capital levels and asset quality, of Metro on an historical,
19
<PAGE> 22
prospective, and pro forma basis and in comparison to other financial
institutions in the area, (ii) the demographic, economic, and financial
characteristics of the markets in which Metro operates, including existing
competition, history of the market areas with respect to financial
institutions, and average demand for credit, on an historical and prospective
basis, and (iii) the results of Regions' due diligence review of Metro; and
(b) a variety of factors affecting and relating to the overall strategic
focus of Regions, including Regions' desire to expand into markets in the
general vicinity of its core markets.
OPINION OF METRO'S FINANCIAL ADVISOR
Metro retained Sterne, Agee to act as Metro's financial advisor in
connection with the Merger. As part of this engagement, Sterne, Agee agreed to
render to the Metro Board an opinion with respect to the fairness to the
stockholders of the consideration to be received in the Merger from a financial
point of view. On August 23, 1995, Sterne, Agee delivered to the Metro Board
its oral opinion that, as of such date, the consideration to be received
pursuant to a draft version of the Agreement was fair to the Metro stockholders
from a financial point of view. Sterne, Agee subsequently confirmed such
opinion in writing as of December 20, 1995, based on the final Agreement. The
full text of Sterne, Agee's final written opinion to the Metro Board is
included as Appendix B to this Proxy Statement/Prospectus and should be read
carefully and in its entirety. Sterne, Agee's opinion to the Metro Board does
not constitute a recommendation to any stockholder as to how such stockholder
should vote at the Special Meeting. The fairness opinion was based upon
information available to Sterne, Agee as of the date the opinion was rendered.
In rendering its opinion, Sterne, Agee, has, among other things: (i)
reviewed certain publicly available financial and other data with respect to
Metro and Regions, including the consolidated financial statements for recent
years and interim periods to date, certain Regions' Current Reports on Form 8-K
presenting certain financial statements on a pro forma basis incorporating the
effects of then pending and expected to be completed acquisitions by Regions,
drafts of the Registration Statement, and certain other relevant financial and
operating data relating to Metro and Regions made available to Sterne, Agee
from published sources and from the internal records of Metro and Regions; (ii)
reviewed the Agreement; (iii) reviewed certain historical market prices and
trading volumes of Metro Common Stock and Regions Common Stock in the
over-the-counter market as reported by the Nasdaq National Market; (iv)
compared Metro and Regions from a financial point of view with certain other
companies in the financial services industry which Sterne, Agee deemed
relevant; (v) considered the financial terms, to the extent publicly available,
of selected recent acquisitions of financial institutions which Sterne, Agee
deemed to be comparable, in whole or in part, to the Merger; (vi) reviewed and
discussed with representatives of the managements of Metro and Regions certain
information of a business and financial nature regarding Metro and Regions,
respectively, furnished to Sterne, Agee by Metro and Regions, respectively;
(vii) inquired about and discussed the Agreement and other matters related
thereto with Metro's counsel; and (viii) performed such other analyses and
examinations as Sterne, Agee deemed appropriate.
In connection with its review, Sterne, Agee has not independently verified
any of the foregoing information with respect to Metro or Regions, has relied
on all such information, and has assumed that all such information is complete
and accurate in all material respects. With respect to the financial forecasts
for Metro and Regions provided to Sterne, Agee by their respective managements,
Sterne, Agee has assumed for purposes of its opinion that they have been
reasonably prepared on bases reflecting the best available estimates and
judgments of their respective managements at the time of preparation as to the
future financial performance of Metro and Regions and that they provide a
reasonable basis upon which Sterne, Agee could form its opinion. Sterne, Agee
has also assumed that there have been no material changes in Metro's or
Regions' assets, financial condition, results of operations, business or
prospects since the respective dates of their last financial statements made
available to them. Sterne, Agee has relied on advice of counsel to Metro as to
all legal matters with respect to Metro, Regions and the Agreement. In
addition, Sterne, Agee has not examined any of the loan files of Metro or
Regions or otherwise evaluated the allowance for loan losses of Metro or
Regions and has not made an independent evaluation, appraisal or physical
inspection of the assets
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or individual properties of Metro or Regions, nor has Sterne, Agee been
furnished with any such appraisals. Further, its opinion is based on economic,
monetary and market conditions existing as of the date hereof.
Sterne, Agee is a regional investment banking firm and, as part of its
investment banking activities, is regularly engaged in the valuation of
businesses and their securities in connection with merger transactions and
other types of acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Metro's Board of Directors
selected Sterne, Agee to act as its financial advisor in connection with the
Merger on the basis of the firm's expertise in southeastern financial
institutions. In the ordinary course of its business, Sterne, Agee actively
trades the equity securities of Metro and Regions for its own account and for
the accounts of customers and, accordingly, may at any time hold a long or
short position in such securities. Sterne, Agee and its officers, employees,
consultants, and agents may have long, short or option positions in the
securities of Metro and Regions. Sterne, Agee has regularly followed and
provided investment research concerning Regions to its clients.
The summary set forth below reflects the material analyses performed by
Sterne, Agee but does not purport to be a complete description of the analyses
performed by Sterne, Agee. The analyses performed by Sterne, Agee are not
necessarily indicative of the actual values, which may be significantly more or
less favorable than suggested by such analyses. Additionally, analyses relating
to the values of businesses do not purport to be appraisals or to reflect the
prices at which businesses actually may be sold.
In connection with rendering its opinion to the Metro Board, Sterne, Agee
performed a variety of financial analyses, which are summarized below. Sterne,
Agee performed substantially similar analyses for its earlier opinions. The
evaluation of the fairness, from a financial point of view, of the
consideration to be received in the Merger was to some extent a subjective one
based on the experience and judgment of Sterne, Agee and not merely the result
of mathematical analysis of financial data. Sterne, Agee considered various
financial valuation methodologies in its determination. The preparation of a
fairness opinion involves determination as to the most appropriate factors to
be considered as well as relevant methods of financial analysis and the
application of those factors and methods to the particular circumstances, and,
therefore, such an opinion is not readily susceptible to summary description.
Sterne, Agee believes that its analyses must be considered as a whole and that
selecting portions of such analyses and factors considered by Sterne, Agee
without considering all such analyses and factors could create an incomplete
view of the process underlying Sterne, Agee's opinion. In addition, Sterne,
Agee may have given various analyses more or less weight than other analyses
and may have deemed various assumptions more or less probable than other
assumptions. In its analyses, Sterne, Agee incorporated numerous assumptions
with respect to business, market, monetary and economic conditions, industry
performance and other matters, many of which are beyond Metro's and Regions'
control. Any estimates contained in Sterne, Agee's analyses are not necessarily
indicative of future results or values, which may be significantly more or less
favorable than such estimates. Such analyses were prepared solely as part of
Sterne, Agee's analysis of the fairness to the Metro stockholders of the
consideration to be paid in the Merger.
Market Premium. Sterne, Agee compared the equivalent market value of the
Regions' stock to be received by the holder of one share of Metro Common Stock
with the price of a share of Metro Common Stock prior to the announcement of
the Agreement. Based on a 0.431 exchange ratio and $43.75 closing price for
Regions on December 5, 1995, an equivalent price per Metro share of $18.86 was
compared with the August 23, 1995 closing price of a Metro share of $11.00.
Analysis of Selected Bank and Thrift Merger Transactions. Sterne, Agee
compared the Merger on the basis of multiples of earnings, stated book value,
tangible book value and premium to core deposits of Metro implied by the
aggregate consideration to be paid in the Merger as of the date of its opinion,
with the same ratios in recent acquisitions of banks and thrifts which Sterne,
Agee deemed comparable, in whole or in part, to the Merger. Such comparable
acquisitions included actual or pending transactions of Georgia banks, thrifts
or bank or thrift holding companies announced during 1993 through March, 1995,
including Colonial BancGroup, Inc.'s acquisition of Mt. Vernon Financial
Corporation; SouthTrust Corporation's acquisition of
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Northside Bank & Trust; and Bank South Corporation's acquisitions of Gwinnett
Bancshares, Chattahoochee Bancorp and The Merchants Bank. In addition, 10 other
relevant acquisitions that were announced between 1993 and October, 1995 were
also considered. Among the characteristics which such comparable acquisitions
have in common with the Merger are a size of $100 million to $1 billion in
assets and/or their location in above average growth market areas. Sterne,
Agee's analysis showed that, in the 15 transactions which were considered, the
average price-to-book-value ratio was 1.76x, the average
price-to-tangible-book-value ratio was 1.78x and the average price-to-earnings
ratio was 15.7x. Sterne, Agee determined the price multiples implied by the
value of the consideration to be received by Metro stockholders in the Merger
based on a Regions common stock price of $43.75 on December 5, 1995; the
price-to-stated-book-value ratio was 2.37x; the price-to-tangible-book-value
ratio was 2.55x and the price-to-last-12-months earnings ratio was 18.7x.
Dilution Analysis. Sterne, Agee compared Metro's book value and earnings
per share as of December 31, 1994 and for the nine months ended September 30,
1995, with Regions' pro forma numbers adjusted for the mergers of Enterprise
National Bank, First Federal Bank of Northwest Georgia, First National Bancorp,
First Gwinnett Bancshares, Inc. and Delta Bank and Trust Company, based on
drafts of the Registration Statement and internal reports provided by Regions
and Metro. Assuming a 0.431 exchange ratio, Sterne, Agee calculated that there
would be a 24.2% increase in equivalent stated book value per share from $7.95
to $9.87 per share as of September 30, 1995 and a 32.1% increase in equivalent
nine months 1995 earnings per share from $0.81 to $1.07 per share. Sterne, Agee
compared Metro's indicated dividend rate per share as of the date hereof with
Regions' numbers and calculated a 185.0% increase in the indicated dividend
rate per share from $0.20 to $0.57 per share.
Present Value Analysis. Sterne, Agee calculated the present value of a
share of Metro Common Stock assuming various price-to-earnings multiples
applied to future estimated earnings per share, plus interim dividends
received, discounted at various rates. The analysis incorporated Metro's
forecasts for earnings growth during the periods and an assumed dividend payout
of 35%. The range of price-to-earnings multiples considered was 11x to 12x and
the discount rates used were 10% and 15%. On the basis of such varying
assumptions, Sterne, Agee calculated a present value of Metro on a stand- alone
basis ranging from $11.98 to $17.55 per share.
Sterne, Agee also calculated the present value under various scenarios of
receiving 0.431 shares of Regions Common Stock per share of Metro based on the
future value of Regions Common Stock received. Two sets of assumptions were
used in analyzing the various scenarios. First, Sterne, Agee calculated the
present value of a share of Regions Common Stock assuming various
price-to-earnings multiples applied to future estimated earnings per share,
plus interim dividends received, discounted at various rates. The analysis
incorporated Regions' forecasts for earnings growth during the periods and
assumed a dividend payout of 35%. The range of price-to-earnings multiples was
11x to 12x and the discount rates used were 10% and 15%. On the basis of such
varying assumptions, Sterne, Agee calculated a present value of Regions on a
stand-alone basis ranging from $37.01 to $53.90 per share. Based on an Exchange
Ratio of 0.431, these values would equate to a range of $15.95 to $23.23 per
Metro share. Second, Regions Common Stock was viewed assuming its acquisition
at a later date at multiples of book ranging from 1.8x to 2.4x. The discount
rates used were 10% and 15%. On the basis of such varying assumptions, Sterne,
Agee calculated a present value ranging from $43.25 to $60.79 per share. Based
on an Exchange Ratio of 0.431, these values would equate to a range of $18.64
to $26.20 per share.
These analyses were based, as applicable, upon various earnings forecasts
for Metro and Regions and assumed future dividend payout ratios. Managements'
projections are based upon many factors and assumptions, many of which are
beyond the control of Metro or Regions.
The foregoing description of Sterne, Agee's opinion is qualified in its
entirety by reference to the full text of such opinion which is attached hereto
as Appendix B.
Compensation to Financial Advisor. In a letter agreement dated August 15
and accepted August 23, 1995, Metro retained Sterne, Agee to act as its
financial advisor to render a fairness opinion to Metro in connection
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with any sale or merger of Metro. Pursuant to the letter agreement, Metro
agreed to pay Sterne, Agee a fee of $100,000, $25,000 of the fee as a retainer
paid as of the date of the letter agreement; $50,000 to be paid at the time of
publication of any proxy statement containing a fairness opinion; and $25,000
at the time of consummation of any proposed sale transaction. In addition,
Metro agreed to reimburse Sterne, Agee for its reasonable out-of-pocket costs
and expenses incurred in connection with its services rendered to Metro
pursuant to the letter agreement and to indemnify Sterne, Agee, its partners,
directors, officers, agents, consultants, employees and controlling persons
against certain liabilities, including liabilities under the federal securities
laws.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Georgia Certificate of Merger relating
to the Merger are filed and declared effective with, respectively, the Delaware
Secretary of State and the Georgia Secretary of State. Unless otherwise agreed
upon by Regions and Metro, and subject to the conditions to the obligations of
the parties to effect the Merger, the parties will use their reasonable efforts
to cause the Effective Date to occur on the last business day of the month in
which the last of the following events occur: (i) the effective date (including
the expiration of any applicable waiting period) of the last federal or state
regulatory approval required for the Merger and (ii) the date on which the
Agreement is approved by the requisite vote of Metro stockholders; or such
later date within 30 days thereof as specified by Regions.
No assurance can be provided that the necessary stockholder and regulatory
approvals can be obtained or that other conditions precedent to the Merger can
or will be satisfied. Regions and Metro anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the first quarter of 1996. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Regions or Metro generally may terminate
the Agreement if the Merger is not consummated by June 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 of the Agreement."
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
Promptly after the Effective Date, Regions will cause First Chicago Trust
Company of New York, acting in the capacity of Exchange Agent, to mail to the
former stockholders of Metro a form letter of transmittal, together with
instructions for the exchange of such stockholders' certificates representing
shares of Metro Common Stock for certificates representing shares of Regions
Common Stock.
METRO STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. Upon surrender to the
Exchange Agent of certificates for Metro Common Stock, together with a properly
completed letter of transmittal, there will be issued and mailed to each holder
of Metro Common Stock surrendering such items a certificate or certificates
representing the number of shares of Regions Common Stock to which such holder
is entitled, if any, and a check for the amount to be paid in lieu of any
fractional share interest, without interest. After the Effective Date, to the
extent permitted by law, Metro stockholders of record as of the Effective Date
will be entitled to vote at any meeting of holders of Regions Common Stock the
number of whole shares of Regions Common Stock into which their Metro Common
Stock has been converted, regardless of whether such stockholders have
surrendered their Metro Common Stock certificates. No dividend or other
distribution payable after the Effective Date with respect to Regions Common
Stock, however, will be paid to the holder of any unsurrendered Metro
certificate until the holder duly surrenders such certificate. Upon such
surrender, all undelivered dividends and other distributions and, if
applicable, a check for the amount to be paid in lieu of any fractional share
interest will be delivered to such stockholder, in each case without interest.
After the Effective Date, there will be no transfers of shares of Metro
Common Stock on Metro's stock transfer books. If certificates representing
shares of Metro Common Stock are presented for transfer after the
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Effective Date, they will be canceled and exchanged for the shares of Regions
Common Stock and a check for the amount due in lieu of fractional shares, if
any, deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions, including,
but not limited to:
(a) approval from the Federal Reserve and the Georgia Department without
any conditions or restrictions that would, in the reasonable judgment of
Regions' Board of Directors, so materially adversely impact the economic
benefits of the transactions contemplated by the Agreement as to render
inadvisable the consummation of the Merger, and the expiration of applicable
waiting periods under the BHC Act;
(b) the approval by the holders of a majority of the Metro Common Stock
issued and outstanding;
(c) the absence of any action by any court or governmental authority
restraining or prohibiting the Merger;
(d) the receipt of a satisfactory opinion of counsel that the Merger
qualifies for federal income tax treatment as a reorganization under Section
368(a) of the Code and that the exchange of Metro Common Stock for Regions
Common Stock will not give rise to recognition of gain or loss to Metro
stockholders, except to the extent of any cash received; and
(e) notification for listing on the Nasdaq National Market of the shares of
Regions Common Stock to be issued in the Merger.
Consummation of the Merger also is subject to the satisfaction or waiver of
various other conditions specified in the Agreement, including, among others:
(i) the delivery by Regions and Metro of opinions of their respective counsel
and certificates executed by their respective Chief Executive Officers and
Chief Financial Officers as to compliance with the Agreement; (ii) as of the
Effective Date, the accuracy of certain representations and warranties and the
compliance in all material respects with the agreements and covenants of each
party; and (iii) the receipt by Regions of a letter from Metro's independent
accountants with respect to certain financial information regarding Metro.
REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. There can be no assurance that such regulatory approvals
will be obtained or as to the timing of such approvals. There also can be no
assurance that such approvals will not be accompanied by a conditional
requirement which causes such approvals to fail to satisfy the conditions set
forth in the Agreement. Applications for the approvals described below have
been submitted to the appropriate regulatory agencies.
Regions and Metro are not aware of any material governmental approvals or
actions that are required for consummation of the Merger, except as described
below. Should any other approval or action be required, it presently is
contemplated that such approval or action would be sought.
The Merger requires the prior approval of the Federal Reserve, pursuant to
Section 3 of the BHC Act. In granting its approval under Section 3 of the BHC
Act, the Federal Reserve must take into consideration, among other factors, the
financial and managerial resources and future prospects of the institutions and
the convenience and needs of the communities to be served. The relevant
statutes prohibit the Federal Reserve from approving the Merger (i) if it would
result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in any part of the
United States or (ii) if its effect in any section of the country may be to
substantially lessen competition or to tend to create a monopoly, or if it
would be a restraint of trade in any other manner, unless the Federal Reserve
finds that any anticompetitive effects are outweighed clearly by the public
interest and the probable effect of the transaction in meeting the convenience
and needs of the communities to be served. Under the BHC Act, the Merger may
not be consummated until either the 15th day or the 30th day following the date
of Federal Reserve approval, during which time the United States Department of
Justice may challenge the transaction on antitrust grounds. The commencement of
any antitrust action would stay the effectiveness of the Federal Reserve's
approval, unless a court specifically orders otherwise.
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The Merger also is subject to the approval of the Georgia Department. In
its evaluation, the Georgia Department will take into account considerations
similar to those applied by the Federal Reserve.
The Federal Reserve has issued its approval, but the Georgia Department has
yet to issue its approval of the Merger.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefitted
by the provision or (ii) amended by a written agreement between Regions and
Metro approved by their respective Boards of Directors; provided, however, that
after approval by the Metro stockholders, no amendment decreasing the
consideration to be received by Metro stockholders may be made without the
further approval of such stockholders.
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date, either before or after approval by Metro
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final nonappealable
denial of any required regulatory approval, or by the Board of Directors of
Regions if any required regulatory approval is conditioned or restricted in the
manner described under "--Conditions to Consummation of the Merger" above;
(b) by the Board of Directors of either party, if the holders of a majority
of shares of Metro Common Stock issued and outstanding shall not have approved
the Agreement;
(c) by mutual agreement of the Boards of Directors of Regions and Metro;
(d) by the Board of Directors of either party, in the event of a breach of
any provision of the Agreement which meets certain standards specified in the
Agreement; or
(e) by the Board of Directors of either party if the Merger shall not have
been consummated by June 30, 1996, but only if the failure to consummate the
Merger by such date has not been caused by the terminating party's breach of
the Agreement.
If the Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination will not relieve the parties from the
consequences of any uncured willful breach of the Agreement giving rise to such
termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of Metro and Regions generally has agreed, unless the prior consent of
the other party is obtained, and except as otherwise contemplated by the
Agreement, to operate its business only in the ordinary course, preserve intact
its business organizations and assets, maintain its rights and franchises, and
take no action that would affect, adversely and materially, the ability of
either party to perform its covenants and agreements under the Agreement or to
obtain any consent or approval required for the consummation of the
transactions contemplated by the Agreement. In addition, the Agreement contains
certain other restrictions applicable to the conduct of the business of either
Metro or Regions prior to consummation of the Merger, as described below.
Metro. Metro has agreed not to take certain actions relating to the
operation of its business pending consummation of the Merger without the prior
approval of Regions. Those actions generally include, without limitation: (i)
amending its Articles of Incorporation or Bylaws; (ii) becoming responsible for
any obligation for borrowed money in excess of an aggregate of $100,000 (except
in the ordinary course of business consistent with past practices); (iii)
acquiring or exchanging any shares of its capital stock or paying any dividend
or other distribution in respect of its capital stock, except that Metro may
declare and pay regular quarterly cash dividends of $.05 per share in
accordance with past practice; (iv) issuing or selling any additional shares of
any Metro capital stock, any rights to acquire any such stock, or any security
convertible into such stock (except as set forth in the Agreement or pursuant
to the exercise of outstanding stock options);
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(v) adjusting or reclassifying any of its capital stock; (vi) acquiring control
over any other entity; (vii) granting any increase in compensation or benefits
to employees or officers (except in accordance with past practice or as
required by law), paying any bonus (except as previously disclosed to Regions
or in accordance with any existing program or plan), entering into or amending
any severance agreements with officers (except as previously disclosed to
Regions), or granting any increase in compensation or other benefits to
directors; (viii) entering into or amending any employment contract that it
does not have the unconditional right to terminate (except as previously
disclosed to Regions and except for any amendment required by law); (ix)
adopting any new employee benefit plan or program, or materially changing any
existing plan or program (except as previously disclosed to Regions and except
for any change required by law or advisable to maintain the tax qualified
status of any such plan); (x) making any significant change in any tax or
accounting methods or systems of internal accounting controls (except in
conformity to changes in tax laws or generally accepted accounting principles
("GAAP")); (xi) commencing any litigation (except in accordance with past
practices); or (xii) modifying or terminating any material contract.
In addition, Metro has agreed not to solicit, directly or indirectly, any
acquisition proposal from any other person or entity. Metro also has agreed not
to negotiate with respect to any such proposal, provide nonpublic information
to any party making such a proposal, or enter into any agreement with respect
to any such proposal, except in compliance with the fiduciary obligations of
its Board of Directors. In addition, Metro has agreed to use reasonable efforts
to cause its advisors and other representatives not to engage in any of the
foregoing activities.
Regions. The Agreement prohibits Regions, prior to the earlier of the
Effective Date or the termination of the Agreement, from taking any action that
would materially adversely affect the ability of either party to obtain the
requisite governmental approvals or to perform its covenants and agreements
under the Agreement.
MANAGEMENT FOLLOWING THE MERGER
Consummation of the Merger will not alter the present officers and
directors of Regions. Information concerning the management of Regions is
included in the documents incorporated herein by reference. See "Documents
Incorporated by Reference."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Agreement provides that Regions will, and will cause Metro to, maintain
all rights of indemnification existing in favor of each person entitled to
indemnification from Metro or any of its subsidiaries on terms no less
favorable than the rights provided in the Articles of Incorporation or Bylaws
of Metro or its subsidiaries, as the case may be, or the rights otherwise in
effect on the date of the Agreement, and that such rights will continue in full
force and effect for six years from the Effective Date with respect to matters
occurring at or prior to the Effective Date.
The Agreement also provides that, after the Effective Date, Regions will
provide generally to officers and employees of Metro and its subsidiaries who
become officers or employees of Regions or its subsidiaries, employee benefits
under employee benefit plans (other than stock option or other plans involving
the potential issuance of Regions Common Stock) on terms and conditions that,
taken as a whole, are substantially similar to those currently provided by
Regions and its subsidiaries to their similarly situated officers and
employees. For purposes of participation and vesting (but not benefit accrual)
under such employee benefit plans, service with Metro or its subsidiaries prior
to the Effective Date will be treated as service with Regions or its
subsidiaries. The Agreement further provides that Regions will cause Metro to
honor all employment, severance, consulting, and other compensation contracts
previously disclosed to Regions between Metro or its subsidiaries and any
current or former director, officer, or employee, and all provisions for vested
amounts earned or accrued through the Effective Date under Metro's benefit
plans.
As described above under "--Treatment of Metro Options," the Agreement also
provides that all rights with respect to Metro Common Stock pursuant to stock
options granted by Metro under its stock option and other stock-based
compensation plans which are outstanding at the Effective Date, whether or not
then
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exercisable, will be converted into and will become rights with respect to
Regions Common Stock, and Regions will assume each of such options in
accordance with its terms.
As of the Record Date, directors and executive officers of Metro owned 75
shares of Regions Common Stock.
ABSENCE OF DISSENTERS' RIGHTS
In accordance with the applicable provisions of the Georgia Act, the
holders of shares of Metro Common Stock are not afforded the right to dissent
from the Merger and to receive an appraised value of such shares in cash.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THIS SUMMARY IS BASED ON THE FEDERAL INCOME TAX
LAWS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES NOT TAKE INTO ACCOUNT
POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS, INCLUDING AMENDMENTS TO
APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN JUDICIAL OR ADMINISTRATIVE
RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT. THIS SUMMARY DOES NOT
PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY PERSON. IN PARTICULAR,
AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT ADDRESS THE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN PERSONS, TAX-EXEMPT
ENTITIES, DEALERS IN SECURITIES, INSURANCE COMPANIES, OR CORPORATIONS, AMONG
OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF THE MERGER UNDER ANY
STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. STOCKHOLDERS, THEREFORE, ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM
OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND
EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, Alston & Bird, special
counsel to Regions, has rendered an opinion to Regions and Metro concerning
certain federal income tax consequences of the proposed Merger under federal
income tax law. It is such firm's opinion that:
(a) Provided the Merger qualifies as a statutory merger under the Delaware
GCL and the Georgia Act, the Merger will be a reorganization within the meaning
of section 368(a). Metro and Regions will each be "a party to a reorganization"
within the meaning of section 368(b).
(b) Metro will recognize no gain or loss upon the transfer of its assets to
Regions in exchange solely for Regions Common Stock and the assumption by
Regions of the liabilities of Metro.
(c) No gain or loss will be recognized by Regions on receipt of Metro's
assets in exchange for Regions Common Stock.
(d) The basis of Metro's assets in the hands of Regions will, in each case,
be the same as the basis of those assets in the hands of Metro immediately
prior to the transaction.
(e) The holding period of the assets of Metro in the hands of Regions will,
in each case, include the period during which such assets were held by Metro.
(f) The stockholders of Metro will recognize no gain or loss upon the
exchange of their Metro Common Stock solely for shares of Regions Common Stock.
(g) The basis of the Regions Common Stock received by the Metro
stockholders in the proposed transaction will, in each instance, be the same as
the basis of the Metro Common Stock surrendered in exchange therefor.
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(h) The holding period of the Regions Common Stock received by the Metro
stockholders will, in each instance, include the period during which the Metro
Common Stock surrendered in exchange therefor was held, provided that the Metro
Common Stock was held as a capital asset on the date of the exchange.
(i) The payment of cash to Metro stockholders in lieu of fractional share
interests of Regions Common Stock will be treated for federal income tax
purposes as if the fractional shares were distributed as part of the exchange
and then were redeemed by Regions. These cash payments will be treated as
having been received as distributions in full payment in exchange for the stock
redeemed. 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 TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, OR OTHER TAX
CONSEQUENCES OF THE MERGER. METRO STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO
THEM INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER STATE OR LOCAL LAW.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a "purchase," as
that term is used pursuant to GAAP, for accounting and financial reporting
purposes. Under the purchase method of accounting, the assets and liabilities
of Metro as of the Effective Date will be recorded at their estimated
respective fair values and added to those of Regions. Financial statements of
Regions issued after the Effective Date will reflect such values and will not
be restated retroactively to reflect the historical financial position or
results of operations of Metro.
EXPENSES AND FEES
The Agreement provides, in general, that each of the parties will bear and
pay its own expenses in connection with the transactions contemplated by the
Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that Regions
will bear and pay the filing fees and printing costs in connection with this
Proxy Statement/Prospectus.
RESALES OF REGIONS COMMON STOCK
The Regions Common Stock to be issued to Metro stockholders in the Merger
has been registered under the Securities Act, but that registration does not
cover resales of those shares by persons who control, are controlled by, or are
under common control with, Metro (such persons are referred to hereinafter as
"affiliates" and generally include executive officers, directors, and 10%
stockholders) at the time of the Special Meeting. Affiliates may not sell
shares of Regions Common Stock acquired in connection with the Merger, except
pursuant to an effective registration statement under the Securities Act or in
compliance with SEC Rule 145 or another applicable exemption from the
Securities Act registration requirements.
Each person who Metro reasonably believes will be an affiliate of Metro has
delivered to Regions a written agreement providing that such person generally
will not sell, pledge, transfer, or otherwise dispose of any Regions Common
Stock to be received by such person upon consummation of the Merger, except in
compliance with the Securities Act and the rules and regulations of the SEC
promulgated thereunder.
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EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of Metro Common Stock will be exchanging
their shares of a Georgia corporation governed by the Georgia Act and Metro's
Articles of Incorporation, as amended (the "Articles"), and Bylaws, for shares
of Regions, a Delaware corporation governed by the Delaware GCL and Regions'
Certificate of Incorporation (the "Certificate") and Bylaws. Certain
significant differences exist between the rights of Metro stockholders and
those of Regions stockholders. The differences deemed material by Metro and
Regions are summarized below. In particular, Regions' Certificate and Bylaws
contain several provisions that may be deemed to have an antitakeover effect in
that they could impede or prevent an acquisition of Regions unless the
potential acquirer has obtained the approval of Regions' Board of Directors.
The following discussion is necessarily general; it is not intended to be a
complete statement of all differences affecting the rights of stockholders and
their respective entities, and it is qualified in its entirety by reference to
the Georgia Act and the Delaware GCL as well as to Regions' Certificate and
Bylaws and Metro'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," "Limitations on Director
Liability," "Special Meetings of Stockholders," "Actions by Stockholders
Without a Meeting," "Stockholder Nominations and Proposals," and "Mergers,
Consolidations, and Sales of Assets Generally," and the provisions of the
Delaware GCL described under the heading "Business Combinations With Certain
Persons," are referred to herein as the "Protective Provisions." In general,
one purpose of the Protective Provisions is to assist Regions' Board of
Directors in playing a role in connection with attempts to acquire control of
Regions, so that the Board can further and protect the interests of Regions and
its stockholders as appropriate under the circumstances, including, if the
Board determines that a sale of control is in their best interests, by
enhancing the Board's ability to maximize the value to be received by the
stockholders upon such a sale.
Although Regions' management believes the Protective Provisions are,
therefore, beneficial to Regions' stockholders, the Protective Provisions also
may tend to discourage some takeover bids. As a result, Regions' stockholders
may be deprived of opportunities to sell some or all of their shares at prices
that represent a premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent that the Protective Provisions
discourage undesirable proposals, Regions may be able to avoid those
expenditures of time and money.
The Protective Provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of Regions
Common Stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the Protective
Provisions may decrease the market price of Regions Common Stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The Protective Provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the Board of Directors and
management. Furthermore, the Protective Provisions may make it more difficult
for Regions' stockholders to replace the Board of Directors or management, even
if a majority of the stockholders believes such replacement is in the best
interests of Regions. As a result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management.
AUTHORIZED CAPITAL STOCK
Regions. The Certificate authorizes the issuance of up to 120,000,000
shares of Regions Common Stock, of which 47,526,707 shares were issued,
including 1,474,579 treasury shares as of September 30, 1995. Regions' Board of
Directors may authorize the issuance of additional shares of Regions Common
Stock without further action by Regions' stockholders, unless such action is
required in a particular case by applicable laws or regulations or by any stock
exchange upon which Regions' capital stock may be listed. The Certificate does
not provide preemptive rights to Regions stockholders.
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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.
Metro. Metro's authorized capital stock consists of 15,000,000 shares of
Metro Common Stock, which is the only class of capital stock authorized and of
which 1,659,095 shares were issued and outstanding as of the Record Date.
Pursuant to the Georgia Act, Metro's Board of Directors may authorize the
issuance of additional shares of Metro Common Stock without further action by
Metro's stockholders. Metro's Articles, as amended, do not provide the
stockholders of Metro with preemptive rights to purchase or subscribe to any
unissued authorized shares of Metro Common Stock or any option or warrant for
the purchase thereof.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
Regions. The Delaware GCL generally provides that the approval of a
corporation's board of directors and the affirmative vote of a majority of (i)
all shares entitled to vote thereon and (ii) the shares of each class of stock
entitled to vote thereon as a class is required to amend a corporation's
certificate of incorporation, unless the certificate specifies a greater voting
requirement. The Certificate states that its provisions regarding authorized
capital stock, election, classification, and removal of directors, the approval
required for certain business combinations, meetings of stockholders, and
amendment of the Certificate and Bylaws may be amended or repealed only by the
affirmative vote of the holders of at least 75% of the outstanding shares of
Regions Common Stock.
The Certificate also provides that the Board of Directors has the power to
adopt, amend, or repeal the Bylaws. Any action taken by the stockholders with
respect to adopting, amending, or repealing any Bylaws may be taken only upon
the affirmative vote of the holders of at least 75% of the outstanding shares
of Regions Common Stock.
Metro. The Georgia Act generally provides that a Georgia corporation's
articles of incorporation may be amended by the affirmative vote of a majority
of the shares entitled to vote thereon, unless the articles of incorporation
provide for a higher or lower voting requirement. Metro's Articles provide that
the affirmative vote of at least 67% of the outstanding voting shares is
required to amend the Articles, unless at least 67% of Metro's directors then
in office approve the proposed amendment, in which event the affirmative vote
of a majority of the outstanding voting shares is sufficient to amend the
Articles.
The Articles also provide that the Board of Directors has the power to
adopt, amend, or repeal the Bylaws by a vote of 67% of the directors then in
office, subject to the right of the stockholders to adopt, amend, or repeal the
Bylaws by the affirmative vote of at least 67% of the outstanding shares.
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;
consequently, two annual meetings are effectively required for Regions'
stockholders to change a majority of the members of the Board.
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Pursuant to the Certificate, each stockholder generally is entitled to one
vote for each share of Regions stock held and is not entitled to cumulative
voting rights in the election of directors. With cumulative voting, a
stockholder has the right to cast a number of votes equal to the total number
of such holder's shares multiplied by the number of directors to be elected.
The stockholder has the right to cast all of such holder's votes in favor of
one candidate or to distribute such holder's votes in any manner among any
number of candidates. Directors are elected by a plurality of the total votes
cast by all stockholders. With cumulative voting, it may be possible for
minority stockholders to obtain representation on the Board of Directors.
Without cumulative voting, the holders of more than 50% of the shares of
Regions Common Stock generally have the ability to elect 100% of the directors.
As a result, the holders of the remaining Regions Common Stock effectively may
not be able to elect any person to the Board of Directors. The absence of
cumulative voting, therefore, could make it more difficult for a stockholder
who acquires less than a majority of the shares of Regions Common Stock to
obtain representation on Regions' Board of Directors.
Metro. Like Regions, Metro's Articles generally provide for a classified
board of directors with three classes, and provide that voting stock does not
have cumulative voting rights.
REMOVAL OF DIRECTORS
Regions. Under the Certificate, any director or the entire Board of
Directors may be removed only for cause and only by the affirmative vote of the
holders of at least 75% of Regions' voting stock.
Metro. Pursuant to Metro's Bylaws, a director may be removed only for cause
at a meeting of stockholders with respect to which notice of the purpose to
remove one or more directors has been given, by the affirmative vote of the
holders of at least 67% of the outstanding shares of Metro voting stock, or by
the affirmative vote of the holders of a majority of Metro voting stock if 67%
of the directors then in office have approved the 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 for liability for (i) any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) the payment of certain unlawful dividends and
the making of certain unlawful stock purchases or redemptions, or (iv) any
transaction from which the director derived an improper personal benefit.
Although this provision does not affect the availability of injunctive or
other equitable relief as a remedy for a breach of duty by a director, it does
limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the
likelihood of stockholder derivative litigation against directors and may
discourage or deter stockholders or management from bringing a lawsuit against
directors for breach of their duties, even though such action, if successful,
might have benefitted Regions and its stockholders. The SEC has taken the
position that similar provisions added to other corporations' certificates of
incorporation would not protect those corporations' directors from liability
for violations of the federal securities laws.
Metro. The Georgia Act generally permits a corporation's articles of
incorporation to relieve directors of liability for money damages for good
faith conduct. The Articles provide that Metro directors shall not be liable
for money damages for breach of duty as a director except for actions taken not
in good faith or that involve intentional misconduct or certain unlawful
transactions. Such limitations on director liability are substantially similar
to those applicable to Regions.
INDEMNIFICATION
Regions. The Certificate provides that Regions will indemnify its officers,
directors, employees, and agents to the full extent permitted by the Delaware
GCL. Under Section 145 of the Delaware GCL as currently in effect, other than
in actions brought by or in the right of Regions, such indemnification would
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apply if it were determined in the specific case that the proposed indemnitee
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of Regions and, with respect to any criminal
proceeding, if such person had no reasonable cause to believe that the conduct
was unlawful. In actions brought by or in the right of Regions, such
indemnification probably would be limited to reasonable expenses (including
attorneys' fees) and would apply if it were determined in the specific case
that the proposed indemnitee acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of Regions,
except that no indemnification may be made with respect to any matter as to
which such person is adjudged liable to Regions, unless, and only to the extent
that, the court determines upon application that, in view of all the
circumstances of the case, the proposed indemnitee is fairly and reasonably
entitled to indemnification for such expenses as the court deems proper. To the
extent that any director, officer, employee, or agent of Regions has been
successful on the merits or otherwise in defense of any action, suit, or
proceeding, as discussed herein, whether civil, criminal, administrative, or
investigative, such person must be indemnified against reasonable expenses
incurred by such person in connection therewith.
Metro. Metro's Bylaws provide for indemnification of its directors,
officers, employees, and agents in substantially the same manner and with
substantially the same effect as in the case of Regions.
SPECIAL MEETINGS OF STOCKHOLDERS
Regions. Regions' Certificate and Bylaws provide that special meetings of
stockholders 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.
Metro. Under the Articles, a special meeting of Metro stockholders may be
called only by a majority of the board of directors, by the Chairman of the
Board, or by the President.
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 meeting or
special meeting called by the Board of Directors, chief executive officer, or
secretary, even if a majority of the stockholders were in favor of such action.
Metro. Under the Articles no action requiring or permitting stockholder
approval may be approved by written consent of stockholders.
STOCKHOLDER NOMINATIONS
Regions. Regions' Certificate and Bylaws provide that any nomination by
stockholders of individuals for election to the Board of Directors must be made
by delivering written notice of such nomination (the "Nomination Notice") to
the Secretary of Regions not less than 14 days nor more than 50 days before any
meeting of the stockholders called for the election of directors; provided,
however, that if less than 21 days notice of the meeting is given to
stockholders, the Nomination Notice must be delivered to the Secretary of
Regions not later than the seventh day following the day on which notice of the
meeting was mailed to stockholders. The Nomination Notice must set forth
certain background information about the persons to be nominated, including
information concerning (i) the name, age, business, and, if known, residential
address of each nominee, (ii) the principal occupation or employment of each
such nominee, and (iii) the number of shares of Regions capital stock
beneficially owned by each such nominee. The Board of Directors is not required
to nominate in the annual proxy statement any person so proposed; however,
compliance with this
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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.
Metro. Metro's 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
Metro not less than 30 days before any meeting of the stockholders called for
the election of directors; provided, however, that if less than 40 days notice
of the meeting is given to stockholders, the Nomination Notice must be
delivered to the Secretary of Metro not later than the tenth day following the
day on which notice of the meeting was mailed to stockholders. The Nomination
Notice must set forth certain background information about the persons to be
nominated as required by Regulation 14A promulgated under the Exchange Act. 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.
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
Regions. Section 203 of the Delaware GCL ("Section 203") places certain
restrictions on "business combinations" (as defined in Section 203 to include,
generally, mergers, sales and leases of assets, issuances of securities, and
similar transactions) by Delaware corporations with an "interested stockholder"
(as defined in Section 203 to include, generally, the beneficial owner of 15%
or more of the corporation's outstanding voting stock). Section 203 generally
applies to Delaware corporations, such as Regions, that have a class of voting
stock listed on a national securities exchange, authorized for quotation on an
interdealer quotation system of a registered national securities association,
or held of record by more than 2,000 stockholders, unless the corporation
expressly elects in its certificate of incorporation or bylaws not to be
governed by Section 203.
Regions has not specifically elected to avoid the application of Section
203. As a result, Section 203 generally would prohibit a business combination
by Regions or a subsidiary with an interested stockholder within three years
after the person or entity becomes an interested stockholder, unless (i) prior
to the time when the person or entity becomes an interested stockholder,
Regions' Board of Directors approved either the business combination or the
transaction pursuant to which such person or entity became an interested
stockholder, (ii) upon consummation of the transaction in which the person or
entity became an interested stockholder, the interested stockholder held at
least 85% of the outstanding Regions voting stock (excluding shares held by
persons who are both officers and directors and shares held by certain employee
benefit plans), or (iii) once the person or entity becomes an interested
stockholder, the business combination is approved by Regions' Board of
Directors and by the holders of at least two-thirds of the outstanding Regions
voting stock, excluding shares owned by the interested stockholder.
Metro. Metro's bylaws specifically provide that Metro shall be subject to
the sections of the Georgia Act that place restrictions on certain business
combinations. Section 14-2-1111 of the Georgia Act restricts "business
combinations" (as defined in Section 14-2-1110 to include, generally, mergers,
sales and leases of assets, issuances of securities, and similar transactions)
by a Georgia corporation with an "interested stockholder" (as defined in
Section 14-2-1110 to include, generally, the beneficial owner of 10% or more of
the corporation's outstanding voting stock).
Section 14-2-1111 of the Georgia Act requires a business combination to be
(i) unanimously approved by the continuing directors, provided that continuing
directors constitute at least three members of the board of directors at the
time of such approval; or (ii) recommended by at least two thirds of the
continuing directors and approved by a majority of the votes entitled to be
cast by holders of voting shares, other than shares beneficially owned by the
interested stockholder who is, or whose affiliate is, a party to the business
combination. These requirements are in addition to any other vote required by
Georgia law or the articles of incorporation or bylaws of the corporation. The
requirements of Section 14-2-1111 must be satisfied in order for a business
combination to avoid the necessity of compliance with the fair pricing and
procedural requirements of the Georgia Act, which are set forth in Section
14-2-1112.
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Additionally, Section 14-2-1132 of the Georgia Act prohibits, with certain
stated exceptions, a business combination with an interested stockholder for
five years from the date the interested stockholder acquired that status.
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
Regions. The Certificate generally requires the affirmative vote of the
holders of at least 75% of the outstanding voting stock of Regions to effect
(i) any merger or consolidation with or into any other corporation, or (ii) any
sale or lease of any substantial part of the assets of Regions to any party
that beneficially owns 5.0% or more of the outstanding shares of Regions voting
stock, unless the transaction was approved by Regions' Board of Directors
before the other party became a 5.0% beneficial owner or is approved by 75% or
more of the Board of Directors after the party becomes such a 5.0% beneficial
owner. 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
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.
Metro. The Articles provide that certain business combination transactions
may not be consummated unless approved by the affirmative vote of either (i)
67% of the voting power of outstanding voting stock or (ii) a majority of the
voting power of outstanding voting stock in the case of a transaction approved
by 67% of the directors of Metro then in office. Absent such provision, the
Georgia Act would require approval of a majority of the voting power of a
corporation's stock.
DISSENTERS' RIGHTS OF APPRAISAL
Regions. The rights of appraisal of dissenting stockholders of Regions are
governed by the Delaware GCL. Pursuant thereto, except as described below, any
stockholder has the right to dissent from any merger of which Regions could be
a constituent corporation. No appraisal rights are available, however, for (i)
the shares of any class or series of stock that is either listed on a national
securities exchange, quoted on the Nasdaq National Market, or held of record by
more than 2,000 stockholders or (ii) any shares of stock of the constituent
corporation surviving a merger if the merger did not require the approval of
the surviving corporation's stockholders, unless, in either case, the holders
of such stock are required by an agreement of merger or consolidation to accept
for that stock something other than: (a) shares of stock of the corporation
surviving or resulting from the merger or consolidation; (b) shares of stock of
any other corporation that will be listed at the effective date of the merger
on a national securities exchange, quoted on the Nasdaq National Market, or
held of record by more than 2,000 stockholders; (c) cash in lieu of fractional
shares of stock described in clause (a) or (b) immediately above; or (d) any
combination of the shares of stock and cash in lieu of fractional shares
described in clauses (a) through (c) immediately above. Because Regions Common
Stock is quoted on the Nasdaq National Market and is held of record by more
than 2,000 stockholders, unless the exception described immediately above
applies, holders of Regions Common Stock do not have dissenters' rights of
appraisal.
Metro. The rights of appraisal of dissenting stockholders under Georgia law
are generally similar to those afforded under the Delaware GCL. Because Metro
Common Stock is quoted on the Nasdaq National Market, unless the exception
described in the preceding paragraph applies, holders of Metro 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.
Metro. Pursuant to the Georgia Act, upon written notice of a demand to
inspect corporate records, a stockholder is entitled to inspect specified
corporate records, including articles of incorporation and bylaws, minutes of
stockholder meetings and certain resolutions adopted at director meetings,
stockholder list, and all stockholder communications for the preceding three
years, including financial statements. Upon demonstration of a proper purpose,
a stockholder may be entitled to inspect other corporate records.
DIVIDENDS
Regions. The Delaware GCL provides that, subject to any restrictions in the
corporation's certificate of incorporation, dividends may be declared from the
corporation's surplus, or, if there is no surplus, from its net profits for the
fiscal year in which the dividend is declared and the preceding fiscal year.
Dividends may not be declared, however, if the corporation's capital has been
diminished to an amount less than the aggregate amount of all capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. Substantially all of the funds
available for the payment of dividends by Regions are derived from its
subsidiary depository institutions. There are various statutory limitations on
the ability of Regions' subsidiary depository institutions to pay dividends to
Regions. See "Certain Regulatory Considerations--Payment of Dividends."
Metro. Pursuant to the Georgia Act, a board of directors may from time to
time make distributions to its stockholders, subject to restrictions in its
articles of incorporation, provided that no distribution may be made if, after
giving it effect, (i) the corporation would not be able to pay its debts as
they become due in the usual course of business, or (ii) the corporation's
total assets would be less than the sum of its total liabilities plus (unless
the articles of incorporation permit otherwise) the amount that would be
needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution.
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COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock and Metro Common Stock are listed for quotation on the
Nasdaq National Market under the symbols "RGBK" and "MFIN," respectively. The
following table sets forth, for the indicated periods, the high and low closing
sale prices for Regions Common Stock and Metro Common Stock as reported by
Nasdaq, and the cash dividends declared per share of Regions Common Stock and
Metro Common Stock for the indicated periods. The stock prices and historical
dividends for Regions have been adjusted to reflect a 10% stock dividend issued
by Regions on April 1, 1993, and the stock prices and historical dividends for
Metro have been adjusted to reflect 10% stock dividends issued by Metro in
September 1993, March 1994, and May 1995.
<TABLE>
<CAPTION>
REGIONS METRO
PRICE RANGE CASH DIVIDENDS PRICE RANGE CASH DIVIDENDS
----------- DECLARED ----------- DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1993
First Quarter . . . . . . . $38.38 $31.25 $.26 $5.07 $3.19 $ --
Second Quarter . . . . . . 38.25 30.25 .26 6.39 5.63 .0751
Third Quarter . . . . . . . 35.25 31.25 .26 7.14 5.63 .0225
Fourth Quarter . . . . . . 35.00 29.63 .26 8.26 7.02 .0331
1994
First Quarter . . . . . . 33.50 30.13 .30 8.88 6.40 .0413
Second Quarter . . . . . . 36.13 30.50 .30 10.68 8.64 .0455
Third Quarter . . . . . . 36.75 34.63 .30 10.08 9.09 .0455
Fourth Quarter . . . . . . 35.00 29.75 .30 10.23 8.86 .0455
1995
First Quarter . . . . . . 36.50 31.63 .33 10.23 8.18 .0455
Second Quarter . . . . . . 37.44 34.50 .33 11.00 9.00 .05
Third Quarter . . . . . . 41.25 37.00 .33 16.75 9.50 .05
Fourth Quarter (through
December 21) . . . . . . 44.88 39.63 .33 19.25 15.75 .05
</TABLE>
On December 21, 1995, the last reported sale prices of Regions Common
Stock and Metro Common Stock, as reported on the Nasdaq National Market, were
$42.88 and $18.13, respectively. At the close of trading on August 23, 1995,
the last trading day prior to public announcement of the proposed Merger, the
last reported sale prices of Regions Common Stock and Metro Common Stock, as
reported on the Nasdaq National Market, were $38.75 and $11.00, respectively.
The holders of Regions Common Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Regions has paid regular quarterly cash dividends since 1971.
Although Regions currently intends to continue to pay quarterly cash dividends
on the Regions Common Stock, there can be no assurance that Regions' dividend
policy will remain unchanged after completion of the Merger. The declaration
and payment of dividends thereafter will depend upon business conditions,
operating results, capital and reserve requirements, and the Board of
Directors' consideration of other relevant factors.
Regions is a legal entity separate and distinct from its subsidiaries and
its revenues depend in significant part on the payment of dividends from its
subsidiary financial institutions, particularly First Alabama Bank. Regions'
subsidiary depository institutions are subject to certain legal restrictions on
the amount of dividends they are permitted to pay. See "Certain Regulatory
Considerations--Payment of Dividends."
In deciding whether to pay cash dividends, Metro considers its capital
position, its ability to meet its financial obligations as they come due, and
its capacity to act as a source of financial strength to its subsidiaries.
Generally, Metro would not maintain its existing rate of cash dividends on its
Common Stock
36
<PAGE> 39
unless (i) Metro's net income available to common stockholders over the past
year has been sufficient to fully fund the dividends and (ii) the prospective
rate of earnings retention appears consistent with Metro's capital needs, asset
quality, and overall financial condition. To the extent consistent with these
considerations, Metro's policy is to maintain an annual dividend rate of at
least 10% of its after-tax earnings.
BUSINESS OF METRO
Metro is a bank holding company organized under the laws of the state of
Georgia, with its principal executive office located in Atlanta, Georgia. Metro
operates principally through the Bank, which is a state-chartered commercial
bank and which provides a range of retail banking services through three
offices in Atlanta, Georgia. At September 30, 1995, Metro had total
consolidated assets of approximately $197 million, total consolidated deposits
of approximately $178 million, and total consolidated stockholders' equity of
approximately $13 million. Metro's principal executive office is located at
6637 Roswell Road, Atlanta, Georgia, 30328, and its telephone number at such
address is (404) 255-8550.
Additional information with respect to Metro and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. Copies of such documents, including Metro's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1994, the Metro Annual
Report to Stockholders, and Metro's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1995, June 30, and September 30, 1995, accompany this
Proxy Statement/Prospectus.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF METRO
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of Metro Common Stock, as of the Record
Date. Unless otherwise indicated, the person listed is the record owner of and
has sole voting and investment powers over his shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (1)
- -------------- ------------------- -------------------- ----------
DIRECT INDIRECT
------ --------
<S> <C> <C> <C> <C>
Common Stock Rayburn J. Fisher, Jr. 227,788(1) 22,165(2) 13.26%
6637 Roswell Road, N.E.
Atlanta, Georgia 30328
</TABLE>
(1) Includes options to purchase 112,470 shares.
(2) Represents shares held by the estate of Mr. Fisher's mother.
37
<PAGE> 40
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 Proxy Statement/Prospectus. See
"Available Information" and "Documents Incorporated by Reference."
38
<PAGE> 41
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.
Also during such period, Regions 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 Proxy
Statement/Prospectus, Regions has pending five acquisitions in addition to
Metro, 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>
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 (the Common
"First Federal Acquisition") Stock
First National Bancorp, located in Gainesville, 3,112 630 Regions Pooling
Georgia (the "FNB Acquisition") Common of
Stock Interests
First Gwinnett Bancshares, Inc., located in 63 13 Regions Purchase
Norcross, Georgia (the "First Gwinnett Acquisition") Common
Stock
Delta Bank and Trust Company, located in Belle 198 34 Regions Pooling
Chasse, Louisiana (the "Delta Acquisition") Common of
Stock Interests
-------- ------
Totals $ 3,517 $ 701
======== ======
</TABLE>
The Enterprise Acquisition, the First Federal Acquisition, the FNB
Acquisition, the First Gwinnett Acquisition, and the Delta Acquisition are
referred to in this Proxy Statement/Prospectus 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.
On December 5, 1995, Regions announced the execution of a definitive
agreement to acquire American City Bancorp, Inc. of Tullahoma, Tennessee, and
its majority-owned subsidiary American City Bank. This acquisition, which
remains subject to Regions' due diligence review and other contingencies, would
add
39
<PAGE> 42
approximately $80 million in assets to Regions' consolidated statement of
condition and would result in the issuance of shares of Regions Common Stock
having an approximate value of $8.8 million, computed as of the date of public
announcement of the proposed transaction. Giving effect to this transaction
would not have a material effect on the pro forma financial information
included in and incorporated by reference in this Proxy Statement/Prospectus.
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.
40
<PAGE> 43
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 condition of
Regions and Metro 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 purchase, 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 purchase, and the Other Pending Acquisitions, assuming three of such
acquisitions are treated as purchases for accounting purposes and two of such
acquisitions are treated as poolings 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 Metro, including the respective notes thereto, which are incorporated by
reference in this Proxy Statement/Prospectus, and the unaudited pro forma
financial information appearing elsewhere in this Proxy Statement/Prospectus
and included in Regions' Current Report on Form 8-K dated November 22, 1995.
See "Documents Incorporated by Reference" and "Summary--Comparative Per Share
Data and --Summary Pro Forma Financial Data." 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,
METRO,
AND OTHER
REGIONS AND PENDING
METRO OTHER ACQUISITIONS
COMBINING PRO FORMA PENDING COMBINING PRO FORMA
REGIONS METRO ADJUSTMENTS COMBINED ACQUISITIONS ADJUSTMENTS COMBINED
------- ----- ----------- -------- ------------ ----------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks . . $ 636,158 $ 969 $ 637,127 $ 151,338 $ 788,465
Interest-bearing deposits
in other banks . . . . . 14,922 1,663 16,585 16,519 $ (8,474) c 24,630
Investment securities . . . 2,145,891 23,843 2,169,734 216,612 2,386,346
Securities available
for sale . . . . . . . . 887,309 17,540 $(29,019) a 875,830 725,724 (28,026) a 1,573,528
Trading account assets . . 17,942 17,942 17,942
Mortgage loans held
for sale . . . . . . . . 98,046 14,177 112,223 112,223
Federal fund sold and
securities purchased under
agreements to resell . . 1,639 1,639 99,482 101,121
Loans, net of
unearned income . . . . . 9,596,673 134,703 9,731,376 2,218,916 11,950,292
Allowance for loan losses . (131,426) (1,643) (133,069) (28,696) (161,765
Premises and
equipment, net . . . . . 188,054 1,426 189,480 77,399 266,879
Other real estate . . . . . 5,537 275 5,812 10,585 16,397
Excess purchase price . . . 105,002 15,840 b 120,842 13,295 11,787 c 145,924
Due from customers on
acceptances . . . . . . . 15,561 15,561 15,561
Other assets . . . . . . . 266,602 4,410 271,012 72,692 343,704
----------- -------- -------- ----------- ---------- --------- -----------
Total assets . . . $13,847,910 $197,363 $(13,179) $14,032,094 $3,573,866 $ (24,713) $17,581,247
=========== ======== ======== =========== ========== ========= ===========
</TABLE>
41
<PAGE> 44
<TABLE>
<CAPTION>
REGIONS,
METRO,
AND OTHER
REGIONS AND PENDING
METRO OTHER ACQUISITIONS
COMBINING PRO FORMA PENDING COMBINING PRO FORMA
REGIONS METRO ADJUSTMENTS COMBINED ACQUISITIONS ADJUSTMENTS COMBINED
------- ----- ----------- -------- ------------ ----------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
Non-interest bearing deposits $ 1,461,775 $ 10,289 $ 1,472,064 $ 410,644 $ 1,882,708
Interest-bearing deposits . 9,280,412 167,329 9,447,741 2,584,100 12,031,842
Federal funds purchased and
securities sold under
agreements to repurchase 1,216,763 1,216,763 85,899 1,302,662
Other borrowed funds . . . 624,240 3,700 627,940 96,155 724,095
Bank acceptances outstanding 15,561 15,561 15,561
Other liabilities . . . . . 135,369 2,866 138,235 50,220 $ 5,600 e 194,054
----------- -------- ----------- ---------- --------- -----------
Total liabilities . . . . . 12,734,120 184,184 12,918,304 3,227,018 5,600 16,150,922
Common stock . . . . . . . 29,704 1,657 $ (1,657) b 29,704 26,146 (3,729) c 39,999
(10,778) d
(1,344) f
Surplus . . . . . . . . . . 418,453 9,345 (9,345) b 418,453 105,397 (13,834) c 522,138
10,778 d
1,344 f
Undivided Profits . . . . . 676,285 2,532 (2,532) b 676,285 212,817 (7,204) c 876,298
(5,600) e
Less: Treasury and
unearned restricted
stock . . . . . . . . . . (14,239) (29,019) a (14,239) (36) (28,026) a (14,239)
29,019 b 28,062 c
Unrealized gain (loss) on
securities available for
sale, net of tax . . . . 3,587 (355) 355 b 3,587 2,524 18 c 6,129
----------- -------- -------- ----------- ---------- --------- ----------
Total stockholders' equity 1,113,790 13,179 (13,179) 1,113,790 346,848 (30,313) 1,430,325
----------- -------- -------- ----------- ---------- --------- ----------
Total liabilities and
stockholders' equity . .
$13,847,910 $197,363 $(13,179) $14,032,094 $3,573,866 $ (24,713) $17,581,247
=========== ======== ======== =========== ========== ========= ===========
</TABLE>
_______________
(a) 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 Merger,
the First Federal Acquisition, and the First Gwinnett Acquisition.
(b) To reflect the elimination of Metro's capital accounts in accordance with
purchase accounting, and corresponding exchange of 714,303 shares of
Regions Common Stock for all the outstanding shares of Metro Common
Stock, assuming a market price of $40.625 per share for Regions Common
Stock. The Regions Common Stock exchanged is reflected as being issued
from treasury stock. Approximately $15.8 million of excess purchase price
will be added as a result of this transaction and is expected to be
amortized over 18 years.
(c) To reflect the elimination of the capital accounts of Enterprise, First
Federal, and First Gwinnett in accordance with purchase accounting, and
corresponding exchange of 715,648 shares of Regions Common Stock and
$8,474,000 for all the outstanding shares of Enterprise, First Federal
and First Gwinnett common stock, assuming a market price of $40.625 per
share for Regions Common Stock. The Regions Common Stock exchanged is
reflected as being issued from treasury stock. Approximately $11.8
million of excess purchase price will be added as a result of these
transactions and is expected to be amortized over 18 years.
(d) To reflect the issuance of 15,602,040 shares of Regions Common Stock to
effect the First National Acquisition. The First National 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 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
42
<PAGE> 45
for all the outstanding shares of First National Common Stock. A
reclassification from common stock to surplus results from the issuance
of the shares.
(e) 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.
(f) 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.
43
<PAGE> 46
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR REGIONS AND METRO
(UNAUDITED)
The following unaudited pro forma combined condensed statements of income
have been prepared for the nine months ended September 30, 1995, and for the
year ended December 31, 1994, and give effect to the Merger, assuming such
acquisition is accounted for as a purchase. The unaudited pro forma combined
condensed statements of income should be read in conjunction with the
historical consolidated financial statements of Regions and Metro, including
the respective notes thereto, which are incorporated by reference in this Proxy
Statement/Prospectus, and the unaudited consolidated historical and other pro
forma financial information, including the notes thereto, appearing elsewhere
in this Proxy Statement/Prospectus and included in Regions' Current Report on
Form 8-K dated November 22, 1995. See "Documents Incorporated by Reference" and
"Summary--Comparative Per Share Data and --Summary Pro Forma Financial Data."
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
SEPTEMBER 30, DECEMBER 31,
1995 1994
---- ----
(In thousands except per share data)
<S> <C> <C>
Income Statement Data:
Total interest income . . . . . . . . . . . . . $ 767,804 $ 796,679
Total interest expense . . . . . . . . . . . . . 393,641 356,226
--------- ---------
Net interest income . . . . . . . . . . . . . . 374,163 440,453
Provision for loan losses . . . . . . . . . . . 15,437 19,318
--------- ---------
Net interest income after loan loss
provision . . . . . . . . . . . . . . . . . . . 358,726 421,135
Total noninterest income . . . . . . . . . . . 119,378 144,892
Total noninterest expense . . . . . . . . . . . 283,810 349,994
Income tax expense . . . . . . . . . . . . . . . 66,368 71,110
--------- ---------
Net income . . . . . . . . . . . . . . . . . . . $ 127,926 $ 144,923
========= =========
Net income per share . . . . . . . . . . . . . . $ 2.77 $ 3.38
========= =========
Average common shares outstanding . . . . . . . . 46,212 42,906
</TABLE>
44
<PAGE> 47
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME FOR REGIONS, METRO,
AND OTHER PENDING ACQUISITIONS
(UNAUDITED)
The following unaudited pro forma combined condensed statements of income
for the nine months ended September 30, 1995, and for the year ended December
31, 1994, give effect to the Merger, assuming such acquisition is accounted for
as a purchase, and the Other Pending Acquisitions, assuming three of such
acquisitions are treated as purchases and two of such acquisitions are treated
as poolings of interests for accounting purposes and assuming each of such
acquisitions had been consummated on January 1, 1994. The following unaudited
pro forma combined condensed statements of income for the years ended December
31, 1993 and 1992 give effect to the First National Acquisition and the Delta
Acquisition, assuming such acquisitions are treated as poolings of interests
for accounting purposes and had been consummated on January 1, 1992. The
unaudited pro forma combined condensed statements of income should be read in
conjunction with the historical consolidated financial statements of Regions
and Metro, including the respective notes thereto, which are incorporated by
reference in this Proxy Statement/Prospectus, and the unaudited consolidated
historical and other pro forma financial information, including the notes
thereto, appearing elsewhere in this Proxy Statement/Prospectus and included in
Regions' current Report on Form 8-K dated November 22, 1995. See "Documents
Incorporated by Reference" and "Summary--Comparative Per Share Data and
- --Summary Pro Forma Financial Data." The pro forma combined condensed
statements of income are not necessarily indicative of the results that
actually would have occurred if the Merger had 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>
45
<PAGE> 48
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 Metro. Additional
information is available in Regions' Annual Report on Form 10-K for the fiscal
year ended December 31, 1994. See "Documents Incorporated by Reference."
GENERAL
Regions and Metro are both bank holding companies registered with the
Federal Reserve under the BHC Act. As such, Regions and Metro 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 a savings and loan holding company, Regions is also
registered with the OTS and is 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, and any other bank holding
company located in Alabama may now acquire a bank located in any other state,
and any bank holding company located outside Alabama may lawfully acquire any
Alabama-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 Proxy Statement/Prospectus,
neither Alabama, Georgia, nor any other state in which the banking subsidiaries
of Regions or Metro 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 Metro 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
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the performance of such an activity reasonably can be expected to produce
benefits to the public, such as greater convenience, increased competition, or
gains in efficiency, that outweigh possible adverse effects, such as undue
concentration of resources, decreased or unfair competition, conflicts of
interest, or unsound banking practices. For example, factoring accounts
receivable, acquiring or servicing loans, leasing personal property, conducting
discount securities brokerage activities, performing certain data processing
services, acting as agent or broker in selling credit life insurance and
certain other types of insurance in connection with credit transactions, and
performing certain insurance underwriting activities all have been determined
by the Federal Reserve to be permissible activities of bank holding companies.
The BHC Act does not place territorial limitations on permissible non-banking
activities of bank holding companies. Despite prior approval, the Federal
Reserve has the power to order a holding company or its subsidiaries to
terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that continuation of such
activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.
Each of the subsidiary depository institutions of Regions and Metro 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.
The regulatory agencies having supervisory jurisdiction over the
respective subsidiary institutions of Regions and Metro (the FDIC and the
applicable state authority in the case of state-chartered nonmember banks, and
the OTS in the case of federally chartered thrift institutions) regularly
examine the operations of such institutions and have authority to approve or
disapprove mergers, consolidations, the establishment of branches, and similar
corporate actions. Such regulatory agencies 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 Metro are legal entities separate and distinct from their
banking, thrift, and other subsidiaries. The principal sources of cash flow of
both Regions and Metro, including cash flow to pay dividends to their
respective stockholders, are dividends from their subsidiary depository
institutions. There are statutory and regulatory limitations on the payment of
dividends by these subsidiary depository institutions to Regions and Metro, as
well as by Regions and Metro to their stockholders.
All of Regions' and Metro's banking subsidiaries are subject to the
respective laws and regulations of the states of Alabama, Florida, Georgia,
Louisiana, and Tennessee as to the payment of dividends. If, in the opinion of
the federal banking regulator, a depository institution under its jurisdiction
is engaged in or is about to engage in an unsafe or unsound practice (which,
depending on the financial condition of the depository institution, could
include the payment of dividends), such authority may require, after notice and
hearing, that such institution cease and desist from such practice. The federal
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 subsidiary depository institutions of Regions and Metro,
without obtaining governmental approvals, could declare aggregate dividends to
Regions and Metro of approximately $264 million and $543,000, respectively.
The payment of dividends by Regions and Metro and their subsidiary
depository institutions may also be affected or limited by other factors, such
as the requirement to maintain adequate capital above regulatory guidelines.
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CAPITAL ADEQUACY
Regions, Metro, and their respective subsidiary depository institutions
are required to comply with the capital adequacy standards established by the
Federal Reserve in the case of Regions and Metro and the appropriate federal
banking regulator in the case of each of their subsidiary depository
institutions. 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 "Total 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 Total 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 Metro's consolidated Total Risk-Based Capital and
Tier 1 Risk-Based Capital Ratios were 10.84% and 9.67%, 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 Metro's respective Leverage Ratios at September 30, 1995,
were 7.25% and 6.73%. The guidelines also provide that bank holding companies
experiencing internal growth or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum supervisory
levels without significant reliance on intangible assets. Furthermore, the
Federal Reserve has indicated that it will consider a "tangible Tier 1 Capital
Leverage Ratio" (deducting all intangibles) and other indicia of capital
strength in evaluating proposals for expansion or new activities.
Each of Regions' and Metro's subsidiary depository institutions 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 subsidiary depository
institutions was in compliance with applicable minimum capital requirements as
of September 30, 1995. Neither Regions, Metro, nor any of their subsidiary
depository institutions has been advised by any federal banking agency of any
specific minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank (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
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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 INSTITUTIONS
Under Federal Reserve policy, Regions and Metro 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 Metro 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 subsidiary depository institutions of Regions and
Metro 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 depository institution's banking or thrift
affiliates, and a potential loss of Regions' or Metro's respective investments
in such other subsidiary depository institutions.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed. Generally, subject to
a narrow exception, FDICIA requires the banking regulator to appoint a receiver
or conservator for an institution that is critically undercapitalized. The
federal banking agencies have specified by regulation the relevant capital
level for each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total 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 Total 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 Total 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 Total 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),
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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 subsidiary depository institutions of
Regions and Metro had the requisite capital levels to qualify as well
capitalized.
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
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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, were 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, Regions is not 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
Regions, the aggregate SAIF assessments of Regions (on a pre-tax basis) would
be approximately $24 million.
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,
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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 corrective action" provisions of
FDICIA. See "--Prompt Corrective Action." 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 47,526,707 shares were issued, including 1,474,579 treasury shares, at
September 30, 1995. 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
therefor. The ability of Regions to pay dividends is affected by the ability of
its Subsidiary Institutions to pay dividends, which is limited by applicable
regulatory requirements and capital guidelines. At September 30, 1995, under
such requirements and guidelines, the Subsidiary Institutions had $264 million
of undivided profits legally available for the payment of dividends. See
"Certain Regulatory Considerations--Payment of Dividends."
For a further description of Regions Common Stock, see "Effect of the
Merger on Rights of Stockholders."
STOCKHOLDER PROPOSALS
Regions expects to hold its next annual meeting of stockholders after the
Merger during April 1996. Under SEC rules, proposals of Regions stockholders
intended to be presented at that meeting must have been received by Regions at
its principal executive offices no later than November 17, 1995, for
consideration by Regions for possible inclusion in such proxy materials.
Proposals with respect to Regions' 1997 annual meeting of stockholders may be
submitted until the date specified in Regions' 1996 annual meeting proxy
statement.
EXPERTS
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
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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.
The consolidated financial statements of Metro 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 Metro's Annual Report on Form 10-KSB 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, 1993 consolidated financial statements refers to a
change in the method of 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," and refers to a change in the method of accounting for income
taxes in 1993 to adopt the provisions of SFAS No. 109, "Accounting for Income
Taxes."
OPINIONS
The legality of the shares of Regions Common Stock to be issued in the
Merger will be passed upon by Lange, Simpson, Robinson & Somerville,
Birmingham, Alabama. Henry E. Simpson, partner in the law firm of Lange,
Simpson, Robinson & Somerville, is a member of the Board of Directors of
Regions. As of December 21, 1995, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville owned an aggregate of 118,845 shares of Regions Common
Stock.
Certain tax consequences of the transaction have been passed upon by Alston
& Bird, Atlanta, Georgia.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
METRO FINANCIAL CORPORATION
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF AUGUST 23, 1995
A-1
<PAGE> 57
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Parties................................................................................ A-5
Preamble............................................................................... A-5
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER.......................................... A-5
1.1 Merger....................................................................... A-5
1.2 Time and Place of Closing.................................................... A-5
1.3 Effective Time............................................................... A-5
ARTICLE 2 -- TERMS OF MERGER........................................................... A-6
2.1 Certificate of Incorporation................................................. A-6
2.2 Bylaws....................................................................... A-6
2.3 Directors and Officers....................................................... A-6
ARTICLE 3 -- MANNER OF CONVERTING SHARES............................................... A-6
3.1 Conversion of Shares......................................................... A-6
3.2 Anti-Dilution Provisions..................................................... A-6
3.3 Shares Held by Metro or Regions.............................................. A-6
3.4 Fractional Shares............................................................ A-6
3.5 Conversion of Stock Options; Restricted Stock................................ A-7
ARTICLE 4 -- EXCHANGE OF SHARES........................................................ A-7
4.1 Exchange Procedures.......................................................... A-7
4.2 Rights of Former Metro Shareholders.......................................... A-7
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF METRO................................... A-8
5.1 Organization, Standing, and Power............................................ A-8
5.2 Authority; No Breach By Agreement............................................ A-8
5.3 Capital Stock................................................................ A-9
5.4 Metro Subsidiaries........................................................... A-9
5.5 Financial Statements......................................................... A-9
5.6 Absence of Undisclosed Liabilities........................................... A-10
5.7 Absence of Certain Changes or Events......................................... A-10
5.8 Tax Matters.................................................................. A-10
5.9 Environmental Matters........................................................ A-10
5.10 Compliance With Laws......................................................... A-11
5.11 Employee Benefit Plans....................................................... A-11
5.12 Material Contracts........................................................... A-12
5.13 Legal Proceedings............................................................ A-13
5.14 Statements True and Correct.................................................. A-13
5.15 Tax and Regulatory Matters................................................... A-13
5.16 State Takeover Laws.......................................................... A-13
5.17 Directors' Agreements........................................................ A-13
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS................................. A-13
6.1 Organization, Standing, and Power............................................ A-13
6.2 Authority; No Breach By Agreement............................................ A-13
6.3 Capital Stock................................................................ A-14
6.4 Financial Statements......................................................... A-14
6.5 Absence of Undisclosed Liabilities........................................... A-14
6.6 Absence of Certain Changes or Events......................................... A-15
6.7 Compliance With Laws......................................................... A-15
6.8 Legal Proceedings............................................................ A-15
6.9 Statements True and Correct.................................................. A-15
6.10 Tax and Regulatory Matters................................................... A-16
</TABLE>
A-2
<PAGE> 58
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION.................................. A-16
7.1 Affirmative Covenants of Metro............................................... A-16
7.2 Negative Covenants of Metro.................................................. A-16
7.3 Covenants of Regions......................................................... A-17
7.4 Adverse Changes in Condition................................................. A-18
7.5 Reports...................................................................... A-18
ARTICLE 8 -- ADDITIONAL AGREEMENTS..................................................... A-18
8.1 Registration Statement; Proxy Statement; Shareholder Approval................ A-18
8.2 Exchange Listing............................................................. A-18
8.3 Applications................................................................. A-18
8.4 Filings with State Offices................................................... A-18
8.5 Agreement as to Efforts to Consummate........................................ A-19
8.6 Investigation and Confidentiality............................................ A-19
8.7 Press Releases............................................................... A-19
8.8 Certain Actions.............................................................. A-19
8.9 Tax Treatment................................................................ A-19
8.10 Agreements of Affiliates..................................................... A-19
8.11 Employee Benefits and Contracts.............................................. A-20
8.12 Indemnification.............................................................. A-20
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE......................... A-21
9.1 Conditions to Obligations of Each Party...................................... A-21
9.2 Conditions to Obligations of Regions......................................... A-22
9.3 Conditions to Obligations of Metro........................................... A-22
ARTICLE 10 -- TERMINATION.............................................................. A-23
10.1 Termination.................................................................. A-23
10.2 Effect of Termination........................................................ A-24
10.3 Non-Survival of Representations and Covenants................................ A-24
ARTICLE 11 -- MISCELLANEOUS............................................................ A-24
11.1 Definitions.................................................................. A-24
11.2 Expenses..................................................................... A-29
11.3 Brokers and Finders.......................................................... A-29
11.4 Entire Agreement............................................................. A-29
11.5 Amendments................................................................... A-30
11.6 Waivers...................................................................... A-30
11.7 Assignment................................................................... A-30
11.8 Notices...................................................................... A-30
11.9 Governing Law................................................................ A-31
11.10 Counterparts................................................................. A-31
11.11 Captions..................................................................... A-31
11.12 Enforcement of Agreement..................................................... A-31
11.13 Severability................................................................. A-31
Signatures............................................................................. A-32
</TABLE>
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------
<C> <S> <C>
1. -- Form of Directors' Agreement. (sec. 5.17).
2. -- Form of agreement of affiliates of Metro. (sec. 8.10, 9.2(f)).
3. -- Matters as to which Varner, Stephens, Humphries and White will opine.
(sec. 9.2(d)).
4. -- Form of Claims Letter (sec. 9.2(g)).
5. -- Matters as to which Lange, Simpson, Robinson & Somerville will opine.
(sec. 9.3(d)).
</TABLE>
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<PAGE> 60
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of the 23rd day of August, 1995, by and between METRO FINANCIAL
CORPORATION ("Metro"), a corporation organized and existing under the laws of
the State of Georgia, with its principal office located in Atlanta, 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 Metro and Regions are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective shareholders. This Agreement provides for the acquisition of Metro by
Regions pursuant to the merger of Metro into and with Regions. At the effective
time of such merger, the outstanding shares of the capital stock of Metro shall
be converted into shares of the common stock of Regions (except as provided
herein). As a result, shareholders of Metro shall become shareholders of Regions
and each of the subsidiaries of Metro shall continue to conduct its business and
operations as a wholly owned subsidiary of Regions. The transactions described
in this Agreement are subject to the approvals of the shareholders of Metro, the
Board of Governors of the Federal Reserve System, and the appropriate state
regulatory authorities and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that the merger for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, Metro shall be merged into and with Regions in accordance with
the provisions of Sections 14-2-1107 and 14-2-11032 of the GBCC and with the
effect provided in Section 14-2-11063 of the GBCC and of Section 258 of the DGCL
and with the effect provided in Section 259 of the DGCL (the "Merger"). Regions
shall be the Surviving Corporation of the Merger and shall continue to be
governed by the Laws of the State of Delaware. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the Boards of Directors of Metro and Regions.
1.2 TIME AND PLACE OF CLOSING. The Closing will take place at 9:00 A.M. on
the date that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their chief executive officers or chief financial officers, may
mutually agree. The place of Closing shall be at the offices of Regions, in
Birmingham, Alabama, or such other place as may be mutually agreed upon by the
Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Georgia
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Georgia and the Delaware Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Delaware (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the chief
executive officers or chief financial officers of each Party, the Parties shall
use their reasonable efforts to cause the Effective Time to occur on the last
business day of the month in which occurs the last to occur of (i) the effective
date (including expiration of any applicable waiting period) of the last
required Consent of any Regulatory Authority having authority over and approving
or exempting the Merger, and (ii) the date on which the shareholders of Metro
approve this Agreement to the extent such approval is required by applicable
Law; or such later date within 30 days thereof as may be specified by Regions.
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ARTICLE 2
TERMS OF MERGER
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Regions in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Regions in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Regions in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of Regions in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of 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 Metro Common Stock (excluding shares held by Metro
or any of its Subsidiaries or by Regions or any of its Subsidiaries, 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
be converted into .431 of a share of Regions Common Stock, subject to
adjustment in accordance with Section 9.3(e) of this Agreement (the
"Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event Metro changes the number of
shares of Metro 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, the Exchange Ratio shall be proportionately adjusted. 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 METRO OR REGIONS. Each of the shares of Metro Common
Stock held by any Metro 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
Agreement, each holder of shares of Metro Common Stock exchanged pursuant to the
Merger, or of options to purchase shares of Metro Common Stock, 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, in the case of
shares exchanged pursuant to the Merger, or the date of exercise, in the case of
options. The market value of one share of Regions Common Stock at the Effective
Time or the date of exercise, as the case may be, shall be the last sale price
of such common stock on the Nasdaq/NMS (as reported by The Wall Street Journal
or, if not reported
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thereby, any other authoritative source) on the last trading day preceding the
Effective Time, in the case of shares exchanged pursuant to the Merger, and the
date of exercise, in the case of options. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder in respect of any
fractional shares.
3.5 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK. (a) At the Effective
Time, all rights with respect to Metro Common Stock pursuant to stock options or
stock appreciation rights ("Metro Options") granted by Metro under the Metro
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 Metro Option, in accordance with the
terms of the Metro Stock Plan and stock option agreement by which it is
evidenced. From and after the Effective Time, (i) each Metro Option assumed by
Regions may be exercised solely for shares of Regions Common Stock (or cash in
the case of stock appreciation rights), (ii) the number of shares of Regions
Common Stock subject to such Metro Option shall be equal to the number of shares
of Metro Common Stock subject to such Metro Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iii) the per share
exercise price under each such Metro Option shall be adjusted by dividing the
per share exercise price under each such Metro Option by the Exchange Ratio and
rounding down to the nearest cent. It is intended that the foregoing assumption
shall be undertaken in a manner that will not constitute a "modification" as
defined in Section 424 of the Internal Revenue Code, as to any stock option
which is an "incentive stock option." Metro agrees to take all necessary steps
to effectuate the foregoing provisions of this Section 3.5.
(b) All restrictions or limitations on transfer with respect to Metro
Common Stock awarded under the Metro Stock Plans or any other plan, program, or
arrangement of any Metro 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
Metro shall cause the exchange agent selected by Regions (the "Exchange Agent")
to mail to the former shareholders of Metro appropriate transmittal materials
(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates theretofore representing shares of Metro Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent).
After the Effective Time, each holder of shares of Metro 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 Metro 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 Metro Common Stock is entitled as a result of the Merger
until such holder surrenders his certificate or certificates representing the
shares of Metro Common Stock for exchange as provided in this Section 4.1. The
certificate or certificates of Metro Common Stock so surrendered shall be duly
endorsed as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, neither Regions, Metro, nor the Exchange Agent shall
be liable to a holder of Metro 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 METRO SHAREHOLDERS. At the Effective Time, the stock
transfer books of Metro shall be closed as to holders of Metro Common Stock
immediately prior to the Effective Time and no transfer of Metro 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
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<PAGE> 63
representing shares of Metro 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. To the
extent permitted by Law, former shareholders of record of Metro shall be
entitled to vote after the Effective Time at any meeting of Regions shareholders
the number of whole shares of Regions Common Stock into which their respective
shares of Metro Common Stock are converted, regardless of whether such holders
have exchanged their certificates representing Metro 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 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 Metro 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 Metro Common Stock certificate, both the Regions Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered cash payments to be paid for fractional
share interests (without interest) shall be delivered and paid with respect to
each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF METRO
Metro hereby represents and warrants to Regions as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Metro is a corporation duly
organized and validly existing, and in good standing under the Laws of the State
of Georgia, and has the corporate power and authority to carry on its business
as now conducted and to own, lease, and operate its material Assets. Metro 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 Metro.
5.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) Metro 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 Metro, subject to the approval of this Agreement by the holders of a
majority of the outstanding Metro Common Stock, which is the only shareholder
vote required for approval of this Agreement and consummation of the Merger by
Metro. Subject to such requisite shareholder approval, this Agreement represents
a legal, valid, and binding obligation of Metro, enforceable against Metro 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 Metro, nor the
consummation by Metro of the transactions contemplated hereby, nor compliance by
Metro with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of Metro'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 Metro Company under, any
Contract or Permit of any Metro 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 Metro, or, (iii) subject to receipt
of the requisite approvals referred to in Section 9.1(b) of this Agreement,
violate any Law or Order applicable to any Metro Company or any of their
respective material Assets.
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(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NYSE and the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Metro, no notice
to, filing with, or Consent of, any public body or authority is necessary for
the consummation by Metro of the Merger and the other transactions contemplated
in this Agreement.
5.3 CAPITAL STOCK. The authorized capital stock of Metro consists of
15,000,000 shares of Metro Common Stock, of which 1,654,516 shares are issued
and outstanding as of the date of this Agreement and not more than 1,885,287
shares will be issued and outstanding at the Effective Time. All of the issued
and outstanding shares of capital stock of Metro are duly and validly issued and
outstanding and are fully paid and nonassessable under the GBCC. None of the
outstanding shares of capital stock of Metro has been issued in violation of any
preemptive rights of the current or past shareholders of Metro. Metro has
reserved 900,000 shares of Metro Common Stock for issuance under the Metro Stock
Plans, pursuant to which options to purchase not more than 230,771 shares of
Metro Common Stock are outstanding. Except as set forth above or as disclosed in
Section 5.3 of the Metro Disclosure Memorandum, there are no shares of capital
stock or other equity securities of Metro outstanding and no outstanding Rights
relating to the capital stock of Metro.
5.4 METRO SUBSIDIARIES. Metro has disclosed in Section 5.4 of the Metro
Disclosure Memorandum all of the Metro Subsidiaries as of the date of this
Agreement. Except as disclosed in Section 5.4 of the Metro Disclosure
Memorandum, Metro or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each Metro Subsidiary. No equity
securities of any Metro Subsidiary are or may become required to be issued
(other than to another Metro Company) by reason of any Rights, and there are no
Contracts by which any Metro Subsidiary is bound to issue (other than to another
Metro Company) additional shares of its capital stock or Rights or by which any
Metro Company is or may be bound to transfer any shares of the capital stock of
any Metro Subsidiary (other than to another Metro Company). There are no
Contracts relating to the rights of any Metro Company to vote or to dispose of
any shares of the capital stock of any Metro Subsidiary. All of the shares of
capital stock of each Metro Subsidiary held by a Metro Company are fully paid
and (except pursuant to 12 U.S.C. Section 55 in the case of national banks and
comparable, applicable state Law, if any, in the case of state depository
institutions) nonassessable under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the Metro Company free and clear of any Lien. Each Metro Subsidiary is either
a bank, a savings association, or a corporation, and is duly organized, validly
existing, and (as to corporations) in good standing under the Laws of the
jurisdiction in which it is incorporated or organized, and has the corporate
power and authority necessary for it to own, lease, and operate its Assets and
to carry on its business as now conducted. Each Metro 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 Metro. Each Metro Subsidiary that
is a depository institution is an "insured institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and the
deposits in which are insured by the Bank Insurance Fund or the Savings
Association Insurance Fund, as appropriate.
5.5 FINANCIAL STATEMENTS. Metro has included in Section 5.5 of the Metro
Disclosure Memorandum copies of all Metro Financial Statements for periods ended
prior to the date hereof and will deliver to Regions copies of all Metro
Financial Statements prepared subsequent to the date hereof. The Metro Financial
Statements (as of the dates thereof and for the periods covered thereby) (i) are
or, if dated after the date of this Agreement, will be in accordance with the
books and records of the Metro Companies, which are or will be, as the case may
be, complete and correct and which have been or will have been, as the case may
be, maintained in accordance with good business practices, and (ii) present or
will present, as the case may be, fairly the consolidated financial position of
the Metro Companies as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows of the Metro
Companies for
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<PAGE> 65
the periods indicated, in accordance with GAAP (subject to any exceptions as to
consistency specified therein or as may be indicated in the notes thereto or, in
the case of interim financial statements, to normal recurring year-end
adjustments that are not material in amount of effect).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Metro Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Metro, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Metro as of
June 30, 1995 included in the Metro Financial Statements or reflected in the
notes thereto. No Metro 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
Metro.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1995, except as
disclosed in Section 5.7 of the Metro 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 Metro, and
(ii) the Metro 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 Metro 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 Metro 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, and all returns filed are
complete and accurate to the Knowledge of Metro. All Taxes shown on filed
returns have been paid. There is no audit examination, deficiency, refund
Litigation, or penalties owed with respect to any Taxes, except as reserved
against in the Metro Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 5.8 of the Metro Disclosure Memorandum. All
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) Except as disclosed in Section 5.8(b) of the Metro Disclosure
Memorandum, none of the Metro Companies has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination by the
Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due for any of the
Metro Companies for the period or periods through and including the date of the
respective Metro Financial Statements has been made and is reflected on such
Metro Financial Statements.
(d) Deferred Taxes of the Metro Companies have been provided for in
accordance with GAAP.
(e) Each of the Metro Companies is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms
W-9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code.
5.9 ENVIRONMENTAL MATTERS. (a) Except as disclosed in Section 5.9(a) of
the Metro Disclosure Memorandum, to the Knowledge of Metro, each Metro Company,
its Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for such instances of non-
compliance that are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Metro.
(b) To the Knowledge of Metro, there is no Litigation pending or threatened
before any court, governmental agency, or authority or other forum in which any
Metro Company or any of its Loan Properties or Participation Facilities has been
or, with respect to threatened Litigation, may be named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any
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Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on, under, or involving a site
owned, leased, or operated by any Metro Company or any of its Loan Properties or
Participation Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Metro, and to the Knowledge of Metro, there is no reasonable
basis for any such Litigation.
(c) To the Knowledge of Metro, there have been no releases of Hazardous
Material in, on, under, or affecting any Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Metro.
5.10 COMPLIANCE WITH LAWS. Metro is duly registered as a bank holding
company under the BHC Act. Each Metro 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 the absence of Permits which do not
have, individually or in the aggregate, a Material Adverse Effect on Metro, and
there has occurred no Default under any such Permit. Except as disclosed in
Section 5.10 of the Metro Disclosure Memorandum, none of the Metro 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 Metro; 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 Metro 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 Metro, (ii) threatening to revoke any Permits, or (iii)
requiring any Metro 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.
5.11 EMPLOYEE BENEFIT PLANS. (a) Metro has disclosed in Section 5.11 of
the Metro 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 Metro Company or
Affiliate thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively, the "Metro
Benefit Plans"). Any of the Metro 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 "Metro ERISA Plan." Each Metro ERISA Plan which is also a "defined
benefit plan" (as defined in Section 414(j) of the Internal Revenue Code) is
referred to herein as a "Metro Pension Plan." No Metro Pension Plan is or has
been a multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All Metro 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 Metro. No Metro Company has engaged in a
transaction with respect to any Metro Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject any
Metro Company to a tax or penalty imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA.
(c) No Metro 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
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"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 Metro Pension Plan, (ii) no change in the actuarial
assumptions with respect to any Metro Pension Plan, and (iii) no increase in
benefits under any Metro 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 Metro or materially adversely affect the
funding status of any such plan. Neither any Metro Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any Metro Company, or the single-employer
plan of any entity which is considered one employer with Metro under Section
4001 of ERISA or Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA. No Metro Company has provided, or is required to provide,
security to a Metro Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(d) No Liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by any Metro Company with respect to any ongoing,
frozen, or terminated single-employer plan or the single-employer plan of any
ERISA Affiliate. No Metro Company has incurred any withdrawal Liability with
respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No notice
of a "reportable event," within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any Metro Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof.
(e) Except as disclosed in Section 5.11(e) of the Metro Disclosure
Memorandum, no Metro Company has any Liability for retiree health and life
benefits under any of the Metro Benefit Plans and there are no restrictions on
the rights of such Metro Company to amend or terminate any such Plan without
incurring any Liability thereunder.
(f) Except as disclosed in Section 5.11(f) of the Metro Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Metro Company
from any Metro Company under any Metro Benefit Plan or otherwise, (ii) increase
any benefits otherwise payable under any Metro Benefit Plan, or (iii) result in
any acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any Metro 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 Metro Financial Statements to the extent
required by and in accordance with GAAP.
5.12 MATERIAL CONTRACTS. Except as disclosed in Section 5.12 of the Metro
Disclosure Memorandum or otherwise reflected in the Metro Financial Statements,
none of the Metro Companies, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting, or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $50,000, (ii) any Contract relating to the borrowing of money by any
Metro Company or the guarantee by any Metro Company of any such obligation
(other than Contracts evidencing deposit liabilities, purchases of federal
funds, fully-secured repurchase agreements, and Federal Home Loan Bank advances
of depository institution Subsidiaries, trade payables, and Contracts relating
to borrowings or guarantees made in the ordinary course of business), (iii) any
Contracts between or among Metro Companies, and (iv) any other Contract or
amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by Metro with the SEC as of the date of this Agreement that has not
been filed as an exhibit to Metro's Form 10-K filed for the fiscal year ended
December 31, 1994 (together with all Contracts referred to in Section 5.11(a) of
this Agreement, the "Metro Contracts"). None of the
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Metro Companies is in Default under any Metro Contract. Except as disclosed in
Section 5.12 of the Metro Disclosure Memorandum, all of the indebtedness of any
Metro Company for money borrowed is prepayable at any time by such Metro Company
without penalty or premium.
5.13 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or,
to the Knowledge of Metro, 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 Metro 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 Metro, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any Metro Company. Section 5.13 of the Metro
Disclosure Memorandum includes a summary report of all Litigation as of the date
of this Agreement to which any Metro Company is a party and which names a Metro
Company as a defendant or cross-defendant.
5.14 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument,
or other writing furnished or to be furnished by any Metro Company or any
Affiliate thereof to Regions pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, each report and other
document, including financial statements, exhibits, and schedules thereto, filed
by a Metro Company with any Regulatory Authority complied in all material
respects with all applicable Laws, and as of its respective date, each such
report and document did not, in all material respects, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. All documents that any
Metro Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.15 TAX AND REGULATORY MATTERS. No Metro Company or any Affiliate thereof
has taken any action or has any Knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the transactions contemplated hereby, including
the Merger, from qualifying as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, or (ii) materially impede receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
5.16 STATE TAKEOVER LAWS. To the extent applicable, each Metro Company has
taken all necessary action to exempt the transactions contemplated by this
Agreement from any applicable state takeover Law, including Parts 2 and 3 of
Article 11 of the GBCC.
5.17 DIRECTORS' AGREEMENTS. Each of the directors of Metro has executed
and delivered to Regions an agreement in substantially the form of Exhibit 1.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to Metro 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 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
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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. 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 approvals 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 NYSE and the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on 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 Metro 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 Metro Common Stock
upon consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past shareholders of Regions.
6.4 FINANCIAL STATEMENTS. Regions has disclosed in Section 6.4 of the
Regions Disclosure Memorandum all Regions Financial Statements for periods ended
prior to the date hereof and will deliver to Metro copies of all Regions
Financial Statements prepared subsequent to the date hereof. The Regions
Financial Statements (as of the dates thereof and for the periods covered
thereby) (i) are or, if dated after the date of this Agreement, will be in
accordance with the books and records of the Regions Companies, which are or
will be, as the case may be, complete and correct and which have been or will
have been, as the case may be, maintained in accordance with good business
practices, and (ii) present or will present, as the case may be, fairly the
consolidated financial position of the Regions Companies as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows of the Regions Companies for the periods indicated, in
accordance with GAAP (subject to exceptions as to consistency specified therein
or as may be indicated in the notes thereto or, in the case of interim financial
statements, to normal recurring year-end adjustments that are not material in
amount of effect).
6.5 ABSENCE OF UNDISCLOSED LIABILITIES. 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. No Regions Company has incurred or paid
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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.
6.6 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, (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.
6.7 COMPLIANCE WITH LAWS. Regions is duly registered as a bank holding
company under the BHC Act. 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 the absence of Permits which do not
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 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, 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.
6.8 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 is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions.
6.9 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument, or
other writing furnished or to be furnished by any Regions Company or any
Affiliate thereof to Metro pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, each report and other
document, including financial statements, exhibits, and schedules thereto, filed
by a Regions Company with any Regulatory Authority complied in all material
respects with all applicable Laws, and as of its respective date, each such
report and document did not, in all material respects, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. All documents that any
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.
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6.10 TAX AND REGULATORY MATTERS. No Regions Company or any Affiliate
thereof has taken any action or has any Knowledge of any fact or circumstance
that is reasonably likely to (i) prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, or (ii) materially impede receipt
of any Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF METRO. Unless the prior written consent of
Regions shall have been obtained, and except as otherwise expressly contemplated
herein, Metro shall and shall cause each of its Subsidiaries to, from the date
of this Agreement until the Effective Time or termination of this Agreement, (i)
operate its business only in the usual, regular, and ordinary course, (ii)
preserve intact its business organization and Assets and maintain its rights and
franchises, and (iii) take no action which would (x) adversely affect the
ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentences of Section 9.1(b) or 9.1(c) of this Agreement,
or (y) adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF METRO. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Metro
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, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any Metro Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Metro Company to another Metro
Company) in excess of an aggregate of $100,000 (for the Metro Companies on
a consolidated basis) except in the ordinary course of the business of
Metro Subsidiaries consistent with past practices (which shall include, for
Metro 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 Metro 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 Metro 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 Metro Company, or declare or pay any dividend
or make any other distribution in respect of Metro's capital stock,
provided that Metro 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 Metro Common Stock at a rate not in excess
of $.05 per share with usual and regular record and payment dates in
accordance with past practice as disclosed in Section 7.2(c) of the Metro
Disclosure Memorandum; provided, that any dividend declared or payable on
the shares of Metro Common Stock for the quarterly period during which the
Effective Time occurs shall, unless otherwise agreed upon in writing by
Regions and Metro, be declared (with a record date prior to the Effective
Time) only if the normal record date for payment of such quarterly dividend
to holders of Regions Common Stock is before the Effective Time; or
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(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof
in existence on the date hereof, or as disclosed in Section 7.2(d) of the
Metro Disclosure Memorandum, issue, sell, pledge, encumber, authorize the
issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of Metro Common Stock or any other capital stock of any
Metro Company, or any Rights to acquire such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any
Metro Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Metro Common Stock, or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares
of capital stock of any Metro Subsidiary (unless any such shares of stock
are sold or otherwise transferred to another Metro Company) or any Asset
having a book value in excess of $100,000 other than in the ordinary course
of business for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities or securities of like maturity or grade,
purchase any securities or make any material investment, either by purchase
of stock or securities, contributions to capital, Asset transfers, or
purchase of any Assets, in any Person other than a wholly owned Metro
Subsidiary, or otherwise acquire direct or indirect control over any
Person, other than in connection with (i) foreclosures in the ordinary
course of business, or (ii) acquisitions of control by a depository
institution Subsidiary in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any Metro Company, except in accordance with past practice or
previously approved by the Board of Directors of Metro, in each case as
disclosed in Section 7.2(g) of the Metro Disclosure Memorandum or as
required by Law; pay any severance or termination pay or any bonus other
than pursuant to written policies or written Contracts in effect on the
date of this Agreement and disclosed in Section 7.2(g) of the Metro
Disclosure Memorandum; and enter into or amend any severance agreements
with officers of any Metro Company; grant any increase in fees or other
increases in compensation or other benefits to directors of any Metro
Company except in accordance with past practice disclosed in Section 7.2(g)
of the Metro Disclosure Memorandum; or except as disclosed in Section
7.2(g) of the Metro Disclosure Memorandum, voluntarily accelerate the
vesting of any stock options or other stock-based compensation or employee
benefits; or
(h) enter into or amend any employment Contract between any Metro
Company and any Person (unless such amendment is required by Law) that the
Metro 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 Metro Company or make
any material change in or to any existing employee benefit plans of any
Metro Company other than any such change that is required by Law or that,
in the opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any Metro
Company for material money damages or restrictions upon the operations of
any Metro Company; or
(l) modify, amend, or terminate any material Contract (including any
loan Contract with an Affiliate) or waive, release, compromise, or assign
any material rights or claims.
7.3 COVENANTS OF 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, except as disclosed in Section 7.3 of the Regions
Disclosure Memorandum, it shall (i) continue to conduct its business and the
business of its
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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 to the extent consistent therewith use all reasonable
efforts to preserve intact the Regions Companies' core businesses and goodwill
with their respective employees and the communities they serve, and (ii) take no
action which would (x) materially adversely affect the ability of any Party to
obtain any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentences of Section 9.1(b) or 9.1(c) of this Agreement, or (y) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement; provided, that the foregoing shall not prevent
any Regions Company from discontinuing or disposing 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.
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 each Party and the Metro Subsidiaries shall
deliver to the other Party copies of all material reports promptly after the
same are filed.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL. Regions
shall file the Registration Statement with the SEC on or before October 31,
1995, provided Metro has provided Regions all information with respect to Metro
necessary for the Registration Statement, and shall use its reasonable efforts
to cause the Registration Statement to become effective under the 1933 Act as
soon as reasonably practicable thereafter 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. Metro shall furnish all information concerning it and the holders of its
capital stock as Regions may reasonably request in connection with such action.
Metro shall call a Shareholders' Meeting, to be held as soon as reasonably
practicable after the Registration Statement is declared effective by the SEC,
for the purpose of voting upon approval of this Agreement and such other related
matters as it deems appropriate. In connection with the Shareholders' Meeting,
(i) Metro shall mail the Proxy Statement to its shareholders, (ii) the Parties
shall furnish to each other all information concerning them that they may
reasonably request in connection with such Proxy Statement, (iii) the Board of
Directors of Metro shall recommend (subject to compliance with their fiduciary
duties as advised by counsel) to its shareholders the approval of this
Agreement, and (iv) the Board of Directors and officers of Metro shall (subject
to compliance with their fiduciary duties as advised by counsel) use their
reasonable efforts to obtain such shareholders' approval.
8.2 EXCHANGE LISTING. Regions shall use its reasonable efforts to list,
prior to the Effective Time, on the Nasdaq/NMS the shares of Regions Common
Stock to be issued to the holders of Metro Common Stock pursuant to the Merger.
8.3 APPLICATIONS. Regions shall promptly prepare and file, and Metro 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 shall execute and file the Georgia
Certificate of Merger with the Secretary of State of the State of
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Georgia and Regions shall execute and file the Delaware Certificate of Merger
with the Secretary of State of the State of Delaware in connection with the
Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY. (a) Prior to the Effective Time,
each Party shall keep the other Party advised of all material developments
relevant to its business and to consummation of the Merger and shall permit the
other Party to make or cause to be made such investigation of the business and
properties of it and its Subsidiaries and of their respective financial and
legal conditions as the other Party reasonably requests, provided that such
investigation shall be reasonably related to the transactions contemplated
hereby and shall not interfere unnecessarily with normal operations. Metro shall
cooperate with Regions in obtaining, at Regions' election and expense,
environmental audits of any or all of the properties owned or occupied by Metro.
No investigation by a Party shall affect the representations and warranties of
the other Party.
(b) Each Party shall, and shall cause its advisers and agents to, maintain
the confidentiality of all confidential information furnished to it by the other
Party concerning its and its Subsidiaries' businesses, operations, and financial
positions and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. If this
Agreement is terminated prior to the Effective Time, each Party shall promptly
return all documents and copies thereof, and all work papers containing
confidential information received from the other Party.
8.7 PRESS RELEASES. Prior to the Effective Time, Metro and Regions shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no Metro Company nor any Affiliate thereof nor
any investment banker, attorney, accountant, or other representative
(collectively, "Representatives") retained by any Metro Company shall directly
or indirectly solicit any Acquisition Proposal by any Person. Except to the
extent necessary to comply with the fiduciary duties of Metro's Board of
Directors, no Metro Company or any Affiliate or Representative thereof shall
furnish any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but Metro may communicate information about such an
Acquisition Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations. Metro shall
promptly notify Regions orally and in writing in the event that it receives any
inquiry or proposal relating to any such transaction. Metro shall (i)
immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (ii) direct and use its reasonable efforts to cause
all of its Representatives not to engage in any of the foregoing.
8.9 TAX TREATMENT. Each of the Parties undertakes and agrees to use its
reasonable efforts to cause the Merger, and to take no action which would cause
the Merger not, to qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 AGREEMENT OF AFFILIATES. Metro has disclosed in Section 8.10 of the
Metro Disclosure Memorandum all Persons whom it reasonably believes is an
"affiliate" of Metro for purposes of Rule 145 under the 1933
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Act. Metro 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, substantially in the form of Exhibit 22, providing that such Person
will not sell, pledge, transfer, or otherwise dispose of the shares of Metro
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. 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.
8.11 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
Regions shall provide generally to officers and employees of the Metro
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 8.11) , 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 Metro
shall be treated as service under Regions' qualified defined benefit plans, (ii)
service under any qualified defined contribution plans of Metro shall be treated
as service under Regions' qualified defined contribution plans, and (iii)
service under any other employee benefit plans of Metro shall be treated as
service under any similar employee benefit plans maintained by Regions. Regions
also shall cause Metro and its Subsidiaries to honor all employment, severance,
consulting, and other compensation Contracts disclosed in Section 8.11 of the
Metro Disclosure Memorandum to Regions between any Metro 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 Metro Benefit Plans.
8.12 INDEMNIFICATION. (a) For a period of six years after the Effective
Time, Regions shall, and shall cause Metro to, indemnify, defend, and hold
harmless the present and former directors, officers, employees, and agents of
the Metro 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 Metro's Articles of Incorporation and Bylaws
or any Contract providing for indemnification as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the defense of
any Litigation. Without limiting the foregoing, in any case in which approval by
Metro is required to effectuate any indemnification, Regions shall cause Metro
to direct, at the election of the Indemnified Party, that the determination of
any such approval shall be made by independent counsel mutually agreed upon
between Regions and the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 8.12, upon learning of any such Liability or Litigation,
shall promptly notify Regions thereof. In the event of any such Litigation
(whether arising before or after the Effective Time), (i) Regions or Metro shall
have the right to assume the defense thereof and Regions shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Regions or Metro elects not to assume such
defense or counsel for the Indemnified Parties advises that there are
substantive issues which raise conflicts of interest between Regions or Metro
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Regions or Metro shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, that Regions shall be obligated pursuant to
this paragraph (b) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the
defense of any such Litigation, and (iii) Regions shall not be liable for any
settlement effected without its prior written consent; and provided further that
Metro shall not have any obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall determine, and such determination
shall have become final, that the indemnification of such Indemnified Party in
the manner contemplated hereby is prohibited by applicable Law.
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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 consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(a) SHAREHOLDER APPROVAL. The shareholders of Metro shall have
approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by
Law or by the provisions of any governing instruments.
(b) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to
the raising of additional capital or the disposition of Assets) which in
the reasonable judgment of the Board of Directors of Regions would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of
any Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party. No Consent so obtained
which is necessary to consummate the transactions contemplated hereby shall
be conditioned or restricted in a manner which in the reasonable judgment
of the Board of Directors of Regions would so materially adversely impact
the economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable the consummation of the Merger.
(d) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of 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.
(g) TAX MATTERS. Each Party shall have received a written opinion of
Alston & Bird, special counsel to Regions, in form reasonably satisfactory
to it (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of Metro Common
Stock for Regions Common Stock will not give rise to gain or loss to the
shareholders of Metro with respect to such exchange (except to the extent
of any cash received), and (iii) neither Metro nor Regions will recognize
gain or loss as a consequence of the Merger. In rendering such Tax Opinion,
counsel for Regions shall be entitled to rely upon representations of
officers of Metro and Regions reasonably satisfactory in form and substance
to such counsel.
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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 Metro 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 Metro 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 Metro set forth in Sections 5.15 and
5.16 of this Agreement shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties of
Metro set forth in this Agreement (excluding the representations and
warranties set forth in Sections 5.3, 5.15, and 5.16) such that the
aggregate effect of such inaccuracies would have, or is reasonably likely
to have, a Material Adverse Effect on Metro; provided that, for purposes of
this sentence only, those representations and warranties which are
qualified by references to "material" or "Material Adverse Effect" shall be
deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Metro 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. Metro 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 Sections 9.2(a) and 9.2(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Metro's Board of Directors and shareholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as Regions and its counsel shall request.
(d) OPINION OF COUNSEL. Regions shall have received an opinion of
Varner, Stephens, Humphries and White, counsel to Metro, dated as of the
Effective Time, in form reasonably satisfactory to Regions, as to the
matters set forth in Exhibit 3.
(e) ACCOUNTANT'S LETTERS. Regions shall have received from KPMG Peat
Marwick letters dated not more than five days prior to (i) the date of the
Proxy Statement and (ii) the Effective Time, with respect to certain
financial information regarding Metro, in form and substance reasonably
satisfactory to Regions, which letters shall be based upon customary
specified procedures undertaken by such firm.
(f) AFFILIATES AGREEMENTS. Regions shall have received from each
affiliate of Metro the affiliates letter referred to in Section 8.10 of
this Agreement.
(g) CLAIMS LETTERS. Each of the directors and executive officers of
Metro shall have executed and delivered to Regions letters in substantially
the form of Exhibit 4.
9.3 CONDITIONS TO OBLIGATIONS OF METRO. The obligations of Metro 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 Metro 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
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inaccuracies which are de minimus in amount). The representations and
warranties of Regions set forth in Section 6.10 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 (excluding the representations and warranties set forth in
Sections 6.3 and 6.10) such that the aggregate effect of such inaccuracies
would have, 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
"material" or "Material Adverse Effect" 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 Metro (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Sections 9.3(a) and 9.3(b)
of this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Regions' Board of Directors evidencing the
taking of all corporate action necessary to authorize the execution,
delivery, and performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as Metro
and its counsel shall request.
(D) OPINION OF COUNSEL. Metro shall have received an opinion of
Lange, Simpson, Robinson & Somerville, counsel to Regions, dated as of the
Effective Time, in form reasonably acceptable to Metro, as to the matters
set forth in Exhibit 5.
(E) PRICE CONDITION. Metro shall not be obligated to effect the
Merger if the Average Closing Price of shares of Regions Common Stock shall
be less than $33.4125; subject however, to the following three sentences.
If Metro elects to exercise its right not to close pursuant to this Section
9.3(e), it shall give prompt written notice thereof to Regions. During the
seven-day period commencing with its receipt of such notice, Regions shall
have the option to elect to increase the Exchange Ratio to equal the
quotient (rounded to the nearest one-thousandth) obtained by dividing (i)
$14.40 by (ii) the Average Closing Price. If Regions makes an election
contemplated by the preceding sentence, within such seven-day period, it
shall give prompt written notice to Metro of such election and the revised
Exchange Ratio whereupon the condition provided in this Section 9.3(e)
shall be deemed to have been satisfied 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 9.3(e).
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of Metro,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time:
(a) By mutual consent of the Board of Directors of Regions and the
Board of Directors of Metro; or
(b) By the Board of Directors of either Party in the event of a
material breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within 30
days after the giving of written notice to the breaching Party of such
breach and which breach would provide the non-breaching Party the ability
to refuse to consummate the Merger under the standard set forth in Section
9.2(a) of this Agreement in the case of Regions and Section 9.3(a) of this
Agreement in the case of Metro; or
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(c) By the Board of Directors of either Party in the event of a
material breach by the other Party of any covenant or agreement contained
in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching Party of such breach;
or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
shareholders of Metro fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the GBCC at the
Shareholders' Meeting where the transactions were presented to such
shareholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by June 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 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 the
31st day after execution of this Agreement without any Liability in the
event that the review of the Assets, business, financial condition, results
of operations, and prospects of Metro undertaken by Regions during such
time period causes the Board of Directors of Regions to determine, in its
reasonable good faith judgment, that a fact or circumstance exists or is
likely to exist or result which materially and adversely impacts one or
more of the economic benefits to Regions of the transactions contemplated
by this Agreement so as to render inadvisable the consummation of the
Merger.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant to
Section 10.1(b), 10.1(c), or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS. Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"Acquisition Proposal" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or assets of, or other business combination involving such Party
or any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, such Party or any
of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by,
or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
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"Agreement" shall mean this Agreement and Plan of Merger, including
the Exhibits delivered pursuant hereto and incorporated herein by
reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"Average Closing Price" shall mean the average of the daily closing
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 10 consecutive full
trading days in which such shares are traded on the Nasdaq/NMS ending at
the close of trading on the fifth full trading day preceding the
Determination Date.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Closing" shall mean the closing of the transactions contemplated
hereby, as described in Section 1.2 of this Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, or undertaking of any kind or character, or other document to
which any Person is a party or that is binding on any Person or its capital
stock, Assets, or business.
"Default" shall mean (i) any breach or violation of or default under
any Contract, Order, or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of control or both would constitute a
breach or violation of or default under any Contract, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time
or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order, or Permit.
"Delaware Certificate of Merger" shall mean the Delaware Certificate
of Merger to be executed by Regions and filed with the Secretary of State
of the State of Delaware relating to the Merger as contemplated by Section
1.1 of this Agreement.
"Determination Date" shall mean the date on which the Consent of the
Board of Governors of the Federal Reserve System of the Merger and the
other transactions contemplated by this Agreement shall be received.
"DGCL" shall mean the General Corporation Law of Delaware.
"Effective Time" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.3 of this Agreement.
"Environmental Laws" shall mean all Laws pertaining to pollution or
protection of the environment and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over pollution or protection of the
environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning provided in Section 5.11 of
this Agreement.
"ERISA Plan" shall have the meaning provided in Section 5.11 of this
Agreement.
"Exchange Agent" shall have the meaning provided in Section 4.1 of
this Agreement.
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"Exchange Ratio" shall have the meaning provided in Section 3.1(b) of
this Agreement.
"Exhibits" 1 through 5, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"Georgia Certificate of Merger" shall mean the Georgia Certificate of
Merger to be executed by Regions 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 any pollutant, contaminant, or toxic
or hazardous substance, pollutant, chemical, or waste within the meaning of
the Comprehensive Environment Response, Compensation, and Liability Act, 42
U.S.C. 9601 et seq., or any similar federal, state, or local Law (and
specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities,
polychlorinated biphenyls, and petroleum and petroleum products).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR Act" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person shall mean the knowledge
of the chairman, president, chief financial officer, chief accounting
officer, chief credit officer, general counsel, any assistant or deputy
general counsel, or any senior or executive vice president of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities, or business, including those promulgated, interpreted,
or enforced by any of the Regulatory Authorities.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute, or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (ii) for depository institution
Subsidiaries of a Party, pledges to secure deposits, and other Liens
incurred in the ordinary course of the banking business.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative, or
other proceeding, or written notice by any Person alleging potential
Liability or requesting information about a potential claim relating to or
affecting a Party, its business, its Assets (including Contracts related to
it), or the transactions contemplated by this Agreement, but shall not
include regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
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"Loan Property" shall mean any property owned by the Party in question
or by any of its Subsidiaries or in which such Party or Subsidiary holds a
security interest, and, where required by the context, includes the owner
or operator of such property, but only with respect to such property.
"Material" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event, change, or
occurrence which, together with any other event, change, or occurrence, has
a material adverse impact on (i) the financial position, business, or
results of operations of such Party and its Subsidiaries, taken as a whole,
or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "material adverse impact"
shall not be deemed to include the impact of (x) changes in banking and
similar Laws of general applicability or interpretations thereof by courts
or governmental authorities, or (y) changes in GAAP or regulatory
accounting principles generally applicable to banks and savings
associations and their holding companies.
"Merger" shall mean the merger of Metro into and with Regions referred
to in Section 1.1 of this Agreement.
"Metro Benefit Plans" shall have the meaning set forth in Section 5.11
of this Agreement.
"Metro Common Stock" shall mean the $1.00 par value common stock of
Metro.
"Metro Companies" shall mean, collectively, Metro and all Metro
Subsidiaries.
"Metro Disclosure Memorandum" shall mean the written information
entitled "Metro Financial Corporation Disclosure Memorandum" delivered
within seven days after the date of this Agreement to Regions describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made.
"Metro Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Metro as of June
30, 1995, and as of December 31, 1994 and 1993, and the related statements
of income, changes in shareholders' 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 Metro in SEC Documents, and (ii) the consolidated
balance sheets of Metro (including related notes and schedules, if any) and
related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) included in SEC
Documents filed with respect to periods ended subsequent to June 30, 1995.
"Metro Stock Plans" shall mean the existing stock options and other
stock-based compensation plans of Metro disclosed in Section 5.11 of the
Metro Disclosure Memorandum.
"Metro Subsidiaries" shall mean the Subsidiaries of Metro, which shall
include the Metro Subsidiaries described in Section 5.4 of this Agreement
and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Metro in the future and owned by Metro at the
Effective Time.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Nasdaq/NMS" shall mean the National Market System of the National
Association of Securities Dealers' Automated Quotations System.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
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"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"Participation Facility" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such
facility or property.
"Party" shall mean either Metro or Regions, and "Parties" shall mean
both Metro 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.
"Proxy Statement" shall mean the proxy statement used by Metro to
solicit the approval of its shareholders 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 Metro Common
Stock.
"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 date of this Agreement to Metro describing in reasonable
detail the matters contained therein and, with respect to each disclosure
made therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto.
"Regions Financial Statements" shall mean (i) the consolidated balance
sheets (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 shareholders' 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 Regions in SEC Documents, and (ii) the
consolidated balance sheets of Regions (including related notes and
schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to June 30, 1995.
"Regions Subsidiaries" shall mean the Subsidiaries of 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 shareholders of Metro in connection with the
transactions contemplated by this Agreement and which shall include the
Proxy Statement.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of Governors
of the Federal Reserve System, the Office of Thrift Supervision (including
its predecessor, the Federal Home Loan Bank Board), the Office of the
Comptroller of the Currency, Federal Deposit Insurance Corporation, all
state regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries, the NYSE, the NASD, and the SEC.
"Rights" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or
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securities or rights convertible into or exchangeable for, shares of the
capital stock of a Person or by which a Person is or may be bound to issue
additional shares of its capital stock or other Rights.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Documents" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to
be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"Shareholders' Meeting" shall mean the meeting of the shareholders of
Metro 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 as the surviving
corporation resulting from the Merger.
"Tax" or "Taxes" shall mean any federal, state, county, local, or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, including interest, penalties,
and additions imposed thereon or with respect thereto.
Any singular term in this Agreement shall be deemed to include the plural, and
any plural term the singular. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation."
11.2 EXPENSES. (a) Except as otherwise provided in this Section 11.2, each
of the Parties shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration, and application fees, printing fees, and fees
and expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that Regions shall bear and pay the filing fees
payable in connection with the Registration Statement and the Proxy Statement
and printing costs incurred in connection with the printing of the Registration
Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.
11.3 BROKERS AND FINDERS. Except with respect to Sterne, Agree & Leach,
Inc., with respect to Metro, each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or being retained by
Metro or Regions, each of Metro 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. Nothing in this Agreement
expressed or implied, is intended to confer
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upon any Person, other than the Parties or their respective successors, any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties; provided, that after any such
approval by the holders of Metro Common Stock, there shall be made no amendment
that pursuant to the GBCC requires further approval by such shareholders without
the further approval of such shareholders.
11.6 WAIVERS. (a) Prior to or at the Effective Time, Regions, acting
through its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Metro, to waive or extend the time for the compliance
or fulfillment by Metro 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, Metro, acting through its Board of
Directors, chief executive officer, or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
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 Metro 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 Metro.
(c) The failure of any Party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such Party at a
later time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or more instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
<TABLE>
<S> <C>
Metro: Metro Financial Corporation
6637 Roswell Road, NE
Atlanta, Georgia 30328
Telecopy Number: (404) 257-2872
Attention: Rayburn J. Fisher, Jr.
President and Chief Executive Officer
</TABLE>
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<TABLE>
<S> <C>
Copy to Counsel: Varner, Stephens, Humphries and White
Suite 1700 Riverwood
100 Cumberland Circle
Atlanta, Georgia 30339
Telecopy Number: (770) 850-7070
Attention: K. Morgan Varner, III
and
Richard W. Stephens
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy Number: (404) 572-5958
Attention: Kathryn L. Knudson
Regions: Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive Financial Officer
Copy to Counsel: Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7099
Attention: Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
</TABLE>
11.9 GOVERNING LAW. Except to the extent the laws of the State of Georgia
apply to the Merger, this Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
11.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.13 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
ATTEST: METRO FINANCIAL CORPORATION
/s/ RICHARD W. STEPHENS By: /s/ RAYBURN J. FISHER, JR.
- --------------------------------------------- ---------------------------------------------
Richard W. Stephens Rayburn J. Fisher, Jr.
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
/s/ SAMUEL E. UPCHURCH, JR. By: /s/ WILLIAM E. JORDAN
- --------------------------------------------- ---------------------------------------------
Samuel E. Upchurch, Jr. William E. Jordan
General Counsel and Corporate Secretary Regional President
[CORPORATE SEAL]
</TABLE>
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<PAGE> 88
Appendix B
December 20, 1995
Members of the Board of Directors
Metro Financial Corporation
6637 Roswell Road
Atlanta, Georgia 30328
Sirs:
We understand that Metro Financial Corporation (the "Company"), and
Regions Financial Corporation, a Delaware corporation ("Regions"), have entered
into an Agreement and Plan of Reorganization, dated as of August 23, 1995 (the
"Agreement"), pursuant to which a wholly-owned subsidiary of Regions will be
merged with the Company and each outstanding share of the Company's common
stock (excluding treasury shares and shares held by stockholders who perfect
their dissenters' rights) will cease to be outstanding and will be converted
into and exchanged for the right to receive 0.431 shares of Regions common
stock subject to adjustments under certain circumstances (the "Consideration"),
as described in the Agreement.
You have asked for our opinion as to whether the Consideration to be
received by the stockholders of the Company's common stock pursuant to the
Agreement is fair to the stockholders of the Company (other than Regions or any
of its subsidiaries) from a financial point of view, as of the date hereof.
In rendering its opinion, Sterne, Agee, has, among other things: (i)
reviewed certain publicly available financial and other data with respect to
the Company and Regions, including the consolidated financial statements for
recent years and interim periods to date; certain Regions Current Reports on
Form 8-K presenting certain financial statements on a pro forma basis
incorporating the effects of then pending and expected-to-be-completed
acquisitions by Regions; drafts of the Registration Statement; and certain
other relevant financial and operating data relating to the Company and Regions
made available to Sterne, Agee from published sources and from the internal
records of the Company and Regions; (ii) reviewed the Merger Agreement; (iii)
reviewed certain historical market prices and trading volumes of the Company
and Regions common stock in the over-the-counter market as reported by the
NASDAQ National Market; (iv) compared the Company and Regions from a financial
point of view with certain other companies in the financial services industry
which Sterne, Agee deemed relevant; (v) considered the financial terms, to the
extent publicly available, of selected recent acquisitions of financial
institutions which Sterne, Agee deemed to be comparable, in whole or in part,
to the Merger; (vi) reviewed and discussed with representatives of the
managements of the Company and Regions certain information of a business and
financial nature regarding the Company and Regions, respectively, furnished to
Sterne, Agee by the Company and Regions, respectively, (vii) made inquiries
regarding and discussed the Merger Agreement and other matters related thereto
with the Company's counsel; and (viii) performed such other analyses and
examinations as we have deemed appropriate.
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Metro Financial Corporation
December 20, 1995
Page 2
In connection with our review, we have not independently verified any
of the foregoing information with respect to the Company or Regions, have
relied on all such information, and have assumed that all such information is
complete and accurate in all material respects. With respect to the financial
forecasts for the Company and Regions provided to us by their respective
managements, we have assumed for purposes of our opinion that they have been
reasonably prepared on bases reflecting the best available estimates and
judgments of their respective managements at the time of preparation as to the
future financial performance of the Company and Regions and that they provide a
reasonable basis upon which we could form our opinion. We have also assumed
that there have been no material changes in the Company's or Regions' assets,
financial condition, results of operations, business or prospects since the
respective dates of their last financial statements made available to us. We
have relied on advice of counsel to the Company as to all legal matters with
respect to the Company, Regions and the Agreement. In addition, we have not
examined any of the loan files of the Company or Regions or otherwise evaluated
the allowance for loan losses of the Company or Regions and have not made an
independent evaluation, appraisal or physical inspection of the assets or
individual properties of the Company or Regions, nor have we been furnished
with any such appraisals. Further, our opinion is based on economic, monetary
and market conditions existing as of the date hereof.
In the ordinary course of our business, we actively trade the equity
securities of the Company and Regions for our own account and for the accounts
of customers and, accordingly, may at any time hold a long or short position in
such securities. Sterne, Agee, and its officers, employees, consultants, and
agents may have long, short, or option positions in the securities of the
Company and Regions. Sterne, Agee has regularly followed and provided
investment research concerning Regions to its clients.
Based upon the foregoing, and in reliance thereon, it is our opinion
that, as of the date hereof, the Consideration to be received by the
stockholders of the Company pursuant to the Agreement is fair to the
stockholders of the Company (other than Regions or any of its subsidiaries)
from a financial point of view.
This opinion is furnished pursuant to our engagement letter, dated
August 15, 1995, and is for the benefit of the Board of Directors of the
Company.
Very truly yours,
STERNE, AGEE & LEACH, INC.
By: /s/ Kathryn H. Bissette
Senior Vice President
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